[Federal Register Volume 81, Number 32 (Thursday, February 18, 2016)]
[Notices]
[Pages 8282-8291]
[FR Doc No: 2016-03301]

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

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31995; File No. 812-14574]

PowerShares Exchange-Traded Self-Indexed Fund Trust, et al.;
Notice of Application

February 11, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') for an exemption from
sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act and rule 22c-1
under the Act, under

sections 6(c) and 17(b) of the Act for an exemption from sections
17(a)(1) and 17(a)(2) of the Act, and under section 12(d)(1)(J) of the
Act for an exemption from sections 12(d)(1)(A) and 12(d)(1)(B) of the
Act.

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

    Summary of Application: Applicants request an order that would
permit (a) series of certain open-end management investment companies
to issue shares (``Shares'') redeemable in large aggregations only
(``Creation Units''); (b) secondary market transactions in Shares to
occur at negotiated market prices rather than at net asset value
(``NAV''); (c) certain series to pay redemption proceeds, under certain
circumstances, more than seven days after the tender of Creation Units
for redemption; (d) certain affiliated persons of the series to deposit
securities into, and receive securities from, the series in connection
with the purchase and redemption of Creation Units; and (e) certain
registered management investment companies and unit investment trusts
outside of the same group of investment companies as the series to
acquire Shares.
    Applicants: PowerShares Exchange-Traded Self-Indexed Fund Trust
(the ``Trust''), Invesco PowerShares Capital Management LLC (``IPCM''),
and Invesco Distributors, Inc. (``IDI'').
    Filing Dates: The application was filed on October 30, 2015, and
amended on November 24, 2015, and January 6, 2016. Applicants have
agreed to file an amendment during the notice period, the substance of
which is reflected in this notice.
    Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on March 7, 2016, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the
Commission's Secretary.

ADDRESSES: The Commission: Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants:
the Trust and IPCM, 3500 Lacey Road, Downers Grove, IL 60515; IDI, 11
Greenway Plaza, Suite 1000, Houston, TX 77046.

FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior Counsel
at<PHONE_NUMBER>, or Dalia Osman Blass, Assistant Director, at (202)
551-6821 (Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling<PHONE_NUMBER>.

Applicants' Representations

    1. The Trust is a statutory trust organized under the laws of the
State of Delaware and will be registered with the Commission as an
open-end management investment company that offers multiple series.
    2. IPCM will be the investment adviser to the Initial Self-Indexing
Fund (defined below). IPCM is, and any other Adviser (defined below)
will be, registered as an investment adviser under the Investment
Advisers Act of 1940 (the ``Advisers Act''). The Adviser may enter into
sub-advisory agreements with one or more investment advisers to act as
sub-advisers to particular Self-Indexing Funds (each, a ``Sub-
Adviser''). Any Sub-Adviser will either be registered under the
Advisers Act or will not be required to register thereunder.
    3. The Trust will enter into a distribution agreement with one or
more distributors. Each distributor for a Self-Indexing Fund (defined
below) will be a broker-dealer (``Broker'') registered under the
Securities Exchange Act of 1934 (`Exchange Act'') and will act as
distributor and principal underwriter (``Distributor'') of one or more
of the Self-Indexing Funds. IDI, a broker-dealer registered under the
Exchange Act, is a wholly-owned subsidiary of Invesco Ltd. and will act
as the initial Distributor and principal underwriter of the Self-
Indexing Funds. No Distributor is or will be affiliated with any
Exchange (defined below).
    4. Applicants request that the order apply to a new series, the
PowerShares Quantitative U.S. Equity Portfolio (``Initial Self-Indexing
Fund''), and any additional series of the Trust, that may be created in
the future (``Future Self-Indexing Funds''), each of which will operate
as an exchange traded fund (``ETF'') and will track a specified
Affiliated Index (as defined below) comprised of domestic and/or
foreign equity and/or fixed income securities (each, an ``Underlying
Index''). Any Future Self-Indexing Fund will (a) be advised by IPCM or
an entity controlling, controlled by, or under common control with IPCM
(each, an ``Adviser'') and (b) comply with the terms and conditions of
the application. The Initial Self-Indexing Fund and Future Self-
Indexing Funds, together, are the ``Self-Indexing Funds.'' \1\
---------------------------------------------------------------------------

    \1\ All existing entities that intend to rely on the requested
order have been named as applicants. Any other existing or future
entity that subsequently relies on the order will comply with the
terms and conditions of the order. A Fund of Funds (as defined
below) may rely on the order only to invest in Self-Indexing Funds
and not in any other registered investment company.
---------------------------------------------------------------------------

    5. Each Self-Indexing Fund will hold certain securities,
currencies, other assets and other investment positions (``Portfolio
Holdings'') selected to correspond generally to the performance of its
Underlying Index. Certain of the Self-Indexing Funds will be based on
Underlying Indexes that will be comprised of equity and/or fixed income
securities issued by one or more of the following categories of
issuers: (i) Domestic issuers and (ii) non-domestic issuers meeting the
requirements for trading in U.S. markets. Other Self-Indexing Funds
will be based on Underlying Indexes that will be comprised of foreign
and domestic, or solely foreign, equity and/or fixed income securities
(``Foreign Self-Indexing Funds'').
    6. Applicants represent that each Self-Indexing Fund will invest at
least 80% of its assets (excluding securities lending collateral) in
the component securities of its respective Underlying Index
(``Component Securities'') and TBA Transactions \2\, and in the case of
Foreign Self-Indexing Funds, Component Securities and Depositary
Receipts \3\ representing Component

Securities. Each Self-Indexing Fund may also invest up to 20% of its
assets in certain index futures, options, options on index futures,
swap contracts or other derivatives, as related to its respective
Underlying Index and its Component Securities, cash and cash
equivalents, other investment companies, as well as in securities and
other instruments not included in its Underlying Index but which the
Adviser believes will help the Self-Indexing Fund track its Underlying
Index. A Self-Indexing Fund may also engage in short sales in
accordance with its investment objective.
---------------------------------------------------------------------------

    \2\ A ``to-be-announced transaction'' or ``TBA Transaction'' is
a method of trading mortgage-backed securities. In a TBA
Transaction, the buyer and seller agree upon general trade
parameters such as agency, settlement date, par amount and price.
The actual pools delivered generally are determined two days prior
to settlement date.
    \3\ Depositary receipts representing foreign securities
(``Depositary Receipts'') include American Depositary Receipts and
Global Depositary Receipts. The Self-Indexing Funds may invest in
Depositary Receipts representing foreign securities in which they
seek to invest. Depositary Receipts are typically issued by a
financial institution (a ``depositary bank'') and evidence ownership
interests in a security or a pool of securities that have been
deposited with the depositary bank. A Self-Indexing Fund will not
invest in any Depositary Receipts that the Adviser or any Sub-
Adviser deems to be illiquid or for which pricing information is not
readily available. No affiliated person of a Self-Indexing Fund, the
Adviser or any Sub-Adviser will serve as the depositary bank for any
Depositary Receipts held by a Self-Indexing Fund.
---------------------------------------------------------------------------

    7. A Self-Indexing Fund will utilize either a replication or
representative sampling strategy to track its Underlying Index. A Self-
Indexing Fund using a replication strategy will invest in the Component
Securities of its Underlying Index in the same approximate proportions
as in such Underlying Index. A Self-Indexing Fund using a
representative sampling strategy will hold some, but not necessarily
all, of the Component Securities of its Underlying Index. Applicants
state that a Self-Indexing Fund using a representative sampling
strategy will not be expected to track the performance of its
Underlying Index with the same degree of accuracy as would an
investment vehicle that invested in every Component Security of the
Underlying Index with the same weighting as the Underlying Index.
Applicants expect that each Self-Indexing Fund will have an annual
tracking error relative to the performance of its Underlying Index of
less than 5%.
    8. The Self-Indexing Funds will be entitled to use their Underlying
Indexes pursuant to either a licensing agreement with the Affiliated
Index Provider (defined below) or a sub-licensing arrangement with the
Adviser, which has or will have a licensing agreement with such
Affiliated Index Provider.\4\ An affiliated person, as defined in
section 2(a)(3) of the Act (an ``Affiliated Person''), or an affiliated
person of an Affiliated Person (a ``Second-Tier Affiliate''), of the
Trust or a Self-Indexing Fund, of an Adviser, of any Sub-Adviser to or
promoter of a Self-Indexing Fund, or of the Distributor (each, an
``Affiliated Index Provider'') \5\ will serve as the Index Provider to
each Self-Indexing Fund. An Affiliated Index Provider will create a
proprietary, rules-based methodology to create Underlying Indexes (each
an ``Affiliated Index'').\6\
---------------------------------------------------------------------------

    \4\ The licenses for the Self-Indexing Funds will specifically
state that the Affiliated Index Provider (or in case of a sub-
licensing agreement, the Adviser) must provide the use of the
Underlying Indexes and related intellectual property at no cost to
the Trust and the Self-Indexing Funds.
    \5\ In the event that an Adviser or Sub-Adviser serves as the
Affiliated Index Provider for a Self-Indexing Fund, the terms
``Affiliated Index Provider'' or ``Index Provider,'' with respect to
that Self-Indexing Fund, will be limited to the employees of the
applicable Adviser or Sub-Adviser that are responsible for creating,
compiling and maintaining the relevant Underlying Index.
    \6\ The Affiliated Indexes may be made available to registered
investment companies, as well as separately managed accounts of
institutional investors and privately offered funds that are not
deemed to be ``investment companies'' in reliance on section 3(c)(1)
or 3(c)(7) of the Act for which the Adviser acts as adviser or
subadviser (``Affiliated Accounts'') as well as other such
registered investment companies, separately managed accounts and
privately offered funds for which it does not act either as adviser
or subadviser (``Unaffiliated Accounts''). The Affiliated Accounts
and the Unaffiliated Accounts, like the Self-Indexing Funds, would
seek to track the performance of one or more Underlying Index(es) by
investing in the constituents of such Underlying Indexes or a
representative sample of such constituents of the Underlying Index.
Consistent with the relief requested from section 17(a), the
Affiliated Accounts will not engage in Creation Unit transactions
with a Self-Indexing Fund.
---------------------------------------------------------------------------

