[Federal Register: April 26, 2011 (Volume 76, Number 80)]
[Rules and Regulations]
[Page 23171-23177]
[DOCID:fr26ap11-2]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 40

[Docket No. RM10-8-000; Order No. 750]

Electric Reliability Organization Interpretations of
Interconnection Reliability Operations and Coordination and
Transmission Operations Reliability Standards

AGENCY: Federal Energy Regulatory Commission, Energy.

ACTION: Final rule.

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SUMMARY: Pursuant to section 215 of the Federal Power Act, the Federal
Energy Regulatory Commission hereby approves the North American
Electric Reliability Corporation's (NERC) interpretation of the
Commission-approved Reliability Standards, IRO-005-1, Reliability
Coordination--Current-Day Operations, Requirement R12, and TOP-005-1,
Operational Reliability Information, Requirement R3. Specifically, the
interpretation finds that a transmission owner must report a Special
Protection System that is operating with only one communication channel
in service to the reliability coordinator and neighboring systems upon
request, or when the loss of the communication channel will result in
the failure of the Special Protection System to operate as designed.

DATES: Effective Date: This rule will become effective May 26, 2011.

FOR FURTHER INFORMATION CONTACT: Danny Johnson (Technical Information),
Office of Electric Reliability, Federal Energy Regulatory Commission,
888 First Street, NE., Washington, DC 20426. Telephone:<PHONE_NUMBER>.
<EMAIL_ADDRESS>    Richard M. Wartchow (Legal Information), Office of the General
Counsel, Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426. Telephone:<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

135 FERC ] 61,041

Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer,
Philip D. Moeller, John R. Norris, and Cheryl A. LaFleur.

Issued April 21, 2011

    1. Pursuant to section 215 of the Federal Power Act, the Federal
Energy Regulatory Commission hereby approves the North American
Electric Reliability Corporation's (NERC) interpretation of the
Commission-

approved Reliability Standards, IRO-005-1, Reliability Coordination--
Current-Day Operations, and TOP-005-1, Operational Reliability
Information. Specifically, the interpretation finds that a transmission
owner must report a Special Protection System that is operating with
only one communication channel in service to the reliability
coordinator and neighboring systems upon request, or when the loss of
the communication channel will result in the failure of the Special
Protection System to operate as designed. In the Final Rule, the
Commission declines to adopt the proposal from the Notice of Proposed
Rulemaking (NOPR) to direct the Electric Reliability Organization (ERO)
to develop modifications to the Reliability Standards to require
additional reporting and instead approves the interpretation as
submitted.\1\
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    \1\ Electric Reliability Organization Interpretations of
Interconnection Reliability Operations and Coordination and
Transmission Operations Reliability Standards, Notice of Proposed
Rulemaking, 75 FR 80391 (Dec. 22, 2010), 133 FERC ] 61,234, at P 27
(2010) (NOPR).
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I. Background

A. FPA Section 215 and Mandatory Reliability Standards

    2. Section 215 of the FPA requires a Commission-certified ERO to
develop mandatory and enforceable Reliability Standards, which are
subject to Commission review and approval. Once approved, the
Reliability Standards may be enforced by the ERO, subject to Commission
oversight, or by the Commission independently.\2\
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    \2\ See 16 U.S.C. 824o(e)(3).
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    3. Pursuant to section 215 of the FPA, the Commission established a
process to select and certify an ERO \3\ and subsequently certified
NERC as the ERO.\4\ On April 4, 2006, as modified on August 28, 2006,
NERC submitted to the Commission a petition seeking approval of 107
proposed Reliability Standards. On March 16, 2007, the Commission
issued a Final Rule, Order No. 693, approving 83 of these 107
Reliability Standards and directing other action related to these
Reliability Standards.\5\ In addition, pursuant to section 215(d)(5) of
the FPA, the Commission directed NERC to develop modifications to 56 of
the 83 approved Reliability Standards.\6\
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    \3\ Rules Concerning Certification of the Electric Reliability
Organization; and Procedures for the Establishment, Approval and
Enforcement of Electric Reliability Standards, Order No. 672, FERC
Stats. & Regs. ] 31,204, order on reh'g, Order No. 672-A, FERC
Stats. & Regs. ] 31,212 (2006).
    \4\ North American Electric Reliability Corp., 116 FERC ]
61,062, order on reh'g & compliance, 117 FERC ] 61,126 (2006), aff'd
sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (DC Cir. 2009).
    \5\ Mandatory Reliability Standards for the Bulk-Power System,
Order No. 693, FERC Stats. & Regs. ] 31,242, order on reh'g, Order
No. 693-A, 120 FERC ] 61,053 (2007).
    \6\ 16 U.S.C. 824o(d)(5). Section 215(d)(5) provides, ``The
Commission * * * may order the Electric Reliability Organization to
submit to the Commission a proposed reliability standard or a
modification to a reliability standard that addresses a specific
matter if the Commission considers such a new or modified
reliability standard appropriate to carry out this section.''
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    4. NERC's Rules of Procedure provide that a person that is
``directly and materially affected'' by Bulk-Power System reliability
may request an interpretation of a Reliability Standard.\7\ The ERO's
standards process manager will assemble a team with relevant expertise
to address the requested interpretation and also form a ballot pool.
NERC's Rules provide that, within 45 days, the team will draft an
interpretation of the Reliability Standard, with subsequent balloting.
If approved by ballot, the interpretation is appended to the
Reliability Standard, forwarded to the NERC Board of Trustees (Board)
for adoption and filed with the applicable regulatory authority for
regulatory approval.
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    \7\ NERC's interpretation process is detailed in its Rules of
Procedure, Appendix 3A, Standards Process Manual, at 27-29
(effective Sept. 3, 2010).
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B. IRO-005-1 and TOP-005-1 Reliability Standards

    5. In this proceeding, the Commission addresses NERC's
interpretation of the IRO-005-1 and TOP-005-1 Reliability Standards, as
previously discussed in the NOPR. In Order No. 693, the Commission
approved prior versions of the IRO-005-1 and TOP-005-1, with
modifications.\8\ The Commission directed NERC to modify TOP-005-1 to
specify the operational status of Special Protection Systems and power
system stabilizers as information that transmission operators are
expected to share, unless otherwise agreed.\9\ Because these and other
intervening changes are not material to the substance of the
interpretation, the discussion in this Final Rule is intended to apply
equally to the subsequent versions of these standards as appropriate.
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    \8\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 945, 1648.
    \9\ Id. P 1648 (directing revisions to TOP-005-1, Attachment 1).
The Commission addressed the most recent versions of the IRO-005-1
and TOP-005-1 Reliability Standards in Mandatory Reliability
Standards for Interconnection Reliability Operating Limits, Order
No. 748, 76 FR, 16240 (Mar. 23, 2011), 134 FERC ] 61,213 (2011)
(revising responsibilities for interconnection reliability operating
limit and system operating limit monitoring), Notice of Proposed
Rulemaking, 75 FR 71613 (Nov. 24, 2010), FERC Stats. & Regs. ]
32,665, at P 65 (2010).
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1. Reliability Standard IRO-005-1
    6. Reliability Standard IRO-005-1 applies to transmission
operators, balancing authorities, reliability coordinators and
purchasing selling entities. The IRO-005-1 Purpose statement provides:
``The Reliability Coordinator must be continuously aware of conditions
within its Reliability Coordinator Area and include this information in
its reliability assessments. The Reliability Coordinator must monitor
Bulk Electric System parameters that may have significant impacts upon
the Reliability Coordinator Area and neighboring Reliability
Coordinator Areas.'' Requirement R12 of IRO-005-1 states in relevant
part:

    Whenever a Special Protection System that may have an inter-
Balancing Authority, or inter-Transmission Operator impact (e.g.,
could potentially affect transmission flows resulting in a SOL or
IROL violation) is armed, the Reliability Coordinator shall be aware
of the impact of the operation of that Special Protection System on
inter-area flows. The Transmission Operator shall immediately inform
the Reliability Coordinator of the status of the Special Protection
System including any degradation or potential failure to operate as
expected.
2. Reliability Standard TOP-005-1
    7. Reliability Standard TOP-005-1 applies to transmission
operators, balancing authorities, reliability coordinators and
purchasing selling entities, and has the stated purpose of ensuring
that reliability entities have the operating data needed to monitor
system conditions within their areas.\10\
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    \10\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1642.
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    8. Requirement R3 of TOP-005-1 states in relevant part:

    Upon request, each Balancing Authority and Transmission Operator
shall provide to other Balancing Authorities and Transmission
Operators with immediate responsibility for operational reliability,
the operating data that are necessary to allow these Balancing
Authorities and Transmission Operators to perform operational
reliability assessments and to coordinate reliable operations.
Balancing Authorities and Transmission Operators shall provide the
types of data as listed in Attachment 1-TOP-005-0 ``Electric System
Reliability Data,'' unless otherwise agreed to by the Balancing
Authorities and Transmission Operators with immediate responsibility
for operational reliability.

