[Federal Register Volume 81, Number 228 (Monday, November 28, 2016)]
[Notices]
[Pages 85663-85666]
[FR Doc No: 2016-28461]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79366; File No. SR-NASDAQ-2016-106]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order
Granting Approval of Proposed Rule Change To Modify Rule IM-5900-7 To
Adjust the Entitlement to Services of Acquisition Companies

November 21, 2016.

I. Introduction

    On September 22, 2016, The Nasdaq Stock Market LLC (``Nasdaq'' 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 modify the treatment of acquisition companies
under Rule IM-5900-7 so that acquisition companies will not be entitled
to complimentary services under IM-5900-7 until they complete an
acquisition meeting the Exchange's requirements, as described below.
The proposed rule change was published in the Federal Register on
October 7, 2016.\3\ The Commission received no comments on the
proposal. This order grants approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 79025 (October 3,
2016), 81 FR 69881 (October 7, 2016) (``Notice'').
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II. Description of the Proposal

    The Exchange proposed to amend Rule IM-5900-7 to adjust the timing
of when complimentary services are provided to listed acquisition
companies under that rule. Under the current rules, except as described
below, Nasdaq generally does not permit the initial or continued
listing of a company that has no specific business plan or that has
indicated that its business plan is to engage in a merger or
acquisition with an unidentified company or companies. However, in the
case of a company whose business plan is to complete an initial public
offering (``IPO'') and engage in a merger or acquisition with one or
more unidentified companies within a specific period of time (an
``Acquisition Company''), Nasdaq will permit the listing on the Nasdaq
Global Market or Capital Market if the company meets all applicable
initial listing requirements, as well as the additional conditions
described in Nasdaq Rule IM-5101-2 (Listing of Companies Whose Business
Plan is to Complete One or More Acquisitions).\4\ Pursuant to Rule IM-
5101-2(b), among other requirements, within 36 months of the
effectiveness of its IPO registration statement, or such shorter period
that the company specified in its registration statement, the company
must complete one or more business combinations having an aggregate
fair market value of at least 80% of the value of the deposit account
(excluding any deferred underwriters fees and taxes payable on the
income earned on the deposit account) at the time of the agreement to
enter into the initial combination (a business combination that
satisfies the conditions of IM-5101-2(b) is referred to as a ``Business
Combination'').\5\ Rule IM-5101-2 also requires that following each
Business Combination, the combined company must meet the requirements
for initial listing.\6\
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    \4\ Id. at 69882. Rule IM-5101-2(a) requires that at least 90%
of the gross proceeds from the IPO and any concurrent sale by the
company of equity securities must be deposited in a trust account
maintained by an independent trustee, an escrow account maintained
by an ``insured depository institution,'' as that term is defined in
Section 3(c)(2) of the Federal Deposit Insurance Act, or in a
separate bank account established by a registered broker or dealer
(collectively, a ``deposit account''). For a full set of
requirements to list an Acquisition Company, see Rule IM-5101-2. The
Exchange permits Acquisition Companies to list only on the Capital
and Global Markets but not the Global Select Market. See Notice,
supra note 3, at 69882 (citing Rule 5310(i), which provides that a
company subject to IM-5101-2 is not eligible to list on the Global
Select Market).
    \5\ Rule IM-5101-2 also provides, among other things, that if
the company does not meet the requirements for initial listing
following a business combination or does not comply with one of the
requirements set forth in the rule, Nasdaq will issue a Staff
Delisting Determination to delist the company's securities.
    \6\ See Rule IM-5101-2. If the company does not meet the
requirements for initial listing following a Business Combination or
does not comply with one of the requirements set forth in the IM-
5101-2, Nasdaq will issue a Staff Delisting Determination under
Nasdaq Rule 5810 to delist the company's securities. Id.
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    As set forth in Rule IM-5900-7, the Exchange offers certain
complimentary services to companies newly listing on the Nasdaq Global
and Global Select Markets in connection with an IPO, upon emerging from
bankruptcy, or in connection with a spin-off or carve-out from another
company (``Eligible New Listings'') and to companies that switch their
listing from the New York Stock Exchange (``NYSE'') to the Global or
Global Select Markets (``Eligible Switches'').\7\ The complimentary
services provided to some listed companies under IM-5900-7 are not,
however, available to companies listing on the Capital Market. The
Exchange also noted that, as of the date of filing its proposal with
the Commission, all companies listing as an Acquisition Company have
listed on the Capital Market.\8\
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    \7\ In addition, all companies listed on Nasdaq receive services
from Nasdaq, including Nasdaq Online and the Market Intelligence
Desk. See Notice, supra note 3, at 69882.
    \8\ See Notice, supra note 3, at 69882.
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    Currently, pursuant to Rule IM-5900-7, the services offered include
a whistleblower hotline (with a retail value of approximately $4,000
annually), an investor relations Web site (with a retail value of
approximately $16,000 annually), disclosure services for earnings or
other press releases (with a retail value ranging from $15,000 to
$20,000 annually, depending on the company's market capitalization and
whether it is an Eligible New Listing or an Eligible Switch), audio
webcasting (with a retail value of approximately $6,500 annually),
market analytic tools (with a retail value ranging from approximately
$29,000 to $51,000 annually, depending on the number of users granted
access), and may include market advisory tools such as stock
surveillance (with a retail value of approximately $51,000 annually),
global targeting (with a retail value of approximately $40,000
annually), monthly ownership analytics and event driven targeting (with
a retail value of approximately $46,000 annually), and an annual
perception study (with a retail value of approximately $35,000
annually).\9\ The total retail value of the services provided ranges
from approximately $70,500 to $188,500 annually, depending on a
company's market capitalization and whether it is an Eligible New
Listing or an Eligible Switch.\10\ In addition, one-time development
fees of approximately $3,500 to establish the services in the first
year are waived.\11\ The length of the complimentary period that a
company receives services under IM-5900-7 is either two or four years
from the listing date, depending on a company's market capitalization
and whether it is an

