[Federal Register Volume 85, Number 164 (Monday, August 24, 2020)]
[Notices]
[Pages 52159-52164]
[FR Doc No: 2020-18462]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89591; File No. SR-NYSE-2020-68]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Its Price List Regarding Port Fees

August 18, 2020.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on August 10, 2020, New York Stock Exchange LLC (``NYSE'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by the self-
regulatory organization. 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\ 15 U.S.C. 78a.
    \3\ 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

    The Exchange proposes to amend its Price List to (1) extend the
Transition Period for member organizations to transition to the
utilization of ports that connect to the Exchange using Pillar
technology; (2) extend the Decommission Period that begins once the
Transition Period ends; and (3) extend the effective date that the
Exchange would prorate the monthly fee for ports activated on or after
July 1, 2019. The Exchange proposes to implement these changes to its
Price List effective August 10, 2020.\4\ The proposed rule change is
available on the Exchange's website at www.nyse.com, at the principal
office of the Exchange, and at the Commission's Public Reference Room.
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    \4\ The Exchange originally filed to amend the Price List on
July 31, 2020 (SR-NYSE-2020-64). SR-NYSE-2020-64 was subsequently
withdrawn and replaced by this filing.
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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 self-regulatory organization
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 those 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 purpose of this filing is to provide additional time for member
organizations to transition from older to newer and more efficient
Pillar technology. The Exchange is not proposing to adjust the amount
of the port fees or the fees charged to offset the Exchange's
continuing costs of supporting legacy ports, which will remain at the
current level for all market participants.
    Effective July 3, 2019, the Exchange introduced transition pricing
designed to provide member organizations an extended transition period
to connect to the Exchange using Pillar technology with no fee
increase. Specifically, the Exchange (1) adopted a cap on monthly fees
for the use of certain ports connecting to the Exchange for the billing
months July 2019 through March 2020 (the ``Transition Period''); (2)
adopted a Decommission Extension Fee applicable for the billing months
April 2020 through September 2020 (the ``Decommission Period'') for
legacy port connections; and (3) prorated the monthly fee for certain
ports activated after July 1, 2019, effective April 1, 2020.\5\
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    \5\ See Securities Exchange Act Release No. 86360 (July 11,
2019), 84 FR 34210 (SR-NYSE-2019-39).
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    Effective March 2, 2020, the Exchange (1) extended the end of the
Transition Period from March 2020 to August 2020 for member
organizations to transition to the utilization of ports that connect to
the Exchange using Pillar technology; (2) shortened the Decommission
Period from six months (April 2020-September 2020) to four months
(September-December 2020); (3) extended the effective date that the
Exchange would prorate the monthly fee for certain ports activated on
or after July 1, 2019 from April 1, 2020 to September 1, 2020; and (4)
revised the fees charged for legacy port connections during the
Decommission Period.\6\
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    \6\ See Securities Exchange Act Release No. 88373 (March 12,
2020), 85 FR 15533 (SR-NYSE-2020-14).
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    The Exchange proposes to:
     extend the end of the Transition Period from August 2020
to October 2020;
     extend the beginning of the Decommission Period from
September 2020 to November 2020 and the end of the Decommission Period
from December 2020 to February 2021; and
     extend the effective date that the Exchange would prorate
the monthly fee for ports activated on or after July 1, 2019 from
September 1, 2020 to November 1, 2020.
    The Exchange would continue to provide a cap on how much member
organizations would be charged for ports during the proposed extra two
months of the Transition Period so that they would not incur additional
charges during the transition to Pillar communication protocols.
Moreover, the Exchange would retain a four month period during which
the few firms that do not transition during the proposed longer
Transition Period would be charged fees to offset the Exchange's
continuing costs of supporting legacy ports but proposes to extend the
beginning and end dates for this period.
    The Exchange proposes to implement these changes to its Price List
effective August 10, 2020.\7\
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    \7\ The Exchange originally filed to amend the Price List on
July 31, 2020 (SR-NYSE-2020-64). SR-NYSE-2020-64 was subsequently
withdrawn and replaced by this filing.
