in developing, implementing, and enforcing SIP provisions. CARB states
that the air districts collaborate through workgroups under CAPCOA to
discuss air quality matters and that CAPCOA meets regularly with state
and federal air quality officials to develop rules and ensure their
consistent application. California's submittal also provides examples
of local government organizations, including MPOs, organizations of
elected officials, and federal land managers who are consulted during
SIP development, and provides an example of an MOA among CARB, the EPA,
CalEPA, San Joaquin Valley APCD, and South Coast AQMD. We propose to
find that California's Infrastructure SIP meets the consultation
requirement of CAA section 110(a)(2)(J).
    In 1980, the EPA approved intergovernmental consultation procedures
into California's SIP.\80\ That SIP submittal fulfilled the
requirements of 40 CFR 51.240, designating the local air districts as
the lead agencies for the adoption, review, and periodic update of
basin-wide air pollution control plans for submission to CARB. It also
specified that the air districts will propose, adopt, implement, and
enforce control measures concerning stationary sources within their
jurisdictions. The ``Chapter 25--Intergovernmental Relations'' \81\
portion of that submittal included a MOU between CARB and Caltrans, the
state transportation agency. The MOU outlined how the two agencies will
work together on transportation controls in nonattainment air plans, on
transportation plans and programs, and to ensure consistency of
transportation plans, programs, and projects with the SIP. These
provisions previously approved into the California SIP reinforce the
consultation procedures described in California's recent SIP
submittals.
---------------------------------------------------------------------------

    \80\ 45 FR 53136 (August 11, 1980).
    \81\ Chapter 25, Intergovernmental Relations, Revision to State
of California Implementation Plan for the Attainment and Maintenance
of Ambient Air Quality Standards. Adopted by the CARB, October 26,
1978.
---------------------------------------------------------------------------

    With respect to the requirements of CAA section 127 and 40 CFR
51.285, California's 2018 Infrastructure SIP provides for adequate
public notification. HSC section 39607(a) requires CARB to acquire and
publicly report data on each air basin and HSC section 40718(a)
requires CARB to publish maps of areas violating the NAAQS. In its 2018
submittal, CARB explains how it and the districts publish information
online about air quality (including the current Air Quality Index), the
health effects of air pollution, and what the public can do about air
pollution. The submittal also describes the public hearing requirements
applicable to CARB and the air districts. Thus, we propose to find that
California's Infrastructure SIP Submittals meet the public notification
requirements of CAA section 110(a)(2)(J).
    As discussed above, when the EPA establishes or revises a NAAQS,
the visibility protection requirements under CAA title I, part C do not
change and, therefore, there are no newly applicable visibility
protection obligations pursuant to CAA section 110(a)(2)(J). We propose
to find that California's Infrastructure SIP Submittals meets the
visibility protection requirements of CAA section 110(a)(2)(J).
    Regarding the PSD requirements of element J, we rely upon our
earlier evaluation of the PSD portion of CAA section 110(a)(2)(C). For
the 13 local air districts that have EPA-approved PSD programs, we are
proposing to partially approve California's 2018 Infrastructure SIP.
For the 22 local air districts that do not have EPA-approved PSD
programs, we are proposing to partially disapprove California's 2018
Infrastructure SIP. Because the EPA has already delegated the PSD FIP
at 40 CFR 52.21 to each of the districts without fully approved PSD
programs, finalization of this proposed, partial disapproval will not
trigger any new obligation for the EPA to promulgate a FIP.
11. CAA Section 110(a)(2)(K)--Air Quality Modeling and Submission of
Modeling Data
a. Statutory and Regulatory Requirements
    Section 110(a)(2)(K) requires SIPs to provide for: ``(i) The
performance of such air quality modeling as the Administrator may
prescribe for the purpose of predicting the effect on ambient air
quality of any emissions of any air pollutant for which the
Administrator has established a national ambient air quality standard,
and (ii) the submission, upon request, of data related to such air
quality modeling to the Administrator.'' To satisfy section
110(a)(2)(K), in the 2013 Infrastructure SIP Guidance, the EPA
indicates that states can provide a reference or citation to the
provisions that give it authority to do the modeling and data
submission required by this element, as well as a narrative explanation
of how the state meets the requirements of this element.
b. Summary of the State's Submission
    California's 2018 Submittal refers to HSC 39602, which designates
CARB as the air pollution agency for all purposes set forth in federal
law and thereby gives it the authority to conduct air quality
monitoring as required under the CAA. CARB explains in the submittal
how California meets the modeling requirements of element K. It notes
that CARB has established an air quality modeling group, which models
primary and secondary pollutants, and states that CARB's modeling
complies

with EPA guidance. It explains that CARB ensures modeling performed by
districts complies with federal requirements and that CARB and the
districts also document and make public their SIP-related modeling
protocols as part of the SIP review process. CARB also notes that
modeling results are made available to the EPA and other stakeholders
upon request.
c. The EPA's Review of the State's Submission
    California's 2018 Infrastructure SIP identifies HSC 39602, which
grants CARB its overarching SIP authority, as its statutory basis for
authority to conduct modeling, and describes how it and the districts
perform air quality modeling following guidelines prescribed by the
EPA. In the EPA's proposal to approve California's infrastructure SIP
for earlier NAAQS, we also identified examples of attainment modeling,
such as in the 2007 State Strategy for 1997 ozone and 1997
PM2.5, and in the attainment SIP for the 2008 Pb NAAQS for
Los Angeles County.\82\ We found they provided evidence of California's
authority to conduct modeling and submit its data and analysis to the
EPA in conjunction with a SIP revision. We propose to find that the
broad authority of HSC section 39602 in conjunction with the various
modeling efforts undertaken by CARB and the districts provide for
ambient air quality modeling and data submission consistent with CAA
section 110(a)(2)(K).
---------------------------------------------------------------------------