    9. Applicants recognize that the Self-Indexing Funds could raise
concerns regarding the ability of the Affiliated Index Provider to
manipulate the Underlying Index to the benefit or detriment of a Self-
Indexing Fund. Applicants further recognize the potential for conflicts
that may arise with respect to the personal trading activity of
personnel of the Affiliated Index Provider who have knowledge of
changes to an Underlying Index prior to the time that information is
publicly disseminated.
    10. Applicants propose that each day that the Trust, the NYSE and
the national securities exchange (as defined in section 2(a)(26) of the
Act) (an ``Exchange'') on which the Self-Indexing Fund's Shares are
primarily listed (``Listing Exchange'') are open for business,
including any day that a Self-Indexing Fund is required to be open
under section 22(e) of the Act (a ``Business Day''), each Self-Indexing
Fund will post on its Web site, before commencement of trading of
Shares on the Exchange, the identities and quantities of the Portfolio
Holdings that will form the basis for the Self-Indexing Fund's
calculation of its NAV at the end of the Business Day.\7\ Applicants
believe that requiring the Self-Indexing Funds to maintain full
portfolio transparency will provide an additional effective mechanism
for addressing any such potential conflicts of interest.
---------------------------------------------------------------------------

    \7\ Under accounting procedures followed by each Self-Indexing
Fund, trades made on the prior Business Day (``T'') will be booked
and reflected in NAV on the current Business Day (T+1). Accordingly,
the Self-Indexing Funds will be able to disclose at the beginning of
the Business Day the portfolio that will form the basis for the NAV
calculation at the end of the Business Day.
---------------------------------------------------------------------------

    11. In addition, applicants do not believe the potential for
conflicts of interest raised by the Adviser's use of the Underlying
Indexes in connection with the management of Self-Indexing Funds and
the Affiliated Accounts will be substantially different from the
potential conflicts presented by an adviser managing two or more
registered funds. Both the Act and the Advisers Act contain various
protections to address conflicts of interest where an adviser is
managing two or more registered funds and these protections will also
help address these conflicts with respect to the Self-Indexing Funds.
    12. Each Adviser and any Sub-Adviser has adopted or will adopt,
pursuant to rule 206(4)-7 under the Advisers Act, written policies and
procedures designed to prevent violations of the Advisers Act and the
rules thereunder. These include policies and procedures designed to
minimize potential conflicts of interest among the Self-Indexing Funds
and the Affiliated Accounts, such as cross trading policies, as well as
those designed to ensure the equitable allocation of portfolio
transactions and brokerage commissions. In addition, IPCM has adopted
policies and procedures as required under section 204A of the Advisers
Act, which are reasonably designed in light of the nature of its
business to prevent the misuse, in violation of the Advisers Act or the
Exchange Act or the rules thereunder, of material non-public
information by the IPCM or associated persons (``Inside Information
Policy''). Any other Adviser and/or Sub-Adviser will be required to
adopt and maintain a similar Inside Information Policy. In accordance
with the Code of Ethics \8\ and Inside Information Policy of each
Adviser and Sub-Adviser, personnel of those entities with knowledge
about the composition of a Portfolio Deposit \9\ will be prohibited
from disclosing such information to any other person, except as
authorized in the course of their employment, until such information is
made public. In addition, an Index Provider will not provide any
information relating to changes to an

Underlying Index's methodology for the inclusion of component
securities, the inclusion or exclusion of specific component
securities, or methodology for the calculation or the return of
component securities, in advance of a public announcement of such
changes by the Index Provider. The Adviser will also include under Item
10.C. of Part 2 of its Form ADV a discussion of its relationship to any
Affiliated Index Provider and any material conflicts of interest
resulting therefrom, regardless of whether the Affiliated Index
Provider is a type of affiliate specified in Item 10.
---------------------------------------------------------------------------

    \8\ IPCM has also adopted (and any other Adviser has adopted or
will adopt) a code of ethics pursuant to rule 17j-1 under the Act
and rule 204A-1 under the Advisers Act, which contains provisions
reasonably necessary to prevent Access Persons (as defined in rule
17j-1) from engaging in any conduct prohibited in rule 17j-1 (``Code
of Ethics'').
    \9\ The instruments and cash that the purchaser is required to
deliver in exchange for the Creation Units it is purchasing is
referred to as the ``Portfolio Deposit.''
---------------------------------------------------------------------------

    13. To the extent the Self-Indexing Funds transact with an
Affiliated Person of an Adviser or Sub-Adviser, such transactions will
comply with the Act, the rules thereunder and the terms and conditions
of the requested order. In this regard, each Self-Indexing Fund's board
of directors or trustees (``Board'') will periodically review the Self-
Indexing Fund's use of an Affiliated Index Provider. Subject to the
approval of the Self-Indexing Fund's Board, the Adviser, Affiliated
Persons of the Adviser (``Adviser Affiliates'') and Affiliated Persons
of any Sub-Adviser (``Sub-Adviser Affiliates'') may be authorized to
provide custody, fund accounting and administration and transfer agency
services to the Self-Indexing Funds. Any services provided by the
Adviser, Adviser Affiliates, Sub-Adviser and Sub-Adviser Affiliates
will be performed in accordance with the provisions of the Act, the
rules under the Act and any relevant guidelines from the staff of the
Commission.
    14. The Shares of each Self-Indexing Fund will be purchased and
redeemed in Creation Units and generally on an in-kind basis. Except
where the purchase or redemption will include cash under the limited
circumstances specified below, purchasers will be required to purchase
Creation Units by making an in-kind deposit of specified instruments
(``Deposit Instruments''), and shareholders redeeming their Shares will
receive an in-kind transfer of specified instruments (``Redemption
Instruments'').\10\ On any given Business Day, the names and quantities
of the instruments that constitute the Deposit Instruments and the
names and quantities of the instruments that constitute the Redemption
Instruments will be identical, unless the Self-Indexing Fund is
Rebalancing (as defined below). In addition, the Deposit Instruments
and the Redemption Instruments will each correspond pro rata to the
positions in the Self-Indexing Fund's portfolio (including cash
positions) \11\ except: (a) In the case of bonds, for minor differences
when it is impossible to break up bonds beyond certain minimum sizes
needed for transfer and settlement; (b) for minor differences when
rounding is necessary to eliminate fractional shares or lots that are
not tradeable round lots; \12\ (c) TBA Transactions, short positions,
derivatives and other positions that cannot be transferred in kind \13\
will be excluded from the Deposit Instruments and the Redemption
Instruments; \14\ (d) to the extent the Self-Indexing Fund determines,
on a given Business Day, to use a representative sampling of the Self-
Indexing Fund's portfolio; \15\ or (e) for temporary periods, to effect
changes in the Self-Indexing Fund's portfolio as a result of the
rebalancing of its Underlying Index (any such change, a
``Rebalancing''). If there is a difference between the NAV attributable
to a Creation Unit and the aggregate market value of the Deposit
Instruments or Redemption Instruments exchanged for the Creation Unit,
the party conveying instruments with the lower value will also pay to
the other an amount in cash equal to that difference (the ``Cash
Amount'').
---------------------------------------------------------------------------

    \10\ The Self-Indexing Funds must comply with the federal
securities laws in accepting Deposit Instruments and satisfying
redemptions with Redemption Instruments, including that the Deposit
Instruments and Redemption Instruments are sold in transactions that
would be exempt from registration under the Securities Act of 1933
(``Securities Act''). In accepting Deposit Instruments and
satisfying redemptions with Redemption Instruments that are
restricted securities eligible for resale pursuant to rule 144A
under the Securities Act, the Self-Indexing Funds will comply with
the conditions of rule 144A.
    \11\ The portfolio used for this purpose will be the same
portfolio used to calculate the Self-Indexing Fund's NAV for the
Business Day.
    \12\ A tradeable round lot for a security will be the standard
unit of trading in that particular type of security in its primary
market.
    \13\ This includes instruments that can be transferred in kind
only with the consent of the original counterparty to the extent the
Self-Indexing Fund does not intend to seek such consents.
    \14\ Because these instruments will be excluded from the Deposit
Instruments and the Redemption Instruments, their value will be
reflected in the determination of the Cash Amount (as defined
below).
    \15\ A Self-Indexing Fund may only use sampling for this purpose
if the sample: (i) Is designed to generate performance that is
highly correlated to the performance of the Self-Indexing Fund's
portfolio; (ii) consists entirely of instruments that are already
included in the Self-Indexing Fund's portfolio; and (iii) is the
same for all Authorized Participants (as defined below) on a given
Business Day.
---------------------------------------------------------------------------