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Competitive Environment
    The Exchange operates in a highly competitive market. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. In Regulation NMS, the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and, also, recognized that current regulation of the
market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \8\
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    \8\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule)
(``Regulation NMS'').
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    As the Commission itself recognized, the market for trading
services in NMS stocks has become ``more fragmented and competitive.''
\9\ Indeed, equity trading is currently dispersed across 13
exchanges,\10\ 31 alternative trading systems,\11\ and numerous broker-
dealer internalizers and wholesalers. Based on publicly-available
information, no single exchange has more than 20% of the market share
of executed volume of equity trades (whether excluding or including
auction volume).\12\ The Exchange believes that the ever-shifting
market share among the exchanges from month to month demonstrates that
market participants can shift order flow, or discontinue or reduce use
of certain categories of products, including ports, in response to fee
changes. Accordingly, the Exchange's fees, including port fees, are
reasonably constrained by competitive alternatives and market
participants can readily trade on competing venues if they deem pricing
levels at those other venues to be more favorable.
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    \9\ See Securities Exchange Act Release No. 51808, 84 FR 5202,
5253 (February 20, 2019) (File No. S7-05-18) (Transaction Fee Pilot
for NMS Stocks Final Rule) (``Transaction Fee Pilot'').
    \10\ See Cboe Global Markets, U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/. See generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \11\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of
alternative trading systems registered with the Commission is
available at https://www.sec.gov/foia/docs/atslist.htm.
    \12\ See Cboe Global Markets U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/.
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    The Exchange is proposing these changes in the context of a
competitive environment in which market participants can and do shift
order flow, or discontinue or reduce use of certain categories of
products, in response to fee changes. Because ports are used by member
organizations to trade electronically on the Exchange, fees associated
with ports are subject to these same competitive forces. The Exchange
believes that the proposal represents a reasonable attempt to provide
member organizations with additional time to effect an orderly
transition to upgraded technology without incurring additional costs.
Proposed Rule Change
    Member organizations enter orders and order instructions, and
receive information from the Exchange, by establishing a connection to
a gateway that uses communication protocols that map to the order types
and modifiers described in Exchange rules. These gateway connections,
also known as logical port connections, are referred to as ``ports'' on
the Exchange's Price List. Legacy ports connect with the Exchange via a
Common Customer Gateway (known as ``CCG'') that accesses its equity
trading systems (``Phase I ports''). Beginning July 1, 2019, the
Exchange began making available ports using Pillar gateways to its
member organizations (``Phase II ports'').
Extension of the Date To Prorate Ports
    The Exchange currently makes available ports that provide
connectivity to the Exchange's trading systems (i.e., ports for entry
of orders and/or quotes (``order/quote entry ports'')) and charges $550
per port per month. Designated Market Makers (``DMMs'') are not charged
for the first 12 ports per month that connect to the Exchange.\13\ The

Exchange also currently makes ports available for drop copies and
charges $550 per port per month,\14\ except that DMMs are not charged
for drop copy ports that connect to the Exchange.
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    \13\ DMMs completed the transition to Phase II ports last year.
    \14\ Only one fee per drop copy port applies, even if receiving
drop copies from multiple order/quote entry ports.
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    During the ongoing first phase of the Exchange's transition
pricing, the fees charged for both order/quote entry and drop copy
ports are, with certain exceptions, capped at--and thus not charged for
more than--the total number of both order/quote entry and drop copy
ports that the member organization has activated as of its June 2019
invoice.
    Effective September 1, 2020, the Exchange will prorate fees for
order/quote entry and drop copy ports activated after July 1, 2019, to
the number of trading days that a port is eligible for production
trading with the Exchange, including any scheduled early closing days.
    The Exchange proposes to extend the effective date for the
prorating of order/quote entry and drop copy ports to November 1, 2020
to coincide with the end of the proposed extended Transition Period in
October 2020, discussed below.