    \82\ 79 FR 63350 (October 23, 2014).
---------------------------------------------------------------------------

12. CAA Section 110(a)(2)(L)--Permit Fees
a. Statutory and Regulatory Requirements
    Section 110(a)(2)(L) requires that each SIP require the owner or
operator of each major stationary source to pay to the permitting
authority, as a condition of any permit required under the Act, a fee
sufficient to cover (i) the reasonable costs of reviewing and acting
upon any application for such a permit, and (ii) if the owner or
operator receives a permit for such source, the reasonable costs of
implementing and enforcing the terms and conditions of any such permit
(not including any court costs or other costs associated with any
enforcement action), until such fee requirement is superseded with
respect to such sources by the Administrator's approval of a fee
program under title V of the Act.
    In the 2013 Infrastructure SIP Guidance, the EPA states that fee
programs are not required to be part of the EPA-approved SIP. We
explain that infrastructure SIP submittals should provide citations to
the regulations that provide for the collection of permitting fees to
cover all CAA permitting, implementation, and enforcement for new and
modified major sources as well as existing major sources.
b. Summary of the State's Submission
    In its 2018 submittal, California states that California's 35 air
districts bear responsibility for stationary source permitting and have
regulations requiring the payment of fees from facilities subject to
CAA title V requirements. The submittal cites HSC section 42311 as
authorizing local air districts ``to adopt a schedule of fees for the
evaluation, issuance, and renewal of permits to cover the cost of air
district programs related to permitting stationary sources.'' It states
that major source permit applicants are assessed a fee for processing
their application for an authority to construct or a permit to operate.
The submittal also provides a link to CARB's website that provides a
general overview of title V permitting in California.\83\
---------------------------------------------------------------------------

    \83\ http://www.arb.ca.gov/fcaa/tv/tvinfo/overview.htm (last
visited on September 14, 2020).
---------------------------------------------------------------------------

    In its 2018 submittal, CARB further notes that the EPA has approved
the title V programs of all 35 air districts, as reflected in 40 CFR
part 70, Appendix A (``Approval Status of State and Local Operating
Permits Programs'') and provides a table that identifies the title V
rule for each air district. The submittal explains that the rules cited
in the table ``represent the district's primary implementation rule,
and in some cases, there may be other district rules that are also
relevant to the Title V process.'' \84\
---------------------------------------------------------------------------

    \84\ California's 2018 Submittal, 38.
---------------------------------------------------------------------------

c. The EPA's Review of the State's Submission
    We have reviewed California's response to this requirement and have
also considered air district provisions approved into the California
SIP. We agree with California that HSC section 42311 provides authority
to require fees for the evaluation, issuance, and renewal of stationary
sources, including new and existing major sources, except for South
Coast AQMD, whose similar permit fee authority is instead found in HSC
section 40510(b). We also agree that all 35 air districts have fully
approved title V operating permit programs. Such program approvals
supersede the operating fee requirements of CAA section 110(a)(2)(L).
    In addition to the title V fee programs, districts in California
have SIP-approved rules requiring the payment of fees for construction
and operating permits. In the EPA's 2016 final action on California's
Infrastructure SIP submittals for earlier NAAQS, we provided examples
of these rules for Bay Area AQMD, Sacramento Metro AQMD, and Yolo-
Solano AQMD.\85\ Additional examples of local district fee rules that
have recently been updated include Mojave Desert AQMD Rule 301,\86\ San
Joaquin Valley APCD Rule 3010,\87\ Monterey Bay ARD Regulation III.\88\
and South Coast AQMD Rule 301.\89\
---------------------------------------------------------------------------

    \85\ https://www.regulations.gov/document?D=EPA-R09-OAR-2014-0547-0008 (last visited on September 14, 2020).
    \86\ http://mdaqmd.ca.gov/home/showdocument?id=6783 (last
visited on September 14, 2020).
    \87\ https://www.valleyair.org/rules/currntrules/2018/R3010-a2.pdf (last visited on September 14, 2020).
    \88\ https://ww3.arb.ca.gov/drdb/mbu/curhtml/r300.pdf (last
visited on September 14, 2020).
    \89\ http://www.aqmd.gov/docs/default-source/rule-book/reg-iii/rule-301-June-2019.pdf (last visited on September 14, 2020).
---------------------------------------------------------------------------

