[Federal Register Volume 77, Number 57 (Friday, March 23, 2012)]
[Proposed Rules]
[Pages 16974-16978]
[FR Doc No: 2012-6986]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Parts 100

[Docket No. USCG-2012-0073]
RIN 1625-AA08

Special Local Regulations; Ocean State Tall Ships Festival 2012,
Narragansett Bay, RI

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Coast Guard proposes to establish temporary special local
regulations on the navigable waters of Narragansett Bay and Newport
Harbor, Rhode Island, for the Ocean State Tall Ships Festival 2012.
This action is necessary to provide for the safety of life and property
on the navigable waters of Narragansett Bay and Newport Harbor, Rhode
Island, during the Ocean State Tall Ships Festival on July 6-9, 2012.
These temporary special local regulations would restrict vessel traffic
in portions of Narragansett Bay and Newport Harbor, Rhode Island,
unless authorized by the Captain of the Port (COTP) Sector Southeastern
New England.

DATES: Comments and related material must be received by the Coast
Guard on or before May 22, 2012. Requests for public meetings must be
received by the Coast Guard on or before April 13, 2012.

ADDRESSES: You may submit comments identified by docket number USCG-
2012-0073 using any one of the following methods:
    (1) Federal eRulemaking Portal: http://www.regulations.gov.
    (2) Fax:<PHONE_NUMBER>.
    (3) Mail or Delivery: Docket Management Facility (M-30), U.S.
Department of Transportation, West Building Ground Floor, Room W12-140,
1200 New Jersey Avenue SE., Washington, DC 20590-0001. Deliveries
accepted between 9 a.m. and 5 p.m., Monday through Friday, except
federal holidays. The telephone number is<PHONE_NUMBER>. See the
``Public Participation and Request for Comments'' portion of the
SUPPLEMENTARY INFORMATION section below for further instructions on
submitting comments. To avoid duplication, please use only one of these
three methods.

FOR FURTHER INFORMATION CONTACT: If you have questions on this proposed
rule, call or email Mr. Edward G. LeBlanc, Waterways Management
Division at Coast Guard Sector Southeastern New England, telephone 401-
435-2351, email<EMAIL_ADDRESS>If you have questions on
viewing or submitting material to the docket, call Renee V. Wright,
Program Manager, Docket Operations, telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Public Participation and Request for Comments

    We encourage you to participate in this rulemaking by submitting
comments and related materials. All comments received will be posted
without change to http://www.regulations.gov and will include any
personal information you have provided.

Submitting Comments

    If you submit a comment, please include the docket number for this
rulemaking (USCG-2012-0073), indicate the specific section of this
document to which each comment applies, and provide a reason for each
suggestion or recommendation. You may submit your comments and material
online (via http://www.regulations.gov) or by fax, mail, or hand
delivery, but please use only one of these means. If you submit a
comment online via http://www.regulations.gov, it will be considered
received by the Coast Guard when you successfully transmit the comment.
If you fax, hand deliver, or mail your comment, it will be considered
as having been received by the Coast Guard when it is received at the
Docket Management Facility. We recommend that you include your name and
a mailing address, an email address, or a telephone number in the body
of your document so that we can contact you if we have questions
regarding your submission.
    To submit your comment online, go to http://www.regulations.gov,
type the docket number (USCG-2012-0073 in the ``SEARCH'' box and click
``SEARCH.'' Click on ``Submit a Comment'' on the line associated with
this rulemaking.
    If you submit your comments by mail or hand delivery, submit them
in an unbound format, no larger than 8\1/2\ by 11 inches, suitable for
copying and electronic filing. If you submit comments by mail and would
like to

know that they reached the Facility, please enclose a stamped, self-
addressed postcard or envelope. We will consider all comments and
material received during the comment period and may change the proposed
rule based on your comments.

Viewing Comments and Documents

    To view comments, as well as documents mentioned in this preamble
as being available in the docket, go to http://www.regulations.gov,
type the docket number USCG-2012-0073 in the ``SEARCH'' box and click
``SEARCH.'' Click on Open Docket Folder on the line associated with
this rulemaking. You may also visit the Docket Management Facility in
Room W12-140 on the ground floor of the Department of Transportation
West Building, 1200 New Jersey Avenue SE., Washington, DC 20590,
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. We have an agreement with the Department of Transportation to
use the Docket Management Facility.

Privacy Act

    Anyone can search the electronic form of comments received into any
of our dockets by the name of the individual submitting the comment (or
signing the comment, if submitted on behalf of an association,
business, labor union, etc.). You may review a Privacy Act notice
regarding our public dockets in the January 17, 2008, issue of the
Federal Register (73 FR 3316).

Public Meeting

    We do not now plan to hold a public meeting. But you may submit a
request for one on or before April 13, 2012, using one of the four
methods specified under ADDRESSES. Please explain why you believe a
public meeting would be beneficial. If we determine that one would aid
this rulemaking, we will hold one at a time and place announced by a
later notice in the Federal Register.

Basis and Purpose

    The legal basis for this proposed rule is 33 U.S.C. 1233, which
authorizes the Coast Guard to define Special Local Regulations.
    These temporary special local regulations are necessary to ensure
the safety of vessels and spectators from hazards associated with the
Ocean State Tall Ships Festival 2012.

Discussion of Proposed Rule

    Newport, Rhode Island, will host the Ocean State Tall Ships
Festival 2012 from July 6-9, 2012. This visit of Class A, B, and C
sailing vessels is part of a recurring series of sail training races,
rallies, cruises, and port festivals organized by Tall Ships America in
conjunction with host ports in the United States and Canada. The Ocean
State Tall Ships Festival 2012, including a Parade of Sail, is akin to
similar events held several times in the past in Newport, Rhode Island,
the most recent being in 2007.
    The Tall Ships visit to Newport, which will occur from July 6-9,
2012, will include a Parade of Sail on July 9, 2012. About 20 Class A,
B, and C vessels are expected to participate in the Parade of Sail.
These temporary special local regulations will provide for the safety
of life and protection of property on the navigable waters of
Narragansett Bay and Newport Harbor, Rhode Island, by providing for the
organized viewing of Tall Ships at their assigned berths during the
festival and by preventing the large number of spectator vessels from
interfering with the organized and controlled Parade of Sail. There may
be vessels participating in the event from several foreign countries
and the high visibility of this event warrants that temporary special
local regulations be established to ensure the safety of vessels and
spectators from hazards associated with the Ocean State Tall Ships
Festival 2012.
    The participating vessels will berth at assigned facilities in
Newport, Rhode Island, from July 5-9 2012. The festival begins on July
6, 2012, when visitors will be permitted to get a relatively close view
of the Tall Ships from recreational vessels in Newport Harbor, and also
to board the berthed vessels from shore. On the morning of July 9,
2012, the Tall Ships will depart Newport Harbor and transit up the East
Passage, Narragansett Bay, to a turning point just north of Gould
Island. The vessels will then transit back down the East Passage, exit
Narragansett Bay, and head for sea.
    The Coast Guard believes that vessel congestion due to the large
number of participating and spectator vessels may pose a significant
hazard to navigation. To reduce the risk associated with congested
waterways the Coast Guard is proposing to establish regulated areas to
restrict vessel movement around the location of the participating Tall
Ships while berthed at Newport, Rhode Island, and also while
participating in the Parade of Sail in Narragansett Bay. These
temporary special local regulations would be in effect at various times
in Narragansett Bay beginning on July 6, 2012 through July 9, 2012.
    Area ``Newport Harbor'': This Area would include all waters of
Newport Harbor within an area bounded by Aquidneck Island to the east
and south, by the Goat Island Causeway to the north, and by a line
extending from the southernmost tip of Goat Island due south to
Aquidneck Island. This area is needed to protect the maritime public
and participating vessels from hazards to navigation associated with
numerous spectator craft approaching participating Tall Ships berthed
at various facilities in the Newport area for the Ocean State Tall
Ships Festival 2012.
    Area ``Potter Cove'': In connection with the Parade of Sail on July
9, 2012, this area would be of the same coordinates of the existing
Anchorage A in the East Passage, Narragansett Bay, that lies north of
the Claiborne Pell/Newport Bridge. This area would be used as a
spectator anchoring area limited to excursion and passenger-for-hire
vessels greater than 50 feet in length carrying passengers for the
viewing of the Parade of Sail.
    Vessels other than excursion and passenger-for-hire vessels greater
than 50 feet in length would not be permitted to anchor and would be
required to transit at reduced speeds staying at least 20 yards away
from any vessels authorized to anchor or otherwise remain within Area
Potter Cove.