TOP-005-1, Attachment 1 includes ``New or degraded special protection
systems'' in the types of data to be reported.

C. Special Protection Systems

    9. Also in Order No. 693, the Commission reviewed standards
addressing Special Protection System design, operation, and
coordination.\11\ The Commission declined to approve them because they
were ``fill in the blank'' standards that required regional reliability
organizations to develop criteria for each region. Subsequently, NERC
has produced a white paper providing background for its Protection
System Reliability Standards development effort.\12\ After this
standards development effort was initiated, the NERC Regional
Reliability Standards Working Group identified the Special Protection
System standard as one that required regional standard development.\13\
The Commission understands that the regional standard development
efforts are currently ongoing.
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    \11\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 1520,
1528, et seq. (declining to approve or remand certain Special
Protection Systems-related Reliability Standards, including PRC-012-
0, Special Protection System Review Procedure; PRC-013-0, Special
Protection System Database; PRC-014-0, Special Protection System
Assessment). The Commission used the term fill-in-the-blank
standards to refer to proposed standards that required the regional
reliability organizations to develop at a later date criteria for
use by users, owners or operators within each region.
    \12\ NERC System Protection and Control Subcommittee (SPCS),
November 18, 2008 white paper on Protection System Reliability,
Redundancy of Protection System Elements available at http://
www.nerc.com/filez/spctf.html (posted Jan. 14, 2009).
    \13\ NERC Regional Reliability Standards Working Group, notes on
October 29, 2009 meeting, available at http://www.nerc.com/filez/
rrswg.html.
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    10. The NERC glossary provides definitions of terms used in the
Reliability Standards and defines a ``Special Protection System'' as:

    An automatic protection scheme designed to detect abnormal or
predetermined system conditions and take corrective actions other
than and/or in addition to the isolation of faulted component to
maintain system reliability. Such action may include changes in
demand, generation (MW and MVAR), or system configuration to
maintain system stability, acceptable voltage or power flows.\14\
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    \14\ In the Western Interconnection, a Special Protection System
is called a ``Remedial Action Scheme.''

    11. Special Protection Systems generally are used to address system
reliability vulnerabilities in lieu of installing additional Bulk-Power
System facilities. For instance, a Special Protection System may be
used to control generator output to limit line loading after a
contingency, or a Special Protection System may rely on pre-determined
operational protocols to reconfigure the system in response to
identified system conditions to prevent system instability or cascading
outages, and protect other facilities in response to transmission
outages.

D. NERC's Interpretation Filing

    12. NERC filed its interpretation on November 24, 2009. The
interpretation responds to a request from Manitoba Hydro asking NERC to
interpret whether a Special Protection System that is operating with
only one communication channel in service would be considered
``degraded,'' and thus subject to the reporting requirements found in
these standards.\15\ NERC's interpretation finds that a transmission
owner must report a Special Protection System that is operating with
only one communication channel in service to the reliability
coordinator and neighboring systems upon request, or when the loss of
the communication channel will result in the failure of the Special
Protection System to operate as designed.
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    \15\ The NERC Petition provides a copy of Manitoba Hydro's
November 28, 2008 request for interpretation as Exhibit A.
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1. NERC Interpretation Process
    13. Manitoba Hydro asked whether a Special Protection System that
is operating with only one communication channel in service would be
considered ``degraded'' for the purposes of these standards. Manitoba
Hydro stated:

    Unlike other facilities, Special Protection Systems are required
by NERC standards to be designed with redundant communication
channels, so that if one communication channel fails the [Special
Protection System] is able to remain in operation. Requirement R1.3
of NERC Standard PRC-012-0 requires a Regional Reliability
Organization with Transmission Owners that use [Special Protection
Systems] to have a documented review procedure to ensure that
[Special Protection Systems] comply with reliability standards and
criteria, including: ``requirements to demonstrate that the [Special
Protection System] shall be designed so that a single [Special
Protection System] component failure, when the [Special Protection
System] was intended to operate, does not prevent the interconnected
transmission system from meeting the performance requirements in
TPL-001-0, TPL-002-0 and TPL-003-0.'' Accordingly, [Special
Protection Systems] are designed to continue to perform their
function with only one communication channel in service.

    14. Accordingly, Manitoba Hydro asserted that a Special Protection
System should not be considered ``degraded'' if it is operating with
one communication channel out of service.
    15. Consistent with the NERC Rules of Procedure, NERC assembled a
team to respond to the request for interpretations of these two
Reliability Standard requirements and presented the proposed
interpretations to industry ballot, using a process similar to the
process it uses for the development of Reliability Standards.\16\
According to NERC, the interpretations were developed and approved by
industry stakeholders using the NERC Reliability Standards Development
Procedure and approved by the NERC Board.
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    \16\ NERC Standards Process Manual at 27-29.
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    16. In response to Manitoba Hydro's interpretation request, NERC
provided the following:

    TOP-005-1 does not provide, nor does it require, a definition
for the term ``degraded.''
    The IRO-005-1 ([Requirement] R12) standard implies that degraded
is a condition that will result in a failure of an [Special
Protection System] to operate as designed. If the loss of a
communication channel will result in the failure of an [Special
Protection System] to operate as designed, then the Transmission
Operator would be mandated to report that information. On the other
hand, if the loss of a communication channel will not result in the
failure of the [Special Protection System] to operate as designed,
then such a condition can be, but is not mandated to be, reported.

    17. In the background section of the interpretation, NERC affirms
that transmission operators are required to provide information such as
that listed in the TOP-005-1, Attachment 1 examples upon request,
``whether or not [a facility] is or is not in some undefined `degraded'
state.'' \17\
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    \17\ NERC Petition, Exhibit B at 5 (proposing text of
interpretation as Appendix 1 to IRO-005-1 and TOP-005-1, and
including ``Background Information for Interpretation'' section).
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    18. In addition, the background section of the NERC interpretation
emphasizes that the information to be provided under IRO-005-1 relates
to events that may have a significant impact on the system, especially
where operating limits are or may be exceeded. Specifically, this
background section states:

    IRO-005-1 mandates that each Reliability Coordinator monitor
predefined base conditions (Requirement R1), collect additional data
when operating limits are or may be exceeded (Requirement R3), and
identify actual or potential threats (Requirement R5). The basis for
that request is left to each Reliability Coordinator. The Purpose
statement of IRO-005-1 focuses on the Reliability Coordinator's
obligation to be aware of conditions that may have a ``significant''
impact upon its area and to communicate that information to others
(Requirements R7 and R9). Please note: it is from this communication
that Transmission Operators and Balancing Authorities would either
obtain or would know to ask for [Special Protection System]
information from another Transmission Operator.\18\
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    \18\ Id., Exhibit B at 6.

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    19. In addition, the NERC Petition states:

    The NERC Board of Trustees, in approving these interpretations,
did so using a standard of strict construction that does not expand
the reach of the standard or correct a perceived gap or deficiency
in the standard. However, the NERC Board of Trustees recommended
that any gaps or deficiencies in a Reliability Standard that are
evident through the interpretation process be addressed promptly by
the standard drafting team.\19\
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    \19\ NERC Petition at 5.

    20. NERC reports that it will examine any gaps or deficiencies in
Reliability Standards TOP-005-1 and IRO-005-2 when it develops the next
version of these standards through the Reliability Standards
development process. According to NERC, the interpretations do not
modify the language contained in the requirements under review. NERC
states that the interpretations do not represent new or modified
Reliability Standard requirements and will provide instruction and
guidance of the intent and application of the requirements. NERC
requests that the Commission approve the interpretations and make them
effective immediately after approval, consistent with the Commission's
procedures.
    21. NERC submitted its Petition for Approval of Interpretations to
Reliability Standard TOP-005-1--Operational Reliability Information and
Reliability Standard IRO-005-1--Reliability Coordination--Current Day
Operations (Petition) on November 24, 2009, seeking Commission approval
of the interpretations referenced in the title of its pleading.