    Therefore, based on the federally approved title V programs for all
35 air districts, the air district rules cited in California's 2018
submittal that establish permit fee requirements for major sources, and
the local district rules that implement fees to cover permitting,
implementation, and enforcement for new and modified major sources, we
propose to find that California meets the requirements of CAA section
110(a)(2)(L).
13. CAA Section 110(a)(2)(M)--Consultation and Participation by
Affected Local Entities
a. Statutory and Regulatory Requirements
    Section 110(a)(2)(M) requires SIPs to ``provide for consultation
and participation by local political subdivisions affected by the
plan.'' In the 2013 Infrastructure SIP Guidance, the EPA explains that,
to meet the requirements of element M, states may identify their
policies or procedures that allow and promote such consultation in
their SIP submittals.
b. Summary of the State's Submission
    In its 2018 submittal, California states that CARB ``routinely
consults and provides liaison'' with all districts, particularly on SIP
revisions. The submittal explains that district boards are composed of
local elected officials, so consultation with air districts provides
for consultation with and participation by local government

entities. CARB states that HSC section 41650 et seq. requires CARB ``to
conduct public hearings and to solicit testimony from air districts,
air quality planning agencies, and the public when adopting SIP-related
documents'' for nonattainment area plans. It also adds that the air
districts have a similar process for participation and comment on
proposed regulatory actions.
    CARB reiterates that HSC section 39602 designates CARB as the
agency in charge of implementing federal air pollution law and that it
requires CARB to coordinate the activities of all air districts
necessary to comply with the CAA. It also reiterates that the
California Administrative Procedures Act, GC section 11340, et seq.,
requires notification and comment opportunities to parties affected by
proposed state regulations, and that HSC section 40725 requires air
districts to provide for public review when adopting, amending, or
repealing district rules.
c. The EPA's Review of the State's Submission
    In its 2018 submittal, CARB highlights its regular consultation
with the air districts, whose governing boards are made up of local
elected officials. The submittal cites HSC section 41650, which
requires CARB to conduct public hearings on nonattainment plans. The
submittal cites HSC section 39602, which requires CARB to coordinate
the SIP activities of the air districts, the California Administrative
Procedures Act, which has public notification requirements for state
regulations, and HSC section 40725, which has public notification
requirements for district-level rules. In addition, as noted in our
evaluation for the consultation requirements of CAA section
110(a)(2)(J), CARB also consults with MPOs and RTPAs, which can be
considered local political subdivisions of the state in that they
address metropolitan and regional transportation planning issues and
include elected officials representing their respective local areas.
    California's SIP submittal demonstrates that the air districts and
the government entities represented by their boards are the local
political subdivisions affected by the plan. The submittal enumerates
how the districts are involved and consulted during the planning
process. We therefore propose to conclude that California adequately
provides for consultation and participation by local political
subdivisions affected by the California SIP, and that California's
Infrastructure SIP Submittals meet CAA section 110(a)(2)(M).

D. Proposed Approval of State and Local Provisions Into the California
SIP

    As part of this action, we are also proposing to approve two
revised state regulations and five air district rules into the
California SIP. Specifically, we propose to approve into the SIP the
updated provisions CCR, Title 2, sections 18700 and 18701. These
revised regulations were part of California's 2018 Submittal and
continue to address the conflict of interest requirements of CAA
sections 110(a)(2)(E)(ii) and 128. We also propose to approve into the
SIP five Ozone Emergency Episode Plans for Amador County APCD,
Calaveras County APCD, Mariposa County APCD, Northern Sierra AQMD, and
Tuolumne County APCD to address the emergency episode planning
requirements of CAA section 110(a)(2)(G) and 40 CFR part 51, subpart H.

E. Proposed Approval of Reclassification Requests for Emergency Episode
Planning

    In its 2018 submittal, CARB requested that the EPA reclassify three
AQCRs with respect to the emergency episode planning requirements of
CAA section 110(a)(2)(G) and 40 CFR part 51, subpart H, as applicable
to ozone, NO2, and SO2. The air quality tests for
classifying AQCRs are prescribed in 40 CFR 51.150 and are pollutant-
specific (e.g., ozone) rather than being specific to any given NAAQS
(e.g., 1997 ozone NAAQS). Consistent with the provisions of 40 CFR
51.153, reclassification of AQCRs must rely on the most recent three
years of air quality data. For ozone, an AQCR with a 1-hour ozone level
greater than 0.10 ppm over the most recent three-year period must be
classified Priority I, while all other areas are classified Priority
III. AQCRs that are classified Priority I are required to have SIP-
approved emergency episode contingency plans, while those classified
Priority III are not required to have such plans, pursuant to 40 CFR
51.151 and 51.152. We interpret 40 CFR 51.153 as establishing the means
for states to review air quality data and request a higher or lower
classification for any given region and as providing the regulatory
basis for the EPA to reclassify such regions, as appropriate, under CAA
sections 110(a)(2)(G) and 301(a)(1).
    On the basis of California's ambient air quality data for 2015-
2017, we are proposing to grant California's request to reclassify Lake
County, North Central Coast, and South Central Coast to Priority I
areas.

