[Federal Register: September 14, 2010 (Volume 75, Number 177)]
[Notices]
[Page 55842-55846]
[DOCID:fr14se10-121]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62842; File No. SR-FINRA-2010-030]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority; Order Granting Approval of a Proposed Rule Change To Adopt
FINRA Rule 11000 Series (Uniform Practice Code) in the Consolidated
FINRA Rulebook

September 3, 2010.

I. Introduction

    On June 14, 2010, Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission
(``Commission'') proposed rule change SR-FINRA-2010-030 pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'').\1\
Notice of the proposal was published in the Federal Register on July
12, 2010.\2\ The Commission received no comment letters. For the
reasons discussed below, the Commission is granting approval of the
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 62454 (July 6, 2010), 75
FR 39715 (July 12, 2010).
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II. Description

    As part of the process of developing a new consolidated rulebook
(``Consolidated FINRA Rulebook''), FINRA will adopt the NASD Rule 11000
Series (Uniform Practice Code [``UPC'']) into the Consolidated FINRA
Rulebook, subject to certain amendments described below.\3\ The UPC was
originally adopted on January 20, 1941, and became effective on August
1, 1941. The UPC prescribes the manner in which over-the-counter
securities transactions other than those cleared through a registered
clearing agency are compared, cleared, and settled between member
firms.
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    \3\ The current FINRA rulebook consists of (1) FINRA Rules, (2)
NASD Rules, and (3) rules incorporated from NYSE (``Incorporated
NYSE Rules'') (together, the NASD Rules and Incorporated NYSE Rules
are referred to as the ``Transitional Rulebook''). While the NASD
Rules generally apply to all FINRA members, the Incorporated NYSE
Rules apply only to those members of FINRA that are also members of
the NYSE (``Dual Members''). The FINRA Rules apply to all FINRA
members unless such rules have a more limited application by their
terms. For more information about the rulebook consolidation
process, see FINRA's Information Notice, March 12, 2008 (Rulebook
Consolidation Process).
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    As a general matter, the UPC does not apply to:
    a. Transactions in securities between members that are compared,
cleared, or settled through the facilities of a registered clearing
agency;
    b. Transactions in securities exempted under Section 3(a)(12) of
the Act or in municipal securities as defined in Section 3(a)(29) of
the Act;
    c. Transactions in redeemable securities issued by companies
registered under the Investment Company Act of 1940; or
    d. Transactions in Direct Participation Program securities.
    The UPC is designed to make uniform, where practicable, custom,
practice, usage, and trading technique in the investment banking and
securities business, particularly with respect to operational and
settlement issues. This can include such matters as trade terms,
deliveries, payments, dividends, rights, interest, stamp taxes, claims,

assignments, powers of substitution, due-bills, transfer fees, and
marking to the market. The UPC, among other things, was created so that
the transaction of day-to-day business by members may be simplified and
facilitated.

1. UPC Rules Generally

    FINRA will transfer a significant portion of the NASD Rule 11000
Series into the Consolidated FINRA Rulebook with the minor changes
detailed below.\4\ Specifically, FINRA will update certain terminology
in the UPC. For example, NASD Rule 11120 defines the term ``written
notice'' as used in the UPC to include a notice delivered by hand,
letter, teletype, telegraph, TWX, facsimile transmission, or other
comparable media. FINRA will delete the references to teletype,
telegraph, and TWX and will include notice delivered by electronic
mail. In addition, FINRA will update cross-references throughout the
rules and will make other minor changes primarily to reflect the new
conventions of the Consolidated FINRA Rulebook.
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    \4\ NASD Rules 11890 (Clearly Erroneous Transactions), IM-11890-
1 (Refusal to Abide by Rulings), and IM-11890-2 (Review by Panels of
the UPC Committee) were adopted, with significant changes, into the
Consolidated FINRA Rulebook as the FINRA Rule 11890 Series (Clearly
Erroneous Transactions) pursuant to a separate rule filing and are
not being addressed as part of this rule filing. Securities Exchange
Act Release No. 61080 (Dec. 1, 2009), 74 FR 64117 (Dec. 7, 2009)
(SR-FINRA-2009-068).
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2. Proposed FINRA Rules 11111 (Refusal to Abide by Rulings of the
Committee) and 11112 (Review by Panels of the UPC Committee)

    FINRA will adopt two new provisions that are largely based on
former NASD IM-11890-1 (Refusal to Abide by Rulings) and NASD IM-11890-
2 (Review by Panels of the UPC Committee).\5\ The provisions of former
NASD IM-11890-1 will be incorporated into and merged with current NASD
IM-11110 (Refusal to Abide by Rulings of the Committee) and adopted as
proposed new FINRA Rule 11111 as the two provisions are largely
identical. Former NASD IM-11890-1 provided that a refusal by a member
to take action necessary to effectuate a final decision of a FINRA
officer or the UPC Committee under NASD Rule 11890 (Clearly Erroneous
Transactions) would be considered conduct inconsistent with just and
equitable principles of trade. Current NASD IM-11110 provides that a
refusal by a member to abide by an official ruling of the UPC
Committee, acting within its appropriate sphere, shall be considered
conduct inconsistent with just and equitable principles of trade. As
approved, the new FINRA Rule 11111 will merge the two provisions and
provide that a refusal by a member to take action necessary to
effectuate a final decision of a FINRA officer or the UPC Committee
under the UPC Code (FINRA Rule 11000 Series) or other FINRA rules that
permit review of FINRA decisions by the UPC Committee will be
considered conduct inconsistent with just and equitable principles of
trade.
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    \5\ Id.
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    The provisions of former NASD IM-11890-2, which applied only to
rulings under NASD Rule 11890, will be adopted as proposed new FINRA
Rule 11112 (Review by Panels of the UPC Committee) and will be
generally applicable to all rulings by the UPC Committee. The new FINRA
Rule 11112 will provide that a decision of the UPC Committee may be
rendered by a panel of the Committee, which shall consist of three or
more members of the UPC Committee, provided no more than 50 percent of
the members of any panel are directly engaged in market making activity
or employed by a firm whose revenues from market making activity exceed
ten percent of its total revenues.

3. Proposed FINRA Rules 11810 (Buying-In) and 11810.03 (Sample Buy-In
Forms)

    As approved by this filing, the current NASD Rule 11810 (Buying-In)
will be adopted as FINRA Rule 11810 (Buy-In Procedures and
Requirements) in the Consolidated FINRA Rulebook with certain
clarifications and changes. Incorporated NYSE Rules 282 (Buy-in
Procedures) and related Supplementary Material paragraphs .10-.80 be
deleted. The changes are intended to harmonize the differences between
the NYSE rule and the NASD rule and to update certain procedures and
time frames. FINRA will also adopt NASD IM-11810, which contains the
sample buy-in forms, into the Consolidated FINRA Rulebook as
accompanying Supplementary Material .03 to FINRA Rule 11810 with minor
changes to replace references to NASD with FINRA.
    As approved, FINRA Rule 11810 will continue to set forth the
required steps that members must follow to effect the ``buy-in'' of
securities including the procedures to be followed in issuing a ``buy-
in'' notice, the contents of such notice, the expectations of the
receiving party to respond to such notice, and the time frames in which
a ``buy-in'' may be issued, retransmitted, and effected.
    FINRA will also make certain minor clarifications and add the
following more substantive provisions to proposed FINRA Rule 11810,
which are currently contained in NYSE Rule 282 either with or without
modifications, as specified:
    a. Include in paragraph (a) a statement clarifying that the rule
does not apply to, among other things, securities contracts that are
subject to the requirements of a national securities exchange or a
registered clearing agency.
    b. Amend certain time frames for action specified in the proposed
rule:
    i. Clarify the time frames within which members must take action to
effect the ``buy-in'' of securities as required therein. Specifically,
the NASD rule requires that a member act within the specified local
time at the member's location whereas the NYSE rule requires action to
be taken based on Eastern Time (ET). To promote operational consistency
among members, the proposal would amend the required time frame for
action to be ET.
    ii. Amend the current time frames specified by the NASD and NYSE
rules for the acknowledgement of a ``buy-in'' notice and the
notification of an execution of the buy-in from 5 p.m. to 6 p.m. ET.
FINRA understands that the 5 p.m. time may be operationally difficult
for members to achieve in some cases and the 6 p.m. ET time frame would
be more operationally feasible.
    iii. Add Supplementary Material .01 (Early Closure of Markets) to
clarify that in the event of an announced early closure of the market
upon which the security subject to the ``buy-in'' notice is traded,
members may take the action required by the rule not earlier than one
hour prior to the announced early closure of such market.
    c. Add new paragraph (b)(4) to specify that (1) the buyer must
maintain as part of its records, confirmation of receipt of the notice
by the seller and (2) if the seller does not accept the notice of
``buy-in,'' it must reject it by response to the buyer no later than 6
p.m. ET on the same date that it receives such notice, and in the
absence of doing so, the seller will have been deemed by the buyer to
have accepted such notice. The provision would clarify that the seller,
in such case, would have the right to request proof of the fail
obligation from the buyer, which the buyer must deliver to the seller
prior to the effective date of the ``buy-in.'' However, in no event
would a buyer be entitled to a ``buy-in'' that exceeds the liability of
a seller under an unsettled securities contract because of the failure
of the seller to reject a ``buy-in'' notice as provided in the rule,
and a buyer may not execute a ``buy-in'' notice to such extent the
buyer fails to deliver the proof of fail