Eligible New Listing or an Eligible Switch.\12\ Notwithstanding the
foregoing, if an Eligible New Listing or Eligible Switch begins to use
a particular service provided under IM-5900-7 within 30 days after the
date of listing, the complimentary period for that service begins on
the date of first use.\13\
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    \9\ The Exchange noted that it does not propose to make any
changes in its filing to the values of the various services provided
to eligible listed companies discussed above, which values are
specified in Rule IM-5900-7. See Notice, supra note 3, at 69882.
    \10\ See Rule IM-5900-7.
    \11\ Id.
    \12\ Id.
    \13\ Id.
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    The Exchange has now proposed to amend Rule IM-5900-7 to provide
that an Acquisition Company will no longer be deemed to be an Eligible
New Listing or an Eligible Switch at the time of its initial listing,
but instead will be deemed to be an Eligible New Listing at such time
as it has completed a Business Combination and lists such merged
company on the Global or Global Select Market in conjunction with that
Business Combination.\14\ Thus, under the proposal, an Acquisition
Company will no longer be eligible to receive complimentary services
under IM-5900-7 at the time of its initial listing on the Global Market
before it has completed a Business Combination, but will instead be
entitled to receive such services if and when it completes a Business
Combination and lists on the Global or Global Select Market in
conjunction with that Business Combination.
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    \14\ The Exchange stated that after completing the Business
Combination, the company would receive the same services under IM-
5900-7, with the same value, as any other Eligible New Listing. See
Notice, supra note 3, at 69882.
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    Under the proposal, for purposes of providing complimentary
services under IM-5900-7 to certain listed companies, the Exchange
would treat a company previously listed on the Nasdaq Capital Market as
listing on the Global or Global Select Market in conjunction with a
Business Combination if it files an application to list on the Global
or Global Select Market before completing the combination and
demonstrates compliance with all applicable criteria within 60 days of
completing the Business Combination. According to the Exchange, this
additional 60-day period may be required, in some cases, to allow time
for the issuance of shares in the transaction and then for the newly
formed entity to obtain information from third parties to demonstrate
compliance with the shareholder and public float requirements of
Nasdaq's Global or Global Select Market.\15\
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    \15\ See Notice, supra note 3, at 69882. See, e.g., Nasdaq Rules
5315 and 5405, which set forth the quantitative listing requirements
for Primary Equity Securities for the Nasdaq Global Select and
Global Markets.
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    Under the proposed rules, if the Acquisition Company is listed on
the Global Market at the time it completes a Business Combination and
remains listed on the Global Market or transfers to the Global Select
Market, the complimentary period for services under IM-5900-7 would
commence on the date of such Business Combination.\16\ If the
Acquisition Company is listed on the Capital Market at the time it
completes the Business Combination, under the proposed rules the
Acquisition Company would be given 60 days to demonstrate that it meets
the listing criteria of the Global or Global Select Market; if it does
qualify within 60 days, the complimentary period for services under IM-
5900-7 would commence on the date of listing on the Global or Global
Select Market.\17\ In either case, however, if the company lists on the
Global or Global Select Market and begins to use a particular service
provided under IM-5900-7 within 30 days after the date of the Business
Combination, the complimentary period for that service would begin on
the date of first use.
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    \16\ The Exchange noted that an Acquisition Company must meet
the initial listing requirements at the time of its Business
Combination even if it is already listed on the Global Market. See
Notice, supra note 3, at 69883 (citing Rule IM-5101-2(d)).
    \17\ The Exchange stated that an Acquisition Company that was
listed on the Capital Market before the Business Combination would
remain on the Capital Market until it demonstrates compliance with
the applicable Global or Global Select Market initial listing
criteria. See Notice, supra note 3, at 69882.
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    Finally, the Exchange proposed to make various non-substantive
technical and conforming revisions to its Rules.\18\
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    \18\ Specifically, the Exchange proposed to delete a reference
in the existing rule text to ``NASDAQ'' when referring to the Global
and Global Select Markets, to conform to other references to the
Global and Global Select Markets within the rule. In addition, the
Exchange proposed to update the introductory note in Rule IM-5900-7
to include the specific date that a prior change to the rule was
approved. See Securities Exchange Act Release No. 78806 (September
9, 2016), 81 FR 63523 (September 15, 2016) (approving NASDAQ-2016-
098) (``NASDAQ 2016 Order'').
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III. Discussion and Commission's Findings

    The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of Section 6 of the
Act.\19\ Specifically, the Commission believes it is consistent with
the provisions of Sections 6(b)(4) and (5) of the Act,\20\ in
particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees, and other charges among Exchange
members, issuers, and other persons using the Exchange's facilities,
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers. Moreover, the Commission believes that
the proposed rule change is consistent with Section 6(b)(8) of the Act
\21\ in that it does not impose any burden on competition not necessary
or appropriate in furtherance of the purposes of the Act.
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    \19\ 15 U.S.C. 78f. 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).
    \20\ 15 U.S.C. 78f(b)(4) and (5).
    \21\ 15 U.S.C. 78f(b)(8).
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    The Commission believes that it is consistent with the Act for the
Exchange to adjust the timing of when Acquisition Companies are
eligible to receive complimentary services under IM-5900-7 from the
time of initial listing of the Acquisition Company on the Global Market
in connection with an IPO or with switching their listing from the
NYSE,\22\ to the time of listing on the Global or Global Select Market
in conjunction with a Business Combination. The Exchange represented
that, in its view, Acquisition Companies do not generally need the
services provided under IM-5900-7 upon listing, but would find these
services useful if they remain listed after they complete a Business
Combination.\23\ The Exchange explained that at the time of initial
listing, Acquisition Companies do not have operating businesses, issue
few press releases, and frequently do not have detailed Web sites.\24\
The Exchange stated when an Acquisition Company completes a Business
Combination with an operating company, the combined company is similar
to other Eligible New Listings, such as IPOs, and will have increased
need to focus on identifying and communicating with its
shareholders.\25\ The Exchange explained that like the other Eligible
New Listings that receive complimentary services under the existing
rule, these companies are transitioning to the traditional public