Area ``Parade of Sail''

    The Coast Guard proposes to establish an area to ensure the safety
of spectator vessels and participating Tall Ships during the Ocean
State Tall Ships Festival 2012 Parade of Sail on July 9, 2012.
    This proposed Area includes all waters of the East Passage,
Narragansett Bay, Rhode Island.
    This area would be enforced only during the actual Parade of Sail.
This area is designed to enhance navigation safety by facilitating the
organized and controlled transit of participating vessels through the
parade route and minimizing the impact on the maritime community.
    Notice of these special local regulations would be provided prior
to the event through the Local Notice to Mariners and Broadcast Notice
to Mariners. In addition, the sponsoring organization, Ocean State Tall
Ships, Inc., is planning to publish information of the event in local
newspapers, pamphlets, Internet sites, television, and radio
broadcasts.
    The specific geographic locations of regulated areas and specific
requirements of this rule are contained in the regulatory text.

Regulatory Analyses

    We developed this proposed rule after considering numerous statutes
and executive orders related to rulemaking.

Below we summarize our analyses based on 14 of these statutes or
executive orders.

Executive Order 12866 and Executive Order 13563

    This proposed rule is not a significant regulatory action under
section 3(f) of Executive Order 12866, Regulatory Planning and Review,
as supplemented by Executive Order 13563, and does not require an
assessment of potential costs and benefits under section 6(a)(3) of
that Order. The Office of Management and Budget has not reviewed it
under that Order.
    We expect the economic impact of this proposed rule to be minimal.
These proposed regulations involve only the southern portion of
Narragansett Bay and would close the East Passage to commercial traffic
only for several hours during the actual Parade of Sail on July 9,
2012. The West Passage would remain open to vessel traffic at all
times. The impact of these proposed regulations will not be significant
because the majority of these proposed regulations would be in effect
for only a portion of one day centered on the Parade of Sail, and most
vessel traffic can pass safely around affected areas of the East
Passage by transiting through the West Passage, Narragansett Bay.
    Notice of these special local regulations would be provided prior
to the event through the Local Notice to Mariners and Broadcast Notice
to Mariners. In addition, the sponsoring organization, Ocean State Tall
Ships, Inc., is planning to publish information of the event in local
newspapers, pamphlets, Internet sites, television, and radio
broadcasts.
    Mariners will be able to adjust their plans accordingly based on
the extensive advance information.
    Moreover, the Areas created by these special local regulations have
been narrowly tailored to impose the least impact on maritime interests
yet provide the level of safety and protection deemed necessary.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have
considered the impact of this proposed rule on small entities. The term
``small entities'' comprises small businesses, not-for-profit
organizations that are independently owned and operated and are not
dominant in their fields, and governmental jurisdictions with
populations of less than 50,000. The Coast Guard certifies under 5
U.S.C. 605(b) that this proposed rule will not have a significant
economic impact on a substantial number of small entities.
    This proposed rule may affect the following entities, some of which
might be small entities: the owners or operators of vessels intending
to transit or anchor in a portion of Narragansett Bay between July 6
and July 9, 2012, particularly during the Parade of Sail on July 9,
2012, when the navigation channel in the East Passage, Narragansett
Bay, is closed for a period of time to all traffic except vessels
participating in the Parade of Sail.
    These proposed regulations would not have a significant economic
impact on a substantial number of small entities for the following
reasons: the regulations affecting navigation in the East Passage,
Narragansett Bay, would be in effect temporarily, and only for those
periods of time necessary for the safety of the Ocean State Tall Ships
Festival 2012 participants and spectators in boats viewing the Parade
of Sail from waters adjacent to the parade route. The East Passage
would remain open to all vessel traffic for the entire Festival from
July 6-8, 2012, and would only be closed to vessel traffic for several
hours during the Parade of Sail on July 9, 2012. While the East Passage
is closed, the West Passage would remain open and is capable of being
used by all recreational and most commercial vessels.
    Notice of these special local regulations would be provided prior
to the event by Local Notice to Mariners and Broadcast Notice to
Mariners. In addition, the sponsoring organization, Ocean State Tall
Ships, Inc., is planning to publish information of the event in local
newspapers, pamphlets, Internet sites, television, and radio
broadcasts.
    If you think that your business, organization, or governmental
jurisdiction qualifies as a small entity and that this rule would have
a significant economic impact on it, please submit a comment (see
ADDRESSES) explaining why you think it qualifies and how and to what
degree this rule would economically affect it.

Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding this proposed rule so that they can better
evaluate its effects on them and participate in the rulemaking. If the
proposed rule would affect your small business, organization, or
governmental jurisdiction and you have questions concerning its
provisions or options for compliance, please contact the person listed
under FOR FURTHER INFORMATION CONTACT. The Coast Guard will not
retaliate against small entities that question or complain about this
proposed rule or any policy or action of the Coast Guard.

Collection of Information

    This proposed rule calls for no new collection of information under
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

Federalism

    A proposed rule has implications for federalism under Executive
Order 13132, Federalism, if it has a substantial direct effect on State
or local governments and would either preempt State law or impose a
substantial direct cost of compliance on them. We have analyzed this
proposed rule under that Order and have determined that it does not
have implications for federalism.

Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Though this proposed rule will not
result in such expenditure, we do discuss the effects of this proposed
rule elsewhere in this preamble.

Taking of Private Property

    This proposed rule will not cause a taking of private property or
otherwise have taking implications under Executive Order 12630,
Governmental Actions and Interference with Constitutionally Protected
Property Rights.

Civil Justice Reform

    This proposed rule meets applicable standards in sections 3(a) and
3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden.

Protection of Children

    We have analyzed this proposed rule under Executive Order 13045,
Protection of Children from Environmental Health Risks and Safety
Risks. This proposed rule is not an economically significant rule and
does not create an environmental risk to health or risk to safety that
may disproportionately affect children.

Indian Tribal Governments

    This proposed rule does not have tribal implications under
Executive

Order 13175, Consultation and Coordination with Indian Tribal
Governments, because it does not have a substantial direct effect on
one or more Indian tribes, on the relationship between the Federal
Government and Indian tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes.

Energy Effects

    We have analyzed this proposed rule under Executive Order 13211,
Actions Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use. We have determined that it is not a ``significant
energy action'' under that order because it is not a ``significant
regulatory action'' under Executive Order 12866 and is not likely to
have a significant adverse effect on the supply, distribution, or use
of energy. The Administrator of the Office of Information and
Regulatory Affairs has not designated it as a significant energy
action. Therefore, it does not require a Statement of Energy Effects
under Executive Order 13211.