obligation in accordance with the requirements of the rule.
Requirements (1) and (2) described above are contained in the current
NYSE rule in a similar form except FINRA will change the time to 6 p.m.
ET. FINRA is also adding new provisions regarding ``passive
acceptance'' of the ``buy-in'' by the seller as described above,
subject to certain safeguards for the benefit of the seller such as
requiring the buyer to provide the proof of fail obligation and
``buying-in'' the seller only for the securities contract amount in
accordance with the proposed rule.
    d. Add new paragraph (b)(5) to specify that the receiving party
shall immediately retransmit a notice of ``buy-in'' to other parties
from which the securities may be due in the form of a retransmitted
``buy-in'' notice. Consistent with new paragraph (b)(4) described
above, the provision would clarify that each party receiving a
retransmitted ``buy-in'' notice will be required to maintain
confirmation of receipt of the notice as part of its books and records
and either reject a retransmitted ``buy-in'' notice that it has
received by 6 p.m. ET on the date such notice is received or be deemed
to have accepted the notice (``passive acceptance''). The safeguards
described above in proposed paragraph (b)(4) would also apply to
sellers receiving a retransmitted notice.
    e. Add new paragraph (b)(6), which is contained in the NYSE rule,
to clarify that when a notice of ``buy-in'' or a retransmitted notice
thereof is given for less than the full amount of securities due, it
shall not be for less than one trading unit.
    f. Amend paragraph (d) as follows:
    i. Retitle proposed paragraph (d) from the current rule title
``Seller's Failure to Deliver After Receipt of Notice'' to ``Procedures
for Closing of Contracts'' to better align the title with the content
of that paragraph.
    ii. Amend the time frames, as discussed generally above, to
generally require the party receiving the ``buy-in'' notice to deliver
the securities to the party issuing the notice by 3 p.m. ET on the
effective date of the ``buy-in'' notice.
    iii. Add language to clarify that if the buyer/issuing party prior
to executing the ``buy-in'' is notified by the seller/delivering party
that some or all of the securities are in the seller's physical
possession and will be delivered to the issuing party then the order to
``buy-in'' shall not be executed with respect to such securities, and
the member that initiated the original order to ``buy-in'' shall accept
and pay for such securities. However, if such securities are not
promptly delivered, the seller that represented that it would make such
delivery shall be liable for any resulting damages.
    iv. Add language contained in the NYSE rule to clarify the
operation of the rule when a retransmitted buy-in notice is sent to the
defaulting party but is not received by such party prior to the
delivery of shares or the execution of the ``buy-in.'' In such case,
the sender of the buy-in notice may unless otherwise agreed promptly
reestablish by a new sale the contract subject to the notice of ``buy-
in.''
    g. Amend paragraph (h) as follows:
    i. Amend the time frame, as discussed above, for notice to be made
to the party for whose account the securities were bought to 6 p.m. ET
on the date of execution of the ``buy-in.''
    ii. Add new language, not contained in either legacy rule, to
clarify that the confirmation of the executed ``buy-in'' provided for
by the rule shall be forwarded to the party entitled to the
confirmation by no later than 9:30 a.m. ET on the following business
day after the execution of the ``buy-in.''
    iii. Add a provision contained in the NYSE rule that requires that
a statement of any resulting money differences from the execution of
the ``buy-in'' be provided immediately and that such money differences
shall be paid by no later than 3 p.m. ET on the business day after the
settlement date of the executed ``buy-in.''
    h. Amend paragraph (i) to clarify, as provided in the NYSE rule,
that notification of all close-outs as provided by the paragraph shall
be sent immediately to the member being closed-out pursuant to the
confirmation provisions of the Rule 11200 Series at least thirty
minutes before such ``close-out.''
    i. Add Supplementary Material .02 to clarify, as provided in the
NYSE rule, that where securities have been delivered by the seller
after the ``buy-in'' order has been placed but not executed, such
securities may be returned to the seller if the ``buy-in'' was executed
in accordance with the rule before it could reasonably be cancelled by
the initiating party.

4. Proposed FINRA Rule 11820 (Selling-Out)

    Current NASD Rule 11820 (Selling-Out) will be adopted as FINRA Rule
11820 (Selling-Out) into the Consolidated FINRA Rulebook, subject to
minor changes. There is no comparable NYSE rule. NASD Rule 11820
generally requires the party executing the ``sell-out'' to notify the
buyer on the day of execution no later than the close of business local
time where the buyer maintains his office of the quantity sold and the
price received. FINRA will conform the time frames in this new rule to
the time frames in the new FINRA Rule 11810 (Buy-In Procedures and
Requirements). Specifically, this new rule will replace the requirement
to provide notice ``no later than the close of business local time,
where the buyer maintains his office'' with the requirement that such
notice must be provided no later than ``6 p.m. ET.'' FINRA believes
this change provides clarity and uniformity to the industry. In
addition, the rule will amend certain references in the proposed rule
from ``should'' to ``shall.'' Specifically, in paragraph (b),
notification by the party executing a ``sell-out'' shall be in written
or electronic form, and a formal confirmation of such sale shall be
forwarded as promptly as possible after execution of the ``sell-out.''

5. Proposed FINRA Rule 11860 (COD Orders)

    FINRA will adopt NASD Rule 11860 (Acceptance and Settlement of COD
Orders) as FINRA Rule 11860 (COD Orders) into the Consolidated FINRA
Rulebook subject to minor changes and to delete NASD Rule 3370
(Purchases) and Incorporated NYSE Rule 387 (COD Orders) and its
Supplementary Material paragraphs .10-.60, NYSE Rule 387
Interpretations /01-/18, Rule 430 (Partial Delivery of Securities to
Customers on C.O.D. Purchases), and NYSE Rule 430 Interpretation /01.
    NASD Rule 11860 and NYSE Rule 387 provide generally that no member
can accept an order from a customer pursuant to an arrangement whereby
payment for the securities purchased or delivery of the securities sold
is to be made to or by an agent of the customer unless certain
specified procedures are followed. NASD Rule 3370 and NYSE Rule 430
both generally provide that no member or associated person may accept a
customer's purchase order for securities unless it has first
ascertained that the customer placing the order or its agent has agreed
to receive the securities against payment in an amount equal to the
execution price even though such purchase may represent only a part of
a larger order. NYSE Rule 430 has an exception for obligations of the
U.S. government.
    As approved, FINRA Rule 11860 will continue the requirement in NYSE
Rule 430 and NASD Rule 3370 that members prior to accepting a purchase
order for a security ascertain that the customer or its agent will
receive against payment securities in an amount equal to any execution
confirmed to the customer

even if such execution may represent a partial fill of the order. FINRA
will eliminate the exemption for transactions in U.S. government
obligations as provided by Rule 430. Further, the rule as being adopted
will continue to require the use of either a Clearing Agency or a
Qualified Vendor for the electronic confirmation and affirmation of all
depository eligible transactions. FINRA is clarifying that the new rule
will, similar to NYSE Rule 387, apply to (1) transactions of foreign
customers and broker-dealers that settle in the U.S. and (2) eligible
sinking funds and/or dividend reinvestment transactions. The new rule
will add a new requirement that is contained in NYSE Rule 387 that
requires a ``Qualified Vendor'' to provide FINRA with copies of its
required submissions to the SEC staff.

6. Proposed FINRA Rules 11870 (Customer Account Transfer Contracts) and
11870.03 (Sample Transfer Instruction Forms)

    FINRA is adopting NASD Rule 11870 as FINRA Rule 11870 (Customer
Account Transfer Contracts) into the Consolidated FINRA Rulebook with
the following changes. There is no comparable NYSE Incorporated
Rule.\6\ FINRA is also adopting NASD IM-11870, which contains the
Sample Transfer Instruction Forms, into the Consolidated FINRA Rulebook
with minor changes to replace references to NASD with FINRA.
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    \6\ Previously, NYSE Rule 412 (Customer Account Transfer
Contracts) and its related interpretations similarly regulated the
transfer of customer accounts. FINRA eliminated NYSE Rule 412 and
its interpretations from the Transitional Rulebook as part of a rule
change to reduce regulatory duplication for Dual Members during the
period before completion of the Consolidated FINRA Rulebook. The
NYSE subsequently amended its version of NYSE Rule 412 to state that
NYSE members and member organizations shall comply with NASD Rule
11870, concerning the transfer of customer accounts between members,
and any amendments thereto, as if such rule were part of the NYSE's
rules. Securities Exchange Act Release No. 58533 (Sept. 12, 2008),
73 FR 54652 (Sept. 22, 2008) (Approval Order; SR-FINRA-2008-036).
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    Generally, NASD Rule 11870 provides that when a brokerage customer
wishes to transfer his or her account to another member and gives
written notice of that fact to the receiving member, both members must
expedite and coordinate the transfer. The new FINRA Rule 11870 would
continue to set forth the required steps that members must follow to
effect the transfer of customers' accounts, including the initial
request to transfer an account, the time frame in which a transfer
request must be acted upon, the validation of such transfer request,
and the documentation required to effect the transfer. FINRA will add
to proposed FINRA Rule 11870 minor clarifications as well as the
following more substantive, which were interpretations to the prior
version of NYSE Rule 412: \7\
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    \7\ Id.
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    a. Add a new provision regarding the procedures for the transfer of
book-entry mutual fund shares that clarifies the obligations of the
parties when transferring a customer's positions in such securities.
FINRA will add this provision to paragraph (f)(9) of proposed FINRA
Rule 11870.
    b. Add a definition of the term ``participant in a registered
clearing agency'' for purposes of the rule to mean a member that is
eligible to use the agency's automated customer securities account
transfer capabilities.
    c. Add Supplementary Material .01 to clarify that members must
establish written procedures to effect and supervise the transfer of
customer account assets pursuant to the requirements of the proposed
rule.
    d. Add Supplementary Material .02 to require members to inform
customers with respect to retirement plan securities that the choice of
the method of disposition of such assets may result in liability for
the payment of taxes and penalties.
    e. Amend the time frames in the new rule for notice and completion
of close-outs of fail contracts resulting from the not completing a
transfer of a customer's account to conform to the time frames for all
close-outs as specified in proposed FINRA Rule 11810 (Buy-In Procedures
and Requirements). Specifically, the new rule will require the
receiving member to provide notice to the carrying member not later
than 12 noon ET two business days preceding the execution of the
proposed close-out (as opposed to 12 noon ``his'' time). In addition,
the rule will require that every notice of close-out state that the
securities may be closed out ``unless delivery is effected at or before
a certain specified time, which may not be prior to 3 p.m. ET,'' as
opposed to ``the local time in the community where the carrying member
maintains his office.'' The new rule will also replace the requirement
that the party executing the ``close-out'' notify the seller as to the
quantity purchased and the price paid not later than ``the close of
business, local time, where the seller maintains his office,'' with the
requirement to provide such notice not later than ``6 p.m. ET on the
date of the execution of such `close-out'.''
    f. Amend certain references in the new rule from ``should'' to
``shall.'' Specifically, (1) In paragraph (f) that the obligation that
fail contracts established pursuant to the rule shall be clearly marked
or captioned as such and that a receiving member shall reject delivery
of a security that cannot be deemed a safekeeping position against a
fail contract; (2) in paragraph (h) that notification shall be in
written or electronic form and that confirmation of purchase along with
a billing or payment shall be forwarded as promptly as possible; (3) in
paragraph (i) that notification shall be in written or electronic form;
and (4) in paragraph (m) that when both members are participants in a
registered clearing agency, the securities account asset transfer
procedures shall be accomplished in accordance with the rule and the
rules of the registered clearing agency.
    g. Eliminate paragraph (n)(3) which requires that a copy of each
customer account transfer instruction issued on an ``ex-clearing
house'' basis be sent to the local District Office of NASD having
jurisdiction over the carrying member. FINRA believes that a majority
of customer account transfers now occur between members of a clearing
agency and that the volume of transactions that occur ``ex-clearing''
has significantly decreased.
    FINRA will announce the implementation date of the rule change in a
Regulatory Notice to be published no later than ninety days following
the date of the approval of this rule change. The implementation date
will be no later than 365 days following the date of the approval of
this rule change.