    15. Purchases and redemptions of Creation Units may be made in
whole or in part on a cash basis, rather than in kind, solely under the
following circumstances: (a) To the extent there is a Cash Amount; (b)
if, on a given Business Day, the Self-Indexing Fund announces before
the open of trading that all purchases, all redemptions or all
purchases and redemptions on that day will be made entirely in cash;
(c) if, upon receiving a purchase or redemption order from an
Authorized Participant, the Self-Indexing Fund determines to require
the purchase or redemption, as applicable, to be made entirely in cash;
\16\ (d) if, on a given Business Day, the Self-Indexing Fund requires
all Authorized Participants purchasing or redeeming Shares on that day
to deposit or receive (as applicable) cash in lieu of some or all of
the Deposit Instruments or Redemption Instruments, respectively, solely
because: (i) Such instruments are not eligible for transfer through
either the NSCC or DTC (defined below); or (ii) in the case of Foreign
Self-Indexing Funds holding non-U.S. investments, such instruments are
not eligible for trading due to local trading restrictions, local
restrictions on securities transfers or other similar circumstances; or
(e) if the Self-Indexing Fund permits an Authorized Participant to
deposit or receive (as applicable) cash in lieu of some or all of the
Deposit Instruments or Redemption Instruments, respectively, solely
because: (i) Such instruments are, in the case of the purchase of a
Creation Unit, not available in sufficient quantity; (ii) such
instruments are not eligible for trading by an Authorized Participant
or the investor on whose behalf the Authorized Participant is acting;
or (iii) a holder of Shares of a Foreign Self-Indexing Fund holding
non-U.S. investments would be subject to unfavorable income tax
treatment if the holder receives redemption proceeds in kind.\17\
---------------------------------------------------------------------------

    \16\ In determining whether a particular Self-Indexing Fund will
sell or redeem Creation Units entirely on a cash or in-kind basis
(whether for a given day or a given order), the key consideration
will be the benefit that would accrue to the Self-Indexing Fund and
its investors. For instance, in bond transactions, the Adviser may
be able to obtain better execution than Share purchasers because of
the Adviser's size, experience and potentially stronger
relationships in the fixed income markets. Purchases of Creation
Units either on an all cash basis or in-kind are expected to be
neutral to the Self-Indexing Funds from a tax perspective. In
contrast, cash redemptions typically require selling portfolio
holdings, which may result in adverse tax consequences for the
remaining Self-Indexing Fund shareholders that would not occur with
an in-kind redemption. As a result, tax consideration may warrant
in-kind redemptions.
    \17\ A ``custom order'' is any purchase or redemption of Shares
made in whole or in part on a cash basis in reliance on clause
(e)(i) or (e)(ii).
---------------------------------------------------------------------------

    16. Creation Units will consist of specified large aggregations of
Shares, e.g., at least 25,000 Shares, and it is expected that the
initial price of a Creation Unit will range from $1 million to $10
million. All orders to purchase Creation Units must be placed with the

Distributor by or through an ``Authorized Participant'' which is either
(1) a ``Participating Party,'' i.e., a broker-dealer or other
participant in the Continuous Net Settlement System of the NSCC, a
clearing agency registered with the Commission, or (2) a participant in
The Depository Trust Company (``DTC'') (``DTC Participant''), which, in
either case, has signed a participant agreement with the Distributor.
The Distributor will be responsible for transmitting the orders to the
Self-Indexing Funds and will furnish to those placing such orders
confirmation that the orders have been accepted, but applicants state
that the Distributor may reject any order which is not submitted in
proper form.
    17. Each Business Day, before the open of trading on the Listing
Exchange, each Self-Indexing Fund will cause to be published through
the NSCC the names and quantities of the instruments comprising the
Deposit Instruments and the Redemption Instruments, as well as the
estimated Cash Amount (if any), for that day. The list of Deposit
Instruments and Redemption Instruments will apply until a new list is
announced on the following Business Day, and there will be no intra-day
changes to the list except to correct errors in the published list.
Each Listing Exchange or other major market data provider will
disseminate, every 15 seconds during regular Exchange trading hours,
through the facilities of the Consolidated Tape Association or other
widely disseminated means, an amount for each Self-Indexing Fund stated
on a per individual Share basis representing the sum of (i) the
estimated Cash Amount and (ii) the current value of the Deposit
Instruments.
    18. Transaction expenses, including operational processing and
brokerage costs, will be incurred by a Self-Indexing Fund when
investors purchase or redeem Creation Units in-kind and such costs have
the potential to dilute the interests of the Self-Indexing Fund's
existing shareholders. Each Self-Indexing Fund will impose purchase or
redemption transaction fees (``Transaction Fees'') in connection with
effecting such purchases or redemptions of Creation Units. In all
cases, such Transaction Fees will be limited in accordance with
requirements of the Commission applicable to management investment
companies offering redeemable securities. Since the Transaction Fees
are intended to defray the transaction expenses as well as to prevent
possible shareholder dilution resulting from the purchase or redemption
of Creation Units, the Transaction Fees will be borne only by such
purchasers or redeemers.\18\ The Distributor will be responsible for
delivering the Self-Indexing Fund's prospectus to those persons
acquiring Shares in Creation Units and for maintaining records of both
the orders placed with it and the confirmations of acceptance furnished
by it. In addition, the Distributor will maintain a record of the
instructions given to the applicable Self-Indexing Fund to implement
the delivery of its Shares.
---------------------------------------------------------------------------

    \18\ Where a Self-Indexing Fund permits an in-kind purchaser to
substitute cash-in-lieu of depositing one or more of the requisite
Deposit Instruments, the purchaser may be assessed a higher
Transaction Fee to cover the cost of purchasing such Deposit
Instruments.
---------------------------------------------------------------------------

    19. Shares of each Self-Indexing Fund will be listed and traded
individually on an Exchange. It is expected that one or more member
firms of an Exchange will be designated to act as a market maker (each,
a ``Market Maker'') and maintain a market for Shares trading on the
Exchange. Prices of Shares trading on an Exchange will be based on the
current bid/offer market. Transactions involving the sale of Shares on
an Exchange will be subject to customary brokerage commissions and
charges.
    20. Applicants expect that purchasers of Creation Units will
include institutional investors and arbitrageurs. Market Makers, acting
in their roles to provide a fair and orderly secondary market for the
Shares, may from time to time find it appropriate to purchase or redeem
Creation Units. Applicants expect that secondary market purchasers of
Shares will include both institutional and retail investors.\19\ The
price at which Shares trade will be disciplined by arbitrage
opportunities created by the option continually to purchase or redeem
Shares in Creation Units, which should help prevent Shares from trading
at a material discount or premium in relation to their NAV.
---------------------------------------------------------------------------

    \19\ Shares will be registered in book-entry form only. DTC or
its nominee will be the record or registered owner of all
outstanding Shares. Beneficial ownership of Shares will be shown on
the records of DTC or the DTC Participants.
---------------------------------------------------------------------------

    21. Shares will not be individually redeemable, and owners of
Shares may acquire those Shares from the Self-Indexing Fund, or tender
such Shares for redemption to the Self-Indexing Fund, in Creation Units
only. To redeem, an investor must accumulate enough Shares to
constitute a Creation Unit. Redemption requests must be placed through
an Authorized Participant. A redeeming investor may pay a Transaction
Fee, calculated in the same manner as a Transaction Fee payable in
connection with purchases of Creation Units.
    22. Neither the Trust nor any Self-Indexing Fund will be advertised
or marketed or otherwise held out as a traditional open-end investment
company or a ``mutual fund.'' Instead, each Self-Indexing Fund will be
marketed as an ``ETF.'' All marketing materials that describe the
features or method of obtaining, buying or selling Creation Units, or
Shares traded on an Exchange, or refer to redeemability, will
prominently disclose that Shares are not individually redeemable and
will disclose that the owners of Shares may acquire those Shares from
the Self-Indexing Fund or tender such Shares for redemption to the
Self-Indexing Fund in Creation Units only. The Self-Indexing Funds will
provide copies of their annual and semi-annual shareholder reports to
DTC Participants for distribution to beneficial owners of Shares.

Applicants' Legal Analysis

    1. Applicants request an order under section 6(c) of the Act for an
exemption from sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act
and rule 22c-1 under the Act, under section 12(d)(1)(J) of the Act for
an exemption from sections 12(d)(1)(A) and (B) of the Act, and under
sections 6(c) and 17(b) of the Act for an exemption from sections
17(a)(1) and 17(a)(2) of the Act.
    2. Section 6(c) of the Act provides that the Commission may exempt
any person, security or transaction, or any class of persons,
securities or transactions, from any provision of the Act, if and to
the extent that such exemption is necessary or appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
Section 17(b) of the Act authorizes the Commission to exempt a proposed
transaction from section 17(a) of the Act if evidence establishes that
the terms of the transaction, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned, and the proposed transaction is
consistent with the policies of the registered investment company and
the general provisions of the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may exempt any person, security, or
transaction, or any class or classes of persons, securities or
transactions, from any provisions of section 12(d)(1) if the exemption
is consistent with the public interest and the protection of investors.

Sections 5(a)(1) and 2(a)(32) of the Act

    3. Section 5(a)(1) of the Act defines an ``open-end company'' as a
management investment company that is offering for sale or has
outstanding any redeemable security of which it is the issuer. Section
2(a)(32) of the Act defines a redeemable security as any security,
other than short-term paper, under the terms of which the owner, upon
its presentation to the issuer, is entitled to receive approximately a
proportionate share of the issuer's current net assets, or the cash
equivalent. Because Shares will not be individually redeemable,
applicants request an order that would permit the Self-Indexing Funds
to register as open-end management investment companies and issue
Shares that are redeemable in Creation Units only. Applicants state
that investors may purchase Shares in Creation Units and redeem
Creation Units from each Self-Indexing Fund. Applicants further state
that because Creation Units may always be purchased and redeemed at
NAV, the price of Shares on the secondary market should not vary
materially from NAV.