Technical Standards

    The National Technology Transfer and Advancement Act (NTTAA) (15
U.S.C. 272 note) directs agencies to use voluntary consensus standards
in their regulatory activities unless the agency provides Congress,
through the Office of Management and Budget, with an explanation of why
using these standards would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., specifications of materials, performance, design, or
operation; test methods; sampling procedures; and related management
systems practices) that are developed or adopted by voluntary consensus
standards bodies.
    This proposed rule does not use technical standards. Therefore, we
did not consider the use of voluntary consensus standards.

Environment

    We have analyzed this proposed rule under Department of Homeland
Security Management Directive 023-01 and Commandant Instruction
M16475.lD, which guide the Coast Guard in complying with the National
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and
have made a preliminary determination that this action is one of a
category of actions that do not individually or cumulatively have a
significant effect on the human environment. A preliminary
environmental analysis checklist supporting this determination is
available in the docket where indicated under ADDRESSES. It appears
that this proposed rule will qualify for Coast Guard categorical
exclusion (34)(h), as described in figure 2-1 of the Instruction. This
proposed rule establishes temporary special local regulations. We seek
any comments or information that may lead to the discovery of a
significant environmental impact from this proposed rule.

List of Subjects in 33 CFR Part 100

    Marine safety, Navigation (water), Reporting and recordkeeping
requirements, Waterways.

    For the reasons discussed in the preamble, the Coast Guard proposes
to amend 33 CFR part 100 as follows:

PART 100--SAFETY OF LIFE ON NAVIGABLE WATERS

    1. The authority citation for part 100 continues to read as
follows:

    Authority: 33 U.S.C. 1233.

    2. Add Sec.  100.35T01-0073 to read as follows:

Sec.  100.35T01-0073  Special Local Regulations; Ocean State Tall Ships
2012, Narragansett Bay and Newport Harbor, Rhode Island.

    (a) Regulated Areas:
    (1) Area Newport Harbor: All waters of Newport Harbor within an
area bounded by Aquidneck Island to the east and south; by the Goat
Island Causeway to the north; and by a line extending from the
southernmost tip of Goat Island due south to Aquidneck Island.
    (2) Area Potter Cove: This Area is of the same coordinates as that
portion of charted Anchorage A, as defined in paragraph Sec.
110.145(a)(1) of this chapter, that lies north of the Claiborne Pell/
Newport Bridge.
    (3) Area Parade of Sail: Includes all waters of the East Passage,
Narragansett Bay, Rhode Island, within the following boundaries:
Beginning at position 41[deg]27'19'' N, 71[deg]23'08'' W, then
northward to position 41[deg]28'18'' N, 71[deg]22'14'' W, (Lighted Gong
Buoy ``7'' (LLNR 17800)) then to position 41[deg]28'38'' N,
71[deg]21'15'' W, (Lighted Gong Buoy ``9'' (LLNR 17805)) then to
position 41[deg]29'00'' N, 71[deg]21'00'' W, (Lighted Bell Buoy ``11''
(LLNR 17810)) then to position 41[deg]29'33'' N, 71[deg]21'04'' W, then
to position 41[deg]30'19'' N, 71[deg]21'04'' W below the Claiborne
Pell/Newport Bridge, then to position 41[deg]31'07'' N, 71[deg]21'17''
W, then to position 41[deg]31'49'' N, 71[deg]21'26'' W, then to
position 41[deg]32'30'' N, 71[deg]21'22'' W, then to position
41[deg]33'00'' N, 71[deg]21'17'' W, then to position 41[deg]33'38'' N,
71[deg]21'00'' W, (U.S. Navy Buoy ``E'' (LLNR 18035)) then to position
41[deg]33'52'' N, 71[deg]20'27'' W, (U.S. Navy Buoy ``F'' (LLNR 18040))
then to position 41[deg]33'48'' N, 71[deg]19'55'' W, (the charted
Halfway Rock). Area Parade of Sail will continue southward to position
41[deg]33'14'' N, 71[deg]19'12.5'' W, then to position 41[deg]32'28''
N, 71[deg]19'30.6'' W, then to position 41[deg]31'55'' N,
71[deg]19'42.7'' W, then to position 41[deg]31'00'' N, 71[deg]20'04''
W, (Lighted Bell Buoy ``14'' (LLNR 17940)) then to position
41[deg]30'28'' N, 71[deg]20'21'' W, then to position 41[deg]30'12'',
71[deg]20'30'' W below the Claiborne Pell/Newport Bridge, then to
position 41[deg]29'34'' N, 71[deg]20'11'' W, (Mitchell Rock Gong Buoy
``3'' (LLNR 17865)), then to position 41[deg]28'55'' N, 71[deg]20'19''
W, then to position 41[deg]27'55'' N, 71[deg]21'43'' W, then to
position 41[deg]27'27'' N, 71[deg]21'57'' W, (Bell Buoy ``6'' (LLNR
17790)), then to position 41[deg]26'57'' N, 71[deg]21'57'' W, then
returning to the starting point at 41[deg]27'19'' N, 71[deg]23'08'' W.
All coordinates are NAD 1983.
    (b) Special Local Regulations.
    (1) Definitions.
    (i) As used in this section, designated representative means a
Coast Guard Patrol Commander, including a Coast Guard coxswain, petty
officer, or other officer operating a Coast Guard vessel and a Federal,
State, or local officer designated by the Captain of the Port (COTP).
    (ii) Excursion vessel, as used in this section, refers to any
vessel granted an excursion permit as such term is defined in 46 CFR
2.01-45.
    (iii) Vessel carrying passengers-for-hire, as used in this section,
refers to, but is not limited to, vessels subject to regulation under
Subchapters H, K, and T of Title 46 of the Code of Federal Regulations.
    (2) In accordance with the general regulations in section 100.35 of
this part, entering into, transiting through, anchoring or remaining
within the regulated areas is prohibited unless designated for vessels
of that size or entry is authorized by the Captain of the Port (COTP)
Southeastern New England or designated representative.
    (3) All persons and vessels are authorized by the COTP Southeastern
New England to enter areas of these special location regulations in
accordance with the following restrictions:
    (i) Area Newport Harbor: Vessels transiting this Area must do so at
a speed of at least three (3) knots or at no wake speed, whichever is
more, while not exceeding six (6) knots. Vessels must not maneuver
within 20 yards of a moored Tall Ship. Vessels must transit

this Area in a counterclockwise direction, entering Newport Harbor from
the west, then proceeding north along the eastern side of the harbor to
a turning point south of the Goat Island causeway in approximate
position 41[deg]29'28'' N and 71[deg]19'40'' N, then proceeding south
along the western side of Newport Harbor to the exit of the Area.
    Vessels proceeding under sail will not be allowed in Area Newport
Harbor unless also propelled by machinery, due to increased difficulty
in maintaining required speed of advance while sailing as well as
limited maneuvering ability to proceed in a single file behind numerous
other spectator craft viewing the moored Tall Ships.
    (ii) Area Potter Cove: This area is a spectator anchoring area
limited to excursion and passenger-for-hire vessels greater than 50
feet in length carrying passengers for the viewing of the Parade of
Sail. Vessels transiting this Area must do so at a speed of at least
three (3) knots or at no wake speed, whichever is more, while not
exceeding six (6) knots. Vessels transiting this Area must not maneuver
within 20 yards of any vessel lawfully anchored within this area for
the viewing of the Parade of Sail.
    (iii) Area Parade of Sail: This will be closed to all vessel
traffic, except those vessels designated as participants.
    (4) All persons and vessels shall comply with the instructions of
the COTP Southeastern New England or designated representative. Upon
being hailed by a U.S. Coast Guard vessel by siren, radio, flashing
lights, or other means the operator of a vessel shall proceed as
directed.
    (5) Persons and vessels desiring to enter, transit through, anchor
in, or remain within the regulated areas must contact the COTP
Southeastern New England by telephone at<PHONE_NUMBER>, or designated
representatives via VHF radio on channel 16, to request authorization.
If authorization to enter, transit through, anchor in, or remain within
the regulated areas is granted by the COTP Southeastern New England or
designated representative, all persons and vessels receiving such
authorization must comply with the instructions of the COTP
Southeastern New England or designated representative.
    (6) The Coast Guard will provide notice of the regulated areas
prior to the event through the Local Notice to Mariners and Broadcast
Notice to Mariners. Notice will also be provided by on-scene designated
representatives.
    (c) Enforcement Period: This section will be enforced during the
following times.
    (1) Area Newport Harbor, from 6 a.m. on July 6, 2012, to noon on
July 9, 2012.
    (2) Area Potter Cove, from 9 a.m. to 4 p.m. on July 9, 2012.
    (3) Area Parade of Sail, from 9 a.m. to 4 p.m. on July 9, 2012.