company model and the complimentary services provided under IM-5900-7
will help ease that transition.\26\ Therefore, the Exchange stated that
it believes that it is not an inequitable allocation of fees nor
unfairly discriminatory to offer the services to an Acquisition
Company, as described in IM-5101-2, only upon completion of a Business
Combination.\27\
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    \22\ An Acquisition Company that has not yet completed a
Business Combination may switch from NYSE to the Capital or Global
Market, but would only be eligible to receive the services under IM-
5900-7 at the time it completes a Business Combination.
    \23\ See Notice, supra note 3, at 69882.
    \24\ Id. The Exchange stated in its filing that Acquisition
Companies tend to trade infrequently and in a tight range until the
company completes an acquisition. Id. The Exchange also stated that
it typically takes more than two years for an Acquisition Company to
identify a target and complete an acquisition and, as a result, the
term of any complimentary services offered to an Acquisition Company
upon initial listing would usually expire before the company
acquired a target and began operating as an operating company that
could benefit from the services. Id.
    \25\ See id. at 69883.
    \26\ Id.
    \27\ Id.
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    In addition, the Exchange stated that in many cases Acquisition
Companies will consider transferring to a new listing venue at the time
they complete a Business Combination, and that the proposed rule change
will enable the Exchange to compete to retain these companies by
offering them a package of complimentary services that assists their
transition to becoming a traditional public operating company.\28\
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    \28\ Id.
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    The Exchange also recognized that not all Acquisition Companies
will complete a Business Combination and that some listed Acquisition
Companies will therefore never become eligible for the complimentary
services under IM-5900-7.\29\ However, the Exchange reiterated that it
does not believe that the services under IM-5900-7 generally would be
useful to an Acquisition Company and that any such Acquisition Company
therefore would not suffer any meaningful detriment as a
consequence.\30\
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    \29\ Id.
    \30\ Id.
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    As noted in the previous order approving IM-5900-7, Section 6(b)(5)
of the Act does not require that all issuers be treated the same;
rather, the Act requires that the rules of an Exchange not unfairly
discriminate between issuers.\31\ In its proposal, the Exchange has
made representations that reasonably justify treating an Acquisition
Company that lists on the Global or Global Select Market in conjunction
with a Business Combination similar to a newly-listed operating
company. In addition, when listed as an Acquisition Company, the
Acquisition Company will also be eligible to receive complimentary
products through the Exchange's Market Intelligence Desk and NASDAQ
Online similar to all listed companies.\32\ The Commission further
notes that an Acquisition Company that completes a Business Combination
will be receiving the same package of services as an Eligible New
Listing \33\ and that it will not be receiving any additional benefits
or services by virtue of the proposed rule change. The Commission has
previously found that the package of complimentary services offered to
Eligible New Listings and Eligible Switches is equitably allocated
among issuers consistent with Section 6(b)(4) of the Act and that
describing the values of the services adds greater transparency to the
Exchange's rules and to the fees applicable to such companies.\34\ The
Commission also believes that describing in the exchange's rules the
products and services available to listed companies and their
associated values will ensure that individual listed companies are not
given specially negotiated packages of products or services to list, or
remain listed, that would raise unfair discrimination issues under the
Act.\35\ Based on the foregoing, the Commission believes that the
Exchange has provided a sufficient basis for adjusting the timing of
when Acquisition Companies are eligible to receive the additional
complimentary services set forth under IM-5900-7 from the time of an
Acquisition Company's initial listing on the Global Market in
connection with an IPO or with switching their listing from NYSE, to
the time of an Acquisition Company's listing on the Global or Global
Select Market in conjunction with a Business Combination, and that this
change does not unfairly discriminate among issuers and is therefore
consistent with the Act. For similar reasons, and as the value of the
services offered are not changing, only the timing of when such
services are provided to an Acquisition Company, we find that the
proposal is consistent with Section 6(b)(4) of the Act.\36\
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    \31\ 15 U.S.C. 78f(b)(5); see also Securities Exchange Act
Release No. 65963 (December 15, 2011), 76 FR 79262 (December 21,
2011) (approving NASDAQ-2011-122) (``NASDAQ 2011 Order'').
    \32\ See supra, note 7; see also NASDAQ 2011 Order, supra note
31, at 79262.
    \33\ See Rule IM-5101-2, requiring, among other things, that an
Acquisition Company meet the requirements for initial listing after
it meets the business combination requirements of IM-5101-2(b) just
as is required for other Eligible New Listings.
    \34\ See NASDAQ 2011 Order, supra note 31, at 79266 and NASDAQ
2016 Order, supra note 18, at 63525.
    \35\ See, e.g., Securities Exchange Act Release No. 65127
(August 12, 2011), 76 FR 51449, 51452 (August 18, 2011) (approving
NYSE-2011-20).
    \36\ The Commission has also approved similar rule proposals
filed by other exchanges. See infra note 48 and accompanying text.
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    The Commission also believes that it is consistent with the Act for
the Exchange to allow the complimentary period for a particular service
to begin on the date of first use if an Acquisition Company that has
completed a Business Combination begins to use the service within 30
days after the date of the Business Combination. The Exchange stated in
its filing that, in its experience, it can take companies a period of
time to review and complete necessary contracts and training for the
complimentary services under IM-5900-7 following their becoming
eligible for those services and that allowing this modest 30 day
period, if the company needs it, will help to ensure that the company
will have the benefit of the full period permitted under the rule to
actually use the services, thus giving companies the full intended
benefit.\37\ The Commission notes that Rule IM-5900-7 currently allows
an Eligible New Listing or an Eligible Switch to begin using services
within 30 days of its initial listing date.\38\ As noted in the NASDAQ
2014 Order, the Commission believes that this would provide only a
short window of additional time to allow companies to finalize their
contracts for the complimentary services. The Commission notes that
under the proposed rule this additional 30 day window would only be
available to Acquisition Companies that list on the Global or Global
Select Markets in conjunction with a Business Combination and thereby
treats such Acquisition Companies, at the time they qualify for listing
as an operating company, the same as other newly-listed companies that
qualify as Eligible New Listings under Rule IM-5900-7.\39\
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    \37\ See Notice, supra note 3, at 69883.
    \38\ See Securities Exchange Act Release No. 72669 (July 24,
2014), 79 FR 44234 (July 30, 2014) (approving NASDAQ-2014-058)
(``NASDAQ 2014 Order'').
    \39\ The Commission expects the Exchange to track the start (and
end) date of each free service.
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    The Commission believes that it is consistent with the Act for the
Exchange to define a company listing on Nasdaq's Global or Global
Select Markets in conjunction with a Business Combination to include a
company that is listed on the Capital Market at the time of the
Business Combination if it both filed an application to list on the
Global or Global Select Market before completing the Business
Combination and demonstrates compliance with all applicable criteria
for the Global or Global Select Market within 60 days of completing the
Business Combination, and to provide that the period of complimentary
services for such a company will commence on the date of its listing on
the Global or Global Select Market. The Exchange represented that, in
its experience, such a company may need a period of as long as 60 days
to obtain information from third parties to demonstrate compliance with
the listing

requirements.\40\ The Exchange stated that this 60-day period
appropriately recognizes the practical problem that a company may have
with demonstrating compliance with the initial listing requirements for
the Global or Global Select Market at exactly the time of its Business
Combination.\41\ The Exchange further stated that it believes that it
is not unfairly discriminatory to limit this 60-day period to
Acquisition Companies transitioning from the Capital Market to the
Global or Global Select Market, as the Exchange expects it would be
rare for a company already on the Global Market to need additional time
to demonstrate compliance with initial listing requirements.\42\ The
Commission also notes that the treatment of an Acquisition Company
completing a Business Combination on the Capital Market as an Eligible
New Listing under IM-5900-7 for purposes of listing on the Global and
Global Select Markets, as long as it completes the Business Combination
and lists no later than 60 days from that date, is consistent with the
other changes noted above concerning when complimentary services are
received by an Acquisition Company listed on the Global and Global
Select Markets.
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    \40\ See Notice, supra note 3, at 69883. As noted above, the
Exchange stated that this additional time may be required, in some
cases, to allow the issuance of shares in the transaction and then
for the newly formed entity to obtain information from third parties
to demonstrate compliance with the shareholder and public float
requirements. See supra note 15 and accompanying text.
    \41\ See Notice, supra note 3, at 69883.
    \42\ See id. For example, the Exchange explained that an
Acquisition Company that is already listed on the Global Market
would be required to have 400 round lot holders upon initially
listing and would be required to have 400 total holders for
continued listing. Id.
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    In addition, the Exchange stated that beginning the complimentary
period for a company in this situation on the date of its listing on
the Global or Global Select Market (rather than on the date of the
Business Combination as is the case for companies listed on Global
Market at the time of the Business Combination) is consistent with the
period provided to other Eligible New Listings and Eligible Switches
under the current rules, which begins on the date of listing.\43\ The
Exchange also noted that, prior to the point of demonstrating
compliance with the listing requirements, there is no certainty as to
whether the company will qualify for the Global or Global Select Market
and be eligible to receive the services and, as a result, complimentary
services could not be provided prior to that date.\44\ Furthermore, the
Exchange noted that the proposal provides that a company that takes
advantage of the 60-day time period to demonstrate compliance cannot
further extend the start of the complimentary period by using an
additional 30-day period to start using the complimentary services.\45\
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    \43\ As described above, while the complimentary period will
begin on the date of listing on the Global or Global Select Markets,
if the company begins to use a particular service within 30 days
after the date of the Business Combination, the period begins for
that service on the date of first use.
    \44\ See Notice, supra note 3, at 69883.
    \45\ See id. For example, if a company completes a Business
Combination on Day 1, demonstrates compliance with Global or Global
Select Market listing standards and becomes listed on that market on
Day 45, and begins using a certain complimentary service on Day 90,
the complimentary period for that service would begin on Day 45, the
day of listing. However, if a company completes a Business
Combination on Day 1 and demonstrates compliance with Global or
Global Select Market listing standards and becomes listed on one of
those markets on Day 15, and begins using a certain complimentary
service on Day 30, the complimentary period for that service would
begin on Day 30, which is 30 days from the Business Combination or
15 days after listing.
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    Based on the foregoing, the Commission believes that the Exchange
has provided a sufficient basis for treating a company listed on the
Capital Market at the time it completes a Business Combination as
listing on the Global or Global Select Market in conjunction with a
Business Combination if it files an application to list on the Global
or Global Select Market before completing the combination and
demonstrates compliance with all applicable criteria within 60 days of
completing the Business Combination, and for beginning the
complimentary period for a company in this situation on the date of its
listing on the Global or Global Select Market rather than on the date
of the Business Combination, and that these changes do not unfairly
discriminate among issuers and are therefore consistent with Section
6(b)(5) of the Act.
    The Commission also believes that the Exchange is responding to
competitive pressures in the market for listings in making this
proposal. Specifically, the Exchange has represented that, in many
cases, an Acquisition Company will consider transferring to a new
listing venue when it completes a Business Combination and that the
proposed rule change would allow it to compete to retain these
companies by offering them a package of complimentary services that
assists their transition to being a traditional public company.\46\ The
Exchange also represented that when the complimentary period ends, a
former Acquisition Company that had acquired an operating business will
be more likely to continue to use the Nasdaq Corporate Solutions
service or a competing service, whereas otherwise they may not be
exposed to the value of these services and therefore may not purchase
any, which will create additional users of the service class and
enhance competition among service providers.\47\ Further, the
Commission notes that it has recently approved similar proposals filed
by other exchanges with respect to the timing of complimentary services
offered to Acquisition Companies under their rules.\48\ The Commission
also notes that nothing in the Exchange's rules requires an Acquisition
Company to remain listed on the Exchange after it completes a Business
Combination and that such company is free to list on other markets.
Accordingly, the Commission believes that the proposed rule reflects
the current competitive environment for exchange listings among
national securities exchanges, and is appropriate and consistent with
Section 6(b)(8) of the Act.\49\
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    \46\ See Notice, supra note 3, at 69883.
    \47\ See id. The Exchange also noted that other service
providers can also offer similar services to companies, thereby
increasing competition to the benefit of those companies and their
shareholders. Id.
    \48\ See Securities Exchange Act Release Nos. 79056 (October 6,
2016), 81 FR 70449 (October 12, 2016) (approving NYSEMKT-2016-62)
and 79187 (October 28, 2016), 81 FR 76403 (November 2, 2016)
(approving NYSE-2016-58).
    \49\ 15 U.S.C. 78f(b)(8).
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    Finally, the Commission finds that it is consistent with Section
6(b)(5) of the Act \50\ for the Exchange to make various technical and
conforming revisions to facilitate clarity of its Rules.
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    \50\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\51\ that the proposed rule change (SR-NASDAQ-2016-106) be, and it
hereby is, approved.
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    \51\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\52\
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    \52\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-28461 Filed 11-25-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 181 (Monday, September 19, 2016)]
[Notices]
[Pages 64249-64250]
[FR Doc No: 2016-22423]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78830; File No. SR-BOX-2016-44]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Fee Schedule on the BOX Market LLC (``BOX'') Options Facility
To Change the Liquidity Fee and Credit Structure for PIP and COPIP
Transactions