E. Notice of Proposed Rulemaking

1. Proposed Determination
    22. In the NOPR, the Commission proposed to approve the
interpretation as just and reasonable and not inconsistent with the
language of the Reliability Standards. However, to address a concern
that a Special Protection System that has lost a communication channel
could compromise system reliability, the Commission proposed to direct
that the ERO develop modifications to the Reliability Standards to
address a potential reliability gap and ensure that a component
failure, wherein a Special Protection System may not be able to perform
as designed to ensure required Bulk-Power System performance, is
reported to the appropriate reliability entities. To assist its
consideration of the issues in this proceeding, the Commission
requested comment on its proposal, and requested that reliability
coordinators and transmission operators report whether it would be
useful to the operation and coordination of the transmission system to
receive information concerning the loss of a redundant communication
channel.
    23. In the NOPR, the Commission acknowledged the NERC System
Protection and Control Subcommittee's (SPCS) November 18, 2008 white
paper, ``Protection System Reliability, Redundancy of Protection System
Elements,'' which explained that ``[r]edundancy means that two or more
functionally equivalent Protection Systems are used to protect each
electric system element.'' \20\ The SPCS also explained that ``[a]
fundamental concept of redundancy is that Protection Systems need to be
designed such that electric system faults will be cleared, even if a
component of the Protection System fails.'' \21\ In other words,
redundant communication channels are a means to provide for the
reliable operation of the Special Protection System. Thus, the
Commission found that, should a communication channel fail at the time
the Special Protection System is required to operate, the designed
redundancy of the Special Protection System ensures that the Bulk-Power
System can meet its reliability performance requirements.
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    \20\ NERC SPCS White Paper at 9, available at http://
www.nerc.com/filez/spctf.html (dated Jan. 14, 2009).
    \21\ Id.; see also Table 4-3 in the white paper noting possible
responses to communication channel failure including adding a
redundant channel or performing testing to ensure that delayed fault
clearing does not violate the planning standards.
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    24. However, the NOPR expressed the Commission's concern that,
given NERC's proposed interpretation, a loss of a communication
channel, a necessary and inherent performance requirement of a Special
Protection System, may not be considered a reportable event under the
current reporting requirements. The NOPR highlighted the critical
status of Special Protection Systems, noting that they are by their
nature used to address system reliability vulnerabilities to prevent
system instability, cascading outages, and protect other facilities in
response to contingencies. Therefore, a failure of the remaining
communication component of a Special Protection System creates a
reliability risk to the Bulk-Power System. We continued that where one
communication channel has failed, the Special Protection System may not
be able to meet the performance criteria of the Reliability Standards
and in particular the performance criteria specified in the
Transmission Planning (TPL) standards, because the Special Protection
System may not withstand a second component failure. In conclusion, the
Commission expressed its view that such a Special Protection System
would be operating at some state less than the normal secure state and
should need to be reported to the appropriate reliability entities in
order for these reliability entities to accurately assess operational
reliability.
2. Comments
    25. NERC, Manitoba Hydro, Bonneville Power Administration
(Bonneville), Edison Electric Institute (EEI), Entergy Services, Inc.
(Entergy) and the ISO/RTO Council submitted comments in response to the
NOPR. Electric Reliability Council of Texas, Inc. (ERCOT) submitted
comments prior to the NOPR.
    26. Commenters support the Commission's proposal to approve NERC's
interpretation. However, with respect to the Commission's proposal to
direct NERC to develop additional reporting requirements,\22\ NERC and
others responded to the Commission's proposal and emphasize that the
information to be reported under the NOPR proposal is already available
pursuant to other requirements. For instance, ISO/RTO Council states
that the information is available to a reliability coordinator under
IRO-002-1, Requirement R2.\23\ NERC asserts that knowledge of the loss
of a communication channel could be of general interest to a
reliability coordinator or transmission operator and reports that its
drafting teams are currently reviewing whether such entities should
have the authority to request any and all information deemed necessary
to protect the reliability of the bulk electric system, including the
status of Special Protection System communication channels.\24\
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    \22\ NOPR, 133 FERC ] 61,234 at P 23, 27 (expressing concern
that a Special Protection System that has lost a communication
channel could compromise system reliability, but would not be
reported to the appropriate reliability entities).
    \23\ ISO/RTO Council at 3 (citing similar requirement in new,
proposed Reliability Standard, IRO-010-1a, Requirement R3). See also
NERC at 4-5; NOPR, 133 FERC ] 61,234 at P 18 (noting interpretation
assertion that reporting under TOP-005-1 is not dependent on whether
a Special Protection System is in a degraded state); Order No. 748,
134 FERC ] 61,213.
    \24\ NERC at 4.
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    27. Entergy cites IRO-005-2, Requirement R1.1 which states that a
reliability coordinator must monitor the status of bulk electric system
elements, including critical auxiliaries such as Special Protection
Systems. According to Entergy, IRO-005-2, Requirement

R1.1, demonstrates that information on the loss of Special Protection
System communication channels is already available to reliability
coordinators. Entergy likewise cites IRO-005-2, Requirement R1.1, which
provides that each reliability coordinator shall monitor its
reliability coordinator area parameters, including ``Current Status of
Bulk Electric Systems elements (transmission or generation including
critical auxiliaries such as Automatic Voltage Regulators and Special
Protection Systems) and system loading.'' \25\ Entergy states, ``In
order to monitor the status of a Special Protection System, a
reliability coordinator must know whether any of the redundant
components of a Special Protection System are non-operational.'' \26\
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    \25\ Entergy at 7.
    \26\ Id.
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    28. Entergy also identifies IRO-002-1, Requirement R5, which
provides that each Reliability coordinator shall have of the capability
to monitor its reliability coordinator area and surrounding reliability
coordinator areas ``to ensure that potential or actual System Operating
Limits or Interconnection Reliability Operating Limit violations are
identified.'' Entergy concludes that reliability coordinators must know
whether redundant components of a Special Protection System are
operational, in order to monitor the status of the Special Protection
System. Entergy also asserts that a reliability coordinator must
monitor the status of communication channels in order to meet its
obligations to ensure that unplanned events do not interfere with its
ability to determine system operating limit violations under IRO-003-2
and IRO-002-1. Entergy concludes that, to the extent the information
would be useful to the reliability coordinators, ``they already have
it.''
    29. Commenters disagree with the premise that the loss of a Special
Protection System communication channel could have an impact on
reliability because the remaining channel ensures that the system is
able to function.\27\ According to ISO/RTO Council and NERC, the loss
of a communication channel on a redundant Special Protection System
does not require changes to operational protocols, such as by moving
towards more conservative operations, because the Special Protection
System is expected to operate properly with the other communication
channel in service.\28\ NERC reports that industry experts determined
that a reliability coordinator or transmission operator will operate as
usual, and not more conservatively, upon learning that a Special
Protection System is operating normally, even though a communication
channel is out of service, and objected to the proposal as imposing a
reporting burden without a corresponding reliability benefit.
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    \27\ See NERC at 3; Bonneville at 3; EEI at 5 and Affidavit of
W. Miller; Entergy at 5; ISO/RTO Council at 3, 4; Manitoba Hydro at
4-5.
    \28\ E.g., NERC at 3; ISO/RTO Council at 3-4.
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    30. According to ISO/RTO Council, the loss of a communication
channel does not require specific planning and operating actions based
on the particular system conditions being experienced.\29\
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    \29\ ISO/RTO Council at 5.
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    31. Some commenters predict that requiring reports on out-of-
service communication channels could result in a flood of reports that
are not useful to system planning and operation. Bonneville reports
that it has over 600 communication channels dedicated to its Special
Protection Systems, and notes that some channels are bound to
experience technical difficulties or be taken out of service during an
outage. Bonneville concludes that requiring its dispatchers to report
to the reliability coordinator every time a communication channel fails
or is removed from service would result in additional reporting and
documentation with no corresponding benefit. Bonneville also commented
that ``loss of communication channels happens frequently.'' \30\
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    \30\ Bonneville at 3.
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    32. Several commenters object to the Commission's taking action in
an interpretation proceeding to propose changes to the Reliability
Standard requirements and propose alternate venues to press any
concerns that are identified.\31\ ERCOT, on the other hand, objects to
the interpretation claiming that NERC should have provided clarity or
guidance as to what constitutes a degraded Special Protection System.
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    \31\ EEI at 6; NERC at 4.
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II. Discussion