    Dated: February 29, 2012.
Verne B. Gifford, Jr.,
Captain, U.S. Coast Guard, Captain of the Port, Southeastern New
England.
[FR Doc. 2012-6986 Filed 3-22-12; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register Volume 85, Number 54 (Thursday, March 19, 2020)]
[Notices]
[Pages 15823-15829]
[FR Doc No: 2020-05703]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88386; File No. SR-CBOE-2020-019]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Rule 5.24

March 13, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 13, 2020, Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The Exchange
filed the proposal pursuant to Section 19(b)(3)(A)(iii) of the Act \3\
and Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend Rule 5.24.

(additions are italicized; deletions are [bracketed])
* * * * *

Rules of Cboe Exchange, Inc.

* * * * *

Rule 5.24. Disaster Recovery

    (a)-(d) No change.
    (e) Loss of Trading Floor. If the Exchange trading floor becomes
inoperable, the Exchange will continue to operate in a screen-based
only environment using a floorless configuration of the System that
is operational while the trading floor facility is inoperable. The
Exchange will operate using this configuration only until the
Exchange's trading floor facility is operational. Open outcry
trading will not be available in the event the trading floor becomes
inoperable, except in accordance with paragraph (2) below and
pursuant to Rule 5.26, as applicable.
    (1) Applicable Rules. In the event that the trading floor
becomes inoperable, trading will be conducted pursuant to all
applicable System Rules, except that open outcry Rules will not be
in force, including but not limited to the Rules (or applicable
portions of the Rules) in Chapter 5, Section G, and as follows
(subparagraphs (A) through (C) will until May 15, 2020):[.]
    (A) notwithstanding the introductory paragraphs of Rules 5.37
and 5.73, an order for the account of a Market-Maker with an
appointment in the applicable class on the Exchange may be solicited
for the Initiating Order submitted for execution against an Agency
Order in any exclusively listed index option class into a simple AIM
Auction pursuant to Rule 5.37 or a simple FLEX AIM Auction pursuant
to Rule 5.73;
    (B) with respect to complex orders in any exclusively listed
index option class:
    (1) notwithstanding Rule 5.4(b), the minimum increment for bids
and offers on complex orders with any ratio equal to or greater than
one-to-twenty-five (0.04) and equal to or less than twenty-five-to-
one (25.00) is $0.01 or greater, which may be determined by the
Exchange on a class-by-class basis, and the legs may be executed in
$0.01 increments; and

    (2) notwithstanding the definition of ``complex order'' in Rule
1.1, for purposes of Rule 5.33, the term ``complex order'' means a
complex order with any ratio equal to or greater than one-to-twenty-
five (0.04) and equal to or less than twenty-five-to-one (25.00);
and
    (3) the contract volume a Market-Maker trades electronically
during a time period in which the Exchange operates in a screen-
based only environment will be excluded from determination of
whether a Market-Maker executes more than 20% of its contract volume
electronically in an appointed class during any calendar quarter,
and thus is subject to the continuous electronic quoting obligation,
as set forth in Rule 5.52(d).
    All non-trading rules of the Exchange will continue to apply.
* * * * *
    The text of the proposed rule change is also available on the
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Rule 5.24 regarding the Exchange's
business continuity and disaster recovery plans. Rule 5.24 describes
which Trading Permit Holders (``TPHs'') are required to connect to the
Exchange's backup systems as well as certain actions the Exchange may
take as part of its business continuity plans so that it may maintain
fair and orderly markets if unusual circumstances occurred that could
impact the Exchange's ability to conduct business. This includes what
actions the Exchange would take if its trading floor became inoperable.
Specifically, Rule 5.24(d) states if the Exchange trading floor becomes
inoperable, the Exchange will continue to operate in a screen-based
only environment using a floorless configuration of the System that is
operational while the trading floor facility is inoperable. The
Exchange would operate using that configuration only until the
Exchange's trading floor facility became operational. Open outcry
trading would not be available in the event the trading floor becomes
inoperable.\5\ Rule 5.24(e)(1) also currently states in the event that
the trading floor becomes inoperable, trading will be conducted
pursuant to all applicable System Rules, except that open outcry Rules
would not be in force, including but not limited to the Rules (or
applicable portions) in Chapter 5, Section G,\6\ and that all non-
trading rules of the Exchange would continue to apply.
---------------------------------------------------------------------------

    \5\ Pursuant to Rule 5.26, the Exchange may enter into a back-up
trading arrangement with another exchange, which could allow the
Exchange to use the facilities of a back-up exchange to conduct
trading of certain of its products. The Exchange currently has no
back-up trading arrangement in place with another exchange.
    \6\ Chapter 5, Section G of the Exchange's rulebook sets forth
the rules and procedures for manual order handling and open outcry
trading on the Exchange.
---------------------------------------------------------------------------

    The Exchange has been closely monitoring the current situation
regarding the novel coronavirus, and has reviewed its pandemic planning
procedures in connection with this situation. While the Exchange's
trading floor is currently operating normally, the Exchange proposes
certain amendments to Rule 5.24, which the Exchange believes are
necessary to maintain a fair and orderly market in the event the
Exchange suspended open outcry trading. Specifically, the proposed rule
change amends Rule 5.24(e)(1) to provide that, in the event that the
trading floor becomes inoperable, trading will be conducted pursuant to
all applicable System Rules, except that open outcry Rules will not be
in force, including but not limited to the Rules (or applicable
portions of the Rules) in Chapter 5, Section G, and as follows:

    (1) Notwithstanding the introductory paragraphs of Rules 5.37
and 5.73,\7\ an order for the account of a Market-Maker with an
appointment in the applicable class on the Exchange may be solicited
for the Initiating Order submitted for execution against an Agency
Order in any exclusively listed index option class into a simple AIM
Auction pursuant to Rule 5.37 or a simple FLEX AIM Auction pursuant
to Rule 5.73;
---------------------------------------------------------------------------

    \7\ Rules 5.37 and 5.73 describe the Exchange's automatic
improvement mechanism (``AIM'') for simple orders in non-flexible
options and in flexible options (``FLEX Options''), respectively.
---------------------------------------------------------------------------

    (2) with respect to complex orders in exclusively listed index
option classes:
    (a) Notwithstanding Rule 5.4(b), the minimum increment for bids
and offers on complex orders with any ratio equal to or greater than
one-to-twenty-five (0.04) and equal to or less than twenty-five-to-
one (25.00) is $0.01 or greater, which may be determined by the
Exchange on a class-by-class basis, and the legs may be executed in
$0.01 increments;
    (b) notwithstanding the definition of ``complex order'' in Rule
1.1, for purposes of Rule 5.33, the term ``complex order'' means a
complex order with any ratio equal to or greater than one-to-twenty-
five (0.04) and equal to or less than twenty-five-to-one (25.00);
and
    (3) the contract volume a Market-Maker trades electronically
during a time period in which the Exchange operates in a screen-
based only environment will be excluded from determination of
whether a Market-Maker executes more than 20% of its contract volume
electronically in an appointed class during any calendar quarter,
and thus is subject to the continuous electronic quoting obligation,
as set forth in Rule 5.52(d).\8\
---------------------------------------------------------------------------

    \8\ As proposed, these changes would be in place for
approximately nine weeks (through May 15, 2020). In the event the
trading floor becomes inoperable during that timeframe, the Exchange
would monitor electronic trading given these proposed changes. If
the trading floor is inoperable beyond May 15, 2020, based on that
review, the Exchange may submit a separate rule filing to extend the
effectiveness of these rules.