Section 22(d) of the Act and Rule 22c-1 Under the Act

    4. Section 22(d) of the Act, among other things, prohibits a dealer
from selling a redeemable security that is currently being offered to
the public by or through an underwriter, except at a current public
offering price described in the prospectus. Rule 22c-1 under the Act
generally requires that a dealer selling, redeeming or repurchasing a
redeemable security do so only at a price based on its NAV. Applicants
state that secondary market trading in Shares will take place at
negotiated prices, not at a current offering price described in a Self-
Indexing Fund's prospectus, and not at a price based on NAV. Thus,
purchases and sales of Shares in the secondary market will not comply
with section 22(d) of the Act and rule 22c-1 under the Act. Applicants
request an exemption under section 6(c) from these provisions.
    5. Applicants assert that the concerns sought to be addressed by
section 22(d) of the Act and rule 22c-1 under the Act with respect to
pricing are equally satisfied by the proposed method of pricing Shares.
Applicants maintain that while there is little legislative history
regarding section 22(d), its provisions, as well as those of rule 22c-
1, appear to have been designed to (a) prevent dilution caused by
certain riskless-trading schemes by principal underwriters and contract
dealers, (b) prevent unjust discrimination or preferential treatment
among buyers, and (c) ensure an orderly distribution of investment
company shares by eliminating price competition from dealers offering
shares at less than the published sales price and repurchasing shares
at more than the published redemption price.
    6. Applicants believe that none of these purposes will be thwarted
by permitting Shares to trade in the secondary market at negotiated
prices. Applicants state that (a) secondary market trading in Shares
does not involve a Self-Indexing Fund as a party and will not result in
dilution of an investment in Shares, and (b) to the extent different
prices exist during a given trading day, or from day to day, such
variances occur as a result of third-party market forces, such as
supply and demand. Therefore, applicants assert that secondary market
transactions in Shares will not lead to discrimination or preferential
treatment among purchasers. Finally, applicants contend that the price
at which Shares trade will be disciplined by arbitrage opportunities
created by the option continually to purchase or redeem Shares in
Creation Units, which should help prevent Shares from trading at a
material discount or premium in relation to their NAV.

Section 22(e)

    7. Section 22(e) of the Act generally prohibits a registered
investment company from suspending the right of redemption or
postponing the date of payment of redemption proceeds for more than
seven days after the tender of a security for redemption. Applicants
state that settlement of redemptions for Foreign Self-Indexing Funds
will be contingent not only on the settlement cycle of the United
States market, but also on current delivery cycles in local markets for
the underlying foreign securities held by a Foreign Self-Indexing Fund.
Applicants state that the delivery cycles currently practicable for
transferring Redemption Instruments to redeeming investors, coupled
with local market holiday schedules, may require a delivery process of
up to fourteen (14) calendar days. Accordingly, with respect to Foreign
Self-Indexing Funds only, applicants hereby request relief under
section 6(c) from the requirement imposed by section 22(e) to allow
Foreign Self-Indexing Funds to pay redemption proceeds within fourteen
(14) calendar days following the tender of Creation Units for
redemption.\20\
---------------------------------------------------------------------------

    \20\ Applicants acknowledge that no relief obtained from the
requirements of section 22(e) will affect any obligations applicants
may otherwise have under rule 15c6-1 under the Exchange Act
requiring that most securities transactions be settled within three
business days of the trade date.
---------------------------------------------------------------------------

    8. Applicants believe that Congress adopted section 22(e) to
prevent unreasonable, undisclosed or unforeseen delays in the actual
payment of redemption proceeds. Applicants propose that allowing
redemption payments for Creation Units of a Foreign Self-Indexing Fund
to be made within fourteen calendar days would not be inconsistent with
the spirit and intent of section 22(e). Applicants suggest that a
redemption payment occurring within fourteen calendar days following a
redemption request would adequately afford investor protection.
    9. Applicants are not seeking relief from section 22(e) with
respect to Foreign Self-Indexing Funds that do not effect creations and
redemptions of Creation Units in-kind.

Section 12(d)(1)

    10. Section 12(d)(1)(A) of the Act prohibits a registered
investment company from acquiring securities of an investment company
if such securities represent more than 3% of the total outstanding
voting stock of the acquired company, more than 5% of the total assets
of the acquiring company, or, together with the securities of any other
investment companies, more than 10% of the total assets of the
acquiring company. Section 12(d)(1)(B) of the Act prohibits a
registered open-end investment company, its principal underwriter and
any other broker-dealer from knowingly selling the investment company's
shares to another investment company if the sale will cause the
acquiring company to own more than 3% of the acquired company's voting
stock, or if the sale will cause more than 10% of the acquired
company's voting stock to be owned by investment companies generally.
    11. Applicants request an exemption to permit registered management
investment companies and unit investment trusts (``UITs'') that are not
advised or sponsored by the Adviser and are not part of the same
``group of investment companies,'' as defined in section
12(d)(1)(G)(ii) of the Act as the Self-Indexing Funds (such management
investment companies are referred to as ``Investing Management
Companies,'' such UITs are referred to as ``Investing Trusts,'' and
Investing Management Companies and Investing Trusts are collectively
referred to as ``Funds of Funds''), to acquire Shares beyond the limits
of section 12(d)(1)(A) of the Act; and the Self-Indexing Funds, and any
principal underwriter for the Self-

Indexing Funds, and/or any Broker registered under the Exchange Act, to
sell Shares to Funds of Funds beyond the limits of section 12(d)(1)(B)
of the Act.
    12. Each Investing Management Company will be advised by an
investment adviser within the meaning of section 2(a)(20)(A) of the Act
(the ``Fund of Funds Adviser'') and may be sub-advised by investment
advisers within the meaning of section 2(a)(20)(B) of the Act (each a
``Fund of Funds Sub-Adviser''). Any investment adviser to an Investing
Management Company will be registered under the Advisers Act. Each
Investing Trust will be sponsored by a sponsor (``Sponsor'').
    13. Applicants submit that the proposed conditions to the requested
relief adequately address the concerns underlying the limits in
sections 12(d)(1)(A) and (B), which include concerns about undue
influence by a fund of funds over underlying funds, excessive layering
of fees and overly complex fund structures. Applicants believe that the
requested exemption is consistent with the public interest and the
protection of investors.
    14. Applicants believe that neither a Fund of Funds nor a Fund of
Funds Affiliate would be able to exert undue influence over a Self-
Indexing Fund.\21\ To limit the control that a Fund of Funds may have
over a Self-Indexing Fund, applicants propose a condition prohibiting a
Fund of Funds Adviser or Sponsor, any person controlling, controlled
by, or under common control with a Fund of Funds Adviser or Sponsor,
and any investment company and any issuer that would be an investment
company but for sections 3(c)(1) or 3(c)(7) of the Act that is advised
or sponsored by a Fund of Funds Adviser or Sponsor, or any person
controlling, controlled by, or under common control with a Fund of
Funds Adviser or Sponsor (``Fund of Funds Advisory Group'') from
controlling (individually or in the aggregate) a Self-Indexing Fund
within the meaning of section 2(a)(9) of the Act. The same prohibition
would apply to any Fund of Funds Sub-Adviser, any person controlling,
controlled by or under common control with the Fund of Funds Sub-
Adviser, and any investment company or issuer that would be an
investment company but for sections 3(c)(1) or 3(c)(7) of the Act (or
portion of such investment company or issuer) advised or sponsored by
the Fund of Funds Sub-Adviser or any person controlling, controlled by
or under common control with the Fund of Funds Sub-Adviser (``Fund of
Funds Sub-Advisory Group'').
---------------------------------------------------------------------------

    \21\ A ``Fund of Funds Affiliate'' is a Fund of Funds Adviser,
Fund of Funds Sub-Adviser, Sponsor, promoter, and principal
underwriter of a Fund of Funds, and any person controlling,
controlled by, or under common control with any of those entities. A
``Self-Indexing Fund Affiliate'' is an investment adviser, promoter,
or principal underwriter of a Self-Indexing Fund and any person
controlling, controlled by or under common control with any of these
entities.
---------------------------------------------------------------------------