Extension of the Transition Period
    Currently, during the billing months of July 2019 through August
2020 (the ``Transition Period''), the total number of ports charged per
member organization is capped at the total number of ports that the
member organization activated as of the June 2019 invoice, which was
the last full month prior to the introduction of the new gateways (the
``Transition Cap''). Transition Cap pricing is available until the
earlier of (1) the end of the Transition Period, i.e., August 2020, or
(2) the billing month during which a member organization fully
transitions to using only ports that communicate using Pillar phase II
protocols. If during the Transition Period, a member organization
increases the number of Phase I ports above the Transition Cap, those
ports would be charged at the current rates for order/quote entry ports
and drop copy ports. Finally, if during the Transition Period a member
organization has a total number of ports below the Transition Cap, the
Exchange would charge a member organization for their actual number of
ports.
    The Exchange proposes to extend the Transition Period by two months
to October 2020. As proposed, the charge per port (order/quote entry
and drop copy) would remain at $550 per port per month. DMMs would
continue not to be charged for drop copy ports and for their first 12
order/quote entry ports per month that connect to the Exchange, and
then charged $550 per order/quote entry port that connects to the
Exchange per month thereafter.
    The purpose of Transition Period pricing is to cap port fees to
allow member organizations additional time to implement technology
changes necessary to connect to the Exchange using the Phase II ports
without incurring additional Exchange fees. As of June 2020, only 65%
of Phase I ports have been cancelled. Based on the Exchange's
experience to date, the Exchange believes that an additional two months
will be necessary to provide sufficient time for all member
organizations, regardless of size, to be able to complete the necessary
changes and transition fully to the Phase II ports.
Extension of the Decommission Period
    Currently, member organizations that have not transitioned to Phase
II ports and are still utilizing Phase I ports during the billing
months of September 2020 through December 2020 (i.e., the Decommission
Period), would, in addition to the current port fees, be charged a
Decommission Extension Fee of $1,000 per port per month, increasing by
$1,000 per port for each month for any ports that communicate using
Pillar phase I protocols. As per the Price List, ports using Pillar
phase I protocols would no longer be available beginning January 1,
2021.
    The Exchange proposes that the Decommission Period would begin in
November 2020, after the end of the proposed longer Transition Period,
and end four months later. As proposed, the Decommission Period would
commence in November 2020 and end in February 2021. As a result, the
Price List would also be amended to provide that ports using Pillar
phase I protocols would no longer be available beginning March 1, 2021.
    As noted above, the Exchange believes that extending the Transition
Period would provide sufficient time for member organizations to fully
transition to Phase II ports and eliminate their use of Phase I ports.
To the extent that member organizations do not complete the transition
during the Transition Period, the Exchange will offer member
organizations the ability to choose to continue using Phase I ports
until March 2021.
    The proposed changes are not otherwise intended to address any
other issues, and the Exchange is not aware of any problems that member
organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\15\ in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5) of the Act,\16\ in
particular, because it provides for the equitable allocation of
reasonable dues, fees, and other charges among its members, issuers and
other persons using its facilities and does not unfairly discriminate
between customers, issuers, brokers or dealers.
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    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Changes are Reasonable
    The Exchange operates in a highly competitive market. The
Commission has repeatedly expressed its preference for competition over
regulatory intervention in determining prices, products, and services
in the securities markets. Specifically, in Regulation NMS, the
Commission highlighted the importance of market forces in determining
prices and SRO revenues and, also, recognized that current regulation
of the market system ``has been remarkably successful in promoting
market competition in its broader forms that are most important to
investors and listed companies.'' \17\
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    \17\ See Regulation NMS, 70 FR at 37499.
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    As the Commission itself recognized, the market for trading
services in NMS stocks has become ``more fragmented and competitive.''
