[Federal Register Volume 80, Number 95 (Monday, May 18, 2015)]
[Notices]
[Pages 28319-28322]
[FR Doc No: 2015-11877]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74937; File No. SR-CBOE-2015-046]

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

May 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 May 1, 2015, Chicago Board Options Exchange, Incorporated (the
``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I and II below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Chicago Board Options Exchange, Incorporated (the ``Exchange'' or
``CBOE'') proposes to amend the terms of the Customized Option Pricing
Service (``COPS''). The text of the proposed rule change is available
on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to amend the terms of
the Exhange's COPS,\3\ specifically, the COPS data revenue-sharing
plan. The Exchange is not proposing to change the fees for COPS data.
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    \3\ See Securities Exchange Act Release No. 67813 (September 10,
2012), 77 FR 56903 (September 14, 2012) (SR-CBOE-2012-083),
Securities Exchange Act Release No. 67928 (September 26, 2012), 77
FR 60161 (October 2, 2012) (SR-CBOE-2012-090), Securities Exchange
Act Release No. 70705 (October 17, 2013), 78 FR 63265 (October 23,
2013) (SR-CBOE-2013-097), Securities Exchange Act Release No. 70845
(November 12, 2013), 78 FR 69168 (November 18, 2013) (SR-CBOE-2013-
104), Securities Exchange Act Release No. 72621 (July 16, 2014), 79
FR 42616 (July 22, 2014) (SR-CBOE-2014-057) and Securities Exchange
Act Release No. 74159 (January 28, 2015), 80 FR 5863 (February 23,
2015) (SR-CBOE-2015-007).

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Background
    COPS provides market participants with an ``end-of-day'' \4\ file
and ``historical'' \5\ files of valuations for Flexible Exchange
(``FLEX'') \6\ options and certain over-the-counter (``OTC'') options
(collectively, ``COPS Data''). Market Data Express, LLC (``MDX''), an
affiliate of CBOE, offers COPS Data for sale to all market
participants. COPS Data is available to ``Subscribers'' for internal
use and internal distribution only, and to ``Customers'' who, pursuant
to a written vendor agreement between MDX and a Customer, may
distribute the Data externally (i.e., act as a vendor) and/or use and
distribute the Data internally.
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    \4\ ``End of day'' refers to data that is distributed prior to
the opening of the next trading day.
    \5\ ``Historical'' COPS data consists of COPS data that is over
one month old (i.e., copies of the ``end-of-day'' COPS file that are
over one month old).
    \6\ FLEX options are exchange traded options that provide
investors with the ability to customize basic option features
including size, expiration date, exercise style, and certain
exercise prices.
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    COPS Data consists of indicative \7\ values for four categories of
``customized'' options. The first category of options is all open
series of FLEX options listed on any exchange that offers FLEX options
for trading.\8\ The second category is OTC options that have the same
degree of customization as FLEX options. The third category includes
options with strike prices expressed in percentage terms. Values for
such options are expressed in percentage terms and are theoretical
values.\9\ The fourth category includes ``exotic'' options.\10\
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    \7\ ``Indicative'' values are indications of potential market
prices only and as such are neither firm nor the basis for a
transaction.
    \8\ Current FLEX options open interest spans over 2,000 series
on over 300 different underlying securities.
    \9\ These values are theoretical in that they are indications of
potential market prices for options that have not traded (i.e. do
not yet exist). Market participants sometimes express option values
in percentage terms rather than in dollar terms because they find it
is easier to assess the change, or lack of change, in the
marketplace from one day to the next when values are expressed in
percentage terms.
    \10\ Exotic options are options which are generally traded OTC
and are more complex than standard options, usually relating to
determination of payoff. An exotic option may also include a non-
standard underlying instrument, developed for a particular client or
for a particular market.
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    The Exchange uses values produced by CBOE Trading Permit Holders
(``TPHs'') to produce COPS Data. Participating CBOE TPHs submit values
to MDX on options series specified by MDX on a daily basis. These
values are generated by the TPH's internal pricing models. The
valuations that MDX ultimately publishes are an average of multiple
contributions of values from participating CBOE TPHs. For each value
provided by MDX through COPS, MDX includes a corresponding indication
of the number of TPH contributors that factored into that value.
    CBOE TPHs that meet the following objective qualification criteria
are allowed to contribute values to MDX for purposes of producing COPS
Data. Interested CBOE TPHs must be approved by the Exchange, have the
ability to provide valuations to MDX in a timely manner each day after
the close of trading, and sign a services agreement with CBOE.
Interested CBOE TPHs must also have the ability to provide both
indicative and implied volatility valuations on several different types
of options, including (i) options on all open FLEX series traded on any
exchange that offers FLEX options for trading, (ii) options on any
potential new FLEX options series, (iii) OTC options that have the same
degree of customization as FLEX options, (iv) customized options where
the strike price is expressed in percentage terms (the valuations
provided to MDX must also be expressed in percentage terms), and (v)
exotic options. In addition, interested CBOE TPHs must participate in a
testing phase with MDX. The values submitted by a TPH during the
testing phase and in live production must meet MDX's quality control
standards designed to ensure the integrity and accuracy of COPS Data.
MDX has implemented procedures including monthly performance reviews to
help ensure the integrity and accuracy of COPS Data.
    To help ensure that MDX receives numerous values from multiple TPHs
on a consistent basis, MDX shares revenue from the sale of COPS Data
with participating CBOE TPHs.\11\ The amount of revenue that MDX shares
with participating TPHs is a percentage of the total revenue received
by MDX from the sale of COPS Data. The revenue sharing is based on the
following table:
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    \11\ The fees that MDX charges for COPS Data are set forth on
the Price List on the MDX Web site (www.marketdataexpress.com). MDX
currently charges a fee per option per day for ``end-of-day'' COPS
data. The amount of the fee is reduced based on the number of
options valuations purchased.