F. The EPA's Action

    Under CAA 110(a), we are proposing to partially approve and
partially disapprove California's 2018 Infrastructure SIP.
Specifically, we are proposing to approve the submittal for the
requirements of CAA sections 110(a)(2)(A), 110(a)(2)(B), 110(a)(2)(E),
110(a)(2)(F), 110(a)(2)(H), 110(a)(2)(K), 110(a)(2)(L), and
110(a)(2)(M). We are also proposing to partially approve and partially
disapprove the submittal for CAA sections 110(a)(2)(C),
110(a)(2)(D)(ii), and 110(a)(2)(J) due to PSD program deficiencies in
certain air districts. These partial disapprovals will not create any
new consequences as the air districts with PSD deficiencies are already
subject to PSD FIPs.
    To meet CAA 110(a)(2)(E)(ii) requirements, we are proposing to
approve into the SIP the updated versions of CCR, Title 2, sections
18700 and 18701, to replace the previous versions of 2 CCR 18700 and
18701.
    To meet the requirements of CAA 110(a)(2)(G), we are proposing to
approve California's 2020 Submittal. This includes the ozone emergency
episode contingency plans for Amador County APCD, San Luis Obispo
County APCD, Northern Sierra AQMD, Tuolumne County APCD, Mariposa
County APCD, and Calaveras County APCD, as well as the exemption
request for Lake County AQMD.
    At this time, EPA is not acting on 110(a)(2)(D)(i)(I), which
prohibits emission sources from contributing significantly to
nonattainment, or interfering with maintenance, of the NAAQS in another
state. The EPA will propose action on the interstate transport
requirements for the 2015 ozone NAAQS in a separate notice.
    We are soliciting comments on these proposed actions. We will
accept comments from the public for 30 days following publication of
this proposal in the Federal Register and will consider any relevant
comments before taking final action.

V. Incorporation by Reference

    In this rule, the EPA is proposing to include in a final EPA rule
regulatory text that includes incorporation by reference. In accordance
with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by
reference two revised state provisions from the California Code of
Regulations for the conflict of interest requirements of CAA sections
110(a)(2)(E)(ii) and 128. These revised provisions are California Code
of Regulations, Title 2, Sections 18700 and 18701. Similarly, the EPA
is also proposing to incorporate by reference

five Ozone Emergency Episode Plans for Amador County APCD, Calaveras
County APCD, Mariposa County APCD, Northern Sierra AQMD, and Tuolumne
County APCD for the emergency episode planning requirements of CAA
section 110(a)(2)(G) and 40 CFR part 51, subpart H. The EPA has made,
and will continue to make, these materials available through https://www.regulations.gov and at the EPA Region IX Office (please contact the
person identified in the FOR FURTHER INFORMATION CONTACT section of
this preamble for more information).

VI. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a
SIP submission that complies with the provisions of the Act and
applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a).
Thus, in reviewing SIP submissions, the EPA's role is to approve state
choices, provided that they meet the criteria of the Clean Air Act.
Accordingly, this proposed action merely proposes to approve state law
as meeting federal requirements and does not impose additional
requirements beyond those imposed by state law. For that reason, this
proposed action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Orders
12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21,
2011);
     Is not an Executive Order 13771 (82 FR 9339, February 2,
2017) regulatory action because SIP approvals are exempted under
Executive Order 12866;
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the Clean Air Act; and
     Does not provide the EPA with the discretionary authority
to address disproportionate human health or environmental effects with
practical, appropriate, and legally permissible methods under Executive
Order 12898 (59 FR 7629, February 16, 1994).
    In addition, the SIP is not approved to apply on any Indian
reservation land or in any other area where the EPA or an Indian tribe
has demonstrated that a tribe has jurisdiction. In those areas of
Indian country, the rule does not have tribal implications and will not
impose substantial direct costs on tribal governments or preempt tribal
law as specified by Executive Order 13175 (65 FR 67249, November 9,
2000).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Nitrogen dioxide, Ozone,
Reporting and recordkeeping requirements, and Volatile Organic
Compounds.

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

    Dated: September 30, 2020.
John Busterud,
Regional Administrator, Region IX.
[FR Doc. 2020-22061 Filed 10-15-20; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 88, Number 48 (Monday, March 13, 2023)]
[Notices]
[Pages 15389-15390]
[FR Doc No: 2023-05101]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings #1

    Take notice that the Commission received the following electric
corporate filings:

    Docket Numbers: EC23-29-000.
    Applicants: Brantley Farm Solar, LLC, Buckleberry Solar, LLC, Fox
Creek Farm Solar, LLC, Innovative Solar 54, LLC, Innovative Solar 67,
LLC.
    Description: Brantley Farm Solar, LLC, et. al. submits Response to
the February 3, 2023, Deficiency Letter.
    Filed Date: 3/6/23.
    Accession Number: 20230306-5188.
    Comment Date: 5 p.m. ET 3/27/23.

    Docket Numbers: EC23-59-000.
    Applicants: FirstEnergy Corp., Metropolitan Edison Company,
Pennsylvania Electric Company, Pennsylvania Power Company, West Penn
Power Company, Keystone Appalachian Transmission Company, Ohio Edison
Company, Mid-Atlantic Interstate Transmission, LLC, FirstEnergy
Pennsylvania Electric Company, FirstEnergy Pennsylvania Holding Company
LLC.
    Description: Joint Application for Authorization Under Section 203
of the Federal Power Act of FirstEnergy Corp., et al.
    Filed Date: 3/6/23.
    Accession Number: 20230306-5202.
    Comment Date: 5 p.m. ET 3/27/23.

    Take notice that the Commission received the following electric
rate filings:

    Docket Numbers: ER23-646-001.
    Applicants: Wagon Wheel Wind Project Holdings LLC.
    Description: Tariff Amendment: Supplement to Market-Based Rate
Application and Response to Deficiency Letter to be effective 5/7/2023.
    Filed Date: 3/7/23.
    Accession Number: 20230307-5039.
    Comment Date: 5 p.m. ET 3/28/23.