\18\ Indeed, equity trading is currently dispersed across 13
exchanges,\19\ 31 alternative trading systems,\20\ and numerous broker-
dealer internalizers and wholesalers. Based on publicly-available
information, no single exchange has more than 20% of the market share
of executed volume of equity trades (whether excluding or including
auction volume).\21\ The Exchange believes that the ever-shifting
market share among the exchanges from month to month demonstrates that
market participants can shift order flow, or discontinue or reduce use
of certain categories of products, including ports,

in response to fee changes. Accordingly, the Exchange's fees, including
port fees, are reasonably constrained by competitive alternatives and
market participants can readily trade on competing venues if they deem
pricing levels at those other venues to be more favorable.
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    \18\ See Transaction Fee Pilot, 84 FR at 5253.
    \19\ See Cboe Global Markets, U.S. Equities Market Volume,
available at http://markets.cboe.com/us/equities/market_share/. See
generally https://www.sec.gov/fast-answers/divisionsmarketregmrexchangesshtml.html.
    \20\ See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of
alternative trading systems registered with the Commission is
available at https://www.sec.gov/foia/docs/atslist.htm.
    \21\ See Cboe Global Markets U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/.
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    If a particular exchange charges excessive fees for connectivity,
impacted members and non-members may opt to terminate their
connectivity arrangements with that exchange, and adopt a possible
range of alternative strategies, including routing to the applicable
exchange through another participant or market center or taking that
exchange's data indirectly. Accordingly, if the Exchange charges
excessive fees, it would stand to lose not only connectivity revenues
but also revenues associated with the execution of orders routed to it,
and, to the extent applicable, market data revenues. The Exchange
believes that this competitive dynamic imposes powerful restraints on
the ability of any exchange to charge unreasonable fees for
connectivity.
    Given this competitive environment, the proposal represents a fair
and reasonable attempt to provide member organizations with additional
time to make an orderly transition to upgraded technology without
increasing their costs. As noted, as of June 2020, 35% of legacy ports
have not been cancelled. If a member organization is unable to complete
this transition within the additional two months of the extended
Transition Period, the pricing is designed so that only those few
member organizations that may not transition within that time period
would pay for the Exchange to continue to support their Phase I ports.
The Proposal is an Equitable Allocation of Fees
    The Exchange believes its proposal equitably allocates its fees
among its market participants. The Exchange is not proposing to adjust
the amount of the port fees or the fees charged fees to offset the
Exchange's continuing costs of supporting legacy ports, which will
remain at the current level for all market participants. Rather, the
proposal would provide additional time for member organizations to
transition from older to newer and more efficient Pillar technology and
would charge the same fee for those few member organizations that
choose not to transition to Phase II ports during the extended
Transition Period.
    The Exchange believes that the proposal to pro-rate port fees
beginning November 1, 2020, is also an equitable allocation of fees
since it would apply equally to all member organizations that connect
to the Exchange, who would equally receive the benefit of being charged
only for the connectivity utilized during any trading month beginning
in November 1, 2020. As noted above, to the extent a member
organization continues to use ports activated before July 1, 2019 to
connect to the Exchange during the new November 1, 2020 date and any
subsequent months, the Exchange believes it is fair and equitable to
continue to charge flat fees for such ports until such time that
connection to the Exchange through the use of Phase I ports is no
longer available beginning March 1, 2021.
    The proposal constitutes an equitable allocation of fees because
all similarly situated member organizations and other market
participants that choose to connect to the Exchange through the use of
Phase I ports during the Decommission Period would continue to be
charged the same, unchanged Decommission Extension Fee. Moreover, as
noted above, the Exchange proposes a longer transition period which the
Exchange expects should be more than sufficient for all member
organizations, regardless of size, to transition to Phase II ports
before the Decommission Fee goes into effect.
The Proposal is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly
discriminatory. In the prevailing competitive environment, member
organizations are free to disfavor the Exchange's pricing if they
believe that alternatives offer them better value, and are free to
discontinue to connect to the Exchange through its ports. As noted, the
Exchange is offering upgraded connections in an effort to keep pace
with changes in the industry and evolving customer needs as new
technologies emerge and products continue to develop and change.
    The proposal neither targets nor will it have a disparate impact on
any particular category of market participant. The Exchange believes
that the proposal does not permit unfair discrimination because the
proposal would be applied to all similarly situated member
organizations and other market participants would be charged the same
rates, which will remain unchanged.