------------------------------------------------------------------------
                                        Total
                                       revenue      Revenue  share per
     No. of participating TPHs          share               TPH
                                      (percent)
------------------------------------------------------------------------
3..................................           21  7%.
4..................................           24  6%.
5 or more..........................           30  30% divided by the
                                                   number of
                                                   participating TPHs.
------------------------------------------------------------------------

    If only three TPHs participate, MDX shares 21% of total revenue
with each TPH receiving a 7% share. If four TPHs participate, MDX
shares 24% of total revenue with each TPH receiving a 6% share. If five
or more TPHs participate, MDX shares 30% of total revenue divided
equally among the TPHs. There are currently five participating TPHs.
    In July 2014, the Exchange submitted a proposed rule change to,
among other things, temporarily change the COPS contributor
compensation structure from a revenue sharing plan to a fixed payment
structure for a six month period (``Fixed Payment Period'').\12\ MDX
has now transitioned back to the revenue sharing plan described herein.
If COPS revenue exceeds $2,000,000 in a calendar year, the percentage
of total COPS revenue shared with TPH contributors will increase from
30% to 32% if a new contributor is added to COPS.\13\ In subsequent
years, if the previous calendar year's COPS revenue increases by
$1,000,000 or more, the percentage of total COPS revenue shared with
contributors will increase by 2% if an additional contributor is added
to COPS. The total number of COPS contributors is limited to fifteen.
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    \12\ See Securities Exchange Act Release No. 72621 (July 16,
2014), 79 FR 42616 (July 22, 2014) (SR-CBOE-2014-057) (``COPS
Enhancements Rule Filing'').
    \13\ The addition of new contributors is accomplished through a
try out mechanism. See COPS Enhancements Rule Filing.
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Proposal
    The Exchange proposes to change the COPS contributor compensation
structure for the remainder of 2015.\14\ All revenue from the sale of
COPS Data would be paid to COPS contributors for the remainder of 2015
(including accrued revenue during the now expired Fixed Payment
Period). The revenue would be divided equally among COPS contributors.
The Exchange had hoped that at the conclusion of the Fixed Payment
Period, COPS revenue would be at a level such that the COPS
contributors would receive a revenue share roughly in line with the
fixed payments they received during the Fixed Payment Period. This has
not yet