III. Discussion

    Section 15A(b)(6) of the Act requires, among other things, that
FINRA rules must be designed to promote just and equitable principles
of trade and, in general, to protect investors and the public
interest.\8\ The rule change amends FINRA's rules so as to adopt a
majority of the UPC Rules into the new Consolidated FINRA Rulebook
without significant changes in order to update and to reflect the new
conventions of the Consolidated FINRA Rulebook. The rule change also
updates certain other UPC Rules to reflect current industry practices.
As one part of a larger undertaking to consolidate the rules of the
NASD and NYSE, FINRA's new rules will apply to all registered broker-
dealers, which should further promote the just and equitable principles
of trade and, in general, better protect investors and the public
interest.
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    \8\ 15 U.S.C. 78o-3(b)(6).
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    Accordingly, for the reasons stated above the Commission believes
that the rule change is consistent with FINRA's

obligation under Section 15A of the Exchange Act, as amended, and the
rules and regulations thereunder.\9\
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    \9\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposed rule change is consistent with the requirements of the Act and
in particular with the requirements of Section 15A of the Act and the
rules and regulations thereunder.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (File No. SR-FINRA-2010-030) be and
hereby is approved.

    For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-22783 Filed 9-13-10; 8:45 am]
BILLING CODE 8010-01-P


[Federal Register Volume 80, Number 33 (Thursday, February 19, 2015)]
[Notices]
[Pages 8916-8917]
[FR Doc No: 2015-03401]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74263; File No. SR-BYX-2015-08]

Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Related to
Fees for Use of BATS Y-Exchange, Inc.

February 12, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 2, 2015, BATS Y-Exchange, Inc. (the ``Exchange'' or
``BYX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the Exchange. The
Exchange has designated the proposed rule change as one establishing or
changing a member due, fee, or other charge imposed by the Exchange
under Section 19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2)
thereunder,\4\ which renders the proposed rule change effective upon
filing with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    The Exchange filed a proposal to amend the fee schedule applicable
to Members \5\ and non-members of the Exchange pursuant to BYX Rules
15.1(a) and (c). Changes to the fee schedule pursuant to this proposal
are effective upon filing.
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    \5\ The term ``Member'' is defined as ``any registered broker or
dealer that has been admitted to membership in the Exchange.'' See
Exchange Rule 1.5(n).
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    The text of the proposed rule change is available at the Exchange's
Web site at www.batstrading.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its fee schedule to remove the
reference to ROLF from fee code BO. Fee code BO currently provides that
the Exchange will charge $0.0030 per share for any order routed using
ROLF or Destination Specific routing strategy unless otherwise
specified. Under the ROLF routing strategy, an order will check the
Exchange for available shares and then will be sent to LavaFlow ECN
(``LavaFlow''). This change is being proposed in response to LavaFlow's
announcement that it will cease market operations and its last day of
trading will be Friday, January 30, 2015. As such, beginning on
February 2, 2015, the Exchange will no longer route orders to LavaFlow.
As proposed, the Exchange would continue to charge $0.0030 per share
for orders routed using a Destination Specific routing strategy.
    The Exchange proposes to implement the amendments to its fee
schedule effective February 2, 2015.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder that are applicable to a national securities exchange, and,
in particular, with the requirements of Section 6 of the Act.\6\
Specifically, the Exchange believes that the proposed rule change is
consistent with Sections 6(b)(4) of the Act and 6(b)(5) of the Act,\7\
in that it provides for the equitable allocation of reasonable dues,
fees and other charges among members and other persons using any
facility or system which the Exchange operates or controls. The
Exchange notes that it operates in a highly competitive market in which
market participants can readily direct order flow to competing venues
if they deem fee levels at a particular venue to be excessive.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The Exchange believes that its proposal to eliminate ROLF from fee
code BO represents an equitable allocation of reasonable dues, fees,
and other charges among Members and other persons using its facilities.
The proposed change is in response to LavaFlow's announcement that it
will cease market operations and its last day of trading will be
Friday, January 30, 2015. The Exchange notes that the proposed change
is not designed to amend any fee or rebate, nor alter the manner in
which the Exchange assesses fees and rebates. As of February 2, 2015,
the Exchange will no longer route orders to LavaFlow and, therefore,
proposes to remove ROLF from the fee schedule, which will make the fee
schedule clearer and less confusing for investors as well as help to
eliminate potential investor confusion, thereby removing impediments to
and perfecting the mechanism of a free and open market and a national
market system, and, in general, protecting investors and the public
interest.

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

    The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act, as amended. The
Exchange also believes that its proposal to remove ROLF from fee code
BO would not affect intermarket nor intramarket competition because the
change is not designed to amend any fee or rebate or to alter the
manner in which the Exchange assesses fees or calculates rebates. It is
simply proposed in response to LavaFlow's announcement that it will
cease market operations following the close of business on Friday,
January 30, 2015. As stated above, the Exchange notes that it operates
in a highly competitive market in which market participants can readily
direct order flow to competing

venues if they deem fee structures to be unreasonable or excessive.

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

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from members or other interested parties.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \8\ and paragraph (f)(2) of Rule 19b-4
thereunder.\9\ At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-BYX-2015-08 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BYX-2015-08. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BYX-2015-08 and should be
submitted on or before March 12, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-03401 Filed 2-18-15; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 141 (Monday, July 23, 2018)]
[Notices]
[Page 34837]
[FR Doc No: 2018-15705]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings

    Take notice that the Commission has received the following Natural
Gas Pipeline Rate and Refund Report filings:

Filings Instituting Proceedings

    Docket Number: PR18-66-000.
    Applicants: Alpine High Pipeline LP.
    Description: Tariff filing per 284.123(b), (e)+(g): Notice of Name
Change and Revision to Statement of Operating Conditions to be
effective 7/2/2018.
    Filed Date: 7/16/18.
    Accession Number:<PHONE_NUMBER>56.
    Comments Due: 5 p.m. ET 8/6/18.
    284.123(g) Protests Due: 5 p.m. ET 9/14/18.

    Docket Numbers: RP18-979-000.
    Applicants: Southern Star Central Gas Pipeline, Inc.
    Description: Compliance filing Tariff Waiver--ROFR Posting.
    Filed Date: 7/16/18.
    Accession Number: 20180716-5140.
    Comments Due: 5 p.m. ET 7/30/18.

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

    Dated: July 17, 2018.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2018-15705 Filed 7-20-18; 8:45 am]
 BILLING CODE 6717-01-P


Stationary Industrial Equipment 29.4% 31.5% 2.1%

All MP& M Manufacturersb 28.0% 29.6% 1.6%

a Operating Margin is calculated as ( value of shipments  cost of materials  payroll)/ value of shipments.

b Weighted average by VOS.

Source: Department of Commerce, Bureau of the Census, Annual Survey of Manufacturers.

3.4 CHARACTERISTICS OF MP& M NON MANUFACTURING SECTORS Eleven of the 18 MP& M sectors include non manufacturing industries. The non manufacturing activities are defined by 50 four digit SIC codes: 26 transportation SIC codes, 18 service SIC codes, five retail trade SIC codes, and one wholesale trade SIC code. MP& M facilities may perform both manufacturing and non manufacturing activities.

The analyses presented in this section cover 1997 only, because the Census does not collect data annually for non

manufacturing SICs as it does for manufacturers in the Annual Survey of Manufacturers. The profile is based on data from the 1997 Censuses of Transportation, Communications, and Utilities; Service Industries; Retail Trade; and Wholesale Trade.