September 13, 2016.
    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 September 1, 2016, BOX Options Exchange LLC (the ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Exchange filed the
proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend the Fee Schedule
change [sic] the liquidity fee and credit structure for PIP and COPIP
Transactions on the BOX Market LLC (``BOX'') options facility. While
changes to the fee schedule pursuant to this proposal will be effective
upon filing, the changes will become operative on September 1, 2016.
The text of the proposed rule change is available from the principal
office of the Exchange, at the Commission's Public Reference Room and
also on the Exchange's Internet Web site at http://boxexchange.com.

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

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

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

1. Purpose
    The Exchange proposes to amend Section II.A. of the BOX Fee
Schedule to make changes to the liquidity fees and credits for PIP and
COPIP Transactions.\5\ Specifically, the Exchange proposes to amend the
liquidity fees and credits for transactions where the PIP or COPIP
Order is from the account of a Professional Customer, Broker Dealer or
Market Maker (``Non-Public Customer''). The Exchange recently
established separate fees and credits for Non-Public Customer PIP and
COPIP Transactions.\6\
---------------------------------------------------------------------------

    \5\ Transactions executed through Price Improvement Period
(``PIP'') and the Complex Order Price Improvement Period (``COPIP'')
auction mechanisms. All COPIP transactions will be charged per
contract per leg.
    \6\ See Securities Exchange Act Release No. 78618 (August 18,
2016), 81 FR 57977 (August 24, 2016) (SR-BOX-2016-41).
---------------------------------------------------------------------------

    Unlike Public Customer PIP and COPIP transactions, liquidity fees
and credits for Non-Public Customer PIP and COPIP transactions are only
assessed if the Non-Public Customer PIP or COPIP Order does not trade
with its contra order (the Primary Improvement Order). Under the
current structure, if there are responses in the PIP or COPIP the
``removal'' credit is applied to the portion of the Non-Public Customer
PIP or COPIP Order that does not trade with its Primary Improvement
Order, and the Improvement Order responses are charged the ``add'' fee.
The Exchange proposes to adjust the fee structure and instead apply any
``removal'' credits to the Primary Improvement Order instead of the
Non-Public Customer PIP or COPIP Order. Improvement Order responses
will continue to be charged the ``add'' fee and the liquidity fee and
credit rates remain unchanged.
    For example, if a Broker Dealer submits a PIP Order for the account
of a Non-Public Customer to buy 100 contracts in the PIP and there are
no responders, the PIP Order would execute against the matching Primary
Improvement Order to sell 100 contracts and neither Order would be
assessed a liquidity fee or credit. If, instead, the same PIP Order
receives an Improvement Order response to sell 75 contracts, the PIP
Order would execute against the Improvement Order for 75 contracts and
the Primary Improvement Order for 25 contracts. Liquidity fees and
credits would be assessed on the 75 contracts which executed against
the Improvement Order, and under the proposed change, the Broker
Dealer's Primary Improvement Order, rather than the PIP Order, would
receive a removal credit for the 75 contracts. Accordingly, the
Improvement Order response would be charged the add fee for the 75
contracts, the same as it would be today. The Exchange notes that there
continue to be no liquidity fees or credits assessed on the remaining
25 contracts.
    The Exchange also proposes to make other non-substantive edits to
Section II.A. to clarify and support the proposed change.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act, in general, and Section
6(b)(4) and 6(b)(5)of the Act,\7\ in particular, in that it provides
for the equitable allocation of reasonable dues, fees, and other
charges among BOX Participants and other persons using its facilities
and does not unfairly discriminate between customers, issuers, brokers
or dealers.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Exchange believes amending the Liquidity Fees and Credits for
Non-Public Customer PIP and COPIP transactions is reasonable, equitable
and not unfairly discriminatory. Liquidity fees and credits on BOX do
not directly result in revenue to BOX, but are meant to incentivize
Participants to attract order flow. The current PIP and COPIP liquidity
fee and credit structure is designed to incentivize valuable Public
Customer PIP and COPIP Order flow, which the Exchange does not believe
is necessary or appropriate for Non-Public Customer PIP and COPIP Order
flow. The proposed change will shift the liquidity credit to the
Primary Improvement Order that is submitting the Non-Public Customer
PIP or COPIP Order to the auction for price improvement. The Exchange
believes this is equitable and not unfairly discriminatory as the
Initiating Participant no longer receives the benefit of a guaranteed
execution against a Public Customer's PIP or COPIP Order \8\ but
continues to play a

critical role by guaranteeing the Non-Public Customer PIP or COPIP
Order an execution at the NBBO or at a better price, and is subject to
market risk while the Non-Public Customer PIP Order or COPIP Order is
exposed to other BOX Participants for the price improvement
opportunity. Therefore, the Exchange believes for Non-Public Customer
PIP and COPIP Orders it is equitable and not unfairly discriminatory to
instead provide the liquidity credit to the Initiating Participant's
Primary Improvement Order so that the Initiating Participant will
continue to submit Non-Public Customer PIP or COPIP Orders to the PIP
and COPIP. Further, the Exchange believes that the proposed change will
have no impact on competition in the PIP or COPIP, as Responders will
continue to be charged the same liquidity fee.
---------------------------------------------------------------------------