    The Exchange believes the proposed rule change will allow it to
maintain fair and orderly markets and facilitate trading in as
continuous manner as possible in the event extraordinary circumstances
cause the trading floor to become inoperable. These proposed changes
would apply only during times when the Exchange's trading floor was
inoperable. The current Rules would continue to apply when normal
conditions exist, and the Exchange offers both electronic and open
outcry trading. All non-trading rules of the Exchange, including
business conduct rules, would continue to apply.
    The Exchange first proposes to permit Market-Makers with an
appointment in the applicable class to be solicited for the Initiating
Order submitted for execution against an Agency Order in a proprietary
index option class into an AIM Auction pursuant to Rule 5.37 or a
simple FLEX AIM Auction pursuant to Rule 5.73. Currently, the
introductory paragraphs of Rules 5.37 and 5.73 prohibit Market-Makers
with an appointment in the applicable class from being solicited to
execute against the Agency Order in an AIM or simple FLEX AIM Auction,
respectively. No similar restriction applies to crossing transactions
in open outcry trading. Brokers seeking liquidity to execute against
customer orders, particularly large customer orders, on the trading
floor regularly solicit Market-Makers with an appointment in the
applicable

class for this liquidity, as they are generally the primary source of
liquidity in a class. For example, during the last week of February
2020, over 70% of open outcry trades (consisting of over 50% of open
outcry volume) in exclusively listed index options included a Market-
Maker on one side of an open outcry crossing transaction that occurred
on the Exchange's trading floor. The Exchange believes it will be
necessary and appropriate to permit Market-Makers to be solicited for
electronic crossing transactions in its exclusively listed index
options if the Exchange's trading floor was inoperable, as it will help
ensure the same sources of liquidity for customer orders that currently
execute in open outcry will continue to be available for these orders
in an electronic-only environment. If this restriction were to remain
in place while the trading floor was inoperable, the Exchange believes
there would be a risk that brokers may have difficulty finding
sufficient liquidity to fill their customer orders that may currently
be traded against orders from solicited Market-Makers appointed in the
applicable class. For example, when operating normally, if a customer
order is not fully executable against electronic bids and offers, a
floor broker can attempt to execute the order, or remainder thereof, on
the trading floor, where the liquidity to trade with this remainder is
generally provided by Market-Makers in the open outcry trading crowd.
Additionally, brokers may solicit liquidity from upstairs Market-Maker
firms. If the trading floor is inoperable, without the proposed rule
change, this liquidity would not be available, which could
significantly reduce execution opportunities for such orders and have
potentially negative impact on the prices at which customer orders
could be executed.
    The second proposed change would permit complex orders in
exclusively listed index options with any ratio up to a ratio of up to
25-to-1 to execute electronically and be eligible for certain complex
order benefits. Currently, the Exchange's System does not accept
complex orders with a ratio of less than one-to-three or greater than
three-to-one for electronic processing.\9\ Pursuant to Rules 5.4(b) and
5.33(f)(1)(A), the minimum increment for bids and offers on complex
orders with any ratio equal to or greater than one-to-three and less
than or equal to three-to-one is $0.01 or greater, which may be
determined by the Exchange on a class-by-class basis, and the legs may
be executed in $0.01 increments. Pursuant to Rule 5.33(f)(2)(A), a
complex order my not execute at a net price (1) that would cause any
component of the complex strategy to be executed at a price of zero;
(2) worse than the synthetic best bid or offer (``SBBO'') or equal to
the SBBO when there is a priority customer order at the SBBO; \10\ (3)
that would cause any component of the complex strategy to be executed
at a price worse than the individual component prices on the simple
book; (4) worse than the price that would be available if the complex
order legged into the simple book; or (5) that would cause any
component of the complex strategy to be executed at a price ahead of a
priority customer order on the simple book without improving the best
bid or offer (``BBO'') of at least one component of the complex
strategy.
---------------------------------------------------------------------------

    \9\ See Rules 1.1 and 5.33(a) (definition of complex order).
    \10\ All-or-none complex orders may only execute at prices
better than the SBBO.
---------------------------------------------------------------------------

    The Exchange currently accepts complex orders in any class with
ratios less than one-to-three and greater than three-to-one for manual
handling and open outcry execution.\11\ Rule 5.4(b) provides that the
minimum increment for bids and offers on complex orders with any ratio
less than one-to-three or greater than three-to-one is the standard
increment for the class (pursuant to Rule 5.4(a)), and the legs may be
executed in the minimum increment applicable to the class. Pursuant to
Rule 5.85(b), a complex order with any ratio greater than or equal to
one-to-three or less than or equal to three-to-one may be executed at a
net debit or credit price without giving priority to equivalent bids
(offers) in the individual series legs that are represented in the
trading crowd or in the book if the price of at least one leg of the
order improves the corresponding bid (offer) of a priority customer
order in the book by at least one minimum trading increment as set
forth in Rule 5.4(b) (which complex order priority is similar to the
priority afforded to electronic complex orders pursuant to Rule
5.34(f)(2) as described above). A complex order with any ratio less
than one-to-three and greater than three-to-one may be executed in open
outcry on the trading floor at a net debit or credit price without
giving priority to equivalent bids (offers) in the individual series
legs that are represented in the trading crowd or in the book if each
leg of the order betters the corresponding bid (offer) of a priority
customer order in the book on each leg by at least one minimum trading
increment as set forth in Rule 5.4(b).
---------------------------------------------------------------------------

    \11\ See Rules 1.1 and 5.83(b).
---------------------------------------------------------------------------

    If the Exchange's trading floor was inoperable, under current
Rules, there would be no opportunity for complex orders in exclusively
listed index options with ratios greater than three-to-one and less
than or equal to 25-to-1 to execute on the Exchange. During the last
week of February 2020, there were over 4,000 complex orders in those
classes with such ratios that executed on the trading floor,\12\ for
nearly 4,500,000 contracts across those classes. This represents nearly
40% of contract volume of all complex orders executed on the trading
floor that week. Given the significant volume represented by these
complex orders, the Exchange believes it is appropriate to make
electronic processing available to these orders if the trading floor
were to become unavailable. Complex orders with ratios of greater than
three-to-one and less than 25-to-1 submitted for electronic processing
will receive the complex order benefits described above currently
available to complex orders with a ratio less than or equal to three-
to-one, as the System is currently unable to handle complex orders with
different ratios in separate manners. The Exchange has observed that
many of the complex strategies submitted for execution in the
Exchange's exclusively listed index options are ``delta neutral,''
often hedged with a ``combo'' of other SPX options (which is a
synthetic future). A ratio of 25:1 will permit customers to continue to
submit hedged orders of 4-delta options while the Exchange operates in
an all-electronic environment. The Exchange has also reviewed recent
data, which demonstrates that while there are a significant number of
contracts that execute as part of orders with ratios greater than 25-
to-1, the Exchange believes a maximum ratio of 25-to-1 will permit the
majority of transactions with ratios greater than 3-to-1 in exclusively
listed index options to execute in an all-electronic environment if the
trading floor inoperable. Unlike in open outcry trading, the parties to
an electronic complex order trade compete only with respect to the net
price and are not able to negotiate the leg prices to ensure the legs
trade in the standard increment, as the System determines the price of
these legs using $0.01 increments.
---------------------------------------------------------------------------