occurred. The proposed payments are intended to, at a minimum, help
COPS contributors cover their costs of producing valuations for COPS
while the Exchange continues to grow the COPS business. MDX would
transition back to the revenue share plan described above on January 1,
2016.
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    \14\ The Exchange is not proposing to eliminate the revenue
share plan, only to suspend it temporarily as described herein.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\15\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \16\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \17\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
    \17\ Id.
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    The Exchange believes the proposed rule change is not designed to
permit unfair discrimination between CBOE TPHs because all COPS data
revenue would be divided equally among TPH contributors for the
remainder of 2015. The Exchange believes the proposed rule change is
consistent with the protection of investors and the public interest in
that it would provide incentive for all of the COPS contributors to
continue to participate in COPS while the Exchange continues to grow
the COPS business, thereby helping to maintain the quality of COPS
Data.

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

    CBOE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. To the contrary, the Exchange
believes the proposal is procompetitive in that it will incentivize
COPS TPH contributors to continue producing quality valuations to help
keep COPS competitive with other similar market data products.\18\
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    \18\ Market data vendors including SuperDerivatives, Markit,
Prism, and Bloomberg's BVAL service produce option value data that
is similar to COPS Data. The Options Clearing Corporation (``OCC'')
also produces FLEX option value data that is similar to the FLEX
option value data that is included in COPS.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

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

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

    Because the foregoing rule does not (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate if consistent with the protection of investors
and the public interest, provided that the self-regulatory organization
has given the Commission written notice of its intent to file the
proposed rule change at least five business days prior to the date of
filing of the proposed rule change or such shorter time as designated
by the Commission,\19\ the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \20\ and Rule 19b-4(f)(6)
thereunder.\21\
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    \19\ The Exchange has fulfilled this requirement.
    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \22\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\23\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposal
may become operative immediately upon filing. The Exchange believes
that the proposal is consistent with the protection of investors and
the public interest because it help COPS contributors cover their costs
of producing valuations for COPS while the Exchange continues to grow
the COPS business, and thereby assist the Exchange with maintaining its
current roster of TPH contributors. The Commission agrees and has
determined to waive the 30-day operative date so that the proposal may
take effect upon filing.\24\
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    \22\ 17 CFR 240.19b-4(f)(6).
    \23\ 17 CFR 240.19b-4(f)(6)(iii).
    \24\ For purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2015-046 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2015-046. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,

Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2015-046 and should be
submitted on or before June 8, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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    \25\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-11877 Filed 5-15-15; 8:45 am]
 BILLING CODE 8011-01-P


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1. Agency/ Subagency originating request US EPA/ Office of Water/ Office of Science and Technology 2. OMB control number b. G None a__ __ __ __  __ __ __ __ _ 2040 NEW_ __ __ __

3. Type of information collection ( check one) a. X New collection b. G Revision of a currently approved collection c. G Extension of a currently approved collection d. G Reinstatement, without change, of a previously approved collection for which approval has expired e. G Reinstatement, with change, of a previously approved collection for which approval has expired f. G Existing collection in use without an OMB control number 4. Type of review requested ( check one) a. X

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7. Title 2000 Aquatic Animal Production Industry Surveys 8. Agency form number( s) ( If applicable) ( EPA ICR No. 2038.01)

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11. Affected public ( Mark primary with " P" and all others that apply with " X") a. Individuals or households d. P Farms b. P Business or other for profit e. X Federal Government c. X Not for profit institutions f. X State, Local or Tribal Government 12. Obligation to respond ( Mark primary with " P" and all others that apply with " X") a. G Voluntary b. G Required to obtain or retain benefits c. X Mandatory 13. Annual reporting and recordkeeping hour burden a. Number of respondents 825 b. Total annual responses N/ A 1. Percentage of these responses collected electronically 0 % c. Total hours requested 19,840 d. Current OMB inventory 0 e. Difference 19,840 f. Explanation of difference 1. Program Change 19,840 2. Adjustment 0 14. Annual reporting and recordkeeping cost burden ( in thousands of dollars)

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"( b) is not unnecessarily duplicative of information otherwise reasonably accessible to the agency;