    Docket Numbers: ER23-647-001.
    Applicants: Diversion Wind Energy Holdings LLC.
    Description: Tariff Amendment: Supplement to Market-Based Rate
Application and Response to Deficiency Letter to be effective 5/7/2023.
    Filed Date: 3/7/23.
    Accession Number: 20230307-5038.
    Comment Date: 5 p.m. ET 3/28/23.

    Docket Numbers: ER23-1253-000.
    Applicants: White Tail Solar, LLC.
    Description: Request for Limited and Prospective Tariff Waiver, et
al. of White Tail Solar, LLC.
    Filed Date: 3/2/23.
    Accession Number: 20230302-5211.
    Comment Date: 5 p.m. ET 3/23/23.

    Docket Numbers: ER23-1255-000.
    Applicants: Hecate Grid Clermont 1 LLC.
    Description: Hecate Grid Clermont 1 LLC submits Limited Waiver
Request of Sections 30.8.1 and 30.3.6 of Attachment X of NYISO OATT.
    Filed Date: 3/3/23.
    Accession Number: 20230303-5267.
    Comment Date: 5 p.m. ET 3/13/23.

    Docket Numbers: ER23-1256-000.
    Applicants: Arizona Public Service Company.
    Description: Sec.  205(d) Rate Filing: Rate Schedule No. 315, ANPP
Interconnection Agreement with Sonoran Solar Energy to be effective 5/
7/2023.
    Filed Date: 3/7/23.
    Accession Number: 20230307-5057.
    Comment Date: 5 p.m. ET 3/28/23.

    Docket Numbers: ER23-1257-000.
    Applicants: Southern California Edison Company.
    Description: Sec.  205(d) Rate Filing: E&P LA, City of Vernon
EAK048 Data Centers Load Project, RS531 to be effective 3/8/2023.
    Filed Date: 3/7/23.
    Accession Number: 20230307-5059.
    Comment Date: 5 p.m. ET 3/28/23.

    Docket Numbers: ER23-1258-000.
    Applicants: Tri-State Generation and Transmission Association, Inc.
    Description: Sec.  205(d) Rate Filing: Amendment to Rate Schedule
FERC No. 79 to be effective 5/8/2023.

    Filed Date: 3/7/23.
    Accession Number: 20230307-5075.
    Comment Date: 5 p.m. ET 3/28/23.

    The filings are accessible in the Commission's eLibrary system
(https://elibrary.ferc.gov/idmws/search/fercgensearch.asp) by querying
the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: March 7, 2023.
Debbie-Anne A. Reese,
Deputy Secretary.
[FR Doc. 2023-05101 Filed 3-10-23; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register: August 11, 2008 (Volume 73, Number 155)]
[Notices]
[Page 46650-46653]
[DOCID:fr11au08-110]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58296; File No. SR-CBOE-2008-30]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Order Approving a Proposed Rule Change Relating to the
Hybrid Opening System

August 4, 2008.

I. Introduction

    On June 5, 2008, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to revise its Hybrid Opening
System (``HOSS'') procedures to allow the Hybrid Agency Liaison
(``HAL'') functionality to be available on the openings in designated
classes. The proposed rule change was published for comment in the
Federal Register on June 30, 2008.\3\ The Commission received no
comments regarding the proposal. This order approves the proposed rule
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 57997 (June 20,
2008), 73 FR 36939.
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II. Description of the Proposal

    CBOE Rule 6.2B, ``Hybrid Opening System (``HOSS''),'' sets forth
procedures for opening trading rotations for series trading on the CBOE
Hybrid Trading System (``Hybrid''). The current HOSS method for opening
chooses a single ``market clearing'' price that will leave unexecuted
those bids and offers that cannot trade with each other.\4\ However,
one or more series of a class may not open if one of the following
conditions is met: (1) No opening quote that complies with the legal
width quote requirements of Rule 8.7(b)(iv) has been entered by at
least one Market Maker appointed to the class (or by the Designated
Primary Market-Maker or

Lead Market-Maker, if applicable for the particular class) (the
``opening quote condition''); (2) the opening price is not within an
acceptable range (as applicable for the particular class) compared to
the lowest quote offer and the highest quote bid (the ``acceptable
opening range condition''); or (3) the opening trade would leave a
market order imbalance (i.e., there are more market orders to buy or to
sell for the particular series than can be satisfied by the limit
orders, quotes and market orders on the opposite side) (``market order
imbalance condition'').
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    \4\ In determining the priority of orders and quotes to be
traded, HOSS gives priority to market orders first, then to limit
orders and quotes whose price is better than the opening price, and
then to resting orders and quotes at the opening price. See Rule
6.2B(c)(iv).
---------------------------------------------------------------------------

    Under the current HOSS procedures, if the opening quote condition
or acceptable opening range condition is present, the senior official
in the Exchange's control room may authorize the opening of the
affected series where necessary to ensure a fair and orderly market. If
the acceptable opening range condition is present, HOSS will not open
the series but will send a notification to market participants
indicating the reason. If the market order imbalance condition is
present, a notification will be sent to market participants indicating
the size and direction (buy or sell) of the market order imbalance.
HOSS will not open the series until the condition causing the delay is
satisfied. HOSS will repeat the process until the series is open.\5\
---------------------------------------------------------------------------

    \5\ See CBOE Rule 6.2B(f).
---------------------------------------------------------------------------