    15. Applicants propose other conditions to limit the potential for
undue influence over the Self-Indexing Funds, including that no Fund of
Funds or Fund of Funds Affiliate (except to the extent it is acting in
its capacity as an investment adviser to a Self-Indexing Fund) will
cause a Self-Indexing Fund to purchase a security in an offering of
securities during the existence of an underwriting or selling syndicate
of which a principal underwriter is an Underwriting Affiliate
(``Affiliated Underwriting''). An ``Underwriting Affiliate'' is a
principal underwriter in any underwriting or selling syndicate that is
an officer, director, member of an advisory board, Fund of Funds
Adviser, Fund of Funds Sub-Adviser, employee or Sponsor of the Fund of
Funds, or a person of which any such officer, director, member of an
advisory board, Fund of Funds Adviser or Fund of Funds Sub-Adviser,
employee or Sponsor is an affiliated person (except that any person
whose relationship to the Self-Indexing Fund is covered by section
10(f) of the Act is not an Underwriting Affiliate).
    16. Applicants do not believe that the proposed arrangement will
involve excessive layering of fees. The board of directors or trustees
of any Investing Management Company, including a majority of the
directors or trustees who are not ``interested persons'' within the
meaning of section 2(a)(19) of the Act (``disinterested directors or
trustees''), will find that the advisory fees charged under the
contract are based on services provided that will be in addition to,
rather than duplicative of, services provided under the advisory
contract of any Self-Indexing Fund in which the Investing Management
Company may invest. In addition, under condition B.5., a Fund of Funds
Adviser, or a Fund of Funds' trustee or Sponsor, as applicable, will
waive fees otherwise payable to it by the Fund of Funds in an amount at
least equal to any compensation (including fees received pursuant to
any plan adopted by a Self-Indexing Fund under rule 12b-1 under the
Act) received from a Self-Indexing Fund by the Fund of Funds Adviser,
trustee or Sponsor or an affiliated person of the Fund of Funds
Adviser, trustee or Sponsor, other than any advisory fees paid to the
Fund of Funds Adviser, trustee or Sponsor or its affiliated person by a
Self-Indexing Fund, in connection with the investment by the Fund of
Funds in the Self-Indexing Fund. Applicants state that any sales
charges and/or service fees charged with respect to shares of a Fund of
Funds will not exceed the limits applicable to a fund of funds as set
forth in NASD Conduct Rule 2830.\22\
---------------------------------------------------------------------------

    \22\ Any references to NASD Conduct Rule 2830 include any
successor or replacement FINRA rule to NASD Conduct Rule 2830.
---------------------------------------------------------------------------

    17. Applicants submit that the proposed arrangement will not create
an overly complex fund structure. Applicants note that no Self-Indexing
Fund will acquire securities of any investment company or company
relying on section 3(c)(1) or 3(c)(7) of the Act in excess of the
limits contained in section 12(d)(1)(A) of the Act, except to the
extent permitted by exemptive relief from the Commission permitting the
Self-Indexing Fund to purchase shares of other investment companies for
short-term cash management purposes. To ensure a Fund of Funds is aware
of the terms and conditions of the requested order, the Fund of Funds
will enter into an agreement with the Self-Indexing Fund (``FOF
Participation Agreement''). The FOF Participation Agreement will
include an acknowledgement from the Fund of Funds that it may rely on
the order only to invest in the Self-Indexing Funds and not in any
other investment company.
    18. Applicants also note that a Self-Indexing Fund may choose to
reject a direct purchase of Shares in Creation Units by a Fund of
Funds. To the extent that a Fund of Funds purchases Shares in the
secondary market, a Self-Indexing Fund would still retain its ability
to reject any initial investment by a Fund of Funds in excess of the
limits of section 12(d)(1)(A) by declining to enter into a FOF
Participation Agreement with the Fund of Funds.

Sections 17(a)(1) and (2) of the Act

    19. Sections 17(a)(1) and (2) of the Act generally prohibit an
affiliated person of a registered investment company, or an affiliated
person of such a person, from selling any security to or purchasing any
security from the company. Section 2(a)(3) of the Act defines
``affiliated person'' of another person to include (a) any person
directly or indirectly owning, controlling or holding with power to
vote 5% or more of the outstanding voting securities of the other
person, (b) any person 5% or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held with
the power to

vote by the other person, and (c) any person directly or indirectly
controlling, controlled by or under common control with the other
person. Section 2(a)(9) of the Act defines ``control'' as the power to
exercise a controlling influence over the management or policies of a
company, and provides that a control relationship will be presumed
where one person owns more than 25% of a company's voting securities.
The Self-Indexing Funds may be deemed to be controlled by the Adviser
or an entity controlling, controlled by or under common control with
the Adviser and hence affiliated persons of each other. In addition,
the Self-Indexing Funds may be deemed to be under common control with
any other registered investment company (or series thereof) advised by
an Adviser or an entity controlling, controlled by or under common
control with an Adviser (an ``Affiliated Fund''). Any investor,
including Market Makers, owning 5% or holding in excess of 25% of the
Trust or such Self-Indexing Funds, may be deemed affiliated persons of
the Trust or such Self-Indexing Funds. In addition, an investor could
own 5% or more, or in excess of 25% of the outstanding shares of one or
more Affiliated Funds making that investor a Second-Tier Affiliate of
the Self-Indexing Funds.
    20. Applicants request an exemption from sections 17(a)(1) and
17(a)(2) of the Act pursuant to sections 6(c) and 17(b) of the Act to
permit persons that are Affiliated Persons of the Self-Indexing Funds,
or Second-Tier Affiliates of the Self-Indexing Funds, solely by virtue
of one or more of the following: (a) Holding 5% or more, or in excess
of 25%, of the outstanding Shares of one or more Self-Indexing Funds;
(b) an affiliation with a person with an ownership interest described
in (a); or (c) holding 5% or more, or more than 25%, of the shares of
one or more Affiliated Funds, to effectuate purchases and redemptions
``in-kind.''
    21. Applicants assert that no useful purpose would be served by
prohibiting such affiliated persons from making ``in-kind'' purchases
or ``in-kind'' redemptions of Shares of a Self-Indexing Fund in
Creation Units. Both the deposit procedures for ``in-kind'' purchases
of Creation Units and the redemption procedures for ``in-kind''
redemptions of Creation Units will be effected in exactly the same
manner for all purchases and redemptions, regardless of size or number.
There will be no discrimination between purchasers or redeemers.
Deposit Instruments and Redemption Instruments for each Self-Indexing
Fund will be valued in the identical manner as those Portfolio Holdings
currently held by such Self-Indexing Fund and the valuation of the
Deposit Instruments and Redemption Instruments will be made in an
identical manner regardless of the identity of the purchaser or
redeemer. Applicants do not believe that ``in-kind'' purchases and
redemptions will result in abusive self-dealing or overreaching, but
rather assert that such procedures will be implemented consistently
with each Self-Indexing Fund's objectives and with the general purposes
of the Act. Applicants believe that ``in-kind'' purchases and
redemptions will be made on terms reasonable to applicants and any
affiliated persons because they will be valued pursuant to verifiable
objective standards. The method of valuing Portfolio Holdings held by a
Self-Indexing Fund is identical to that used for calculating ``in-
kind'' purchase or redemption values and therefore creates no
opportunity for affiliated persons or Second-Tier Affiliates of
applicants to effect a transaction detrimental to the other holders of
Shares of that Self-Indexing Fund. Similarly, applicants submit that,
by using the same standards for valuing Portfolio Holdings held by a
Self-Indexing Fund as are used for calculating ``in-kind'' redemptions
or purchases, the Self-Indexing Fund will ensure that its NAV will not
be adversely affected by such securities transactions. Applicants also
note that the ability to take deposits and make redemptions ``in-kind''
will help each Self-Indexing Fund to track closely its Underlying Index
and therefore aid in achieving the Self-Indexing Fund's objectives.
    22. Applicants also seek relief under sections 6(c) and 17(b) from
section 17(a) to permit a Self-Indexing Fund that is an affiliated
person, or an affiliated person of an affiliated person, of a Fund of
Funds to sell its Shares to and redeem its Shares from a Fund of Funds,
and to engage in the accompanying in-kind transactions with the Fund of
Funds.\23\ Applicants state that the terms of the transactions are fair
and reasonable and do not involve overreaching. Applicants note that
any consideration paid by a Fund of Funds for the purchase or
redemption of Shares directly from a Self-Indexing Fund will be based
on the NAV of the Self-Indexing Fund.\24\ Applicants believe that any
proposed transactions directly between the Self-Indexing Funds and
Funds of Funds will be consistent with the policies of each Fund of
Funds. The purchase of Creation Units by a Fund of Funds directly from
a Self-Indexing Fund will be accomplished in accordance with the
investment restrictions of any such Fund of Funds and will be
consistent with the investment policies set forth in the Fund of Funds'
registration statement. Applicants also state that the proposed
transactions are consistent with the general purposes of the Act and
are appropriate in the public interest.
---------------------------------------------------------------------------

    \23\ Although applicants believe that most Funds of Funds will
purchase Shares in the secondary market and will not purchase
Creation Units directly from a Self-Indexing Fund, a Fund of Funds
might seek to transact in Creation Units directly with a Self-
Indexing Fund that is an affiliated person of a Fund of Funds. To
the extent that purchases and sales of Shares occur in the secondary
market and not through principal transactions directly between a
Fund of Funds and a Self-Indexing Fund, relief from section 17(a)
would not be necessary. However, the requested relief would apply to
direct sales of Shares in Creation Units by a Self-Indexing Fund to
a Fund of Funds and redemptions of those Shares. Applicants are not
seeking relief from section 17(a) for, and the requested relief will
not apply to, transactions where a Self-Indexing Fund could be
deemed an affiliated person, or an affiliated person of an
affiliated person of a Fund of Funds because an Adviser or an entity
controlling, controlled by or under common control with an Adviser
provides investment advisory services to that Fund of Funds.
    \24\ Applicants acknowledge that the receipt of compensation by
(a) an affiliated person of a Fund of Funds, or an affiliated person
of such person, for the purchase by the Fund of Funds of Shares of a
Self-Indexing Fund or (b) an affiliated person of a Self-Indexing
Fund, or an affiliated person of such person, for the sale by the
Self-Indexing Fund of its Shares to a Fund of Funds, may be
prohibited by section 17(e)(1) of the Act. The FOF Participation
Agreement also will include this acknowledgment.
---------------------------------------------------------------------------

Applicants' Conditions

    Applicants agree that any order of the Commission granting the
requested relief will be subject to the following conditions:

A. ETF Relief

    1. The requested relief to permit ETF operations will expire on the
effective date of any Commission rule under the Act that provides
relief permitting the operation of affiliated index-based ETFs.
    2. As long as a Self-Indexing Fund operates in reliance on the
requested order, the Shares of such Self-Indexing Fund will be listed
on an Exchange.
    3. Neither the Trust nor any Self-Indexing Fund will be advertised
or marketed as an open-end investment company or a mutual fund. Any
advertising material that describes the purchase or sale of Creation
Units or refers to redeemability will prominently disclose that Shares
are not individually redeemable and that owners of Shares may acquire
those Shares from the Self-Indexing Fund and tender those Shares for
redemption to a Self-Indexing Fund in Creation Units only.