    \8\ Under BOX Rule 7150(h)(a) [sic] and 7245(h)(a) [sic] the
Initiating Participant retains trade allocation privileges upon
conclusion of the PIP or COPIP for up to forty percent (40%) of the
remaining size of the PIP or COPIP Order after Public Customer
orders are satisfied. If only one competing order matches the
Initiating Participant's Single-Priced Primary Improvement Order at
the final price level, then the Initiating Participant may retain
priority for up to fifty percent (50%) of the remaining size of the
PIP or COPIP Order after Public Customer orders are satisfied.
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. Specifically, the Exchange
believes that amending where the liquidity credit is applied in Non-
Public Customer PIP and COPIP Transactions will not impose a burden on
competition among various Exchange Participants. The Exchange believes
that the proposed changes will result in these Participants being
credited appropriately for these transactions.
    Finally, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing exchanges. In such an environment, the Exchange must
continually review, and consider adjusting, its fees and credits to
remain competitive with other exchanges. For the reasons described
above, the Exchange believes that the proposed rule change reflects
this competitive environment.

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

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Exchange Act \9\ and Rule 19b-4(f)(2)
thereunder,\10\ because it establishes or changes a due, or fee.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-BOX-2016-44 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-BOX-2016-44. 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 such 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-BOX-2016-44, and should be
submitted on or before October 11, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-22423 Filed 9-16-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 96 (Wednesday, May 18, 2011)]
[Notices]
[Pages 28760-28761]
[FR Doc No: 2011-12120]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. IC11-73-001]

Commission Information Collection Activities (FERC-73); Comment
Request; Submitted for OMB Review

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice.

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

SUMMARY: In compliance with the requirements of section 3507 of the
Paperwork Reduction Act of 1995, 44 U.S.C. 3507, the Federal Energy
Regulatory Commission (Commission or FERC) has submitted the
information collection described below to the Office of Management and
Budget (OMB) for review of the information collection requirements. Any
interested person may file comments directly with OMB and should
address a copy of those comments to the Commission as explained below.
The Commission issued a Notice in the Federal Register (76 FR 12090, 2/
24/2011) requesting public comments. FERC received one comment on the
FERC-73 and has made this notation in its submission to OMB and
provides a summary of the comment and a response below.

DATES: Comments on the collection of information are due by June 17,
2011.

ADDRESSES: Address comments on the collection of information to the
Office of Management and Budget, Office of Information and Regulatory
Affairs, Attention: Federal Energy Regulatory Commission Desk Officer.
Comments to OMB should be filed electronically, c/o<EMAIL_ADDRESS>and include OMB Control Number 1902-0019 for
reference. The Desk Officer may be reached by telephone at 202-395-
4638.
    A copy of the comments should also be sent to the Federal Energy
Regulatory Commission and should refer to Docket No. IC11-73-001.
Comments may be filed either electronically or in paper format. Those
persons filing electronically do not need to make a paper filing.
Documents filed electronically via the Internet must be prepared in an
acceptable filing format and in compliance with the Federal Energy
Regulatory Commission submission guidelines. Complete filing
instructions and acceptable filing formats are available at http://www.ferc.gov/help/submission-guide.asp. To file the document
electronically, access the Commission's Web site and click on Documents
& Filing, E-Filing (http://www.ferc.gov/docs-filing/efiling.asp), and
then follow the instructions for each screen. First time users will
have to establish a user name and password. The Commission will send an
automatic acknowledgement to the sender's e-mail address upon receipt
of comments.
    For paper filings, the comments should be submitted to the Federal
Energy Regulatory Commission, Secretary of the Commission, 888 First
Street, NE., Washington, DC 20426, and should refer to Docket No. IC11-
73-001.
    Users interested in receiving automatic notification of activity in
FERC Docket Number IC11-73 may do so through eSubscription at http://www.ferc.gov/docs-filing/esubscription.asp. All comments may be viewed,
printed or downloaded remotely via the Internet through FERC's homepage
using the ``eLibrary'' link. For user assistance, contact
<EMAIL_ADDRESS>or toll-free at<PHONE_NUMBER>, or for TTY,
contact<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Ellen Brown may be reached by e-mail
at<EMAIL_ADDRESS>by telephone at<PHONE_NUMBER>, and by fax
at<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The information collected under the
requirements of FERC Form No. 73 ``Oil Pipelines Service Life Data''
(OMB No. 1902-0019) is used by the Commission to implement the
statutory provisions of sections 306 and 402 of the Department of
Energy Organization Act, 42 U.S.C. 7155 and 7172, and Executive Order
No. 12009, 42 FR 46277 (September 13, 1977). The Commission has
authority over interstate oil pipelines as stated in the Interstate
Commerce Act, 49 U.S.C. 6501 et al. As part of the information
necessary for the subsequent investigation and review of an oil
pipeline company's proposed depreciation rates, the pipeline companies
are required to provide

service life data as part of their data submissions if the proposed
depreciation rates are based on the remaining physical life
calculations. This service life data is submitted on FERC Form No. 73.
    The data submitted are used by the Commission to assist in the
selection of appropriate service lives and book depreciation rates.
Book depreciation rates are used by oil pipeline companies to compute
the depreciation portion of their operating expense which is a
component of their cost of service which in turn is used to determine
the transportation rate to assess customers. FERC staff's recommended
book depreciation rates become legally binding when issued by
Commission order. These rates remain in effect until a subsequent
review is requested and the outcome indicates that a modification is
justified. The Commission implements these filings in 18 CFR parts 347
and 357.

Public Comment and FERC Response

    The Commission received one comment from the Bureau of Economic
Analysis (BEA). In that comment, BEA strongly supported the continued
collection of data through the FERC Form No. 73. Their support stems
from reliance on this data collection for key components of its
economic statistics. Specifically, BEA uses the information on the
service lives for petroleum pipeline companies to validate the lives in
BEA's depreciation rates for petroleum pipelines. Moreover, these rates
help BEA derive economic depreciation or consumption of fixed capital
as part of the National Income and Product Accounts work BEA does.
    In response, the FERC intends to work with BEA should there be a
need to make any changes to this data collection.
    Action: The Commission is requesting a three-year approval of the
collection of data with no changes to the information that is collected
on Form 73. This is a mandatory information collection requirement.
    Burden Statement: Public reporting burden for this collection is
estimated as follows:

----------------------------------------------------------------------------------------------------------------
                                          Number of          Number of       Average  burden
           Data collection               respondents       responses per        hours  per       Total  annual
                                           annually          respondent          response         burden hours
                                                   (1)                (2)                (3)        (1)x(2)x(3)
----------------------------------------------------------------------------------------------------------------
FERC Form 73........................                 3                  1                 40          120 hours
----------------------------------------------------------------------------------------------------------------