"( c) reduces to the extent practicable and appropriate the burden on persons who shall provide information to or for the agency, including with respect to small entities, as defined in the Regulatory Flexibility Act 5 U. S. C. § 601( 6)), the use of such techniques as:

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OMB 83 I ( Instructions) 10/ 95


Margaret Sheppard/DC/USEPA/US
07/05/2007 03:06 PM	To
	Julius Banks/DC/USEPA/US@EPA, Dave Godwin/DC/USEPA/US@EPA
	cc
	Karen Thundiyil/DC/USEPA/US@EPA, Nancy Rattner/DC/USEPA/US@EPA
	bcc

	Subject
	more on HCR-188C

Refrigeration team,
I had a long phone call with Richard Maruya, submitter of the flammable
refrigerant HCR-188C.

Further clarification of the email I forwarded:
1) He is already reclaiming his refrigerant from his car using standard
equipment (a Robin Air device).
2) The refrigerant can be separated and stored in 30 lb canisters used for
propane for grilling.  These are already approved containers for shipping
hydrocarbons under DOT regs.
3) Rather than reclaiming and recycling the HC blends as a refrigerant, he
suggests using it as a fuel, in case the composition has changed slightly
from its original formulation.  (It beats venting.)
In addition, Richard Maruya said that it certainly would be necessary to
put warnings on a refrigerator with a HC charge to reduce the hazards
associated with using a flammable refrigerant.

Also, Mr. Maruya said that some time ago, he talked with the company that
is preparing his formulation.  They suggested that if he gets to the point
of commercialization, the appropriate place for manufacturing the blend
would be in a refinery.  It then would be packaged in cylinders by Air Gas
or a similar company with experience in working with compressed
hydrocarbon gases.  I would think that safety standards exist at
refineries and facilities of specialty gas packagers.

Margaret Sheppard
USEPA/Stratospheric Protection Division
SNAP Program
Tel.<PHONE_NUMBER>
Fax<PHONE_NUMBER>
email: sheppard.margaret@epa.gov