    4. The Web site, which is and will be publicly accessible at no
charge, will contain, on a per Share basis for each Self-Indexing Fund,
the prior Business Day's NAV and the market closing price or the
midpoint of the bid/ask spread at the time of the calculation of such
NAV (``Bid/Ask Price''), and a calculation of the premium or discount
of the market closing price or Bid/Ask Price against such NAV.
    5. Each Self-Indexing Fund will post on the Web site on each
Business Day, before commencement of trading of Shares on the Exchange,
the Self-Indexing Fund's Portfolio Holdings.
    6. No Adviser or any Sub-Adviser to a Self-Indexing Fund, directly
or indirectly, will cause any Authorized Participant (or any investor
on whose behalf an Authorized Participant may transact with the Self-
Indexing Fund) to acquire any Deposit Instrument for the Self-Indexing
Fund through a transaction in which the Self-Indexing Fund could not
engage directly.

B. Section 12(d)(1) Relief

    1. The members of a Fund of Funds' Advisory Group will not control
(individually or in the aggregate) a Self-Indexing Fund within the
meaning of section 2(a)(9) of the Act. The members of a Fund of Funds'
Sub-Advisory Group will not control (individually or in the aggregate)
a Self-Indexing Fund within the meaning of section 2(a)(9) of the Act.
If, as a result of a decrease in the outstanding voting securities of a
Self-Indexing Fund, the Fund of Funds' Advisory Group or the Fund of
Funds' Sub-Advisory Group, each in the aggregate, becomes a holder of
more than 25 percent of the outstanding voting securities of a Self-
Indexing Fund, it will vote its Shares of the Self-Indexing Fund in the
same proportion as the vote of all other holders of the Self-Indexing
Fund's Shares. This condition does not apply to the Fund of Funds' Sub-
Advisory Group with respect to a Self-Indexing Fund for which the Fund
of Funds' Sub-Adviser or a person controlling, controlled by or under
common control with the Fund of Funds' Sub-Adviser acts as the
investment adviser within the meaning of section 2(a)(20)(A) of the
Act.
    2. No Fund of Funds or Fund of Funds Affiliate will cause any
existing or potential investment by the Fund of Funds in a Self-
Indexing Fund to influence the terms of any services or transactions
between the Fund of Funds or Fund of Funds Affiliate and the Self-
Indexing Fund or a Self-Indexing Fund Affiliate.
    3. The board of directors or trustees of an Investing Management
Company, including a majority of the disinterested directors or
trustees, will adopt procedures reasonably designed to ensure that the
Fund of Funds Adviser and Fund of Funds Sub-Adviser are conducting the
investment program of the Investing Management Company without taking
into account any consideration received by the Investing Management
Company or a Fund of Funds Affiliate from a Self-Indexing Fund or Self-
Indexing Fund Affiliate in connection with any services or
transactions.
    4. Once an investment by a Fund of Funds in the securities of a
Self-Indexing Fund exceeds the limits in section 12(d)(1)(A)(i) of the
Act, the Board of the Self-Indexing Fund, including a majority of the
directors or trustees who are not ``interested persons'' within the
meaning of section 2(a)(19) of the Act (``non-interested Board
members''), will determine that any consideration paid by the Self-
Indexing Fund to the Fund of Funds or a Fund of Funds Affiliate in
connection with any services or transactions: (i) Is fair and
reasonable in relation to the nature and quality of the services and
benefits received by the Self-Indexing Fund; (ii) is within the range
of consideration that the Self-Indexing Fund would be required to pay
to another unaffiliated entity in connection with the same services or
transactions; and (iii) does not involve overreaching on the part of
any person concerned. This condition does not apply with respect to any
services or transactions between a Self-Indexing Fund and its
investment adviser(s), or any person controlling, controlled by or
under common control with such investment adviser(s).
    5. The Fund of Funds Adviser, or trustee or Sponsor of an Investing
Trust, as applicable, will waive fees otherwise payable to it by the
Fund of Funds in an amount at least equal to any compensation
(including fees received pursuant to any plan adopted by a Self-
Indexing Fund under rule 12b-1 under the Act) received from a Self-
Indexing Fund by the Fund of Funds Adviser, or trustee or Sponsor of
the Investing Trust, or an affiliated person of the Fund of Funds
Adviser, or trustee or Sponsor of the Investing Trust, other than any
advisory fees paid to the Fund of Funds Adviser, trustee or Sponsor of
an Investing Trust, or its affiliated person by the Self-Indexing Fund
in connection with the investment by the Fund of Funds in the Self-
Indexing Fund. Any Fund of Funds Sub-Adviser will waive fees otherwise
payable to the Fund of Funds Sub-Adviser, directly or indirectly, by
the Investing Management Company in an amount at least equal to any
compensation received from a Self-Indexing Fund by the Fund of Funds
Sub-Adviser, or an affiliated person of the Fund of Funds Sub-Adviser,
other than any advisory fees paid to the Fund of Funds Sub-Adviser or
its affiliated person by the Self-Indexing Fund in connection with the
investment by the Investing Management Company in the Self-Indexing
Fund made at the direction of the Fund of Funds Sub-Adviser. In the
event that the Fund of Funds Sub-Adviser waives fees, the benefit of
the waiver will be passed through to the Investing Management Company.
    6. No Fund of Funds or Fund of Funds Affiliate (except to the
extent it is acting in its capacity as an investment adviser to a Self-
Indexing Fund) will cause a Self-Indexing Fund to purchase a security
in any Affiliated Underwriting.
    7. The Board of a Self-Indexing Fund, including a majority of the
non-interested Board members, will adopt procedures reasonably designed
to monitor any purchases of securities by the Self-Indexing Fund in an
Affiliated Underwriting, once an investment by a Fund of Funds in the
securities of the Self-Indexing Fund exceeds the limit of section
12(d)(1)(A)(i) of the Act, including any purchases made directly from
an Underwriting Affiliate. The Board will review these purchases
periodically, but no less frequently than annually, to determine
whether the purchases were influenced by the investment by the Fund of
Funds in the Self-Indexing Fund. The Board will consider, among other
things: (i) Whether the purchases were consistent with the investment
objectives and policies of the Self-Indexing Fund; (ii) how the
performance of securities purchased in an Affiliated Underwriting
compares to the performance of comparable securities purchased during a
comparable period of time in underwritings other than Affiliated
Underwritings or to a benchmark such as a comparable market index; and
(iii) whether the amount of securities purchased by the Self-Indexing
Fund in Affiliated Underwritings and the amount purchased directly from
an Underwriting Affiliate have changed significantly from prior years.
The Board will take any appropriate actions based on its review,
including, if appropriate, the institution of procedures designed to
ensure that purchases of securities in Affiliated Underwritings are in
the best interest of shareholders of the Self-Indexing Fund.
    8. Each Self-Indexing Fund will maintain and preserve permanently
in

an easily accessible place a written copy of the procedures described
in the preceding condition, and any modifications to such procedures,
and will maintain and preserve for a period of not less than six years
from the end of the fiscal year in which any purchase in an Affiliated
Underwriting occurred, the first two years in an easily accessible
place, a written record of each purchase of securities in Affiliated
Underwritings once an investment by a Fund of Funds in the securities
of the Self-Indexing Fund exceeds the limit of section 12(d)(1)(A)(i)
of the Act, setting forth from whom the securities were acquired, the
identity of the underwriting syndicate's members, the terms of the
purchase, and the information or materials upon which the Board's
determinations were made.
    9. Before investing in a Self-Indexing Fund in excess of the limit
in section 12(d)(1)(A), a Fund of Funds and the Trust will execute a
FOF Participation Agreement stating without limitation that their
respective boards of directors or trustees and their investment
advisers, or trustee and Sponsor, as applicable, understand the terms
and conditions of the order, and agree to fulfill their
responsibilities under the order. At the time of its investment in
Shares of a Self-Indexing Fund in excess of the limit in section
12(d)(1)(A)(i), a Fund of Funds will notify the Self-Indexing Fund of
the investment. At such time, the Fund of Funds will also transmit to
the Self-Indexing Fund a list of the names of each Fund of Funds
Affiliate and Underwriting Affiliate. The Fund of Funds will notify the
Self-Indexing Fund of any changes to the list of the names as soon as
reasonably practicable after a change occurs. The Self-Indexing Fund
and the Fund of Funds will maintain and preserve a copy of the order,
the FOF Participation Agreement, and the list with any updated
information for the duration of the investment and for a period of not
less than six years thereafter, the first two years in an easily
accessible place.
    10. Before approving any advisory contract under section 15 of the
Act, the board of directors or trustees of each Investing Management
Company, including a majority of the disinterested directors or
trustees, will find that the advisory fees charged under such contract
are based on services provided that will be in addition to, rather than
duplicative of, the services provided under the advisory contract(s) of
any Self-Indexing Fund in which the Investing Management Company may
invest. These findings and their basis will be fully recorded in the
minute books of the appropriate Investing Management Company.
    11. Any sales charges and/or service fees charged with respect to
shares of a Fund of Funds will not exceed the limits applicable to a
fund of funds as set forth in NASD Conduct Rule 2830.
    12. No Self-Indexing Fund will acquire securities of an investment
company or company relying on section 3(c)(1) or 3(c)(7) of the Act in
excess of the limits contained in section 12(d)(1)(A) of the Act,
except to the extent the Self-Indexing Fund acquires securities of
another investment company pursuant to exemptive relief from the
Commission permitting the Self-Indexing Fund to acquire securities of
one or more investment companies for short-term cash management
purposes.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-03301 Filed 2-17-16; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 13 (Thursday, January 20, 2011)]
[Notices]
[Pages 3622-3624]
[FR Doc No: 2011-1099]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings 1