    33. The Commission declines to adopt the NOPR proposal and approves
NERC's interpretation of IRO-005-1, Requirement R12 and TOP-005-1,
Requirement R3 as submitted. The Commission approves the interpretation
as consistent with the language of the Reliability Standards, and finds
the interpretation just and reasonable. Based on the comments of NERC
and the industry that no reliability gap exists, the Commission will
rely on their expert opinion and decline to adopt the NOPR proposal to
direct the ERO develop modifications to the Reliability Standards.
These actions are discussed more fully below.
    34. The Commission agrees with the ERO that, with regard to IRO-
005-2 Requirement R12, if a redundant Special Protection System with
one communication channel out of service can still perform reliably
with the remaining channel and its function would therefore not be
considered degraded under IRO-005-2.\32\ We also agree with the ERO and
Entergy that if a reliability coordinator has identified a Special
Protection System that is necessary for Reliable Operation, the
reliability coordinator can request detailed data as needed, including
the status of the components of a Special Protection System.\33\ The
Reliability Coordinator is obligated to receive and consider data to
support its assessment of the performance of the system in order to
protect against SOL and IROL events--this could include data about the
status of communication facilities.\34\ We agree with commenters that,
while the specific wording in the Requirement does not compel the
affected entities to report the outage of a single communication
channel as degraded if the system remains functional, the information
can be compelled by the Reliability Coordinator.
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    \32\ See NERC Petition, Exhibit B at 6 (providing text to
interpretation as appendix to IRO-005-1 and TOP-005-1).
    \33\ See NERC Petition, Exhibit B at 5 (``Background Information
for Interpretation''); Entergy at 7; see also IRO-002-1, Requirement
R2 (``Each reliability coordinator shall determine the data
requirements to support its reliability coordination tasks and shall
request such data.'').
    \34\ IRO-002-1, Requirement R2; see also NERC Petition, Exhibit
B at 5, ``Background Information for Interpretation'' (discussing
TOP-005-1).
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    35. In the NOPR, the Commission expressed concern that the
interpretation may create a reliability gap with regard to the
reporting requirements for a Special Protection System that is able to
operate as designed, but still poses a reliability risk to the Bulk-
Power System with loss of a single communication channel with redundant
design. The ERO asserts that the fact ``that one communication channel
of a Special Protection System may be out of service in no way prevents
that Special Protection System from performing its designed function.''
As such, a system operator would not be required to make changes to its
operational protocols. The ERO nevertheless states that ``* * * the
knowledge of the loss of a communication channel could be of general
interest to a reliability

coordinator or transmission operator.'' Finally, the ERO and ISO/RTO
Council indicate that this information is available to reliability
coordinators pursuant to requirements in other reliability standards,
and is therefore not necessary as a reporting requirement in TOP-005-1.
    36. We are persuaded that a requirement to report the outage of a
single communication channel where redundant channels exist is
unnecessary because both the ERO and ISO/RTO point to existing
requirements in other Reliability Standards that would make this
information available to the reliability coordinator upon its
request.\35\ Such requirements provide the reliability coordinator
authority to compel such information as it may deem necessary to ensure
reliable operation of the Bulk-Power System including information on
the outage of communication channels. Our review of the record in this
proceeding satisfies the concerns we expressed in the NOPR and
therefore we do not find it necessary to establish the NOPR reporting
requirement proposal.
---------------------------------------------------------------------------

    \35\ IRO-005-1, Requirement R2; see also the interpretation,
Background Information for Interpretation, discussing TOP-005-1.
---------------------------------------------------------------------------

    37. In light of the Commission's decision not to implement the NOPR
proposal concerning the reporting of the loss of a redundant
communication channel, we need not address commenters' objections to
our proposal. Ultimately, the decision whether the redundancy of a
particular system is needed to perform as designed is a judgment call
that must be made by the appropriate reliability entities (i.e., the
transmission operator and the reliability coordinator).

III. Information Collection Statement

    38. The Office of Management and Budget (OMB) regulations require
that OMB approve certain reporting and recordkeeping (collections of
information) imposed by an agency.\36\ The information contained here
is also subject to review under section 3507(d) of the Paperwork
Reduction Act of 1995.\37\
---------------------------------------------------------------------------

    \36\ 5 CFR 1320.11.
    \37\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    39. As stated above, the IRO-005-1 and TOP-005-1 Reliability
Standards that are the subject of the approved interpretation was
approved in Order No. 693, and the related information collection
requirements were reviewed and approved, accordingly.\38\ The approved
interpretations of IRO-005-1 and TOP-005-1 do not modify or otherwise
affect the collection of information already in place.
---------------------------------------------------------------------------

    \38\ Order No. 693, FERC Stats. & Regs. ] 31,242 at P 945, 1648.
---------------------------------------------------------------------------

    40. With respect to TOP-005-1, the interpretation clarifies that
NERC affirms that transmission operators are required to provide
information upon request, without regard to whether the equipment is
operating in a degraded state, as posited in the request for an
interpretation.\39\ Consequently, the interpretation does not change
the information that a transmission owner must report, because the
requesting entity is free to request the same types of information as
before, and the same logs, data, or measurements would be maintained.
---------------------------------------------------------------------------

    \39\ NERC Petition, Exhibit B at 5 (proposing text of
interpretation as Appendix 1 to IRO-005-1 and TOP-005-1).
---------------------------------------------------------------------------

    41. With respect to IRO-005-1, the interpretation states that a
transmission operator is mandated to report the loss of a communication
channel, if the loss will result in the failure of a Special Protection
System to operate as designed. Thus, the interpretation and the
comments received in this rulemaking clarify that the reporting
requirements focus on whether a Special Protection System can continue
to perform its reliability function.
    42. Thus, the interpretations of the current Reliability Standards
at issue in this rulemaking will not modify the reporting burden.
However, we will submit this Final Rule to OMB for informational
purposes.
    43. Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426 [Attention:
Ellen Brown, Office of the Executive Director, e-mail:
<EMAIL_ADDRESS>Phone:<PHONE_NUMBER>, fax:<PHONE_NUMBER>].
    44. For submitting comments concerning the collection(s) of
information and the associated burden estimate(s), please send your
comments to the contact listed above and to the Office of Information
and Regulatory Affairs, Office of Information and Regulatory Affairs,
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy
Regulatory Commission, phone<PHONE_NUMBER>, fax:<PHONE_NUMBER>, e-
mail<EMAIL_ADDRESS>Please reference OMB Control Number
1902-0244 and the docket number of this rulemaking in your
submission.].

IV. Environmental Analysis

    45. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\40\ The
Commission has categorically excluded certain actions from this
requirement as not having a significant effect on the human
environment. Included in the exclusion are rules that are clarifying,
corrective, or procedural or that do not substantially change the
effect of the regulations being amended.\41\ The actions proposed
herein fall within this categorical exclusion in the Commission's
regulations.
---------------------------------------------------------------------------

    \40\ Regulations Implementing the National Environmental Policy
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs.
Regulations Preambles 1986-1990 ] 30,783 (1987).
    \41\ 18 CFR 380.4(a)(2)(ii).
---------------------------------------------------------------------------

V. Regulatory Flexibility Act

    46. The Regulatory Flexibility Act of 1980 (RFA) \42\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
The RFA mandates consideration of regulatory alternatives that
accomplish the stated objectives of a proposed rule and that minimize
any significant economic impact on a substantial number of small
entities. The Small Business Administration's (SBA) Office of Size
Standards develops the numerical definition of a small business.\43\
The SBA has established a size standard for electric utilities, stating
that a firm is small if, including its affiliates, it is primarily
engaged in the transmission, generation and/or distribution of electric
energy for sale and its total electric output for the preceding twelve
months did not exceed four million megawatt hours.\44\
---------------------------------------------------------------------------

    \42\ 5 U.S.C. 601-612.
    \43\ 13 CFR 121.101.
    \44\ 13 CFR 121.201, Sector 22, Utilities & n. 1.
---------------------------------------------------------------------------

    47. Initially, as noted above, this Final Rule addresses an
interpretation of the IRO-005-1 and TOP-005-1 Reliability Standards,
which were already approved in Order No. 693, and, therefore, does not
create an additional regulatory impact on small entities. Therefore,
the Commission certifies that this Final Rule will not have a
significant impact on a substantial number of small entities.