    CBOE proposes to amend the current HOSS procedures in CBOE Rule
6.2B to permit HAL functionality to be available on the openings in
designated classes. HAL is a system for automated handling of
electronically received orders that are not automatically executed upon
receipt by Hybrid.\6\ Under the proposed rule change, the Exchange
could designate the classes in which HAL would be activated for HOSS
openings. For such designated classes, additional steps would be
automatically taken using HAL functionality to address the opening
quote, acceptable opening range, and market order imbalance conditions,
as well as to address instances where CBOE's opening trade would be at
a price that is not the current national best bid or offer (the ``NBBO
condition'').
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    \6\ See CBOE Rule 6.14 (governing the operation of HAL).
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    In particular, CBOE proposes that for classes where HAL is
activated for HOSS openings, the following procedures would apply if
one of the following conditions is met:
    (1) If the opening quote condition is present, HOSS would check to
see if there is an NBBO quote on another market that falls within the
acceptable opening range. If such an NBBO quote is present, the series
would open and expose the marketable order(s) at the NBBO price. If
such an NBBO quote is not present, HOSS would not open the series and
would send a notification to market participants indicating the reason.
    (2) If the acceptable opening range condition is present, HOSS
would match orders and quotes to the extent possible at a single
clearing price \7\ within the acceptable opening range and then expose
the remaining marketable order(s) at the widest price point within the
acceptable opening range or the NBBO price, whichever is better.
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    \7\ In determining the priority of orders and quotes to be
traded on the opening trade or through the subsequent exposure
process, HOSS would give priority to public customer market orders
first (with multiple orders ranked based on time priority), then to
non-public customer market orders second (with multiple orders being
ranked based on time priority), then to limit orders and quotes
whose price is better than the opening price (with multiple orders
and quotes being ranked in accordance with the allocation algorithm
in effect for the option class pursuant to CBOE Rule 6.45A,
``Priority and Allocation of Equity Option Trades on the CBOE Hybrid
System,'' or 6.45B, ``Priority and Allocation of Trades in Index
Options and Options on ETFs on the CBOE Hybrid System),'' and then
to limit orders and quotes at the opening price (with multiple
orders and quotes being ranked in accordance with the allocation
algorithm in effect for the option class pursuant to Rule 6.45A or
6.45B). See proposed Interpretation and Policy .03(c)(i) to Rule
6.2B.
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    (3) If the market order imbalance condition is present, HOSS would
match orders and quotes to the extent possible at a single clearing
price and then expose the remaining marketable order(s) at the widest
price point within the acceptable opening range or the NBBO price,
whichever is better.
    (4) If the NBBO condition is present, HOSS would match orders and
quotes to the extent possible at a single clearing price within the
acceptable opening range or the NBBO price, whichever is better, and
then expose the remaining marketable order(s) at the NBBO price.
    The order exposure process in each of the above would be conducted
pursuant to Rule 6.14, ``Hybrid Agency Liaison (HAL).'' Under the HAL
process, marketable orders would be electronically exposed to all
Market-Makers appointed to the relevant option class if not executed at
a single clearing price.\8\ For HOSS openings where HAL is used, this
exposure period would afford Market-Makers appointed to the class an
opportunity to match the widest price point within the opening range or
the NBBO price, whichever is better. If at least one Market-Maker
committed to trade any portion of the exposed marketable order(s)
during the exposure period, the exposure period would end and an
allocation period would commence. The Exchange would determine on a
class-by-class basis the applicable exposure period (which would not
exceed 1.5 seconds) and allocation period (which, when combined with
the designated exposure period time--as opposed to an exposure period
that is terminated early \9\--would not exceed a total of 3 seconds)
that would be applicable where HAL is activated for HOSS openings.
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    \8\ On an intra-day basis, orders are normally exposed through
HAL to Market-Makers appointed to the relevant option class as well
as members acting as agent for orders at the top of CBOE's book
(``Qualifying Members'') in the relevant series. See CBOE Rule
6.14(b). For HOSS openings where HAL is used, the exposure to
Qualifying Members would not be applicable because there would not
be an established ``top of CBOE's book'' at the time. As part of a
separate rule filing, the Exchange recently modified Rule 6.14 to
permit electronic exposure of HAL orders on a class-by-class basis
to all members that elect to receive HAL messages (not just Market-
Makers appointed to the relevant option class and Qualifying
Members) and to permit such members to participate in the HAL
process. See Securities Exchange Act Release No. 57837 (May 20,
2008), 73 FR 30431 (May 27, 2008) (SR-CBOE-2008-46). In classes
where all members that elect to receive HAL messages are eligible to
participate in the HAL process for a particular class on an intra-
day basis, all such members would also be eligible to participate in
any HAL process that occurs as part of the HOSS opening in that
class.
    \9\ In addition to the receipt of a response to trade any
portion of the exposed order(s), the exposure period would also
terminate early under the circumstances described in CBOE Rule
6.14(d).
---------------------------------------------------------------------------