    \12\ The Exchange notes there were 727 trades consisted of
complex orders in these classes with ratios greater than 25-to-1,
which will not be permitted to trade electronically pursuant to this
proposed rule change.
---------------------------------------------------------------------------

    It is possible to modify the System to require complex orders with
ratios greater than three-to-one to trade pursuant to an allocation
algorithm and increment consistent with what is currently required in
open outcry

trading for these orders. However, the Exchange has determined it would
be a multi-month project given the necessary resources and testing to
modify the System in this manner. Given the proposed rule change would
only apply in unlikely, extraordinary circumstances that caused the
trading floor to be inoperable, and only temporarily, the Exchange does
not believe it is appropriate to expend the resources and take on
additional system risk associated with such a change.\13\ The Exchange
has determined this change to be necessary and appropriate to permit
the uninterrupted trading of complex orders with larger ratios and
legitimate investment strategies that are regularly executed on the
Exchange's trading floor, and thus maintain a fair and orderly market
in the event of an inoperable trading floor.
---------------------------------------------------------------------------

    \13\ If the trading floor became inoperable for a significant
period of time, the Exchange would consider implementing the change
or would submit a rule filing to allow the proposed rule change to
apply in all circumstances rather than only when the trading floor
is inoperable.
---------------------------------------------------------------------------

    The Exchange understands that the simple order market may be
somehow disadvantaged by allowing certain multi-legged orders that have
ratios larger than three-to-one to receive the complex order benefits
described above. One concern appears to be that if the ratios are too
greatly expanded, market participants will, for example, enter multi-
legged strategies designed primarily to gain priority over orders on
the limit order book or in the trading crowd, rather than to effectuate
a bona fide trading or hedging strategy. Since the Exchange is
proposing to permit complex orders with ratios no greater than 25-to-1
to be electronically processed if the trading floor were inoperable,
similar to the practice today, this will be systematically enforced for
electronic trading.
    Additionally, the Exchange understands that permitting more complex
orders to avail themselves of the complex order priority currently only
available to complex orders with ratios less than or equal to three-to-
one may result in more legs trading at the same price as resting
priority customer orders. As noted above, the System will not execute
any complex order, regardless of ratio, at a price that would cause a
component of the complex strategy to trade at a price ahead of a
priority customer order on the book without improving the BBO of at
least one component. While the proposed rule change may result in legs
of more complex orders trading at the same price as resting priority
customer orders, the Exchange believes priority customer orders are
resting on the simple book at the BBO a minimal amount of the time,
thus making this risk de minimis. The Exchange notes that during the
last week of February 2020, across all classes, approximately 84% of
contracts executed as parts of complex trades occurred inside the BBO
for the applicable legs. This includes orders with ratios equal to
three-to-one or less, which would only have to improve the BBO of one
leg if there was a priority customer order resting at the BBO in the
complex strategy. In other words, the vast majority of legs executed as
part of complex trades execute at a price better than the BBO of the
applicable leg, and thus at a price better than required by the rules.
The Exchange believes this further demonstrates the likely de minimis
nature of the perceived risk.
    Based on the number of orders submitted to, and trades that occur
on, the trading floor, the Exchange believes it has sufficient system
capacity to handle any additional traffic that may result from the
proposed rule change during a time when the trading floor is
inoperable. The Exchange's Regulatory Division will continue its
standard routine surveillance reviews for electronic trading as it does
today, and has put together a regulatory plan to surveil the additional
changes being proposed when operating in a screen-based only
environment.
    Cboe Options (and its designated TPHs pursuant to Rule 5.24)
participates in the annual Reg SCI/SIFMA BCP test from its disaster
recovery data center in accordance with Rule 1004 under Regulation SCI.
Additionally, Cboe Options conducted an internal test (in which no TPHs
participated) of an all-electronic configuration in preparation for the
October 2019 System migration. The Exchange recently made available
testing of the all-electronic configuration in a certification
environment beginning Thursday, March 12, 2020, and plans to provide
customers with a testing opportunity of the all-electronic
configuration on Saturday, March 14, 2020. At least seven TPHs have
submitted orders into this certification environment as of the time of
this rule filing.
    The third proposed change would exclude any contract volume by a
Market-Maker during a time when the Exchange's trading floor was
inoperable from the determination of whether the Market-Maker would be
subject to continuous quoting obligations in Rule 5.52(d). Currently,
if a Market-Maker executes more than 20% of its contract volume
electronically during a calendar quarter, it is obligated to quote
electronically in a designated percentage of series within that class
for a designated percentage of time. Once a Market-Maker becomes
subject to that continuous electronic quoting obligation, the Market-
Maker will continue to be subject to it, even if there is a subsequent
calendar quarter in which it executes less than 20% of its contract
volume electronically. While most Market-Makers are currently subject
to that continuous electronic quoting obligation, there are certain
Market-Makers who execute at least 80% of their contract volume in open
outcry. If the trading floor were inoperable, those Market-Makers would
execute a larger percentage of their contract volume electronically as
a result. Depending on the length of time for which the trading floor
were inoperable, it is possible those Market-Makers would exceed that
20% threshold, which would subject them to continuous electronic
quoting obligations beginning the following calendar quarter (even if
open outcry trading has resumed). The Exchange believes it would be
unduly burdensome to subject a Market-Maker to additional obligations
because of the unavailability of the Exchange facility where that
Market-Maker conducts most of its business under normal trading
circumstances, including after the extraordinary circumstances that
caused the suspension of open outcry trading no longer exist.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\14\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \15\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, 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. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \16\ requirement that