3.4.1 Domestic Production a. Output This profile uses sales and receipts as a measure of output. The sum of the receipts a manufacturer earns from the sale of its outputs is an indicator of the overall size of a market or the size of a firm in relation to its market or competitors. EPA used Department of Commerce data to assess sales and receipts for the MP& M non manufacturing sectors.

Table 3.12 shows sales and receipts by sector for MP& M non manufacturers. The MP& M nonmanufacturing sector generated 1.25 trillion dollars in sales and receipts in 1997. Motor vehicle repair and maintenance, with sales and receipts of 870 billion dollars, accounted for almost 70 percent of total sales and receipts. Bus and truck, with sales and receipts of 209 3 25 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors billion dollars, accounted for another 17 percent. These two vehicle sectors made up 87% of total non manufacturing output.

The smallest sector was precious metals and jewelry, which accounted for only 367 million dollars in sales and receipts.

Table 3.12: Sales/ Receipts: MP& M Non Manufacturing Sectors in 1997 ( millions, 2001$)

Sector Output a Share Aircraft 9,935.9 0.8%

Bus & Truck 209,316.1 16.7%

Household Equipment 2,848 0.2%

Instruments 7,402 0.6%

Motor Vehicle 870,451 69.6%

Office Machine 30,930 2.5%

Other Metal Products 22,041 1.8%

Precious Metals and Jewelry 367 0.029%

Railroadb 30,728 2.5%

Ships and Boats 37,383 3.0%

Stationary Industrial Equipment 29,747 2.4%

Total 1,251,148 100.0%

a Total sales for retail and wholesale trade, total receipts for service industries, total revenue for transportation.

b Railroad sales/ receipts is estimated from 1992 data.

Source: Department of Commerce, Bureau of the Census, Census of Transportation, Census of Wholesale Trade, Census of Retail Trade, Census of Service Industries, 1997.

b. Number of facilities and firms The number of facilities and firms in an industry is an indicator of the size and structure of an industry. Increases and decreases in the number of firms and facilities can indicate whether an industry is growing or shrinking, and changes in the ratio of facilities and firms can indicate whether an industry is becoming more integrated and concentrated. This profile uses SBA data to assess the number of facilities and firms in the non manufacturing sector from 1989 to 1996. The SBA changed its survey to include firms in 1990, but data on the number of firms are not available from this source in 1989.

Table 3.13 shows the number of facilities and firms in the MP& M non manufacturing sectors in 1989/ 1990 and 1996, with average annual growth rates. The number of firms and facilities grew from 1989 to 1996 in all of the sectors. The average number of facilities per firm shrank slightly over this time period, from 1.13 to 1.11, due to the fact that the number of firms in the non manufacturing sector grew at 4.5 percent per year while the number of facilities grew at only 3.6 percent per year.

In general, most MP& M non manufacturers are single facility firms.

Although the number of facilities and firms increased for all of the sectors over this time period, not all industries grew at the same rate. The number of facilities in the other metal products sector grew at only 0.6 percent annually, and the number of facilities in the stationary industrial equipment and instruments sectors grew at 1.3 percent annually. In contrast, the number of facilities in the office machine sector grew by 20.2 percent annually and the number of firms in the office machine sector grew by 23.7 percent annually.

Concentration varied across the sectors. Stationary industrial equipment was the most concentrated sector, with an average of 1.45 facilities per firm in 1996. The other metal products, household equipment, and office machine sectors were the least concentrated sectors, with only 1.04, 1.06, and 1.07 facilities per firm, respectively.

3 26 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors Table 3.13: Number of Firms and Facilities: MP& M Non Manufacturing Sectors Sector Number of Firms Number of Facilities Facilities per Firm 1990 1996 Average Annual Growth Rate 1989 1996 Average Annual Growth Rate 1989/ 90 1996 Aircraft 2,024 3,281 8.4% 2,463 4,062 7.4% 1.22 1.24 Bus & Truck 74,719 113,840 7.3% 88,128 127,675 5.4% 1.18 1.12 Household Equipment 3,234 3,706 2.3% 3,367 3,935 2.3% 1.04 1.06 Instruments 7,214 7,444 0.5% 8,365 9,185 1.3% 1.16 1.23 Motor Vehicle 183,986 213,355 2.5% 203,592 234,542 2.0% 1.11 1.10 Office Machine 9,206 32,916 23.7% 9,714 35,150 20.2% 1.06 1.07 Other Metal Products 32,865 36,290 1.7% 34,683 37,902 1.3% 1.06 1.04 Precious Metals and Jewelry 1,379 1,625 2.8% 1,535 1,838 2.6% 1.11 1.13 Railroada n/ a n/ a n/ a n/ a n/ a n/ a n/ a n/ a Ships and Boats 5,739 8,290 6.3% 6,561 9,262 5.0% 1.14 1.12 Stationary Industrial Equipment 14,672 15,075 0.5% 20,880 21,791 0.6% 1.42 1.45 Total 335,038 435,822 4.5% 379,288 485,342 3.6% 1.13 1.11 a The railroad sector has only two non manufacturing SIC codes, both of which were excluded from the 1997 Census. Thus no data on railroads is available.

Source: Small Business Administration, Statistics of U. S. Businesses.

3 27 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors c. Employment Employment is a measure of the level and trend of activity in an industry. Payroll is a measure of the skill level of employees and of their value to the production process. While employment growth is often correlated with economic strength in an industry, strong productivity growth and scale economies can result in growth in revenues that could not be predicted from employment trends alone. Trends in labor utilization relative to output are important in understanding how regulatory requirements may translate into job losses both in aggregate and at the community level.

Table 3.14 shows DOC data on employment and payroll for the non manufacturing MP& M sectors in 1997. Total employment for the non manufacturing sector was 5.99 million, and total payroll was $ 201 billion. Average yearly pay/ employee was $ 33,610.

The majority of total employment came from the motor vehicle and bus and truck sectors. The motor vehicle sector had 2.6 million employees, and the bus and truck sector had 2.1 million employees. Together these two sectors accounted for over 78 percent of total employment in the non manufacturing sector. The precious metals and jewelry sector had the lowest employment, with only 5,599 employees.

Workers in a few industries were highly compensated. The railroad sector paid its workers $ 58,851 per year, and the office machine sector paid $ 56,092 per year. On the other extreme, workers in the precious metals and jewelry sector earned only $ 20,121 per year.

Table 3.14: Employment and Payroll, 1997: MP& M Non Manufacturing Sectors Sector Employment Share Payroll ( thousands, 2001$) Share Pay/ Employee Aircraft 121,210 2.0% 3,286,985 1.6% 27,118 Bus & Truck 2,106,432 35.1% 65,643,990 32.6% 31,164 Household Equipment 25,455 0.4% 935,661 0.5% 36,757 Instruments 76,970 1.3% 2,530,404 1.3% 32,875 Motor Vehicle 2,622,049 43.7% 83,223,310 41.3% 31,740 Office Machine 235,332 3.9% 13,200,240 6.6% 56,092 Other Metal Products 226,069 3.8% 6,981,264 3.5% 30,881 Precious Metals and Jewelry 5,599 0.1% 112,659 0.1% 20,121 Railroad 197,421 3.3% 11,618,460 5.8% 58,851 Ships and Boats 178,560 3.0% 7,221,006 3.6% 40,440 Stationary Industrial Equipment 198,735 3.3% 6,701,350 3.3% 33,720 Total 5,993,832 100.0% 201,455,328.90 100.0% 33,610.44 Source: Department of Commerce, Census of Transportation, Census of Wholesale Trade, Census of Retail Trade, Census of Service Industries, 1997.

3.4.2 Industry Structure and Competitiveness A number of factors play an important role in determining market structure for an industry, including the barriers that firms face in entering and exiting the market, the degree to which firms in the market are vertically and horizontally integrated, and the extent to which markets have been globalized. This profile shows facility size and firm size as measures of industry structure and competitiveness in the MP& M non manufacturing sector.

a. Facility size Facility size is an indicator of economies of scale. The presence of many large facilities in an industry can indicate that there are advantages to building on a larger scale, such as dividing labor more efficiently, utilizing equipment more effectively, or getting bulk discounts. EPA used data from the 1997 Census to assess facility size for manufacturing facilities.

3 28 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors Non manufacturing facilities tend to be small. There were 255,602 non manufacturing facilities, or 52.9 percent, that employed 4 employees or less. These facilities accounted for 7 percent of sales and receipts in the non manufacturing MP & M sectors. Facilities with less than 20 employees accounted for 88 percent of all non manufacturing facilities but generated only 24 percent of non manufacturing revenues. Facilities with more than 100 employees employed less than one percent of total employees, but generated 17 percent of total revenues. Non manufacturing MP& M facilities appear to experience significant economies of scale.

Although the individual non manufacturing sectors tended to have small facilities, there was some variation between sectors in facility size. The aircraft sector and the ships and boats sector had relatively large facilities, probably because these sectors are involved with large scale transportation. For both sectors, 6.3 percent of facilities had more than 100 employees. In contrast, the other metal products and precious metals and jewelry sectors had mostly small facilities. Ninety four percent of facilities in the other metal products sector and 96 percent of facilities in the precious metals and jewelry sector had less than 20 employees.

Table 3.15 presents the number of facilities and total sales by facility employment size category for each category.