VI. Document Availability

    48. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through the Commission's Home Page (http://www.ferc.gov) and
in the Commission's Public Reference Room during normal

business hours (8:30 a.m. to 5 p.m. Eastern time) at 888 First Street,
NE., Room 2A, Washington, DC 20426.
    49. From the Commission's Home Page on the Internet, this
information is available on eLibrary. The full text of this document is
available on eLibrary in PDF and Microsoft Word format for viewing,
printing, and/or downloading. To access this document in eLibrary, type
the docket number excluding the last three digits of this document in
the docket number field.
    50. User assistance is available for eLibrary and the Commission's
Web site during normal business hours from FERC Online Support at (202)
502-6652 (toll free at 1-866-208-3676) or e-mail at
<EMAIL_ADDRESS>or the Public Reference Room at (202) 502-
8371, TTY<PHONE_NUMBER>. E-mail the Public Reference Room at
<EMAIL_ADDRESS>
VII. Effective Date and Congressional Notification

    51. These regulations are effective May 26, 2011. The Commission
has determined, with the concurrence of the Administrator of the Office
of Information and Regulatory Affairs of OMB, that this rule is not a
``major rule'' as defined in section 351 of the Small Business
Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 18 CFR Part 40

    Electric power, Electric utilities, Reporting and recordkeeping
requirements.

    By the Commission.
Kimberly D. Bose,
Secretary.
[FR Doc. 2011-10011 Filed 4-25-11; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 83, Number 100 (Wednesday, May 23, 2018)]
[Notices]
[Pages 23966-23968]
[FR Doc No: 2018-10978]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83278; File No. SR-ISE-2018-16]

Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
of Amendment No. 1 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 1, To Introduce the
ATR Protection for Orders That Are Routed to Away Markets

May 17, 2018.

I. Introduction

    On February 23, 2018, Nasdaq ISE, LLC (``ISE'' 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
amend Exchange Rule 714 regarding the Acceptable Trade Range (``ATR'')
functionality for orders that are routed to away markets. The proposed
rule change was published for comment in the Federal Register on March
14, 2018.\3\ On April 20, 2018, the Exchange submitted Amendment No. 1
to the proposed rule change, which replaced and superseded the original
filing in its entirety.\4\ On April 26, 2018, the Commission extended
the time period within which to approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether to disapprove the proposed rule change to June 22,
2018.\5\ The Commission received no comments on the proposed rule
change. The Commission is publishing this notice to solicit comment on
Amendment No. 1 to the proposed rule change from interested persons and
is approving the proposed rule change, as modified by Amendment No. 1,
on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 82846 (March 9,
2018), 83 FR 11254 (``Notice'').
    \4\ See Letter to Brent J. Fields, Secretary, Commission, from
Adrian Griffiths, Senior Associate General Counsel, Nasdaq, Inc.,
dated April 20, 2018 (``Amendment No. 1''). Amendment No. 1 revises
the proposed rule change to: (i) Provide further discussion of the
current application of the ATR to orders routed away; (ii) modify
the proposed rule text regarding the recalculation of the ATR for
orders routed away pursuant to Supplementary Material to Exchange
Rule 1901, if the applicable National Best Bid (``NBB'') or the
National Best Offer (``NBO'') price is improved at the time of
routing; (iii) expand the discussion and justification for
recalculating the ATR for such orders; and (iv) make other
amendments to the proposed rule text to improve the
understandability of the current ATR calculation. Amendment No. 1
was also submitted as a comment to the proposed rule change.
Amendment No. 1 is available at: https://www.sec.gov/comments/sr-ise-2018-16/ise201816-3483594-162248.pdf.
    \5\ See Securities Exchange Act Release No. 83119 (April 26,
2018), 83 FR 19367 (May 2, 2018).
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change, as Modified by Amendment
No. 1 \6\
---------------------------------------------------------------------------

    \6\ For a more detailed description of the proposal, see Notice,
supra note 3; Amendment No. 1, supra note 4.
---------------------------------------------------------------------------

    The ATR is a functionality designed to prevent the Exchange's
System \7\ from experiencing dramatic price swings by preventing the
execution of orders beyond set thresholds.\8\ Pursuant to Exchange Rule
714(b)(1), the System calculates an ATR to limit the range of prices at
which an order or quote will be allowed to execute.\9\ Upon receipt of
a new order or quote, the ATR is calculated by taking the reference
price, plus or minus a value to be determined by the Exchange, where
the reference price is the NBB for sell orders/quotes and the NBO for
buy orders/quotes.\10\ Accordingly, the ATR is: The reference price-(x)
for sell orders/quotes; and the reference price + (x) for buy
orders.\11\ If an order or quote reaches the outer limit of the ATR
without being fully executed, then any unexecuted balance will be
cancelled.\12\
---------------------------------------------------------------------------

    \7\ The term ``System'' means the electronic system operated by
the Exchange that receives and disseminates quotes, executes orders
and reports transactions. See Exchange Rule 100(a)(53).
    \8\ See Amendment No. 1, supra note 4.
    \9\ See Exchange Rule 714(b)(1).
    \10\ See Notice, supra note 3, at 11254-55. For purposes of
determining the value that will be added or subtracted from the
reference price, there are three categories of options for the ATR:
(1) Penny Pilot Options trading in one cent increments for options
trading at less than $3.00 and increments of five cents for options
trading at $3.00 or more, (2) Penny Pilot Options trading in one-
cent increments for all prices, and (3) Non-Penny Pilot Options. See
id.
    \11\ See Exchange Rule 714(b)(1)(i).
    \12\ See Exchange Rule 714(b)(1)(ii). The ATR is not available
for All-or-None Orders or Complex Orders that leg into the regular
order book. See Notice, supra note 3, at 11254, n.3.

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

    The Exchange states that, currently, the System calculates a
reference price for an incoming order or quote only when that order or
quote rests or trades on the regular order book.\13\ Accordingly,
orders that route to away exchanges do not always receive the ATR.
Orders that first trade on the Exchange prior to being routed away
receive the ATR, but orders that are routed away upon entry (or
otherwise do not rest or trade on the regular order book) are not
currently subject to the ATR.\14\
---------------------------------------------------------------------------

    \13\ See Notice, supra note 3, at 11255.
    \14\ See Amendment No. 1, supra note 4.
---------------------------------------------------------------------------

    The Exchange now proposes to amend the ATR to modify how it applies
to orders that are routed by the Exchange. First, the Exchange proposes
to apply the ATR to orders that are routed to away markets without
first trading on the Exchange.\15\ This means that, unlike today, the
System will calculate an ATR for orders even if the order does not rest
or trade on the regular order book prior to being routed.\16\
---------------------------------------------------------------------------

    \15\ See Notice, supra note 3, at 11255.
    \16\ See Amendment No. 1, supra note 4.
---------------------------------------------------------------------------

    In addition, the Exchange proposes that, for orders routed to away
markets pursuant to the Supplementary Material to Exchange Rule
1901,\17\ if the applicable NBB or NBO price is improved at the time
the order is routed, a new ATR would be calculated based on the
reference price at that time.\18\ The Exchange notes that the NBB or
NBO price for a security may change during the ``Flash'' auction
process described in Supplementary Material .02 to Rule 1901, and the
proposed rule change would provide additional protection if the
reference price was improved at the time the order is routed.\19\
Similarly, the Exchange represents that other routable orders not
subject to the ``Flash'' auction process must still be processed by the
System prior to routing, and during this processing time the market may
have moved.\20\ Under the proposed rule change, if the NBB or NBO price
has not improved at the time an order is routed, the ATR that was
applied to the order upon entry into the System would apply.\21\
---------------------------------------------------------------------------