    The estimated total cost to respondents is $8,214 [120 hours/2,080
hours \1\ per year, times $142,372 \2\ equals $8,214]. The cost per
respondent annually is $2,738.
---------------------------------------------------------------------------

    \1\ Number of hours an employee works each year.
    \2\ Average annual salary per employee (including benefits and
overhead).
---------------------------------------------------------------------------

    The reporting burden includes the total time, effort, or financial
resources expended to generate, maintain, retain, disclose, or provide
the information including: (1) Reviewing instructions; (2) developing,
acquiring, installing, and utilizing technology and systems for the
purposes of collecting, validating, verifying, processing, maintaining,
disclosing and providing information; (3) adjusting the existing ways
to comply with any previously applicable instructions and requirements;
(4) training personnel to respond to a collection of information; (5)
searching data sources; (6) completing and reviewing the collection of
information; and (7) transmitting, or otherwise disclosing the
information.
    The estimate of cost for respondents is based upon salaries for
professional and clerical support, as well as direct and indirect
overhead costs. Direct costs include all costs directly attributable to
providing this information, such as administrative costs and the cost
for information technology. Indirect or overhead costs are costs
incurred by an organization in support of its mission. These costs
apply to activities which benefit the whole organization rather than
any one particular function or activity.
    Comments are invited on: (1) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information will have practical
utility; (2) the accuracy of the agency's estimates of the burden of
the proposed collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility and clarity of the information to be collected; and (4) ways to
minimize the burden of the collections of information on those who are
to respond, including the use of appropriate automated, electronic,
mechanical, or other technological collection techniques or other forms
of information technology, e.g. permitting electronic submission of
responses.

    Dated: May 11, 2011.
Kimberly D. Bose,
Secretary.
[FR Doc. 2011-12120 Filed 5-17-11; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 84, Number 31 (Thursday, February 14, 2019)]
[Proposed Rules]
[Pages 4029-4032]
[FR Doc No: 2019-02349]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 81

[EPA-R09-OAR-2018-0831; FRL-9989-53-Region 9]

Finding of Failure To Attain and Reclassification of Pechanga
Nonattainment Area for the 2008 Ozone National Ambient Air Quality
Standards

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to
determine that the Pechanga Band of Luise[ntilde]o Mission Indians of
the Pechanga Reservation nonattainment area (``Pechanga nonattainment
area'' or ``Pechanga area'') failed to attain the 2008 national ambient
air quality standards for ozone (``ozone NAAQS'' or ``ozone
standards'') by the applicable attainment date. The effect of failing
to attain by the attainment date is that the ``Moderate'' Pechanga
nonattainment area will be reclassified by operation of law to
``Serious'' upon the effective date of the final reclassification
action. This proposed action, if finalized, would fulfill the EPA's
statutory obligation to

determine whether ozone nonattainment areas attained the NAAQS by the
attainment date.

DATES: Written comments must arrive on or before March 18, 2019.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R09-
OAR-2018-0831 at https://www.regulations.gov. For comments submitted at
Regulations.gov, follow the online instructions for submitting
comments. Once submitted, comments cannot be edited or removed from
Regulations.gov. The EPA may publish any comment received to its public
docket. Do not submit electronically any information you consider to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Multimedia submissions (audio,
video, etc.) must be accompanied by a written comment. The written
comment is considered the official comment and should include
discussion of all points you wish to make. The EPA will generally not
consider comments or comment contents located outside of the primary
submission (i.e., on the web, cloud, or other file sharing system). For
additional submission methods, please contact the person identified in
the FOR FURTHER INFORMATION CONTACT section. For the full EPA public
comment policy, information about CBI or multimedia submissions, and
general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Laura Lawrence, EPA Region IX, (415)
972-3407<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us'' and
``our'' refer to the EPA.

Table of Contents

I. Regulatory Context
    A. Ozone Standards
    B. Area Designations and Classifications
    C. Determinations of Attainment or Failure To Attain
    D. Reclassification
II. Proposed Determination and Rationale
    A. Pechanga Ozone Nonattainment Area and Attainment Deadline
    B. Determination of Failure To Attain
    C. Reclassification to Serious
III. Proposed Action and Request for Public Comment
IV. Statutory and Executive Order Reviews

I. Regulatory Context

A. Ozone Standards

    Ground-level ozone pollution is formed from the reaction of
volatile organic compounds (VOCs) and oxides of nitrogen
(NOX) in the presence of sunlight. These two pollutants,
referred to as ozone precursors, are emitted by many types of sources,
including on-and off-road motor vehicles and engines, power plants and
industrial facilities, and smaller area sources such as lawn and garden
equipment and paints.
    Scientific evidence indicates that adverse public health effects
occur following exposure to elevated levels of ozone, particularly in
children and adults with lung disease. Breathing air containing ozone
can reduce lung function and inflame airways, which can increase
respiratory symptoms and aggravate asthma or other lung diseases.\1\
---------------------------------------------------------------------------

    \1\ See ``Fact Sheet--2008 Final Revisions to the National
Ambient Air Quality Standards for Ozone'' dated March 2008.
---------------------------------------------------------------------------

    Under section 109 of the Clean Air Act (CAA or ``Act''), the EPA
promulgates NAAQS for pervasive air pollutants, such as ozone. The EPA
has previously promulgated NAAQS for ozone in 1979 and 1997.\2\ In
2008, the EPA revised and further strengthened the ozone NAAQS by
setting the acceptable level of ozone in the ambient air at 0.075 parts
per million (ppm) averaged over an 8-hour period.\3\ Although the EPA
further tightened the 8-hour ozone NAAQS to 0.070 ppm in 2015, this
proposed action relates to the 2008 ozone NAAQS.\4\
---------------------------------------------------------------------------

    \2\ The ozone NAAQS promulgated in 1979 was 0.12 parts per
million (ppm) averaged over a 1-hour period. See 44 FR 8202
(February 8, 1979). The ozone NAAQS promulgated in 1997 was 0.08 ppm
averaged over an 8-hour period. See 62 FR 38856 (July 18, 1997).
    \3\ 73 FR 16436 (March 27, 2008). The 2008 ozone NAAQS are
codified at 40 CFR 50.15.
    \4\ Information on the 2015 ozone NAAQS is available at 80 FR
65292 (October 26, 2015).
---------------------------------------------------------------------------

B. Area Designations and Classifications

    Following promulgation of a new or revised NAAQS, the EPA is
required under CAA section 107(d) to designate areas throughout the
country as attaining or not attaining the NAAQS, and the EPA designated
all areas in the country for the 2008 ozone NAAQS in 2012.\5\ With
respect to the 2008 ozone NAAQS, the EPA classifies nonattainment areas
under CAA section 181 and 40 CFR 51.1102 according to the severity of
the ozone pollution problem, with classifications ranging from Marginal
to Extreme. Attainment deadlines are determined by the nonattainment
area's classification in accordance with CAA section 181(a)(1) and 40
CFR 51.1102. Nonattainment area classification also determines, in
part, the emissions control requirements for ozone applicable to the
area.
---------------------------------------------------------------------------

    \5\ 77 FR 30088 (May 21, 2012). The initial area designations
for the 2008 ozone NAAQS were effective July 20, 2012.
---------------------------------------------------------------------------