150 days of receipt of the final mitigation banking instrument.
    (e) Extension of deadlines. (1) The deadlines in paragraphs (c) and
(d) of this section may be extended by the district engineer at his
sole discretion in cases where:
    (i) Compliance with other applicable laws, such as Endangered
Species Act Section 7 consultation, is required;
    (ii) Timely submittal of information necessary for the review of
the proposed mitigation bank is not accomplished by the sponsor; or
    (iii) Information that is essential to the district engineer's
response cannot be reasonably obtained within the specified time frame.
    (2) In such cases, the district engineer must promptly notify the
sponsor in writing of the extension and the reason for it. Such
extensions shall be for the minimum time necessary to resolve the issue
necessitating the extension.
    (f) Modification of mitigation banking instruments. (1) In general,
modification of an approved mitigation banking instrument must follow
the procedures in paragraph (c) of this section, unless the district
engineer determines that the streamlined review process described in
paragraph (f)(2) of this section is warranted. The streamlined review
process may be used for changes reflecting adaptive management of the
mitigation bank, changes in credit release schedules, and changes that
the district engineer determines are non-significant.
    (2) If the district engineer determines that the streamlined review
process is warranted, he must notify the IRT members and the sponsor of
this determination and provide them with copies of the proposed
modification. IRT members and the sponsor have 30 days to notify the
district engineer if they have concerns with the proposed modification.
If IRT members or the sponsor notify the district engineer of such
concerns, the district engineer shall attempt to resolve those
concerns. Within 60 days of providing the proposed modification to the
IRT, the district engineer must notify the IRT members of his intent to
approve or disapprove the proposed modification. If no IRT member
objects, by initiating the dispute resolution process in paragraph (d)
of this section, within 15 days of receipt of this notification, the
district engineer will notify the sponsor of his final decision and, if
the modification is approved, arrange for it to be signed by the
appropriate parties. If any IRT member initiates the dispute resolution
process, the district engineer will so notify the sponsor. Following
conclusion of the dispute resolution process, the district engineer
will notify the sponsor of his final decision, and if the modification
is approved, arrange for it to be signed by the appropriate parties.
    (g) Umbrella mitigation banking instruments. A single mitigation
banking instrument may provide for future authorization of additional
mitigation bank sites. As additional sites are selected, they must be
included in the mitigation banking instrument as modifications, using
the procedures in paragraph (c) of this section.
    (h) Coordination of mitigation banking instrument and DA permit
issuance. In cases where initial establishment of the mitigation bank
involves activities requiring DA authorization, the permit should not
be issued until all relevant provisions of the mitigation banking
instrument have been substantively determined. This is to ensure that
the DA permit accurately reflects all relevant provisions of the final
mitigation banking instrument.
    (i) Project implementation. Authorization to sell credits to
satisfy compensatory mitigation requirements in DA permits is
contingent on compliance with all of the terms of the mitigation
banking instrument. This includes constructing a mitigation bank in
accordance with the mitigation plan as approved by the district
engineer and incorporated by reference in the mitigation banking
instrument. If the aquatic resource restoration, establishment,
enhancement, and/or preservation activities cannot be implemented in
accordance with the approved mitigation plan, the district engineer
must consult with the sponsor and the IRT to consider modifications to
the mitigation banking instrument, including adaptive management,
revisions to the credit release schedule, and alternatives for
providing compensatory mitigation to satisfy any credits that have
already been sold.
    (j) Credit withdrawal from mitigation banks. The mitigation banking
instrument may allow for initial debiting of a percentage of the total
credits projected at mitigation bank maturity provided the following
conditions are satisfied: the mitigation banking instrument and
mitigation plan have been approved, the mitigation bank site has been
secured, appropriate financial assurances have been established, and
any other requirements determined to be necessary by the district
engineer have been fulfilled. The mitigation banking instrument must
provide a schedule for additional credit releases as appropriate
milestones are achieved (see paragraph (k)(7) of this section).
    (k) Determining credits. (1) Units of measure. For mitigation
banks, the principal units for credits and debits are acres or linear
feet or functional assessment units of particular resource types.
Functional assessment units may be linked to acres or linear feet.
    (2) Functional assessment. Where practicable, an appropriate
functional assessment method (e.g., hydrogeomorphic approach to
wetlands functional assessment) must be used to assess and describe the
aquatic resource types that will be restored, established, enhanced
and/or preserved by the mitigation bank.
    (3) Credit production. The number of credits must reflect the
difference between pre- and post-mitigation bank site conditions. If an
existing resource is being enhanced, the number of credits should
reflect only the enhancements produced by construction of the
mitigation bank. This may be reflected in a discounted number of
credits