the rules of an exchange not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(5).
    \16\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes the proposed rule change will
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, protect investors
and the public interest by creating an all-electronic trading
environment that permits continued trading in an uninterrupted manner
as much as practicable if extraordinary circumstances cause the trading
floor to become inoperable. The Exchange believes the proposed rule
change will create an all-electronic trading environment similar to the
otherwise unavailable open outcry trading environment. The Exchange
believes the proposed rule change is necessary and appropriate to
provide continued execution opportunities in such a situation for
orders that generally execute in open outcry trading.
    With respect to the proposed rule change to permit appointed
Market-Makers to be solicited to trade against an Agency Order
submitted into a simple AIM Auction (both for FLEX and non-FLEX Options
in exclusively listed index option classes), the majority of liquidity
provided to orders executed as part of an open outcry cross is provided
by appointed Market-Makers. If this liquidity was not available to TPHs
in an all-electronic environment, there would be significant risk that
these orders may not receive full execution in a timely manner (or at
all), and may trade at worse prices than would have otherwise been
available on the trading floor. The Exchange believes this proposed
rule change will minimize this risk and provide electronic execution
and price improvement opportunities for these orders, similar to the
opportunities that are generally available to them on the trading
floor, which protects customers seeking execution of these orders. As
set forth in the Rules, all TPHs may submit responses to AIM Auctions,
all Agency Orders will continue to have an opportunity for price
improvement, and priority customer orders will continue to have
priority at each price level.
    The Exchange believes the proposed rule change to permit complex
orders with ratios greater than three-to-one and less than or equal to
25-to-one to execute electronically and receive complex order benefits
otherwise provided to complex orders with ratios less than or equal to
three-to-one will also remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, protect investors and the public interest. As discussed above,
the System is currently unable to apply a different allocation
algorithm and increment to complex orders with different ratios, and
would need a significant amount of time and resources to do so. Given
that significant contract volume executes on the trading floor as part
of complex trades with ratios greater than three-to-one as part of
their investment and hedging strategies, the Exchange believes it will
protect investors looking to execute those orders as part of their
overall strategies to provide electronic execution opportunities during
a time when the trading floor is not available. As noted above, the
complex order priority that would apply to these complex orders with
larger ratios would be the same as the priority applied today to
complex orders with ratios no greater than three-to-one, which the
Exchange believes will continue to protect customers. Since the
Exchange is proposing to permit complex orders with ratios no greater
than 25-to-1 to be electronically processed if the trading floor were
inoperable, similar to the practice today, this will be systematically
enforced for electronic trading. The Exchange appreciates the
Commission's concerns described above; however, the Exchange believes
the risks of harm to investors by not permitting these orders to
execute at all when the trading floor is unavailable (which may be
occurring due to extraordinary circumstances causing volatility in the
markets) significantly outweighs the potential risks associated with
these concerns.
    The Exchange's Regulatory Division will continue its standard
routine surveillance reviews for electronic trading as it does today
and has put together a regulatory plan to surveil the additional
changes being proposed when operating in a screen-based only
environment.
    The Exchange believes the proposed rule change to exclude volume
executed during a time when the trading floor is inoperable from the
determination of whether a Market-Maker is subject to continuous
electronic quoting obligations will promote just and equitable
principles of trade. If this volume were included in this
determination, a Market-Maker not otherwise subject to these
obligations may become subject to them for reasons outside of the
Market-Maker's control. As a result, a Market-Maker may become subject
to additional obligations that would not apply during normal
circumstances. This proposed rule change will have no impact on Market-
Makers currently subject to continuous electronic quoting obligations,
as once a Market-Maker becomes subject to that obligation, it remains
subject to that obligation, even if it executes less than 20% of its
contract volume electronically in a subsequent calendar quarter. The
proposed rule change is solely intended to impact those Market-Makers
who currently are not subject to continuous electronic quoting
obligations. Without this rule change, depending on the length of time
the trading floor is inoperable, a Market-Maker that has not previously
exceeded the 20% contract volume threshold and thus is not currently
subject to continuous electronic quoting obligation could exceed that
threshold for a calendar quarter, which would then subject it to a new
obligation that was not in place when the trading floor was operable.
The Exchange believes it would be unduly burdensome to impose
obligations on a Market-Maker that are inconsistent with the Market-
Maker's standard business practices as a result of extraordinary
circumstances outside of the Market-Maker's control, particularly when
the Exchange expects those circumstances to be temporary. The Exchange
notes all Market-Makers must comply with the other obligations set
forth in Rules 5.51 and 5.52, including the obligations related to
size, two-sided quotes, and competitive quotes.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not intended as a competitive filing, but rather is proposed as part of
its business continuity plans intended to allow it to maintain fair and
orderly markets if unusual circumstances cause the Exchange's trading
floor to become inoperable. The Exchange does not believe the proposed
rule change related to AIM contra-parties will impose any burden on
intramarket competition, as it will permit all market participants to
be solicited to participate in AIM transactions in exclusively listed
index options. The Exchange also does not believe the proposed rule
changes related to complex orders will impose any burden on intra
market competition, as all market participants will be able to submit
complex orders in exclusively listed index options with ratios no
greater than 25-to-1. Additionally, the Exchange does not believe these
proposed rule change will impose any burden on intermarket competition,
as they both apply only to exclusively listed index options, which are
available

for trading solely on the Exchange. By limiting these proposed rule
changes to exclusively listed index options, the Exchange believes
these proposed rule changes will permit competition with other options
exchange with respect to multi-listed options to continue in the same
manner as it occurs during normal trading circumstances. The Exchange
believes the proposed rule change is necessary and appropriate to allow
it to provide trading in these products (which are only able to trade
on the Exchange) in an uninterrupted manner to the extent practicable
under extraordinary circumstances.
    The proposed rule change to exclude contract volume executed during
a time when the trading floor is inoperable from the determination of
whether a Market-Maker is subject to continuous quoting obligations is
not intended for competitive purposes. The Exchange believes this
proposed rule change will not burden intramarket competition, as it
will apply in the same manner to all Market-Makers. As noted above, the
proposed rule change will have no impact on Market-Makers currently
subject to continuous electronic quoting obligations, as those will
continue to apply. The proposed rule change will prevent Market-Makers
not currently subject to continuous electronic quoting obligations who
could exceed the 20% threshold triggering those obligations solely
because the trading floor was inoperable. The Exchange believes it
would be unduly burdensome to subject a Market-Maker to additional
obligations because of the unavailability of the Exchange facility
where that Market-Maker conducts the vast majority of its business
under normal trading circumstances. The Exchange believes this proposed
rule change will not burden intermarket competition, as it applies
solely to continuous electronic quoting obligations applicable to
Market-Makers of the Exchange.

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

    The Exchange neither solicited nor received comments on the
proposed rule change.

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

    The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \17\ and Rule 19b-4(f)(6) thereunder.\18\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \19\ and Rule 19b-
4(f)(6) thereunder.\20\
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \18\ 17 CFR 240.19b-4(f)(6).
    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b- 4(f)(6)(iii)
under the Act, the Exchange is required to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has requested that the Commission waive the five-day
pre-filing notice requirement in Rule 19b-4(f)(6)(iii). The
Commission has determined to waive the five day pre-filing notice
requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \21\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\22\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative immediately. Waiver of the operative
delay would allow the proposed changes, which are designed to minimize
disruptions in the market and to facilitate the continued trading of
index options that trade exclusively on the Exchange, to be in effect
on Monday, March 16, 2020, the date when the Exchange announced that it
will temporarily close its floor. For these reasons, the Commission
believes that waiver of the 30-day operative delay is consistent with
the protection of investors and the public interest. Accordingly, the
Commission hereby waives the 30-day operative delay and designates the
proposal operative upon filing.\23\
---------------------------------------------------------------------------

    \21\ 17 CFR 240.19b-4(f)(6).
    \22\ 17 CFR 240.19b-4(f)(6)(iii).
    \23\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2020-019 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2020-019. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CBOE-2020-019, and

should be submitted on or before April 9, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12), (59).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-05703 Filed 3-18-20; 8:45 am]
 BILLING CODE 8011-01-P


0154 04 010\ reduction for group 2 wastewater memo. doc MEMORANDUM TO: Randy McDonald, U. S. Environmental Protection Agency, OAQPS/ Sector Policies and Programs Division, Coatings and Chemicals Group ( C504 04)

FROM: Danny Greene, Eastern Research Group, Inc.

DATE: June 7, 2006 SUBJECT: Estimation of Control Costs and Emission Reductions for Group 2 Wastewater Streams 1.0 INTRODUCTION This memorandum describes the methodology used to estimate the emission reductions and capital and annual costs associated with controlling Group 2 wastewater streams at facilities subject to the National Emission Standards for Organic Hazardous Air Pollutants from the Synthetic Organic Chemical Manufacturing Industry ( HON).

Section 2.0 summarizes the background and available data and Section 3.0 discusses the methodology used to estimate emissions and emission reductions of controlling wastewater streams. The methodology used to estimate control costs is discussed in Section 4.0. Attachment A contains the data tables cited in this memorandum.