Table 3.15: Number of Facilities and Sales/ Receipts by Facility Employment Size Category: MP& M Non Manufacturing Sectors in 1997 Sector Number of Facilities Sales/ Receipts ( millions, $ 2001)

0 to 4 5 to 9 10 to 19 20 to 99 100 or more 0 to 4 5 to 9 10 to 19 20 to 99 100 or more Aircraft 1,936 936 720 870 299 381 482 879 2,767 5,433 Bus & Truck 67,959 24,548 19,355 21,294 3,573 15,924 16,044 24,189 75,663 81,036 Household Equipment 1,886 735 456 305 37 358 411 551 1,072 457 Instruments 5,535 1,737 988 711 131 1,017 936 1,064 2,473 1,917 Motor Vehicle 126,505 58,372 28,184 23,021 2,548 41,209 45,438 62,030 388,395 180,200 Office Machine 16,849 3,619 2,186 1,935 408 3,598 2,592 3,327 9,285 12,146 Other Metal Products 21,564 7,585 3,813 2,136 138 3,810 3,856 4,444 7,178 2,118 Precious Metals and Jewelry 790 215 88 41 2 109 81 70 88 19 Railroada n/ a n/ a n/ a n/ a n/ a n/ a n/ a n/ a n/ a n/ a Ships and Boats 2,605 930 848 1,046 366 2,578 1,580 2,161 9,535 19,380 Stationary Industrial Equipment 9,974 7,601 3,601 2,084 134 3,183 5,487 6,000 9,321 3,189 Total 255,602 106,277 60,238 53,443 7,635 72,168 76,907 104,714 505,778 305,894 a The non manufacturing railroad sector is comprised of two SIC codes, both of which were excluded from the 1997 Census.

Source: Department of Commerce, Bureau of the Census, Census of Transportation, Census of Wholesale Trade, Census of Retail Trade, Census of Service Industries, 1997.

b. Firm size This profile uses firm employment size as an indicator of market power and barriers to entry. The distribution of facilities and output by firm size can indicate that the firms in an industry have market power. If the largest firms own disproportionately many facilities, in which case they are considered horizontally integrated, or if the largest firms control a large portion of industry output, then they may have significant market power. These firms can use their large capacities to control and exploit markets. The presence of many large firms in an industry can also indicate that there are barriers to entry into that industry, such as capital requirements or economies of scale, that give existing firms in the industry a competitive advantage.

Table 3.16 presents SUSB data on numbers of firms and facilities with estimated receipts by firm employment size category in 1996 for MP& M non manufacturers. In general, although the majority of MP& M non manufacturing firms were small, the larger firms owned many facilities and had disproportionately large market shares. The vast majority of non manufacturing 3 29 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors firms   427,173 firms or about 98 percent of non manufacturers   employed fewer than 100 employees. However, these firms owned only 90 percent of all facilities and earned 610 billion dollars, only 58 percent of all revenues. The 2,338 firms with 500 or more employees, equal to 0.54 percent of all non manufacturers, owned 6.5 percent of all facilities and generated 207 billion dollars, equal to 19.8 percent of total revenue.

Firm size in the individual MP& M non manufacturing sectors is relatively similar to the trends in the non manufacturing sector as a whole. At least 94 percent of the firms in every sector had less than 100 employees. Although firm size varies little by sector, there were larger variations in receipts by firm size. The aircraft, instruments, and ships and boats sectors each had a small percentage of firms that controlled a large share of the market. In the aircraft sector, the largest 2.35 percent of firms generated 60.4 percent of total revenues. In the instruments sector, the largest 1.2 percent of firms generated 50.2 percent of total revenues. In the ships and boats sector, the largest 2.6 percent of firms generated 57.4 percent of total revenues.

Table 3.16: Number of Firms, Facilities, and Estimated Receipts by Firm Employment Size Category, 1996: MP& M Non Manufacturing Sectors Sector Firms Facilities Estimated Receipts ( millions,

2001$)

1 to 99 100 to 499 500 or more 1 to 99 100 to 499 500 or more 1 to 99 100 to 499 500 or more Aircraft 3,124 80 77 3,189 139 734 2,717 1,264 6,071 Bus & Truck 111,038 2,001 801 112,751 4,334 10,590 79,331 23,943 66,113 Household Equipment 3,669 19 18 3,700 23 212 2,032 275 873 Instruments 7,277 76 91 7,536 206 1,443 3,119 562 3,715 Motor Vehicle 209,814 3,010 531 216,707 7,119 10,716 465,989 186,083 87,113 Office Machine 32,428 290 198 32,745 759 1,646 14,787 4,800 10,565 Other Metal Products 35,788 284 218 36,205 567 1,130 16,749 2,308 4,610 Precious Metals and Jewelry 1,615 6 4 1,661 105 72 269 0 0 Railroad n/ a n/ a n/ a n/ a n/ a n/ a n/ a n/ a n/ a Ships and Boats 7,833 243 214 8,000 519 743 9,087 6,122 20,493 Stationary Industrial Equipment 14,587 302 186 16,331 1,359 4,101 15,422 4,606 7,739 Total 427,173 6,311 2,338 438,825 15,130 31,387 609,502 229,963 207,294 a The non manufacturing railroad sector is comprised of two SIC codes, both of which were excluded from the 1997 Census.

Source: Small Business Administration, Statistics of U. S. Businesses.

3.5 CHARACTERISTICS OF ALL MP& M SECTORS This section presents additional market structure data for the MP& M industry as a whole. It includes eight firm concentration data and risk normalized return on assets ( ROA) data as measures of industry competitiveness.

3.5.1 Eight firm Concentration Ratio The eight firm concentration ratio ( 8 firm CR) is a measure of the degree to which the largest firms in an industry have market power. It is defined as the percentage of the value of total industry shipments that is produced by the top eight firms of a given industry. In general, an industry with a high 8 firm CR are likely to have larger entry and exit barriers and to be less competitive. Firms in this kind of industry have less incentive to compete and more ability to manipulate prices to increase their profits. It is more difficult for firms in a competitive, less concentrated industry to manipulate prices. This profile presents 8 firm CR data from the 1992 Census.

3 30 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors Table 3.17 shows the 8 firm CR for each sector in 1992. The aerospace and aircraft sectors were particularly concentrated,

with the largest eight firms in each sector producing 92 percent and 85 percent of industry shipments, respectively. The motor vehicle, ordnance, and railroad sectors were also relatively concentrated. The job shop and hardware industries were the least concentrated, with only 19 percent and 25 percent of output, respectively, being produced by the eight largest firms.

Table 3.17: ght firm Concentration Ratio, 1992 Sector 8 firm Concentration Ratio Value Ranka Aerospace 92.29 19 Aircraft 85.3 18 Bus & Truck 42.51 7 Electronic Equipment 47.27 9 Hardware 24.52 2 Household Equipment 54.22 10 Instruments 44.2 8 Iron and Steel 41.87 6 Job Shop 19.26 1 Mobile Industrial Equipment 58.56 13 Motor Vehicle 77.30 17 Office Machine 61.38 14 Ordnance 76.90 16 Other Metal Products 54.27 11 Precious Metals and Jewelry 35.0 4 Printed Circuit Boards 35.0 3 Railroad 71.00 15 Ships and Boats 58.20 12 Stationary Industrial Equipment 41.16 5 Ei a Rank is a comparison within the MP& M manufacturing sectors only. A rank of 1 indicates the lowest level of concentration.

Source: Department of Commerce, Bureau of the Census.

3.5.2 Risk Normalized Return on Assets Firms  abilities to enter and exit markets determine, in part, the competitiveness of an industry. If significant barriers to entry exist, potential entrants may be dissuaded and existing firms may enjoy market power. If few barriers to entry exist, existing firms are more likely to face competition for market share via price and other competitive tactics. Some important entry barriers for the MP & M industry are large capital requirements, economies of scale, and brand name recognition. Although data on barriers to entry are limited, the available data show that market power exists in some sectors.

EPA used the risk normalized return on assets as an indicator of the existence of entry or exit barriers for each industry 3. A firm s return on assets is the profit the firm earns from investing in assets. Normally, firms in riskier industries tend to have higher ROA s. However, barriers to entry or exit can allow firms to achieve higher ROA s than would be predicted from their 3 The risk normalized ROA only assigns MP& M industry sectors relative rankings and does not imply that they face high or low barriers to competition in absolute terms.

3 31 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors risk level. The risk normalized return on assets measures the additional profit that firms earn above and beyond what their risk level predicts. EPA used data from Marketguide. com to calculate a risk normalized ROA. The agency calculated risk normalized ROA by dividing each firm s ROA by its asset beta ( a measure of the relative riskiness of the firm s common stock) and averaging over the five year period from 1996 to 2000.

The electronic equipment, printed circuit board, and office machine industries had the lowest risk normalized ROA s,

indicating relatively weaker barriers to entry or exit for these industries. The instrument, other metal products, mobile industrial equipment, and motor vehicle industries had the highest ROA s. These industries are likely to have significant barriers to entry and exit.

Table 3.18 presents the average risk normalized return on assets for the period from 1996 to 2001, based on data from Marketguide. com.

Table 3.18: Average Risk Normalized Return on Assets, 1996 to 2001 Sector Risk Normalized ROA (%)

Value Rank Aerospace 13.19 8 Aircraft 16.15 13 Bus & Truck 12.31 7 Electronic Equipment 7.21 1 Hardware 17.18 15 Household Equipment 12.02 5 Instruments 19.64 18 Iron and Steel 11.38 4 Job Shop 13.44 9 Mobile Industrial Equipment 18.13 17 Motor Vehicle 18.10 16 Office Machine 9.58 3 Ordnance 12.30 6 Other Metal Products 26.60 19 Precious Metals and Jewelry 14.43 10 Printed Circuit Boards 7.50 2 Railroad 14.62 11 Ships and Boats 16.11 12 Stationary Industrial Equipment 16.78 14 Source: www. marketguide. com 3.6 CHARACTERISTICS OF MP& M FACILITIES This section uses survey data to characterize MP& M facilities. It includes data on facility revenue sources, discharge type,

small business status, market type, and financial performance. These data are organized according to MP& M regulation subcategories based on unit operations performed and the nature of the waste generated. EPA determined that a basis exists for dividing the MP& M category into the following subcategories: General Metals, Non Chromium Anodizing, Metal Finishing Job Shops, Printed Wiring Boards, Steel Forming and Finishing, Oily Wastes, Railroad Line Maintenance, and Shipbuilding Dry Dock. EPA did not generally define subcategories in terms of industrial sectors because many facilities perform operations covered by multiple sectors and, as a result, the industrial sectors are too broad for subcategorization.