relative to the total acres or linear feet encompassed by the
mitigation bank.
    (4) Credit value. Once a credit is debited, its value cannot
change.
    (5) Credits provided by preservation. These credits should be
specified as acres or linear feet of preservation of a particular
resource types. In determining the compensatory mitigation requirements
for DA permits using the mitigation bank, the district engineer should
apply a higher mitigation ratio if the requirements are to be met
through the use of preservation credits. In determining this higher
ratio, the district engineer must consider the relative importance of
both the impacted and the preserved aquatic resources in sustaining
watershed functions as described in Sec.  230.93(c).
    (6) Credits provided by riparian areas, buffers, and uplands. These
credits should be specified as acres or linear feet of riparian area,
buffer, and uplands respectively. Non-aquatic resources can only be
used as compensatory mitigation for impacts to aquatic resources
authorized by DA permits when those resources are essential to
maintaining the ecological viability of adjoining aquatic resources. In
determining the compensatory mitigation requirements for DA permits
using the mitigation bank, the district engineer may authorize the use
of riparian area, buffer and/or upland credits if he determines that
these areas are essential to sustaining watershed functions as
described in Sec.  230.93(c) and are the most appropriate compensation
for the authorized impacts.
    (7) Credit release schedule. The terms of the credit release
schedule must be specified in the mitigation banking instrument. The
credit release schedule may provide for release of a limited portion of
projected credits once the mitigation banking instrument, including the
mitigation plan, has been approved, the site secured, and appropriate
financial assurances established. Release of the remaining credits must
be tied to performance based milestones (e.g., construction, planting,
establishment of specified plant and animal communities). The credit
release schedule should reserve a significant share of the total
credits for release only after full achievement of ecological
performance standards. When determining the credit release schedule,
factors to be considered may include, but are not limited to: the
method of providing compensatory mitigation credits (e.g.,
restoration), the likelihood of success, the nature and amount of work
needed to generate the mitigation bank credits, the aquatic resource
type(s) and function(s) to be provided by the mitigation bank, and the
initial capital costs needed to establish the mitigation bank. Once
released, credits may only be used to satisfy compensatory mitigation
requirements in a DA permit if they have been specifically approved by
the district engineer as part of the permit review process.
    (8) Release of credits. Credit releases must be approved by the
district engineer. The sponsor must submit documentation to the
district engineer demonstrating that the appropriate milestones for a
release of credits have been achieved and requesting the release. The
district engineer will provide copies of this documentation to the IRT
members for review. IRT members must provide any comments to the
district engineer within 15 days of receiving this documentation.
However, if the district engineer determines that a site visit is
necessary, IRT members must provide any comments to the district
engineer within 30 days of receipt of this documentation. After full
consideration of any comments received, the district engineer will
determine whether the milestones have been achieved and the credits can
be released.
    (9) Adjustments to credit totals and release schedules. (i) If,
after achieving all performance standards as specified in the
mitigation banking instrument, the sponsor finds that the mitigation
bank has developed aquatic resource functions substantially in excess
of those upon which the original credit totals and release schedule
were based, he may request that the mitigation banking instrument be
amended in accordance with the procedures in paragraph (f) of this
section. This request must include detailed documentation of the
aquatic resource functions provided by the mitigation bank site, an
explanation of how those aquatic resource functions substantially
exceed the functions upon which the original credit totals were based,
an explanation of the basis for calculating the additional credits, and
any other information deemed necessary by the district engineer.
    (ii) If the district engineer determines that the mitigation bank
is not meeting performance standards, he may reduce the number of
available credits or suspend credit sales. The district engineer may
also require adaptive management and/or direct the use of financial
assurances for remediation.
    (l) Reporting. (1) Ledger account. The mitigation banking
instrument must contain a provision requiring the sponsor to establish
and maintain a ledger to account for all credit transactions for the
mitigation bank. Each time an approved credit transaction occurs, the
sponsor must notify the district engineer. The sponsor must compile an
annual ledger report showing the beginning and ending balance of
available credits of each resource type, all additions and subtractions
of credits, and any other changes in credit availability (e.g.,
additional credits released, credit sales suspended). The ledger report
must be submitted to the district engineer, who will distribute copies
to the IRT members. The ledger report is part of the administrative
record for the mitigation bank. The district engineer will make the
ledger report available to the public upon request.
    (2) Monitoring reports. The sponsor is responsible for monitoring
the mitigation bank site in accordance with the approved monitoring
requirements to determine the level of success and identify problems
requiring remedial action. Monitoring must be conducted in accordance
with the requirements in Sec.  230.96, and at time intervals
appropriate for the particular project type and until such time that
the district engineer, in consultation with the IRT, has determined
that the performance standards have been attained. The mitigation
banking instrument must include requirements for periodic monitoring
reports to be submitted to the district engineer, who will provide
copies to other IRT members.
    (m) Use of credits. All activities authorized by DA permits are
eligible, at the discretion of the district engineer, to use a
mitigation bank to compensate for unavoidable impacts to aquatic
resources, such as streams and wetlands. The district engineer will
determine the number and type(s) of credits required to compensate for
the authorized impacts. Permit applicants may propose to use a
particular mitigation bank to provide the required compensatory
mitigation. The banker must provide the permit applicant with a
statement of credit availability. The district engineer must review the
permit applicant's compensatory mitigation proposal, and notify the
applicant of his determination regarding the acceptability of using
that mitigation bank. In making this determination, the district
engineer must fully consider agency and public comments submitted as
part of the permit review process. Use of an approved mitigation bank
consistent with the terms of its instrument (e.g., the permitted
activity is located within the approved service area, credits are
available for an appropriate resource type) will