    \17\ This could occur: (1) If an order is routed to an away
market pursuant to Supplementary Material .02 to Rule 1901 (the
``Flash'' auction) without first trading against any Exchange
interest in the ``Flash'' auction; (2) if an order is a ``Sweep
Order'' as defined in Rule 715(s) and processed pursuant to
Supplementary Material .05 to Rule 1901 instead of the ``Flash''
auction; or (3) if a Non-Customer Order opts out of the ``Flash''
auction and is processed pursuant to Supplementary Material .04 to
Rule 1901. See Amendment No. 1, supra note 4.
    Supplementary Material .02 to Rule 1901 provides that orders to
be routed to away markets may be eligible for a ``Flash'' auction
wherein Exchange members are allowed the opportunity to enter
responses to trade with the order prior to routing. See Notice,
supra note 3, at 11255.
    \18\ See Amendment No. 1, supra note 4; proposed Exchange Rule
714(b)(1)(ii). In the Notice, the Exchange provides examples of how
the ATR will be applied to orders routed to away markets. See
Notice, supra note 3, at 11255.
    \19\ See Amendment No. 1, supra note 4.
    \20\ See Amendment No. 1, supra note 4.
    \21\ The Exchange states that the ATR is not again recalculated
for orders after routing, so orders that are routed but not executed
in full by an away market, and subsequently return to trade on the
Exchange, would not receive a new ATR. See Amendment No. 1, supra
note 4.
---------------------------------------------------------------------------

    The Exchange states that it intends to implement the ATR
functionality described in the proposed rule change no later than
October 31, 2018.\22\
---------------------------------------------------------------------------

    \22\ See Notice, supra note 3, at 11255. The Exchange further
states that it will announce the implementation date of this
functionality in an Options Trader Alert prior to the launch date.
See id.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 1, is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities exchange.\23\ In particular, the
Commission finds that the proposed rule change, as modified by
Amendment No. 1, is consistent with Section 6(b)(5) of the Act,\24\
which requires, among other things, that the rules of a national
securities 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
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.
---------------------------------------------------------------------------

    \23\ 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).
    \24\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the ATR is reasonably designed to
prevent executions of orders and quotes at prices that are
significantly worse than the NBBO at the time of an order's submission
and may reduce the potential negative impacts of unanticipated
volatility in individual options.\25\ The Commission notes that the
proposed rule change extends the application of the ATR to orders that
route away immediately upon entry, thus offering these orders the same
protections that the ATR provides to orders that first trade on the
Exchange before being routed. The Commission also believes that
recalculating the ATR for orders routed to away markets pursuant to the
Supplementary Material to Rule 1901, if the applicable NBB or NBO price
is improved at the time the order is routed, should help provide such
orders with a price protection that better reflects the NBB or NBO. The
Commission further believes that the proposed rule change will provide
transparency and enhance investors' understanding of the operation of
the ATR. The Commission notes that the Exchange will continue to use
the NBB or NBO as the reference price for the ATR. For these reasons,
the Commission believes that the proposed rule change, as modified by
Amendment No. 1, is consistent with the Act.
---------------------------------------------------------------------------

    \25\ See Securities Exchange Act Release No. 80432 (April 11,
2017), 82 FR 18191, 18193-94 (April 17, 2018) (SR-ISE-2017-03)
(Order approving, among other things, proposal to establish ATR).
---------------------------------------------------------------------------

III. Solicitation of Comments on Amendment No. 1

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 1
to the proposed rule change is consistent with the Exchange 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 protected]. Please include
File Number SR-ISE-2018-16 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-ISE-2018-16. 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-ISE-
2018-16 and should be submitted on or before June 13, 2018.

V. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 1

    The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 1, prior to the 30th day after the
date of publication of notice of Amendment No. 1 in the Federal
Register. As discussed above, Amendment No. 1 adds detail to the
proposal and the proposed rule text regarding the operation of the ATR.
Amendment No. 1 revises the proposed rule text to specify that for
orders routed to away markets pursuant to the Supplementary Material to
Rule 1901, if the applicable NBB or NBO price is improved at the time
the order is routed, a new ATR will be calculated based on the
reference price at that time. Amendment No. 1 also sets forth
additional justification for the proposed rule change. The Commission
believes that these revisions provide greater clarity with respect to
the current and proposed application of the ATR for routed away orders.
Accordingly, the Commission finds good cause, pursuant to Section
19(b)(2) of the Exchange Act,\26\ to approve the proposed rule change,
as modified by Amendment No. 1 on an accelerated basis.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\27\ that the proposed rule change (SR-ISE-2018-16), as
modified by Amendment No. 1 thereto, be, and it hereby is, approved on
an accelerated basis.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10978 Filed 5-22-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 140 (Tuesday, July 22, 2014)]
[Notices]
[Pages 42616-42619]
[FR Doc No: 2014-17145]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72621; File No. SR-CBOE-2014-057]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change Relating to the Customized Option Pricing Service

July 16, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 3, 2014, Chicago Board Options Exchange, Incorporated (the
``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been prepared by the
Exchange. 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.
---------------------------------------------------------------------------

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

    Chicago Board Options Exchange, Incorporated (the ``Exchange'' or
``CBOE'') proposes various changes to the Customized Option Pricing
Service (``COPS''). The text of the proposed rule change is available
on the Exchange's Web site (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 purpose of the proposed rule change is to describe various
changes to COPS\3\. The Exchange is not proposing to change the fees
for COPS data.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 67813 (September 10,
2012), 77 FR 56903 (September 14, 2012) (SR-CBOE-2012-083),
Securities Exchange Act Release No. 67928 (September 26, 2012), 77
FR 60161 (October 2, 2012) (SR-CBOE-2012-090), Securities Exchange
Act Release No. 70705 (October 17, 2013), 78 FR 63265 (October 23,
2013) (SR-CBOE-2013-097), and Securities Exchange Act Release No.
70845 (November 12, 2013), 78 FR 69168 (November 18, 2013) (SR-CBOE-
2013-104).
---------------------------------------------------------------------------

Background
    COPS provides market participants with an ``end-of-day'' \4\ file
and ``historical'' \5\ files of valuations for Flexible Exchange
(``FLEX'')\6\ options and certain over-the-counter (``OTC'') options
(collectively, ``COPS Data''). Market Data Express, LLC (``MDX''), an
affiliate of CBOE, offers COPS Data for sale to all market
participants. COPS Data is available to ``Subscribers'' for internal
use and internal distribution only, and to ``Customers'' who, pursuant
to a written vendor agreement between MDX and a Customer, may
distribute the Data externally (i.e., act as a vendor) and/or use and
distribute the Data internally.
---------------------------------------------------------------------------

    \4\ ``End of day'' refers to data that is distributed prior to
the opening of the next trading day.
    \5\ ``Historical'' COPS data consists of COPS data that is over
one month old (i.e., copies of the ``end-of-day'' COPS file that are
over one month old).
    \6\ FLEX options are exchange traded options that provide
investors with the ability to customize basic option features
including size, expiration date, exercise style, and certain
exercise prices.
---------------------------------------------------------------------------

    COPS Data consists of indicative \7\ values for three categories of
``customized'' options. The first category of options is all open
series of FLEX options listed on any exchange that offers FLEX options
for trading.\8\ The second category is OTC options that have the same
degree of customization as FLEX options. The third category includes
options with strike prices expressed in percentage terms. Values for
such options are expressed in percentage terms and are theoretical
values.\9\
---------------------------------------------------------------------------

    \7\ ``Indicative'' values are indications of potential market
prices only and as such are neither firm nor the basis for a
transaction.
    \8\ Current FLEX options open interest spans over 2,000 series
on over 300 different underlying securities.
    \9\ These values are theoretical in that they are indications of
potential market prices for options that have not traded (i.e. do
not yet exist). Market participants sometimes express option values
in percentage terms rather than in dollar terms because they find it
is easier to assess the change, or lack of change, in the
marketplace from one day to the next when values are expressed in
percentage terms.