3 32 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors Table 3.19 shows the national number of MP& M facilities that sell products to different combinations of sectors. The table shows that many MP& M facilities operate in multiple market sectors. Almost every combination of sectors shows overlap,

and some MP& M facilities report revenues from three or more sectors.

3 33 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors Table 3.19: Overlap of Sectors Sector Aerospace Aircraft Bus and Truck Electronic Equipment Hardware Household Equipment Instrument Mobile Industrial Equipment Motor Vehicle Office Machine Ordnance Other Metal Products Precious Non Precious Metals Printed Circuit Boards Railroad Ships and Boats Stationary Industrial Equipment Unknown Aerospace 1,828 Aircraft 0 2,350 Bus and Truck 129 169 5,574 Electronic Equipment 1,327 1,318 824 4,073 Hardware 345 399 914 1,129 7,075 Household Equipment 289 317 477 898 1,600 2,635 Instrument 1,046 1,126 398 1,680 678 610 4,965 Mobile Industrial Equipment 47 116 1,511 704 738 417 404 2,467 Motor Vehicle 157 220 1,790 619 823 678 524 1,089 13,853 Office Machine 265 349 198 622 515 477 356 159 223 1,088 Ordnance 132 119 52 204 86 77 202 80 153 89 481 Other Metal Products 289 321 457 850 1,450 1,393 475 438 695 329 36 5,359 Precious and Non

Precious Metals 47 47 0 36 47 24 47 12 36 36 0 92 1,651 Printed Circuit Boards 160 164 0 164 160 160 4 0 0 375 0 160 0 1,229 Railroad 16 61 95 86 143 67 69 124 154 91 58 81 12 26 1,132 Ship and Boat 102 0 237 146 191 156 104 138 245 138 25 78 12 0 48 1,366 Stationary Industrial Equipment 1,169 1,255 714 1,818 1,151 687 1,293 688 530 486 130 469 39 164 109 324 4,907 Unknown 583 Source: U. S. EPA analysis.

3 34 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors The remainder of this profile focuses on MP& M industry facilities that discharge effluent. Out of a total population of 638,696 MP& M industry establishments reported in the Statistics of U. S. Businesses for 1996, approximately seven percent,

or 43,858 facilities, are effluent dischargers as identified by the MP& M surveys.

Figure 3.2 shows the breakdown of MP & M facilities by discharge type. Of the effluent dischargers, 41,119 ( 94 percent) are indirect dischargers, meaning that they discharge into a sewer or a POTW, and 2,699 ( 6 percent) are direct dischargers that discharge directly into a surface water body. The remaining 40 facilities are both direct and indirect dischargers.

Figure 3.2: Facilities by Discharge Type Source: U. S. EPA analysis.

Figure 3.3 shows facilities by revenue source. Local governments or municipalities operate 3,785 facilities ( 9 percent). The remaining 40,073 facilities are privately owned. Of these, 17,428 facilities ( 40 percent) are rebuilding and maintenance facilities and 20,172 facilities ( 46 percent) are manufacturing facilities.

Figure 3.3: Facilities by Revenue Source Source: U. S. EPA analysis.

Figure 3.4 shows facilities by small entity status. Small Business Administration ( SBA) thresholds were used to estimate the number of facilities that are likely to be owned by small businesses, as defined by the SBA. Using the methodology detailed in 3 35 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors the Small Entity Impact Analysis ( see Chapter 10), EPA determined that 32,179 facilities ( 73 percent) are owned by small or potentially small entities.

Figure 3.4: Facilities by Small Entity Status Source: U. S. EPA analysis.

Figure 3.5 indicates that MP& M facilities derive approximately 22 percent of their revenues from export sales. Almost 78 percent of MP& M revenues come from domestic non government sources. Government purchases account for a very small share of MP& M revenues overall.

Figure 3.5: 1996 Facility Revenues by Market Type ( billions, 2001$)

Export data were not available for Iron and Steel surveys.

Source: U. S. EPA analysis.

To characterize baseline financial performance across regulation subcategories, EPA used Pre Tax Return on Assets ( PTRA) as a measure of industry profitability. PTRA measures the return, before tax, to total capital that company management achieves from its deployed capital assets. Unlike the ROA measure noted above in section 3.5.2, the PTRA reported in this discussion is not adjusted for risk.

3 36 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors Table 3.20 shows that the printed wiring board subcategory has the highest median PTRA ( 13.4 percent ) of all the subcategories. The shipbuilding drydock subcategory has the lowest median PTRA ( 2.5 percent). The median PTRA for all of the MP& M facilities is 11.1 percent.

Table 3.20: Financial Performance Subcategory Median Pre Tax Return on Assets ( PTRA)

Shipbuilding Drydock 2.5%

General Metals 11.5%

Steel Forming & Finishing 9.1%

Metal Finishing Job Shops 9.2%

Non Chromium Anodizer 9.0%

Oily Wastes 9.6%

Printed Wiring Boards 13.4%

Railroad Line Maintenancea n/ a a PTRA data was not available for railroad line maintenance because these facilities were treated as cost centers in the survey analysis.

Source: U. S. EPA analysis.

3 37 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors GLOSSARY capital expenditures: expenditures for permanent additions and major alterations to facilities and equipment, as well as replacements and additions to capacity, which are ordinarily depreciated. Reported capital expenditures include work done on contract and expenditures for assets leased from other concerns through capital leases. Expenditures for land and cost of maintenance and repairs charged as current operating expenses are excluded concentration ratio: the percentage of output from a given industry that is produced by the largest firms in that industry.

For example, the eight firm concentration ratio measures the percentage of output that is produced by the eight largest firms in an industry. The concentration ratio is a measure of industry competitiveness.

employment: total number of full time equivalent employees, including production workers and non production workers.

export dependence: the share of shipments by domestic producers that is exported; calculated by dividing the value of exports by the value of domestic shipments.

import penetration: the share of all consumption in the U. S. that is provided by imports; calculated by dividing imports by reported or apparent domestic consumption ( the latter calculated as domestic value of shipments minus exports plus imports).

manufacturing: series of unit operations necessary to produce metal products; generally performed in a production environment.

North American Industry Classification System: classification system adopted beginning in 1997 to replace SIC codes. NAICS codes will be used throughout North American and allow for greater comparability with the International Standard Industrial Classification System ( ISIC), which is developed and maintained by the United Nations. The new system also better reflects the structure of today s economy, including the growth of the service sectors and new technologies.

nominal values: dollar values expressed in current dollars.

operating margin: measure of the relationship between input costs and the value of production, as an indicator of financial performance and condition. Everything else being equal, industries and firms with lower operating margins will generally have less flexibility to absorb the costs associated with a regulation than those with higher operating margins. Operating margins were calculated in this profile by subtracting the cost of materials and total payroll from the value of shipments. Operating margin is only an approximate measure of profitability, since it does not consider capital costs and other costs. It is used to examine trends in revenues compared with production costs within an industry; it should not be used for cross industry comparisons of financial performance.

pre tax return on assets ( PTRA): the ratio of cash operating income ( net income plus depreciation) to the book value of total assets. This ratio is a measure of facility profitability.

producer price index ( PPI): a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services ( Bureau of Labor Statistics, PPI Overview). Used in this profile to convert nominal values into real dollar values.

real values: nominal values normalized using a price index to express values in a single year s dollars. Removes the effects of price inflation when evaluating trends in dollar measures.

rebuilding/ maintenance: unit operations necessary to disassemble used metal products into components, replace the components or subassemblies or restore them to original function, and reassemble the metal product. These operations are intended to keep metal products in operating condition and can be performed in either a production or a non production environment.

return on assets: the profit the firm earns from investing in assets. Generally firms in riskier industries have higher returns on assets. A risk normalized return on assets ( RNRO A) measures the additional profit that firms earn above and beyond what their risk level predicts. The RNROA is a measure of industry competitiveness.

3 38 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors Standard Industrial Classification: classification system used for all establishment based Federal economic statistics classified by industry. Each establishment is assigned a 4 digit SIC code based on its principal product, or service. Last revised in 1987 and currently being replaced by the NAICS.

value added: measure of manufacturing activity, derived by subtracting the cost of purchased inputs ( materials, supplies,

containers, fuel, purchased electricity, contract work, and contract labor) from the value of shipments ( products manufactured plus receipts for services rendered), and adjusted by the addition of value added by merchandising operations ( i. e., the difference between the sales value and the cost of merchandise sold without further manufacture, processing, or assembly) plus the net change in finished goods and work in process between the beginning and end of year inventories. Value added avoids the duplication in value of shipments as a measure of economic activity that results from the use of products of some establishments as materials by others. Value added is considered to be the best value measure available for comparing the relative economic importance of manufacturing among industries and geographic areas.

value of shipments: net selling values of all products shipped as well as miscellaneous receipts. Includes all items made by or for an establishment from materials owned by it, whether sold, transferred to other plants of the same company, or shipped on consignment. Value of shipments is a measure of the dollar value of production, and is often used as a proxy for revenues. This profile uses value of shipments to indicate the size of a market and how the size differs from year to year, and to calculate operating margins.

3 39 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors ACRONYMS NAICS: North American Industry Classification System PPI: producer price index PTRA: pre tax return on assets ROA: return on assets SIC: Standard Industrial Classification VA: value added VOS: value of shipments 3 40 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors REFERENCES DRI/ McGraw Hill and U. S. Department of Commerce, International Trade Administration. 2000. U. S. Industry and Trade Outlook.