generally satisfy the requirement to use a watershed approach to
determine compensatory mitigation requirements where feasible and
considering opportunities for on-site, in-kind mitigation, as described
in Sec.  332.3(b).
    (n) IRT concerns with use of credits. If, in the view of a member
of the IRT, an issued permit or series of issued permits raises
concerns about how credits from a particular mitigation bank are being
used to satisfy compensatory mitigation requirements (including
concerns about whether credit use is consistent with the terms of the
mitigation banking instrument), the IRT member may notify the district
engineer in writing of the concern and request an IRT consultation. The
district engineer shall promptly consult with the IRT to address the
concern. Final resolution of the concern is at the discretion of the
district engineer, consistent with applicable statutes, regulations,
and policies regarding compensatory mitigation requirements for DA
permits.
    (o) Long-term management. The legal mechanisms and the party
responsible for the long-term management of the mitigation bank and the
protection of the site must be documented in the mitigation banking
instrument. The sponsor must make adequate provisions for the
operation, maintenance, and long-term management of the mitigation bank
site. The mitigation banking instrument may contain provisions for the
sponsor to transfer long-term management responsibilities to a land
stewardship entity, such as a public agency, non-governmental
organization, or private land manager. Where needed, the acquisition
and protection of water rights must be secured by the sponsor and
documented in the mitigation banking instrument.
    (p) Grandfathering of existing mitigation banking instruments. All
mitigation banking instruments approved after [date 90 days after
publication of final rule] must meet the requirements of this part.
Mitigation banks approved prior to [date 90 days after publication of
final rule] may continue to operate under the terms of their existing
instruments. However, any modification to such a mitigation banking
instrument after [date 90 days after publication of final rule],
including authorization of additional sites under an umbrella
mitigation banking instrument, must be consistent with the terms of
this part.

Sec.  230.99  In-lieu fee programs.

    (a) Suspension of future authorizations. As of [date 90 days after
publication of final rule] district engineers will not authorize new
in-lieu fee programs to provide compensatory mitigation for DA permits.
    (b) Transition period for existing in-lieu fee programs. (1) In-
lieu fee programs with an approved instrument in effect as of [date 90
days after publication of final rule] may continue to sell credits
consistent with the terms of that instrument until [date 5 years and 90
days after publication of final rule]. Credits that have already been
sold by the in-lieu fee program on or before this date (or the date
resulting from an extended deadline, as provided in paragraph (b)(2) of
this section) continue to be subject to the terms and conditions of the
instrument for that in-lieu fee program.
    (2) In-lieu fee programs that wish to continue operating beyond
this date must reconstitute themselves as a mitigation bank, consistent
with the requirements of this subpart. If an in-lieu fee program has
submitted a prospectus satisfying the requirements of Sec.
230.98(c)(2) by [date 4 years and 90 days after publication of final
rule] and is making a good faith effort to complete the process of
obtaining an approved mitigation banking instrument that satisfies the
requirements of this subpart, the district engineer may extend the
deadline for final approval of this instrument beyond [date 5 years and
90 days after publication of final rule] as necessary.
    (3) If the district engineer determines that the substantive
requirements of this subpart pertaining to mitigation banks are already
satisfied by the existing in-lieu fee program instrument, any changes
necessary to reconstitute the in-lieu fee program as a mitigation bank
may be accomplished using the streamlined review process in Sec.
230.98(f)(2), otherwise a new mitigation banking instrument must be
developed using the procedure in Sec.  230.98(c).
    (4) Any in-lieu fee program that has not reconstituted itself as a
mitigation bank by the applicable deadline in paragraphs (b)(1) or
(b)(2) of this section must cease selling credits as of that date.
However, any such in-lieu fee program is still responsible for
providing all credits already sold, consistent with the terms of its
instrument.

    Dated: March 23, 2006.
Stephen L. Johnson,
Administrator, U.S. Environmental Protection Agency.
[FR Doc. 06-2969 Filed 3-27-06; 8:45 am]

BILLING CODE 3710-92-P