C. Determinations of Attainment or Failure To Attain

    Section 181(b)(2) of the CAA requires the EPA to determine whether
areas designated nonattainment for ozone attained the standards by the
applicable attainment date.\6\ Under EPA regulations at 40 CFR part 50,
Appendix P, the 2008 ozone NAAQS is attained at a site when the 3-year
average of the annual fourth highest daily maximum 8-hour average
ambient air quality ozone concentration is less than or equal to 0.075
ppm. This 3-year average is referred to as the ``design value.'' When
the design value is less than or equal to 0.075 ppm at each ambient air
quality monitoring site within the area, the area is deemed to be
attaining the ozone NAAQS.
---------------------------------------------------------------------------

    \6\ In a recent rulemaking, the EPA proposed to make these
determinations for most other areas in the country. See 83 FR 56781
(November 14, 2018).
---------------------------------------------------------------------------

    Because the design value is based on the three most recent calendar
years of complete, quality-assured data, an area must attain the
standard by the end of the full calendar year prior to the attainment
date.
    The EPA's determination of attainment is based upon data that have
been collected and quality-assured in accordance with 40 CFR part 58
and recorded in the EPA's Air Quality System (AQS) database.\7\ Ambient
air quality monitoring data for the 3-year period preceding the
attainment date must meet the data completeness requirements in
Appendix P.\8\ The completeness requirements are met for the 3-year
period at a monitoring site if daily maximum 8-hour average
concentrations of ozone are available for at least 90 percent of the
days within the ozone monitoring season, on average, for the 3-year
period, and no single year has less than 75 percent data completeness.
---------------------------------------------------------------------------

    \7\ The EPA maintains the AQS, a database that contains ambient
air pollution data collected by the EPA, state, local, and tribal
air pollution control agencies. The AQS also contains meteorological
data, descriptive information about each monitoring station
(including its geographic location and its operator) and data
quality assurance/quality control information. The AQS data are used
to (1) assess air quality, (2) assist in attainment/nonattainment
designations, (3) evaluate SIPs for nonattainment areas, (4) perform
modeling for permit review analysis, and (5) prepare reports for
Congress as mandated by the CAA. Access is through the website at
https://www.epa.gov/aqs.
    \8\ 40 CFR part 50, Appendix P, section 2.3(b).
---------------------------------------------------------------------------

    To make the determination that an area attains the NAAQS, each
monitor must have a valid design value meeting the standard.\9\ If one
or more monitors

have a design value that exceeds the standard, the area does not attain
the NAAQS.
---------------------------------------------------------------------------

    \9\ Design values attaining the 2008 ozone NAAQS must also the
meet minimum data completeness requirements specified in to 40 CFR
part 50, Appendix P to be considered valid.
---------------------------------------------------------------------------

D. Reclassification

    In the event an area fails to attain the ozone NAAQS by the
applicable attainment date, CAA section 181(b)(2)(A) requires the EPA
to make the determination that the ozone nonattainment area failed to
attain the ozone standard by the applicable attainment date, and
requires the area to be reclassified by operation of law to the higher
of either the next higher classification for the area, or the
classification applicable to the area's design value as of the
determination of failure to attain.

II. Proposed Determination and Rationale

A. Pechanga Ozone Nonattainment Area and Attainment Deadline

    The Pechanga Band of Luise[ntilde]o Mission Indians of the Pechanga
Reservation (``Pechanga Tribe'') is a federally recognized tribe whose
reservation (``Pechanga Reservation'') straddles the boundary between
western Riverside and northern San Diego counties. The EPA designated
the lands of the Pechanga Reservation as nonattainment for the 2008
ozone standards on May 21, 2012. At the time of designation, the
nonattainment area consisted of the entirety of the Pechanga
Reservation.\10\
---------------------------------------------------------------------------

    \10\ The Pechanga Tribe has since acquired additional lands that
they have placed in trust; however, the nonattainment area
boundaries established in 2012 for these standards are unchanged and
do not include these new properties.
---------------------------------------------------------------------------

    At the time of designation, the Pechanga area was classified as a
Moderate nonattainment area.\11\ Moderate areas were given a deadline
of July 20, 2018, to attain the 2008 ozone NAAQS. As noted above,
because the design value is based on the three most recent calendar
years of complete, quality-assured data, an area must attain the
standard by the end of the full calendar year prior to the attainment
date. In this case, to determine whether an area classified as Moderate
for the 2008 ozone standards attained the standards by the July 20,
2018 attainment date, we rely on complete, quality-assured and
certified ozone monitoring data from calendar years 2015, 2016, and
2017.
---------------------------------------------------------------------------

    \11\ 77 FR 30088, at 30109 (May 21, 2012).
---------------------------------------------------------------------------

B. Determination of Failure To Attain

    We are proposing to determine that the Pechanga nonattainment area
failed to attain the 2008 ozone standards by the July 20, 2018
attainment date. We are proposing this determination on the basis of
complete, quality-assured and certified data for 2015-2017 at the
Temecula monitoring site (AQS ID 06-065-0016), which is located
approximately 10 miles north of the Pechanga Reservation.\12\ The
Temecula monitoring site is operated by the South Coast Air Quality
Management District (SCAQMD). The Pechanga Tribe also operates an ozone
monitoring site at the reservation and submits the data that it
collects to AQS. However, the 2015-2017 design value from the Pechanga
monitoring site is invalid because it does not meet the completeness
requirements for the 2008 ozone standard.\13\ Therefore, our proposed
determination that the Pechanga nonattainment area failed to attain is
based on data from the Temecula monitoring site rather than data
collected at the Pechanga monitoring site.
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    \12\ In accordance with 40 CFR 58, data-collecting agencies must
certify annually that ambient concentration data and quality
assurance data are completely submitted to AQS, and that the data
are accurate to the best knowledge of the certifier, taking into
consideration quality assurance findings. For certification for
Temecula monitor data for calendar years 2015-2017, see 1) April 29,
2016 letter from Laki Tisopulos, South Coast Air Quality Management
District Assistant Deputy Executive Officer to Deborah Jordan, EPA
Region IX Air Division Director; 2) April 28, 2017 letter from Jason
C. Low, South Coast Air Quality Management District Assistant Deputy
Executive Officer, to Alexis Strauss, EPA Region IX Acting Regional
Administrator; and 3) April 27, 2018 letter from Jason C. Low, South
Coast Air Quality Management District Assistant Deputy Executive
Officer, to Alexis Strauss, EPA Region IX Acting Regional
Administrator.
    \13\ AQS 2017 Design Value Report for Pechanga (AQS ID 06-065-
0009), December 17, 2018. The 2015-2017 DV for the Pechanga
monitoring site failed to meet the 75% annual completeness
requirement in 2015 (67%) and the 90% 3-year completeness
requirement for 2015-2017 (85%) and, therefore, is invalid. 40 CFR
part 50, Appendix P, section 2.3(b).
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    The EPA's ``Policy for Establishing Separate Air Quality
Designations for Areas in Indian Country'' (``Tribal Designation
Policy'') anticipates the use of data from proximate state regulatory
monitors to characterize air quality on tribal lands when air
monitoring data are unavailable on the reservation.\14\ In a previous
rulemaking, the EPA relied on 8-hour ozone data from the Temecula
monitor to redesignate the Pechanga nonattainment area to attainment
for the 1997 ozone NAAQS based on our conclusion that the data from the
Temecula monitor were representative of ozone concentrations in the
Pechanga nonattainment area.\15\ This conclusion was based on the
following considerations: ozone pollution is regional in nature; the
Temecula monitor is located just 10 miles from the Pechanga area; there
are no significant topographic barriers between the monitor and the
reservation; and available data from the Temecula and Pechanga monitors
tracked very closely over the 2012 to 2014 period.\16\
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    \14\ ``Policy for Establishing Separate Air Quality Designations
for Areas of Indian Country,'' a memorandum from Stephen D. Page,
Director, EPA Office of Air Quality Planning and Standards, to EPA
Regional Air Directors, Regions I-X, dated December 20, 2011. A copy
of the Tribal Designation Policy is at https://www.epa.gov/ozonedesignations/guidance.htm. See page 6 of the Tribal Designation
Policy.
    \15\ 80 FR 18120 (April 3, 2015).
    \16\ 80 FR 18120, at 18121-18122 (April 3, 2015) (Response to
SCAQMD Comment #1).
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    The ozone data collected at SCAQMD's Temecula monitoring site is
complete and, as discussed above, representative of ozone
concentrations at the reservation. The 2017 design value calculated
from 2015-2017 data from the Temecula monitor is 0.080 ppm, which
exceeds the 2008 ozone standard level of 0.075 ppm.\17\
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    \17\ AQS 2017 Design Value Report for Temecula (AQS ID 06-065-
0016), report date December 12, 2018.
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C. Reclassification to Serious