Marketguide. com. 1992. Risk Normalized Return on Assets. http:// www. marketguide. com.

U. S. Bureau of Labor Statistics. 2000. Producer Price Index.

U. S. Department of Commerce. 1992. Bureau of the Census. Census of Manufacturers, Census of Transportation, Census of Wholesale Trade, Census of Retail Trade, Census of Service Industries.

U. S. Department of Commerce. 1996. Bureau of the Census. Annual Survey of Manufacturers.

U. S. Department of Commerce. 2000. Bureau of the Census. Foreign Trade Data.

U. S. Environmental Protection Agency. 1995a. Profile of the Electronics and Computer Industry. EPA Office of Compliance Sector Notebook Project. EPA 310 R 95 002. http:// es. epa. gov/ oeca/ sector/ index. html U. S. Environmental Protection Agency. 1995b. Profile of the Fabricated Metal Products Industry. EPA Office of Compliance Sector Notebook Project. EPA 310 R 95 007. http:// es. epa. gov/ oeca/ sector/ index. html U. S. Environmental Protection Agency. 1995c. Profile of the Iron and Steel Industry. EPA Office of Compliance Sector Notebook Project. EPA 310 R 95 005. http:// es. epa. gov/ oeca/ sector/ index. html U. S. Environmental Protection Agency. 1995d. Profile of the Motor Vehicle Assembly Industry. EPA Office of Compliance Sector Notebook Project. EPA 310 R 95 009. http:// es. epa. gov/ oeca/ sector/ index. html U. S. Environmental Protection Agency. 1995e. Printed Wiring Board Industry and Use Cluster Profile. Design for the Environment Printed Wiring Board Project. EPA 744 R 95 005. http:// www. epa. gov/ opptintr/ dfe/ pwb/ techreports/ usecluster U. S. Environmental Protection Agency. 1997. Profile of the Shipbuilding and Repair Industry. EPA Office of Compliance Sector Notebook Project. EPA 310 R 97 008. http:// es. epa. gov/ oeca/ sector/ index. html U. S. Environmental Protection Agency. 1998. Profile of the Aerospace Industry. EPA Office of Compliance Sector Notebook Project. EPA 310 R 98 001. http:// es. epa. gov/ oeca/ sector/ index. html U. S. Small Business Administration. Statistics of U. S. Businesses. http:// www. sba. gov/ advo/ stats/ int_ data. html Value Line Investment Survey. Industry Reports. Value Line Publishing, Inc: December 2001.

3 41 MP& M EEBA Part I: Introduction and Background Information Chapter 3: Profile of the MP& M Industry Sectors THIS PAGE INTENTIONALLY LEFT BLANK 3 42 MP& M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options Chapter 4: Regulatory Options INTRODUCTION The preamble for the final rule describes the regulatory options considered by EPA for the final MP& M effluent guidelines. This chapter provides a brief summary of the subcategories and the regulatory options.

4.1 SUBCATEGORIZATION EPA may divide a point source category into subcategories to address variations in products, raw materials, processes,

and other factors that result in distinctly different effluent characteristics. Defining subcategories makes it possible to establish effluent limitations that take into account technological achievability and economic impacts unique to each subcategory. EPA considered the following factors in defining MP& M subcategories:

In a way similar to the proposed rule, EPA established subcategories for the final MP & M rule based on unit operations performed. The subcategories are defined in part based on the type of wastewater that facilities discharge, including: CHAPTER CONTENTS 4.1 orization ................. ......... 4 1 4.2 y Options ................. ....... 4 3 4.3 T Options for Direct Dischargers ........ 4 3 4.4 or Indirect Dischargers .......... 4 3 4.5 NS Options for New Sources ....... 4 4 4.6 Summary of the Final Rule and Regulatory Alternatives ................. ............. 4 4 Glossary ................. ................. ... 4 5 Acronyms ................. ................. .. 4 6 Subcateg Technolog BPT/ BA PSES Options f NSPS and PS   unit operation,   nature of the waste generated,

  activity,   econo mic impacts,

  raw materials,   treatment costs,

  products,   total energy requirem ents,

  size of site,   air pollution control method s,

  location,   solid waste generation and disposal, and   age,   publicly owned treatment work ( POTW)

burd en.

facilities that discharge wastewaters with high metals content, with or without oil and grease ( O& G) ; and   facilities that discharge wastewaters containing mainly O& G, with limited metals and other associated organic constituents.

The subcategories identified by EPA in each group are:

Metal bearing ( with or without O& G):

  General Metals,

  Metal Finishing Job Shops,

  Non Chromium Anodizing,

  Printed Wiring Board,

  Steel Forming & Finishing; and 4 1 MP& M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options Oil bearing only:

  Oily Wastes,

  Railroad Line Maintenance, and   Shipbuilding Dry Docks.

For the final rule, EPA is establishing limitations and standards only for direct dischargers in the Oily Wastes subcategory.

The other subcategories were considered at proposal and for some of the alternative regulatory options but are not further regulated under the final rule. Section VI. B of the preamble accompanying the final rule describes the basis for defining these subcategories. The following are brief summaries of each subcategory:

General Metals: The General Metals subcategory includes facilities that perform operations that generate metal bearing wastewater. 1 At a minimum, wastewater at these sites requires metals removal and may also require the preliminary treatment steps of oil/ water separation, chromium reduction, and cyanide destruction. For example, wastewater generated from most manufacturing operations and heavy rebuilding operations ( e. g., aircraft/ aerospace, bus/ truck, railroad, ship, industrial equipment) would be regulated under the General Metals subcategory as well as sites performing surface finishing operations at a captive shop ( i. e., not a metal finishing job shop) including continuous electroplating as defined in today s rule.

Metal Finishing Job Shops: These facilities must perform one or more of the six operations regulated by the existing Metal Finishing ( 40 CFR 433) and Electroplating ( 40 CFR 413) effluent guidelines, and must meet the definition of a job shop.

The six metal finishing operations are electroplating, electroless plating, anodizing, coating, chemical etching and milling, and printed circuit board manufacture. A job shop is a facility that owns no more than 50 percent of the materials undergoing metal finishing. EPA proposes to regulate Printed Wiring Board facilities that are job shops under this subcategory, but is seeking comment on this proposal.

Non Chromium Anodizing: This subcategory includes facilities that perform aluminum anodizing without the use of chromic acid or dichromate sealants. The wastewater generated at these facilities contains very low levels of metals ( except for aluminum) and toxic organic pollutants.

Printed Wiring Board: These facilities manufacture, maintain, and repair printed wiring boards ( i. e., circuit boards), not including job shops. They perform some unique operations, including applying, developing, and stripping of photoresist;

lead/ tin soldering; and wave soldering.

Steel Forming & Finishing: This subcategory applies to facilities that perform MP& M operations or cold forming operations on steel wire, rod, bar, pipe, or tube. Other operations on steel, including any hot forming operations for steel, or cold forming, electroplating, or continuous hot dip coating of other steel products, will be regulated under the revisions to the existing Iron and Steel Manufacturing effluent guidelines ( 40 CFR 420).

Oily Wastes: The Oily Wastes subcategory is a   catch all  for sites that discharge wastewater exclusively from oily operations and are not otherwise covered by the Railroad Line Maintenance or Shipbuilding Dry Dock subcategory. Oily operations for the this subcategory are defined in today s final rule as: alkaline cleaning for oil removal, aqueous or solvent degreasing, corrosion preventative coating ( as specified in § 438.21( b)); floor cleaning; grinding; heat treating; deformation by impact or pressure; machining; painting ( spray or brush); steam cleaning; and testing ( such as hydrostatic, dye penetrant,

ultrasonic, magnetic flux); iron phosphate conversion coating; abrasive blasting, alkaline treatment without cyanide;

assembly/ disassembly; tumbling/ barrel finishing/ mass finishing/ vibratory finishing; burnishing; electrical discharge machining; polishing, thermal cutting; washing of final products; welding; wet air pollution control for organic constituents;

adhesive bonding; and calibration.

Railroad Line Maintenance: This is one of two specific subcategories that discharge only oil bearing wastewaters ( as defined above for the Oily Wastes subcategory). The Railroad Line Maintenance subcategory includes facilities that discharge from performing routine cleaning and light maintenance on railroad engines, cars, car wheel trucks, or similar parts or machines. Facilities engaged in the manufacture, overhaul or heavy maintenance of railroad engines, cars, car wheel 1 These sites may also perform operations that generate oil bearing wastewater.

4 2 MP& M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options trucks, or similar parts or machines are not covered by this subcategory and depending on the operations performed may be covered by either the General Metals or Oily Wastes subcategory.

Shipbuilding Dry Docks: This is the second of two specific subcategories that discharge only oil bearing wastewaters ( as defined above for the Oily Wastes subcategory). The Shipbuilding Dry Dock subcategory applies to discharges of process wastewater generated in or on dry docks and similar structures, such as graving docks, building ways, marine railways and lift barges at shipbuilding facilities ( or shipyards). When generated by operations from within a dry dock or similar structure, this subcategory covers process wastewater generated inside and outside the vessel ( including bilge water) and wastewater generated from barnacle removal conducted as preparation for ship maintenance, rebuilding or repair. Wastewaters generated from other operations at shipyards are not included in this subcategory.

4.2 TECHNOLOGY OPTIONS EPA defined specific effluent limitations guidelines and standards for consideration in developing the regulation based on a statistical analysis of the performance of several wastewater treatment technology options. This analysis is described in Section 9 of the Technical Development Document and the Statistical Support Document.