January 11, 2011.
    Take notice that the Commission received the following electric
rate filings:

    Docket Numbers: ER10-149-005, ER05-487-010, ER09-832-013.
    Applicants: Elk City Wind, LLC, FPL Energy Cowboy Wind, LLC, NexEra
Energy Power Marketing, LLC.
    Description: NextEra Energy Entities Notification of Non-Material
Change in Status.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5144.
    Comment Date: 5 p.m. Eastern Time on Monday, January 31, 2011.

    Docket Numbers: ER10-2391-001.
    Applicants: Vermont Yankee Nuclear Power Corporation.
    Description: Triennial Market Power Analysis of Vermont Yankee
Nuclear Power Corporation in Compliance with Order No. 697.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5131.
    Comment Date: 5 p.m. Eastern Time on Friday, March 11, 2011.

    Docket Numbers: ER11-39-001.
    Applicants: Flat Water Wind Farm, LLC.

    Description: Notice of Flat Water Wind Farm, LLC.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5231.
    Comment Date: 5 p.m. Eastern Time on Monday, January 31, 2011.

    Docket Numbers: ER11-2658-000.
    Applicants: Pacific Gas and Electric Company.
    Description: Pacific Gas and Electric Company submits tariff filing
per 35.13(a)(2)(iii): PG&E's Five Points and Westside Solar Project
LGIA to be effective 1/11/2011.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5002.
    Comment Date: 5 p.m. Eastern Time on Monday, January 31, 2011.

    Docket Numbers: ER11-2659-000.
    Applicants: Florida Power Corporation.
    Description: Florida Power Corporation submits tariff filing per
35.13(a)(2)(iii): Service Agreement No. 147 under Florida Power
Corporation OATT to be effective 1/1/2011 under ER11-2659-000.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5035.
    Comment Date: 5 p.m. Eastern Time on Monday, January 31, 2011.

    Docket Numbers: ER11-2660-000.
    Applicants: Southwestern Electric Power Company.
    Description: Southwestern Electric Power Company submits tariff
filing per 35.13(a)(2)(iii): 20110110 Tex-La Backup SA to be effective
1/1/2011.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5036.
    Comment Date: 5 p.m. Eastern Time on Monday, January 31, 2011.

    Docket Numbers: ER11-2661-000.
    Applicants: ISO New England Inc.
    Description: ISO New England Inc. submits tariff filing per
35.13(a)(2)(iii): Request for Waiver of Tariff Provision to be
effective 1/10/2011.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5051.
    Comment Date: 5 p.m. Eastern Time on Monday, January 31, 2011.

    Docket Numbers: ER11-2662-000.
    Applicants: PSEG Energy Resources & Trade LLC.
    Description: PSEG Energy Resources & Trade LLC submits tariff
filing per 35.1: Baseline Refile of Cost of Service Recovery Rate
Tariff to be effective 1/11/2011.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5089.
    Comment Date: 5 p.m. Eastern Time on Monday, January 31, 2011.

    Docket Numbers: ER11-2663-000.
    Applicants: Viridian Energy New Jersey LLC.
    Description: Viridian Energy New Jersey LLC submits tariff filing
per 35.12: FERC Electric Tariff, Volume No. 1 Filing to be effective 1/
13/2011.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5127.
    Comment Date: 5 p.m. Eastern Time on Monday, January 31, 2011.

    Docket Numbers: ER11-2664-000.
    Applicants: Powerex Corporation.
    Description: Powerex Corporation submits tariff filing per 35: Rate
Schedule No. 1 Compliance Filing to be effective 9/30/2010.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5159.
    Comment Date: 5 p.m. Eastern Time on Monday, January 31, 2011.

    Take notice that the Commission received the following PURPA
210(m)(3) filings:

    Docket Numbers: QM10-6-000
    Applicants: Commonwealth Edison Company
    Description: ComEd's Compliance Filing in Response to December 7,
2010 Deficiency Notice.
    Filed Date: 01/06/2011
    Accession Number: 20110106-5166
    Comment Date: 5 p.m. Eastern Time on Thursday, February 03, 2011

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

    Docket Numbers: RD11-1-000
    Applicants: Version Two Facilities Design, Connectio
    Description: Compliance Filing of the North American Electric
Reliability Corporation in Response to December 7, 2010 Order Approving
NERC's May 29, 2010 and July 6, 2010 Compliance Filings in Response to
Order No. 722.
    Filed Date: 01/06/2011.
    Accession Number: 20110106-5111.
    Comment Date: 5 p.m. Eastern Time on Wednesday, January 26, 2011.

    Docket Numbers: RR09-6-003.
    Applicants: North American Electric Reliability Corporation.
    Description: Errata of the North American Electric Reliability
Corporation to December 23, 2010 Compliance Filing Regarding Appendix
4D to the NERC ROP, Standard Processes Manual.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5167.
    Comment Date: 5 p.m. Eastern Time on Monday, January 24, 2011.

    Docket Numbers: RR10-7-002.
    Applicants: North American Electric Reliability Corporation.
    Description: Compliance Filing of the North American Electric
Reliability Corporation in Response to July 12, 2010 and December 1,
2010 Commission Orders Relating to Compliance Monitoring and
Enforcement Agreements Between SERC and FRCC and SERC and SPP RE.
    Filed Date: 01/10/2011.
    Accession Number: 20110110-5090.
    Comment Date: 5 p.m. Eastern Time on Monday, January 31, 2011.

    Any person desiring to intervene or to protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Rules of Practice and Procedure (18 CFR 385.211 and
385.214) on or before 5 p.m. Eastern time on the specified comment
date. It is not necessary to separately intervene again in a subdocket
related to a compliance filing if you have previously intervened in the
same docket. Protests will be considered by the Commission in
determining the appropriate action to be taken, but will not serve to
make protestants parties to the proceeding. Anyone filing a motion to
intervene or protest must serve a copy of that document on the
Applicant. In reference to filings initiating a new proceeding,
interventions or protests submitted on or before the comment deadline
need not be served on persons other than the Applicant.
    As it relates to any qualifying facility filings, the notices of
self-certification [or self-recertification] listed above, do not
institute a proceeding regarding qualifying facility status. A notice
of self-certification [or self-recertification] simply provides
notification that the entity making the filing has determined the
facility named in the notice meets the applicable criteria to be a
qualifying facility. Intervention and/or protest do not lie in dockets
that are qualifying facility self-certifications or self-
recertifications. Any person seeking to challenge such qualifying
facility status may do so by filing a motion pursuant to 18 CFR
292.207(d)(iii). Intervention and protests may be filed in response to
notices of qualifying facility dockets other than self-certifications
and self-recertifications.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
14 copies of the intervention or protest to the

Federal Energy Regulatory Commission, 888 First St., NE., Washington,
DC 20426.
    The filings in the above proceedings are accessible in the
Commission's eLibrary system by clicking on the appropriate link in the
above list. They are also available for review in the Commission's
Public Reference Room in Washington, DC. There is an eSubscription link
on the Web site that enables subscribers to receive e-mail notification
when a document is added to a subscribed docket(s). For assistance with
any FERC Online service, please e-mail<EMAIL_ADDRESS>or
call<PHONE_NUMBER> (toll free). For TTY, call<PHONE_NUMBER>.

Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2011-1099 Filed 1-19-11; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register: September 26, 2007 (Volume 72, Number 186)]
[Rules and Regulations]
[Page 54562-54564]
[DOCID:fr26se07-13]

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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R07-OAR-2007-0926; FRL-8471-9]

Approval and Promulgation of Implementation Plans; State of
Missouri

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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

SUMMARY: EPA is approving a revision to the Missouri State
Implementation Plan (SIP) that will fulfill the condition of a
previously-published approval (July 11, 2006). The revision amends the
Construction Permits By Rule and requires a preconstruction review
period before sources may begin construction.