    At the conclusion of the allocation period, the order(s) would be
filled in accordance with the allocation algorithm in effect for the
class pursuant to Rule 6.45A or 6.45B. There would be no participation
entitlement applicable to exposed orders, and response sizes are
limited to the size of the exposed order for allocation purposes. If no
responses are received or if there remains an unexecuted marketable
order (or portion thereof), then the balance of the order would be
booked if it is a limit order that is not marketable or processed in
accordance with CBOE Rule 6.14(b)(i)-(ii).\10\ In addition, for all
classes, any remaining balance of opening contingency orders not
executed via HAL on the opening would be automatically cancelled.\11\
For single list classes, any remaining balance of

marketable orders (other than opening contingency orders) not executed
via HAL on the opening would route as determined by the Exchange on a
class-by-class basis to PAR, BART, or at the order entry firm's
discretion to the order entry firm's booth printer.\12\
---------------------------------------------------------------------------

    \10\ With respect to new proposed HAL exposure period,
``Exchange Initial BBO'' in CBOE Rule 6.14(i)-(ii) means the best
bid (or offer) that exists in the system at the time the auction
begins. This takes into account orders and quotes on the relevant
side of the market that exist in the system at that time (including
orders and quotes that may have been entered up until the beginning
of the HAL auction). See e-mail from Jennifer Lamie, Assistant
General Counsel, CBOE, to Sara Gillis, Special Counsel, Division,
Commission, dated June 19, 2008.
    \11\ See proposed CBOE Rule 6.2B, Interpretation .03(c)(ii).
    \12\ See proposed CBOE Rule 6.2B, Interpretation .03(c)(ii).
---------------------------------------------------------------------------

    The Exchange also notes that all transactions executed via HOSS,
including through the new proposed HAL exposure period, must be in
compliance with Section 11(a) of the Act \13\ and the rules promulgated
thereunder. In this regard, the Exchange states that it believes that
orders for proprietary accounts submitted into HOSS, including any such
orders submitted as a response through the proposed HAL exposure
period, would qualify for an exception under Rule 11a2-2(T).\14\
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    \13\ 15 U.S.C. 78k(a).
    \14\ 17 CFR 240.11a2-2(T).
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III. Discussion

    The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\15\
Specifically, the Commission finds that the proposal is consistent with
section 6(b)(5) of the Act,\16\ which requires, among other things,
that the rules of a national securities exchange be designed to promote
just and equitable principles of trade, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \15\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the proposed rule change will reduce
delays in the opening of a series where the opening quote, acceptable
opening range, and market order imbalance conditions (collectively,
``opening conditions'') currently would cause the Exchange to delay the
opening of a series until the condition causing the delay is satisfied.
Under the current HOSS procedures, the Exchange must undertake a manual
process when one of the opening conditions exits, which includes
notifying members of the existence of one of the opening conditions and
waiting for the condition(s) to be remedied. The proposed rule change
would automate the process for addressing the opening conditions by
allowing the HAL functionality to be enabled on the openings in
designated classes. Specifically, rather than preventing a series from
opening, the Exchange's system will match orders and quotes to the
extent possible and then expose the remaining marketable orders to HAL.
The Commission believes that this may enhance the efficiency of HOSS
opening rotations because it will allow the opening conditions to be
addressed more quickly through the automated HAL process, as well as
address NBBO condition scenarios where the Exchange's opening trade
might occur at a price inferior to an away market.
    Section 11(a)(1) of the Act \17\ prohibits a member of a national
securities exchange from effecting transactions on that exchange for
its own account, the account of an associated person, or an account
over which it or its associated person exercises discretion
(collectively, ``covered accounts'') unless an exception applies. Rule
11a2-2(T) under the Act, known as the ``effect versus execute'' rule,
provides exchange members with an exemption from the section 11(a)(1)
prohibition. Rule 11a2-2(T) permits an exchange member, subject to
certain conditions, to effect transactions for covered accounts by
arranging for an unaffiliated member to execute the transactions on the
exchange. To comply with Rule 11a2-2(T)'s conditions, a member (i) must
transmit the order from off the exchange floor; (ii) may not
participate in the execution of the transaction once it has been
transmitted to the member performing the execution; \18\ (iii) may not
be affiliated with the executing member; and (iv) with respect to an
account over which the member has investment discretion, neither the
member nor its associated person may retain any compensation in
connection with effecting the transaction except as provided in the
Rule.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78k(a).
    \18\ The member may, however, participate in clearing and
settling the transaction.
---------------------------------------------------------------------------

    The Rule's first condition is that orders for covered accounts must
be transmitted from off the exchange floor. The HOSS system receives
orders electronically through remote terminals or computer-to-computer
interfaces.\19\ In the context of other automated trading systems, the
Commission has found that the off-floor transmission requirement is met
if a covered account order is transmitted from a remote location
directly to an exchange's floor by electronic means.\20\ Since HOSS
receives orders electronically through remote terminals or computer-to-
computer interfaces, the Commission believes that such orders satisfy
the off-floor transmission requirement. However, the Commission notes
that to the extent a member submits an order for a covered account into
HOSS from on the floor of the Exchange, such an order would not meet
this requirement.
---------------------------------------------------------------------------