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

    The Exchange uses values produced by CBOE registered market-makers
to produce COPS Data. Participating CBOE market-makers submit values to
MDX on options series specified by MDX on a daily basis. These values
are generated by the market-maker's internal pricing models. The
valuations that MDX ultimately publishes are an average of multiple
contributions of values from participating CBOE market-makers. For each
value provided by MDX through COPS, MDX includes a corresponding
indication of the number of market-maker contributors that factored
into that value.
    CBOE market-makers that meet the following objective qualification
criteria are allowed to contribute values to MDX for purposes of
producing COPS Data. Interested CBOE market-makers must be approved by
the Exchange, have the ability to provide valuations to MDX in a timely
manner each day after the close of trading, and sign a services
agreement with CBOE. Interested CBOE market-makers must also have the
ability to provide valuations on several different types of options,
including (i) options on all open FLEX series traded on any exchange
that offers FLEX options for trading, (ii) options on any potential new
FLEX options series, (iii) OTC options that have the same degree of
customization as FLEX options, and (iv) customized options where the
strike price is expressed in percentage terms (the valuations provided
to MDX must also be expressed in percentage terms). In addition,
interested CBOE market-makers must participate in a testing phase with
MDX. The values submitted by a market-maker during the testing phase
and in live production must meet MDX's quality control standards
designed to ensure the integrity and accuracy of COPS Data. MDX has
implemented procedures including monthly performance reviews to help
ensure the integrity and accuracy of COPS Data.
    To help ensure that MDX receives numerous values from multiple
market-makers on a consistent basis, MDX shares revenue from the sale
of COPS Data with participating CBOE market-makers. The amount of
revenue that MDX shares with participating market-makers does not
exceed thirty percent (30%) of the total revenue received by MDX from
the sale of COPS Data. The revenue sharing is based on the following
table:

------------------------------------------------------------------------
Number of participating market-   Total revenue   Rev. share per market-
            makers               share (percent)           maker
------------------------------------------------------------------------
3.............................                21  7%
4.............................                24  6%
5 or more.....................                30  30% divided by the
                                                   number of
                                                   participating market-
                                                   makers
------------------------------------------------------------------------

    If only three market-makers participate, MDX shares 21% of total
revenue with each market-maker receiving a 7% share. If four market-
makers participate, MDX shares 24% of total revenue with each market-
maker receiving a 6% share. If five or more market-makers participate,
MDX shares 30% of total revenue divided equally among the market-
makers. There are currently three participating market-makers.\10\
---------------------------------------------------------------------------

    \10\ In order to help ensure that participating market-makers
submit values to MDX on 100% of the series to be valued, a market-
maker's revenue share is reduced as follows:
    There is one ``grace day'' per month, i.e., if a market-maker
does not submit values for 100% of the series on just one day within
a given month, that market-maker will not lose any portion of its
revenue share for that month.
    If a market-maker submits values for less than 100% of the
series on any two days within a month, that market-maker will
forfeit 10% of its revenue share for that month.
    If a market-maker submits values for less than 100% of the
series on any three days within a month, that market-maker will
forfeit 25% of its revenue share for that month.
    If a market-maker submits values for less than 100% of the
series on any four days within a month, that market-maker will
forfeit 50% of its revenue share for that month.
    If a market-maker submits values for less than 100% of the
series on any five days within a month, that market-maker will
forfeit 75% of its revenue share for that month.
    If a market-maker submits values for less than 100% of the
series on any six or more days within a month, that market-maker
will forfeit 100% of its revenue share for that month.
---------------------------------------------------------------------------

    The fees that MDX charges for COPS Data are set forth on the Price
List on the MDX Web site (www.marketdataexpress.com) (``MDX Web
site''). MDX currently charges a fee per option per day for ``end-of-
day'' COPS data. The amount of the fee is reduced based on the number
of options purchased. MDX charges Customers and Subscribers $1.25 per
option per day for each option purchased up to 50 options, $1.00 per
option per day for each option purchased from 51 to 100 options, $0.75
per option per day for each option purchased from 101 to 500 options,
and $0.50 per option per day for each option purchased over 500
options. MDX charges Customers and Subscribers $75 per day for
``historical'' COPS data. Customers are not currently charged any fees
for their external distribution of COPS Data.
Proposal
    The Exchange proposes a number of changes to COPS for the purpose
of improving COPS to potentially make it more appealing to a wider
group of users. First, the Exchange proposes to provide additional data
through COPS. Specifically, COPS would also provide indicative values
for ``exotic'' options. Exotic options are options which are generally
traded OTC and are more complex than standard options, usually relating
to determination of payoff.\11\ An exotic option may also include a
non-standard underlying instrument, developed for a particular client
or for a particular market. In addition to exotic option values, the
Exchange also proposes to provide an implied volatility value with each
option value provided by COPS.
---------------------------------------------------------------------------

    \11\ For example, the payoff at expiration of an exotic option
may depend not just on the value of the underlying instrument at
expiration, but at its value at several times during the contract's
life.
---------------------------------------------------------------------------

    Second, the Exchange proposes to allow any CBOE Trading Permit
Holder (``TPH'') that meets the COPS qualification criteria to
contribute values to MDX for purposes of producing COPS Data. Third,
the Exchange proposes to amend the COPS qualification criteria to add
new criteria. Specifically, interested CBOE TPHs must also have the
ability to provide valuations on exotic options and an implied
volatility value with each option value provided.
    Fourth, the Exchange proposes to specify a daily deadline for COPS
customers to submit requests for new options series to be priced by
COPS that day. Currently, COPS customers may request pricing for
options that are not already priced by COPS by submitting an email
request to MDX. The request must be submitted by a specified time each
day in order for the requested option to be priced by COPS that day
(currently, this deadline is 11:00 a.m.

CT). The Exchange proposes that MDX may change this deadline from time
to time by publishing the deadline and notice of changes to the
deadline on the MDX Web site.
    Finally, in order to attract new TPH contributors to COPS, and in
light of significantly increased responsibilities such as pricing
exotic options, the Exchange proposes to amend the compensation paid to
COPS contributors. The Exchange proposes to temporarily change COPS
contributor compensation from the revenue sharing plan described above
to a fixed payment structure.\12\ MDX would pay a maximum of five
contributing TPHs a monthly fixed amount for the first six months of
the enhanced COPS program, or until annual COPS revenue exceeds
$1,000,000, whichever comes first. MDX would pay each of the three
current COPS contributors $12,000 per month and each of two new
contributors $7,000 per month. The purpose of the fixed monthly fee
would be to help contributors offset the cost of development work they
would likely need to complete in order to price exotic options. The
three current contributors would receive a higher monthly payment than
the new contributors because the current contributors have been a part
of the COPS program since its inception and have been working with MDX
to build the program. The Exchange proposes to limit the number of COPS
contributors to five during this initial period because the Exchange
believes five contributors is an ideal number to provide significant
price discovery yet not too dilutive as to diminish interest among TPHs
in participating in COPS.
---------------------------------------------------------------------------

    \12\ The Exchange is not proposing to eliminate the revenue
share plan, only to suspend it temporarily as described herein.
---------------------------------------------------------------------------

    The three current contributors would be ``grandfathered'' into the
enhanced COPS program and the new compensation structure. The two new
contributor positions would be open to all TPHs (announced via
regulatory circular) and filled during a trial period. Of all the TPHs
that try out for the two new positions, the top two TPHs that have the
highest weighted average \13\ contributions over the course of the
trial period would be added to the program, assuming continued
adherence to COPS quality control standards.
---------------------------------------------------------------------------

    \13\ MDX would publish on its Web site a description of the
methodology used for averaging the values submitted by TPHs to
produce a single publishable value (which methodology may change
from time to time). MDX intends to use a weighted average
methodology. A weighted average is an average in which each quantity
to be averaged (in this case each value submitted by a contributor)
is assigned a weight. These weightings determine the relative
importance of each quantity on the average.
---------------------------------------------------------------------------

    MDX would transition back to the original revenue share plan
described above after this initial six month period (or until annual
COPS revenue exceeds $1,000,000, whichever comes first), unless annual
COPS revenue exceeds $2,000,000, in which case the percentage of total
COPS revenue shared with contributors would increase from 30% to 32% if
a new contributor is added to COPS.\14\ In subsequent years, if the
previous year's COPS revenue increases by $1,000,000 or more, the
percentage of total COPS revenue shared with contributors would
increase by 2% if an additional contributor is added to COPS. The total
number of COPS contributors would ultimately be limited to fifteen. The
Exchange believes limiting the number of contributors to fifteen would
help keep the revenue share of each TPH at a level sufficient to
maintain TPH interest in participating in COPS and incent them to
produce high quality valuations. The Exchange further believes that the
value of additional contributor prices beyond fifteen would be very
limited.
---------------------------------------------------------------------------

    \14\ The addition of new contributors would be accomplished
through the same try out mechanism described above. This try out
mechanism would also be used if a contributor is removed from COPS,
or voluntarily leaves the program.
---------------------------------------------------------------------------