DATES: This direct final rule will be effective November 26, 2007,
without further notice, unless EPA receives adverse comment by October
26, 2007. If adverse comment is received, EPA will publish a timely
withdrawal of the direct final rule in the Federal Register informing
the public that the rule will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R07-
OAR-2007-0926, by one of the following methods:
    1. http://www.regulations.gov. Follow the on-line instructions for

submitting comments.
    2. E-mail<EMAIL_ADDRESS>    3. Mail: Amy Algoe-Eakin, Environmental Protection Agency, Air
Planning and Development Branch, 901 North 5th Street, Kansas City,
Kansas 66101.
    4. Hand Delivery or Courier. Deliver your comments to Amy Algoe-
Eakin, Environmental Protection Agency, Air Planning and Development
Branch, 901 North 5th Street, Kansas City, Kansas 66101.
    Instructions: Direct your comments to Docket ID No. EPA-R07-OAR-
2007-0926. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information

provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit through http://www.regulations.gov
 or e-mail information that you consider to be CBI

or otherwise protected. The http://www.regulations.gov Web site is an

``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through http://www.regulations.gov, your e-mail address will be

automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses.
    Docket: All documents in the electronic docket are listed in the
http://www.regulations.gov index. Although listed in the index, some

information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either electronically in http://www.regulations.gov
 or in hard copy at the Environmental Protection

Agency, Air Planning and Development Branch, 901 North 5th Street,
Kansas City, Kansas 66101. The Regional Office's official hours of
business are Monday through Friday, 8 to 4:30 excluding Federal
holidays. The interested persons wanting to examine these documents
should make an appointment with the office at least 24 hours in
advance.

FOR FURTHER INFORMATION CONTACT: Amy Algoe-Eakin at<PHONE_NUMBER>, or
by e-mail at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,''
``us,'' or ``our'' is used, we mean EPA. This section provides
additional information by addressing the following questions:

What is a SIP?
What is the Federal approval process for a SIP?
What does Federal approval of a state regulation mean to me?
What is being addressed in this document?
Have the requirements for approval of a SIP revision been met?
What action is EPA taking?

What is a SIP?

    Section 110 of the Clean Air Act (CAA) requires states to develop
air pollution regulations and control strategies to ensure that state
air quality meets the national ambient air quality standards (NAAQS)
established by EPA. These ambient standards are established under
section 109 of the CAA, and they currently address six criteria
pollutants. These pollutants are: Carbon monoxide, nitrogen dioxide,
ozone, lead, particulate matter, and sulfur dioxide.
    Each state must submit these regulations and control strategies to
us for approval and incorporation into the federally-enforceable SIP.
    Each federally-approved SIP protects air quality primarily by
addressing air pollution at its point of origin. These SIPs can be
extensive, containing state regulations or other enforceable documents
and supporting information

such as emission inventories, monitoring networks, and modeling
demonstrations.

What is the Federal approval process for a SIP?

    In order for state regulations to be incorporated into the
Federally-enforceable SIP, states must formally adopt the regulations
and control strategies consistent with state and Federal requirements.
This process generally includes a public notice, public hearing, public
comment period, and a formal adoption by a state-authorized rulemaking
body.
    Once a state rule, regulation, or control strategy is adopted, the
state submits it to us for inclusion into the SIP. We must provide
public notice and seek additional public comment regarding the proposed
Federal action on the state submission. If adverse comments are
received, they must be addressed prior to any final Federal action by
us.
    All state regulations and supporting information approved by EPA
under section 110 of the CAA are incorporated into the Federally-
approved SIP. Records of such SIP actions are maintained in the Code of
Federal Regulations (CFR) at title 40, part 52, entitled ``Approval and
Promulgation of Implementation Plans.'' The actual state regulations
which are approved are not reproduced in their entirety in the CFR
outright but are ``incorporated by reference,'' which means that we
have approved a given state regulation with a specific effective date.

What does Federal approval of a state regulation mean to me?

    Enforcement of the state regulation before and after it is
incorporated into the Federally-approved SIP is primarily a state
responsibility. However, after the regulation is Federally approved, we
are authorized to take enforcement action against violators. Citizens
are also offered legal recourse to address violations as described in
section 304 of the CAA.

What is being addressed in this document?

    EPA is approving a SIP revision submitted by the state of Missouri
that will fulfill the condition of a previously-published approval
(July 11, 2006). Missouri adopted a rule in June 2003 (10 CSR 10-6.062)
to establish permits by rule for various source categories (e.g.,
printing operations, surface coating operations) which authorizes
sources in categories covered by the rule to operate under specified
conditions, instead of obtaining source-specific permits. The rule
applies only to the minor source program. The original rule (see 71 FR
38997 for a detailed description of the rule and specific action by EPA
on the rule) did not expressly include a mechanism for preconstruction
review of applications received from facilities that wanted to operate
under this rule. Section 110(a)(2)(C) of the CAA requires that each SIP
include a program to regulate construction and modification of sources
to ensure that the NAAQS are achieved. EPA's implementing regulation
provides that the plan must include procedures, ``by which the state .
. . will prevent such construction or modification'' where the source
or modification would violate a control strategy or interfere with
attainment or maintenance of the NAAQS (see 40 CFR 51.160(b)). Because
Missouri's rule that was adopted on June 26, 2003, appeared to
authorize construction to begin before any air quality review occurred,
and the rule only provided for revocation of a permit after the source
began construction or operation, EPA believed that Missouri's
preconstruction permit program was deficient with respect to sources
which may qualify for Permit By Rule.
    To correct the deficiency, the Missouri Department of Natural
Resources was directed by the Missouri Air Conservation Commission via
resolution on December 8, 2005, to revise the Permit By Rule to
expressly include a preconstruction period of seven days before sources
could begin construction. The purpose of the preconstruction period is
to allow time for the state to review the application for the permit by
rule and determine whether additional air quality analyses should be
conducted for a particular project. The state must also approve the
application before construction may begin. This revision establishes
the seven day preconstruction period and fulfills the requirements of
the conditional approval.

Have the requirements for approval of a SIP revision been met?

    The state submittal has met the public notice requirements for SIP
submissions in accordance with 40 CFR 51.102. The submittal also
satisfied the completeness criteria of 40 CFR part 51, appendix V. In
addition, as explained above and in more detail in the technical
support document which is part of this docket, the revision meets the
substantive SIP requirements of the CAA, including section 110 and
implementing regulations.

What action is EPA taking?

    EPA is approving a revision to the Missouri SIP to fulfill the
condition of a previously-published approval (July 11, 2006). The
revision includes a mechanism for preconstruction review of
applications from facilities that want to operate under 10 CSR 10-
6.062, the permit by rule. We do not anticipate any adverse comments.
Please note that if EPA receives adverse comments on part of this rule,
and if that part can be severed from the remainder of the rule, EPA may
adopt as final those parts of the rule that are not the subject of an
adverse comment.

Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is not a ``significant regulatory action'' and therefore is not
subject to review by the Office of Management and Budget. For this
reason, this action is also not subject to Executive Order 13211,
``Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action
merely approves state law as meeting Federal requirements and imposes
no additional requirements beyond those imposed by state law.
Accordingly, the Administrator certifies that this action will not have
a significant economic impact on a substantial number of small entities
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because
this action approves pre-existing requirements under state law and does
not impose any additional enforceable duty beyond that required by
state law, it does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4).
    This action also does not have tribal implications because it will
not have a substantial direct effect on one or more Indian tribes, on
the relationship between the Federal Government and Indian tribes, or
on the distribution of power and responsibilities between the Federal
Government and Indian tribes, as specified by Executive Order 13175 (65
FR 67249, November 9, 2000). This action also does not have Federalism
implications because it does not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government, as specified in Executive Order 13132 (64
FR 43255, August 10, 1999). This action merely approves a state rule
implementing a

Federal standard, and does not alter the relationship or the
distribution of power and responsibilities established in the CAA. This
action also is not subject to Executive Order 13045, ``Protection of
Children from Environmental Health Risks and Safety Risks'' (62 FR
19885, April 23, 1997), because it approves a state rule implementing a
Federal standard.
    In reviewing state submissions, EPA's role is to approve state
choices, provided that they meet the criteria of the CAA. In this
context, in the absence of a prior existing requirement for the State
to use voluntary consensus standards (VCS), EPA has no authority to
disapprove a state submission for failure to use VCS. It would thus be
inconsistent with applicable law for EPA, when it reviews a state
submission, to use VCS in place of a state submission that otherwise
satisfies the provisions of the CAA. Thus, the requirements of section
12(d) of the National Technology Transfer and Advancement Act of 1995
(15 U.S.C. 272 note) do not apply. This action does not impose an
information collection burden under the provisions of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by November 26, 2007. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this rule for the purposes of judicial review nor does
it extend the time within which a petition for judicial review may be
filed, and shall not postpone the effectiveness of such rule or action.
This action may not be challenged later in proceedings to enforce its
requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide,
Incorporation by reference, Intergovernmental relations, Lead, Nitrogen
dioxide, Ozone, Particulate matter, Reporting and recordkeeping
requirements, Sulfur oxides, Volatile organic compounds.

    Dated: September 13, 2007.
John B. Askew,
Regional Administrator, Region 7.

0
Chapter I, title 40 of the Code of Federal Regulations is amended as
follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart AA--Missouri

0
2. In Sec.  52.1320 the table in paragraph (c) is amended by revising
the entry for 10-6.062 to read as follows:

Sec.  52.1320  Identification of plan.

* * * * *
    (c) * * *

                                                            EPA-Approved Missouri Regulations
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       State
          Missouri citation                       Title              effective               EPA approval date                       Explanation
                                                                        date
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Missouri Department of Natural Resources
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                      * * * * * * *
      Chapter 6 Air Quality Standards, Definitions, Sampling and Reference Methods, and Air Pollution Control Regulations for the State of Missouri
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                      * * * * * * *
10-6.062............................  Construction Permits By           5/30/07  9/26/07 [insert FR page number where the   Section (3)(B)4 is not
                                       Rule..                                     document begins].                          included in the SIP.

                                                                      * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------

[FR Doc. E7-18792 Filed 9-25-07; 8:45 am]

BILLING CODE 6560-50-P