    \19\ See e-mail from Jennifer Lamie, Assistant General Counsel,
CBOE, to Sara Gillis, Special Counsel, Division of Trading and
Markets, Commission, dated July 31, 2008.
    \20\ See, e.g., Securities Exchange Act Release Nos. 57478
(March 12, 2008), 73 FR 14521 (March 18, 2008) (order approving The
NASDAQ Options Market as an options exchange facility of The NASDAQ
Stock Market (``Nasdaq'')); 53128 (January 13, 2006), 71 FR 3550
(January 23, 2006) (order approving Nasdaq's application to register
as a national securities exchange); 49068 (January 13, 2004), 69 FR
2775 (January 20, 2004) (order approving the Boston Options Exchange
as an options trading facility of the Boston Stock Exchange); 44983
(October 25, 2001), 66 FR 55225 (November 1, 2001) (order approving
Archipelago Exchange as electronic trading facility of the Pacific
Exchange (``PCX'')); 29237 (May 24, 1991), 56 FR 24853 (May 31,
1991) (regarding the New York Stock Exchange's (``NYSE'') Off-Hours
Trading Facility); 15533 (January 29, 1979), 44 FR 6084 (January 31,
1979) (regarding the American Stock Exchange (``Amex'') Post
Execution Reporting System, the Amex Switching System, the
Intermarket Trading System, the Multiple Dealer Trading Facility of
the Cincinnati Stock Exchange, the PCX Communications and Execution
System, and the Philadelphia Stock Exchange's Automated
Communications and Execution System (``1979 Release'')); and 14563
(March 14, 1978), 43 FR 11542 (March 17, 1978) (regarding the NYSE's
Designated Order Turnaround System (``1978 Release'')).
---------------------------------------------------------------------------

    Second, the Rule requires that the member not participate in the
execution of its order. CBOE represented that no Exchange member is
able to acquire control or influence over the result or timing of an
order's execution through HOSS. According to CBOE, the execution of a
member's order through HOSS, including the subsequent HAL exposure, is
determined solely by automated processing and execution by computerized
systems.\21\ Accordingly, the Commission believes that a member does
not participate in the execution of an order submitted to HOSS.
---------------------------------------------------------------------------

    \21\ The member may cancel or modify the order, or modify the
instruction for executing the order. The Commission has stated that
the non-participation requirement is satisfied under such
circumstances so long as such modifications or cancellations are
also transmitted from off the floor. See 1978 Release, supra note 20
(stating that the ``non-participation requirement does not prevent
initiating members from canceling or modifying orders (or the
instructions pursuant to which the initiating member wishes orders
to be executed) after the orders have been transmitted to the
executing member, provided that any such instructions are also
transmitted from off the floor.'') Thus, the Commission notes that
if such orders are cancelled or modified from on the floor of the
Exchange, such orders would not meet this requirement of Rule 11a2-
2(T).
---------------------------------------------------------------------------

    Third, Rule 11a2-2(T) requires that the order be executed by an
exchange member who is unaffiliated with the

member initiating the order. The Commission has stated that this
requirement is satisfied when automated exchange facilities are used,
as long as the design of these systems ensures that members do not
possess any special or unique trading advantages in handling their
orders after transmitting them to the exchange.\22\ CBOE has
represented that the design of HOSS, including the new HAL exposure
period, ensures that no member has any special or unique trading
advantage in the handling of its orders after transmitting its orders
to the Exchange and is designed to prevent any Exchange members from
gaining any time or place advantages. Based on CBOE's representation,
the Commission believes that HOSS, as amended herein, satisfies this
requirement.
---------------------------------------------------------------------------

    \22\ In considering the operation of automated execution systems
operated by an exchange, the Commission noted that while there is
not an independent executing exchange member, the execution of an
order is automatic once it has been transmitted into the systems.
Because the design of these systems ensures that members do not
possess any special or unique trading advantages in handling their
orders after transmitting them to the exchange, the Commission has
stated that executions obtained through these systems satisfy the
independent execution requirement of Rule 11a2-2(T). See 1979
Release, supra note 20.
---------------------------------------------------------------------------

    Fourth, in the case of a transaction effected for an account with
respect to which the initiating member or an associated person thereof
exercises investment discretion, neither the initiating member nor any
associated person thereof may retain any compensation in connection
with effecting the transaction, unless the person authorized to
transact business for the account has expressly provided otherwise by
written contract referring to section 11(a) of the Act and Rule 11a2-
2(T).\23\ CBOE represents that members trading for covered accounts
over which they exercise investment discretion must comply with this
condition in order to rely on the rule's exemption.\24\
---------------------------------------------------------------------------

    \23\ 17 CFR 240.11a2-2(T)(a)(2)(iv). In addition, Rule 11a2-
2(T)(d) requires a member or associated person authorized by written
contract to retain compensation, in connection with effecting
transactions for covered accounts over which such member or
associated persons thereof exercises investment discretion, to
furnish at least annually to the person authorized to transact
business for the account a statement setting forth the total amount
of compensation retained by the member in connection with effecting
transactions for the account during the period covered by the
statement. See 17 CFR 240.11a2-2(T)(d). See also 1978 Release, supra
note 20 (stating ``[t]he contractual and disclosure requirements are
designed to assure that accounts electing to permit transaction-
related compensation do so only after deciding that such
arrangements are suitable to their interests'').
    \24\ See e-mail from Jennifer Lamie, Assistant General Counsel,
CBOE, to Sara Gillis, Special Counsel, Division of Trading and
Markets, Commission, dated July 31, 2008.
---------------------------------------------------------------------------

    Accordingly, for the reasons stated above, the Commission finds
that the proposed rule change is consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\25\ that the proposed rule change (SR-CBOE-2008-30) is approved.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-18368 Filed 8-8-08; 8:45 am]

BILLING CODE 8010-01-P