EPA is establishing BPT pH limitations and daily maximum limitations for two pollutants, oil and grease as hexane extractable material ( O& G ( as HEM)) and total suspended solids ( TSS), for direct dischargers in the Oily Wastes subcategory based on the proposed technology option ( Option 6). The technology requirements include the following treatment measures:

( 1) in process flow control and pollution prevention; and ( 2) oil water separation by chemical emulsion breaking and skimming ( see Section 9 of the TDD). This technology is available technology readily applicable to all facilities in the Oily Wastes subcategory. Approximately 42% of the direct discharging facilities in the Oily Wastes subcategory currently employ this technology already.

4.3 BPT/ BAT OPTIONS FOR DIRECT DISCHARGERS EPA selected the Best Practicable Control Technology Currently Available ( BPT) for direct dischargers in each subcategory based on the average of the best performances within the industry from operations of various ages, sizes,

processes, and other characteristics. The Agency considered the cost of these treatment technologies relative to the effluent reductions achieved to assess the cost reasonableness of these limitations. EPA then considered application of the Best Available Technology Economically Achievable ( BAT) for priority and nonconventional pollutants and Best Conventional Pollutant Control Technology ( BCT) for conventional pollutants. EPA is promulgating BCT equivalent to BPT for facilities in the Oily Wastes subcategory and has decided not to establish BAT limitations.

Table 4.1 shows the technology basis for the selected option for BPT, BCT and BAT for the Oily Wastes subcategory.

Table 4.1: Selected Options For Direct Dischargers: BPT, BCT and BAT Subcategory BPT Option BCT/ BAT For oil bearing wastes Oily Wastes 6 BCT = 6 BAT not promulgated Source: U. S. EPA analysis.

4.4 PSES OPTIONS FOR INDIRECT DISCHARGERS EPA considered Pretreatment Standards for Existing Sources ( PSES) options for regulating existing indirect dischargers under today s final rule. EPA has selected no further regulation for indirect dischargers in all of the defined subcategories.

4 3 MP& M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options Wastewater discharges to POTWs from facilities in all subcategories will continue to be regulated by local limits, general pretreatment standards, and 40 CFR 413 or 433, as appropriate.

4.5 NSPS AND PSNS OPTIONS FOR NEW SOURCES EPA is promulgating New Source Performance Standards ( NSPS) for new direct dischargers in the Oily Wastes subcategory at the BPT and BCT levels. New facilities have the opportunity to incorporate the best available demonstrated technologies, including process changes, in plant controls, and end of pipe treatment technologies, without the cost of retrofitting. EPA considered the same technologies discussed previously for BPT/ BAT and PSES as the basis for new source technology. In addition, because new sites may be able to install pollution prevention and pollution control technologies more cost effectively then existing sources, the Agency strongly considered more advanced treatment options. EPA is not promulgating Pretreatment Standards for New Sources ( PSNS) for new indirect dischargers.

Table 4.2 lists the technology options and exclusions for new direct and indirect dischargers.

Table 4.2: Options For New Direct Dischargers ( NSPS) and Indirect Dischargers ( PSNS)

Subcategory NSPS Technology Option PSNS Technology Option For oil bearing wastes Oily Wastes 6 No further regulation Source: U. S. EPA analysis.

4.6 SUMMARY OF THE FINAL RULE AND REGULATORY ALTERNATIVES The following describes the final rule and the three alternative regulatory options considered by EPA:

  Final Rule: technology Option 6 applied only to direct dischargers in the Oily Wastes subcategory;

  NODA/ Proposal Option: applies limitations and standards for direct dischargers in all eight MP& M subcategories and pretreatment standards for all indirect dischargers in three subcategories ( i. e., Metal Finishing Job Shops, Printed Wiring Board, and Steel Forming & Finishing); pretreatment standards for facilities above a certain wastewater flow volume in two subcategories ( i. e., General Metals and Oily Wastes); and no national pretreatment standards for facilities in three subcategories ( i. e., Non Chromium Anodizing, Railroad Line Maintenance, and Shipbuilding Dry Docks);

  Direct Dischargers + 413 to 433 Upgrade Option: applies the same technology requirements for direct dischargers as the final rule and includes new requirements for indirect dischargers in the General Metals, Printed Wiring Board,

and Metal Finishing Job Shops subcategories currently regulated under the Electroplating regulations ( 40 CFR 413);

and   Direct Dischargers + 413 plus 50% Local Limits Upgrade Option: applies the same technology requirements for direct dischargers as the final rule and includes new requirements for indirect dischargers in the General Metals,

Printed Wiring Board, and Metal Finishing Job Shops subcategories currently regulated under the Electroplating regulations ( 40 CFR 413) and also includes new requirements for indirect dischargers in the General Metals subcategory that are currently regulated by local limits or general pretreatment standards.

4 4 MP& M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options GLOSSARY Best Practicable Control Technology Currently Available ( BPT): effluent limitations for direct discharging facilities, addressing conventional, toxic, and nonconventional pollutants. In specifying BPT, EPA considers the cost of achieving effluent reductions in relation to the effluent reduction benefits. The Agency also considers the age of the equipment and facilities, the processes employed and any required process changes, engineering aspects of the control technologies, non water quality environmental impacts ( including energy requirements), and such other factors as the Agency deems appropriate. Limitations are traditionally based on the average of the best performances of facilities within the industry of various ages, sizes, processes, or other common characteristics. Where existing performance is uniformly inadequate, EPA may require higher levels of control than currently in place in an industrial category if the Agency determines that the technology can be practically applied.

Best Available Technology Economically Achievable ( BAT): effluent limitations for direct dischargers, addressing priority and nonconventional pollutants. BAT is based on the best existing economically achievable performance of plants in the industrial subcategory or category. Factors considered in assessing BAT include the cost of achieving BAT effluent reductions, the age of equipment and facilities involved, the processes employed, engineering aspects of the control technology, potential process changes, non water quality environmental impacts ( including energy requirements), economic achievability, and such factors as the Administrator deems appropriate. The Agency may base BAT limitations upon effluent reductions attainable through changes in a facility's processes and operations. Where existing performance is uniformly inadequate, EPA may base BAT upon technology transferred from a different subcategory within an industry or from another industrial category.

Best Conventional Pollutant Control Technology ( BCT): effluent limitations for direct discharging facilities,

addressing conventional pollutants. Conventional pollutants include biochemical oxygen demand ( BOD5 ), total suspended solids ( TSS), fecal coliform, pH, and O& G. BCT is the equivalent of Best Available Technology ( BAT) for control of conventional pollutants. EPA evaluates the reasonableness of BCT candidate technologies by applying a two part cost test:

( 1) the POTW test, and ( 2) the industry cost effectiveness test. In the POTW test, EPA calculates the cost per pound of conventional pollutant removed by industrial dischargers to upgrade from BPT to a BCT candidate technology, and then compares this cost to the POTW cost per pound for similar pollutant load reductions. The upgrade cost to industry must be less than the POTW benchmark of $ 0.25 per pound ( in 1976 dollars). In the industry cost effectiveness test, the ratio of the incremental BPT to BCT cost divided by the BPT cost for the industry must be less than 1.29 ( i. e., the cost increase must be less than 29 percent).

Job Shop: Facilities with more than 50 percent of their revenues coming from work on products not owned by the site.

While there are SIC codes associated with some Metal Finishing Job Shops, they sell to a variety of markets and are not a market in and of themselves.

New Source Performance Standards ( NSPS): effluent limitations for new direct dischargers based on the best available demonstrated control technology. NSPS represents the greatest degree of effluent reduction attainable through the application of the best available demonstrated control technology for all pollutants ( i. e., conventional, nonconventional, and priority pollutants). In establishing NSPS, EPA considers the cost of achieving the effluent reduction and any non water quality environmental impacts and energy requirements.

Pretreatment Standards for Existing Sources ( PSES): categorical pretreatment standards for existing indirect dischargers, designed to prevent the discharge of pollutants that pass through, interfere with, or are otherwise incompatible with the operation of POTWs. Standards are technology based and analogous to BAT effluent limitations guidelines.

Pretreatment Standards for New Sources ( PSNS): pretreatment standards for new indirect dischargers, designed to prevent discharges of pollutants that pass through, interfere with, or are otherwise incompatible with the operation of POTWs.

Addresses all pollutants ( i. e., conventional, nonconventional, and priority pollutants). Based on the same factors as are considered in promulgating NSPS.

4 5 MP& M EEBA Part I: Introduction and Background Information Chapter 4: Regulatory Options ACRONYMS BAT: Best Available Technology Economically Achievable BCT: Best Conventional Pollutant Control Technology BPT: Best Practicable Control Technology Currently Available NSPS: New Source Performance Standards O& G: oil and grease POTW: publicly owned treatment works PSES: Pretreatment Standards for Existing Sources PSNS: Pretreatment Standards for New Sources 4 6


UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

NATIONAL VEHICLE AND FUEL EMISSIONS LABORATORY

2565 PLYMOUTH ROAD

ANN ARBOR, MICHIGAN 48105-2498

MEMORANDUM

SUBJECT:	March 2009 Meeting with Delphi

FROM:		Brian Nelson

TO:		Docket EPA-HQ-OAR-2009-0472

DATE:		September 11, 2009

________________________________________________________________________ ______

In March of 2009, we met with technical staff from Delphi to discuss the A/C technologies which can improve the overall efficiency of A/C systems, and the relative efficiency improvement that is possible with each.  In particular, we discussed improved methods of controlling motor speed – such as pulse width modulated (PWM) control -  which applied to both the blower and cooling fan motors, could result in a 15% improvement in system efficiency.

Attendees from Delphi were:

Prasad Kadle

Timothy Craig

Attendees from EPA were:

Ed Nam

Tony Fernandez

Brian Nelson

OFFICE OF

AIR AND RADIATION