Table A 1 presents the emission reduction and control cost estimates. Based on this analysis, the total HAP emission reduction associated with controlling Group 2 wastewater streams is approximately 449 megagrams per year ( Mg/ yr). The cost effectiveness values ( i. e., total annual cost divided by the emission reductions) for controlling Group 2 wastewater streams ranged from a low of approximately $ 3,600/ Mg to a high of approximately $ 4,200,000/ Mg. The average of the cost effectiveness values calculated for each facility is approximately $ 457,000/ Mg. 0154 04 010\ reduction for group 2 wastewater memo. doc 2 2.0 BACKGROUND For storage vessels, process vents, process wastewater streams, and transfer operations, the HON establishes applicability criteria to distinguish between Group 1 emission points and Group 2 emission points. Controls are required only for emission points meeting the Group 1 criteria. Group 2 emission points are subject to recordkeeping requirements only.

The HON applicability cutoffs for Group 1 streams at existing facilities are based on the total annual average concentration of HAP compounds listed in Table 9 of 40 CFR part 63, subpart G and the wastewater stream flow rate. A Group 1 stream has a:

  total annual average HAP concentration of at least 10,000 parts per million by weight ( ppmw) at any flow rate; or   total annual average HAP concentration of at least 1,000 ppmw and an annual average flow rate of at least 10 liters per minute ( lpm).

Wastewater streams that do not meet either of these criteria are considered Group 2 streams.

Data on HAP emissions from Group 1 and Group 2 wastewater streams was obtained from a voluntary survey distributed by the American Chemistry Council ( ACC).

Table A 2 presents the ACC survey data for Group 2 streams. As shown in the table, the survey data identified the wastewater stream source and provided the HAP specific emissions from uncontrolled and undesignated wastewater streams for 60 facilities for the base year 1999. For this analysis, uncontrolled streams ( UCWW) and streams where the control status was not designated ( WW) were considered to be Group 2 streams.

To develop estimates of emission reductions and control costs for Group 2 wastewater streams, the current HON MACT level of control ( i. e., steam stripper with control of overhead gases) was applied to the emissions from uncontrolled wastewater streams reported in the ACC survey. The HAP emissions data from the survey were used directly to estimate the emission reductions achieved by controlling Group 2 streams ( see Section 3.0). However, the ACC data did not contain flow rate data for individual streams which is necessary to estimate control costs. Consequently, we developed control cost estimates using model wastewater streams ( see Section 4.0). 0154 04 010\ reduction for group 2 wastewater memo. doc 3 3.0 EMISSION AND EMISSION REDUCTION ESTIMATES Emissions and emission reduction estimates were develop for each individual stream identified in the ACC industry survey ( Table A 3). For this analysis, the assumption was made that Group 2 streams would be sent to a steam stripper to reduce emissions. Overhead gases from the steam stripper were assumed to be controlled by a thermal oxidizer achieving 98 percent destruction.

The total controlled emissions were calculated as the sum of two components: the emissions from the stripper thermal oxidizer, and emissions from compounds remaining in the stripper effluent ( i. e., residual emissions). The emission reductions achieved by steam stripping were calculated by subtracting the controlled emissions ( the sum of emissions from the stripper/ thermal oxidizer and residual stream emissions) from the emissions reported in the ACC industry survey.

The emissions from the stripper thermal oxidizer were calculated using the following equation:

Controlled emissions = ( HAP/ Fe)*( Fr)*( 1 Eff)

where:

Controlled emissions = stripper thermal oxidizer emissions ( kg/ yr)

HAP = HAP emissions reported in ACC survey ( kg/ yr)

Fe = compound specific fraction emitted values Fr = compound specific fraction removed by stripping values Eff = the destruction efficiency of the thermal oxidizer ( 98 percent)

The compound specific Fe and Fr values were obtained from Table 2 of Appendix J of 40 CFR part 60, subpart YYY ( the proposed New Source Performance Standards for Wastewater from the Synthetic Organic Chemical Manufacturing Industry ( SOCMI NSPS)). In cases where a compound specific value was not available for a particular HAP, the average of the assigned Fe ( or Fr) values was used. Residual emissions were estimated using the following equation: 0154 04 010\ reduction for group 2 wastewater memo. doc 4 Residual emissions = ( HAP/ Fe)*( 1 Fr)

where:

Residual emissions = emissions from compounds in the stripper effluent ( kg/ yr)

HAP = HAP emissions reported in ACC survey ( kg/ yr)

HAP = HAP emissions reported in ACC survey ( kg/ yr)

Fe = compound specific fraction emitted values Fr = compound specific fraction removed by stripping values 4.0 CONTROL COST ESTIMATES To estimate the capital and annual costs of controlling Group 2 streams, the assumption was made that a new steam stripper would be constructed to treat the additional wastewater. The cost estimates do not include the cost of an incinerator for combustion of stripper off gases. For this analysis, the assumption was made that the organics removed by the steam stripper would be returned to a production process or combusted.

Section 4.1 describes the methodology used to estimate the flow rate of Group 2 wastewater streams. Section 4.2 explains the methodology used to develop the control cost estimates.

4.1 Default Wastewater Stream Flow Rates Since data for wastewater stream flow rates were not provided in the ACC survey,

data from the Miscellaneous Organic NESHAP ( MON) were used to estimate the wastewater stream characteristics. The MON data were used since the production processes and wastewater streams are similar to those found in the facilities regulated by the HON.

To develop the wastewater stream characteristics, streams in the MON data that met the Group 2 applicability characteristics were grouped into the following HAP loading ranges:

  less than 1 kg/ yr;

  1 to 9 kg/ yr;

  10 to 999 kg/ yr; 0154 04 010\ reduction for group 2 wastewater memo. doc 5   1,000 to 9,999 kg/ yr; and   10,000 kg/ yr and greater.

Within each of these HAP loading ranges, the streams were further divided into those that were considered to be dilute ( D), intermediate ( I), or concentrated ( C) based on an evaluation of the HAP concentration of the streams.

For each of these loading ranges ( i. e., D, I, and C), a default flow rate ( liters per minute, lpm) was estimated by multiplying the average concentration calculated for each stream grouping by the median of the HAP loading range. The median was used instead of the average to ensure that the default flow rates for each stream grouping were comparable to the actual flow rates seen in MON data. Because the loading values cover a large range, using the average of the loading range produced flow rates that did not appear to be representative. Table A 4 shows the MON data and calculations used to estimate default stream flow rates. Table A 3 also shows the weighting factors used to estimate a single flow rate for each loading range ( rather than three separate flow rates for dilute, intermediate, or concentrated streams). The weighting factors for each HAP loading range were calculated by dividing the number of streams in the D, I, and C groups by the total number of streams in the HAP loading range.

The default flow rates were assigned to each individual stream in the ACC survey data based on each stream's HAP loading. Table A 5 shows the resulting default flow rates for the D, I, and C groups and the weighted flow rates for each Group 2 stream reported in the ACC survey.

4.2 Steam Stripper Costs The capital and annual costs of steam stripping were estimated using values ($/ liter) taken from Figure 5 3 ( Unit Operating Costs Versus Wastewater Feed Rate for Steam Stripping Unit) and Figure 3 1 ( Summary of Total Capital Investment Versus Wastewater Feed Rate for Steam Stripping Unit) of the HON proposal BID. The steam stripper costs from the HON BID were in 1989 dollars. To estimate the equipment costs in today's dollars, the costs indices for 1989 ( 361.1) and 2004 ( 444.2) were used.

Table A 6 summarizes the unit cost factors used in this analysis. 0154 04 010\ reduction for group 2 wastewater memo. doc Attachment A Data Tables