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.\15\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \16\ 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) \17\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
    \17\ Id.
---------------------------------------------------------------------------

    In adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility to
offer new and unique market data to the public. It was believed that
this authority would expand the amount of data available to consumers,
and also spur innovation and competition for the provision of market
data. The Exchange believes the proposal to provide exotic option and
implied volatility values through COPS is in keeping with those
principles by promoting increased transparency through the
dissemination of useful data and also by clarifying its availability to
market participants.
    The Exchange believes the proposed rule change is not designed to
permit unfair discrimination between CBOE TPHs because it would allow
any CBOE TPH that meets the COPS qualification criteria to participate
in COPS (assuming continued adherence to COPS quality control
standards). Expanding eligibility for COPS to all CBOE TPHs may result
in more contributors, which should help improve the quality of COPS
Data.
    The Exchange believes the proposal to add new COPS qualification
criteria is consistent with the protection of investors and the public
interest in that it would help ensure that only TPHs who are able to
produce quality valuations for all categories of COPS Data are allowed
to participate in the program.
    The Exchange believes the proposal to specify a daily deadline for
customers to submit requests for new options series to be priced by
COPS is consistent with just and equitable principles of trade because
it would provide MDX and contributors with enough time to price the new
options series the same day.
    The Exchange believes the proposal to grandfather the three current
contributors into the enhanced COPS program and pay them a higher fixed
monthly fee than new contributors for a limited period of time is not
unfairly discriminatory because the current contributors have been a
part of COPS since its inception and have helped MDX build the program.
For example, in advance of the COPS launch in January 2013, the current
contributors participated in trial runs with MDX to help ensure their
values were in line with MDX's expectations. The current contributors
also helped MDX work out the flow of the daily file transfer process
(MDX delivers to contributors a file of options series to be priced,
the contributors return the file including their option values). In
addition,

contributors have assisted MDX with promotion of COPS. Through these
efforts, the current contributors have helped MDX lay the ground work
for new contributors to join COPS. The Exchange believes limiting the
number of COPS contributors to five initially, and ultimately to
fifteen, is not unfairly discriminatory because all TPHs would be
eligible to try out for the limited COPS contributor positions and to
be selected if they perform best during a trial period.

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

    CBOE 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 would
allow the Exchange, through MDX, to disseminate COPS Data on a
voluntary basis. COPS is voluntary on the part of the Exchange, which
is not required to offer such services, and voluntary on the part of
prospective customers who are not required to use it. The Exchange
notes there are at least a small number of market data vendors that
produce option value data that is similar to COPS Data and market data
users may elect to buy these other products if they choose.\18\ The
Options Clearing Corporation (``OCC'') also produces FLEX option value
data that is similar to the FLEX option value data that is included in
COPS.\19\ The Exchange believes the proposed COPS enhancements may help
attract new customers to COPS and new order flow to the Exchange,
thereby improving the Exchange's ability to compete in the market for
options order flow and executions.
---------------------------------------------------------------------------

    \18\ These vendors include SuperDerivatives, Markit, Prism, and
Bloomberg's BVAL service.
    \19\ The OCC makes this data available on its Web site at http://www.theocc.com/webapps/flex-reports.
---------------------------------------------------------------------------

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

    Because the foregoing rule 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, provided that the self-regulatory organization
has given the Commission written notice of its intent to file 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,\20\ the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \21\ and Rule 19b-4(f)(6)
thereunder.\22\ 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 will institute
proceedings to determine whether the proposed rule change should be
approved or disapproved.
---------------------------------------------------------------------------

    \20\ The Exchange has fulfilled this requirement.
    \21\ 15 U.S.C. 78s(b)(3)(A).
    \22\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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-2014-057 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-2014-057. 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 Web site (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 Web site 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; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2014-057 and should be
submitted on or before August 12, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
---------------------------------------------------------------------------

    \23\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-17145 Filed 7-21-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 80 (Tuesday, April 26, 2016)]
[Notices]
[Pages 24602-24603]
[FR Doc No: 2016-09575]

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

ENVIRONMENTAL PROTECTION AGENCY

[FRL-9931-87-OEI]

Cross-Media Electronic Reporting: Authorized Program Revision
Approval, State of Kansas

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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

SUMMARY: This notice announces EPA's approval of the State of Kansas'
request to revise its National Primary Drinking Water Regulations
Implementation EPA-authorized program to allow electronic reporting.

DATES: EPA's approval is effective May 26, 2016 for the State of
Kansas' National Primary Drinking Water Regulations Implementation
program, if no timely request for a public hearing is received and
accepted by the Agency.

FOR FURTHER INFORMATION CONTACT: Karen Seeh, U.S. Environmental
Protection Agency, Office of Environmental Information, Mail Stop
2823T, 1200 Pennsylvania Avenue NW., Washington, DC 20460, (202) 566-
1175<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: On October 13, 2005, the final Cross-Media
Electronic Reporting Rule (CROMERR) was published in the Federal
Register (70 FR 59848) and codified as part 3 of title 40 of the CFR.
CROMERR establishes electronic reporting as an acceptable regulatory
alternative to paper reporting and establishes requirements to assure
that electronic documents are as legally dependable as their paper
counterparts. Subpart D of CROMERR requires that state, tribal or local
government agencies that receive, or wish to begin receiving,
electronic reports under their EPA-authorized programs must apply to
EPA for a revision or modification of those programs and obtain EPA
approval. Subpart D provides standards for such approvals based on
consideration of the electronic document receiving systems that the
state, tribe, or local government will use to implement the electronic
reporting. Additionally, Sec.  3.1000(b) through (e) of 40 CFR part 3,
subpart D provides special procedures for program revisions and
modifications to allow electronic reporting, to be used at the option
of the state, tribe or local government in place of procedures
available under existing program-specific authorization regulations. An
application submitted under the subpart D procedures must show that the
state, tribe or local government has sufficient legal authority to
implement the electronic reporting components of the programs covered
by the application and will use electronic document receiving systems
that meet the applicable subpart D requirements.
    On March 29, 2016, the Kansas Department of Health and Environment
(KDHE) submitted an application titled Compliance Monitoring Data
Portal for revision to its EPA-approved drinking water program under
title 40 CFR to allow new electronic reporting. EPA reviewed KDHE's
request to revise its EPA-authorized program and, based on this review,
EPA determined that the application met the standards for approval of
authorized program revision set out in 40 CFR part 3, subpart D. In
accordance with 40 CFR 3.1000(d), this notice of EPA's decision to
approve Kansas' request to revise its Part 142--National Primary
Drinking Water Regulations Implementation program to allow electronic
reporting under 40 CFR part 141 is being published in the Federal
Register.
    KDHE was notified of EPA's determination to approve its application
with respect to the authorized program listed above.
    In today's notice, EPA is also informing interested persons that
they may request a public hearing on EPA's action to approve the State
of Kansas' request to revise its authorized public water system program
under 40 CFR part 142, in accordance with 40 CFR 3.1000(f). Requests
for a hearing must be submitted to EPA within 30 days of publication of
today's Federal Register notice. Such requests should include the
following information:
    (1) The name, address and telephone number of the individual,
organization or other entity requesting a hearing;
    (2) A brief statement of the requesting person's interest in EPA's
determination, a brief explanation as to why EPA should hold a hearing,
and any other information that the requesting person wants EPA to
consider when determining whether to grant the request;
    (3) The signature of the individual making the request, or, if the
request is made on behalf of an organization or other entity, the
signature of a responsible official of the organization or other
entity.
    In the event a hearing is requested and granted, EPA will provide
notice of the hearing in the Federal Register not less than 15 days
prior to the scheduled hearing date. Frivolous or insubstantial
requests for hearing may be denied by EPA. Following such a public
hearing, EPA will review the record of the hearing and issue an order
either affirming today's determination or rescinding such
determination. If no timely request for a hearing is received and
granted, EPA's approval of the State of Kansas' request to revise its
part 142--National Primary Drinking Water Regulations Implementation
program to allow electronic reporting will become effective 30 days
after today's notice is published, pursuant to CROMERR section
3.1000(f)(4).

Matthew Leopard,
Director, Office of Information Collection.
[FR Doc. 2016-09575 Filed 4-25-16; 8:45 am]
BILLING CODE 6560-50-P