    If we finalize the finding of failure to attain as proposed, the
effect of this finding would be to reclassify the Pechanga
nonattainment area by operation of law to Serious, the next higher
classification, as provided under CAA section 181(b)(2)(A)(i). If
reclassified, the Pechanga area would be required to attain the
standard ``as expeditiously as practicable'' but no later than 9 years
after the initial designation as nonattainment, which in this case
would be no later than July 20, 2021. After reclassification to
Serious, if the area attains the 2008 ozone NAAQS prior to the Serious-
area attainment date, the area may seek a clean data determination or a
redesignation to attainment.
    As noted above, control and permitting requirements for
nonattainment areas are determined, in part, by their classification,
and a reclassification from Moderate to Serious imposes additional
control requirements. Under the CAA and the Tribal Authority Rule
(TAR),\18\ tribes may, but are not required to, submit implementation
plans to the EPA for approval. Under the TAR, the EPA has authority to
implement such plan provisions as are necessary or appropriate to
protect air quality where tribes do not do so. Accordingly, the EPA
implements the tribal major source nonattainment new source review

(NSR) \19\ and the title V operating permit \20\ programs in areas
without delegated programs. If this proposed reclassification is
finalized, the Pechanga nonattainment area will be subject to the
Serious area provisions of the tribal major source nonattainment NSR
regulations and title V regulations cited above, but it will not be
required to submit an implementation plan to address any part D or
title V requirements. The Pechanga area is currently subject to
Moderate area major source thresholds of 100 tons per year (tpy) for
ozone precursors. If this proposal is finalized, the Pechanga area
major source thresholds will be lowered to 50 tpy for ozone precursors.
The NSR control requirements for minor sources under the tribal minor
NSR regulations will remain the same.\21\
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    \18\ CAA section 301(d) and 40 CFR part 49.
    \19\ 40 CFR 49.166 through 49.173.
    \20\ 40 CFR part 71.
    \21\ 40 CFR 49.151 through 49.164.
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III. Proposed Action and Request for Public Comment

    The EPA is proposing to determine that the Pechanga nonattainment
area failed to attain the 2008 ozone NAAQS by its applicable Moderate
area attainment date of July 20, 2018, based on complete, quality-
assured and certified data from the Temecula monitoring site for years
2015-2017. The effect of this determination, if finalized, will be to
reclassify the Pechanga nonattainment area from Moderate to Serious for
the 2008 ozone NAAQS. The EPA is soliciting comments on our proposed
action and rationale over the next 30 days.

IV. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 13563: Improving Regulation and Regulatory Review

    This proposed action is not a significant regulatory action and was
therefore not submitted to the Office of Management and Budget (OMB)
for review.

B. Executive Order 13771: Reducing Regulations and Controlling
Regulatory Costs

    This proposed action is not expected to be an Executive Order 13771
regulatory action because this action is not significant under
Executive Order 12866.

C. Paperwork Reduction Act (PRA)

    This proposed rule does not impose an information collection burden
under the provisions of the PRA. As noted above, under the CAA and TAR,
tribes may, but are not required to, submit implementation plans to the
EPA for approval to address the more stringent requirements that apply
to Serious ozone nonattainment areas relative to Moderate ozone
nonattainment areas.

D. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. This
proposed action will not impose any requirements on small entities. The
proposed determination of failure to attain the 2008 ozone NAAQS (and
resulting reclassification) does not in and of itself create any new
requirements beyond what is mandated by the CAA. Instead, this proposed
rulemaking only makes factual determinations, and does not directly
regulate any entities.

E. Unfunded Mandates Reform Act (UMRA)

    This proposed action does not contain any unfunded mandate as
described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or
uniquely affect small governments. This proposed action imposes no
enforceable duty on any state, local or tribal governments or the
private sector.

F. Executive Order 13132: Federalism

    This proposed action does not have federalism implications. It will
not have substantial direct effects on the states, tribes, or the
relationship between the national government and the states and tribes,
or on the distribution of power and responsibilities among the various
levels of government.

G. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

    This proposed action has tribal implications. However, it will
neither impose substantial direct compliance costs on federally
recognized tribal governments, nor preempt tribal law. EPA staff have
discussed this proposed rule with environmental staff of the Pechanga
Tribe. Additionally, an opportunity for formal government-to-government
consultation is being extended to Pechanga tribal officials in
conjunction with this rulemaking. This outreach and consultation is
being conducted according to the ``EPA Policy on Consultation and
Coordination with Indian Tribes.'' \22\
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    \22\ The document ``EPA Policy on Consultation and Coordination
with Indian Tribes'' is available at https://www.epa.gov/tribal/forms/consultation-and-coordination-tribes.
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H. Executive Order 13045: Protection of Children From Environmental
Health and Safety Risks

    The EPA interprets Executive Order 13045 as applying only to those
regulatory actions that concern environmental health or safety risks
that the EPA has reason to believe may disproportionately affect
children, per the definition of ``covered regulatory action'' in
section 2-202 of the Executive Order. This proposed action is not
subject to Executive Order 13045 because it does not concern an
environmental health risk or safety risk.

I. Executive Order 13211: Actions That Significantly Affect Energy
Supply, Distribution, or Use

    This proposed action is not subject to Executive Order 13211,
because it is not a significant regulatory action under Executive Order
12866.

J. National Technology Transfer Advancement Act (NTTAA)

    This proposed rulemaking does not involve technical standards.

K. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations

    The EPA believes that this proposed action will not have
disproportionately high or adverse human health or environmental
effects on minority, low income, or indigenous populations. The purpose
of this rule is to make the determination whether a certain area
attained the 2008 ozone NAAQS by the attainment date, which is required
by the CAA for purposes of implementing the 2008 ozone NAAQS. As such,
this action does not directly affect the level of protection provided
for human health or the environment.

List of Subjects in 40 CFR Part 81

    Environmental protection, Administrative practice and procedure,
Air pollution control, Designations and classifications,
Intergovernmental relations, Nitrogen oxides, Ozone, Reporting and
recordkeeping requirements, and Volatile organic compounds.

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

    Dated: February 1, 2019.
Deborah Jordan,
Acting Regional Administrator, Region IX.
[FR Doc. 2019-02349 Filed 2-13-19; 8:45 am]
 BILLING CODE 6560-50-P