    The Exchange believes that the proposal does not permit unfair
discrimination because the Exchange will be making available both the
Phase I and Phase II ports available to all member organizations during
the extended Transition Period on an equal basis. Accordingly, no
member organization already operating on the Exchange would be
disadvantaged by this allocation of fees. For the same reasons, the
Exchange believes that the proposal would not permit unfair
discrimination between member organizations.
    Similarly, the Decommission Extension Fee would apply equally to
all member organizations that choose to connect to the Exchange through
the use of such ports during the proposed Decommission Period. If a
member organizations becomes subject to the Decommission Fee, it would
only be because such firm chose not to complete its transition to the
Phase II ports by the end of the proposed Transition Period. While the
Exchange cannot predict with certainty whether any firms would be
subject to the Decommission Fee, and if so, which ones, the Exchange
anticipates that it would be a limited set of member organizations that
would incur such fees.
    The Exchange believes that the proposal to pro-rate port fees does
not permit unfair discrimination because it would apply equally to all
member organizations that connect to the Exchange, who would equally
receive the benefit of being charged only for the connectivity utilized
during any trading month beginning November 1, 2020. As noted, to the
extent a member organization continues to use ports activated before
July 1, 2019 to connect to the Exchange during November 1, 2020 and any
subsequent months, the Exchange believes it is fair, equitable and not
unfairly discriminatory to continue to charge flat fees for such ports
until such time that connection to the Exchange through the use of old
ports is no longer available beginning March 1, 2021.
    Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\22\ the Exchange
believes that the proposed rule change would not impose any burden on
competition that is not necessary or appropriate in furtherance of the
purposes of the Act. Instead, as discussed above, the Exchange believes
that the proposed changes would provide additional time for member

organizations to transition from older to newer and more efficient
Pillar technology with no fee increase and offset the Exchange's
continuing costs of supporting the Phase I ports for the few firms that
do not transition to the new ports during the longer transition period
without any change to the fees currently charged by the Exchange for
the use of ports to connect to the Exchange's trading systems.
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    \22\ 15 U.S.C. 78f(b)(8).
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    Intramarket Competition. The Exchange does not believe the proposed
rule change would impose any burden on intramarket competition that is
not necessary or appropriate because it would apply to all member
organizations equally that connect to the Exchange. All member
organizations, regardless of size, will be eligible for the transition
pricing through the extended Transition Period ending October 2020 and
will be eligible to connect via either Phase I or Phase II ports during
this period. In addition, all member organizations will be subject to
the Decommission Fee on an equal basis if they do complete the
transition to Phase II ports by the end of the new October 2020 date.
As noted, the Exchange anticipates that a low percentage of member
organizations would be subject to the proposed Decommission Fee, and
the firms likely to be subject to such fee would be larger firms that
could more easily absorb the cost of that fee. The Exchange further
believes that by extending the Transition Period, all member
organizations have an equal opportunity to timely transition to Phase
II ports before the Decommission Fee would take effect.
    Intermarket Competition. The Exchange does not believe the proposed
rule change would impose any burden on intermarket competition that is
not necessary or appropriate because the Exchange operates in a highly
competitive market in which market participants can readily choose to
send their orders to other exchange and off-exchange venues if they
deem fee levels at those other venues to be more favorable. The
Exchange believes that fees for connectivity are constrained by the
robust competition for order flow among exchanges and non-exchange
markets.
    As noted, the no single exchange has more than 20% of the market
share of executed volume of equity trades (whether excluding or
including auction volume).\23\ The Exchange believes that the ever-
shifting market share among the exchanges from month to month
demonstrates that market participants can shift order flow, or
discontinue or reduce use of certain categories of products, including
ports, in response to fee changes. Accordingly, the Exchange's fees,
including port fees, are reasonably constrained by competitive
alternatives and market participants can readily trade on competing
venues if they deem pricing levels at those other venues to be more
favorable.
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    \23\ See Cboe Global Markets U.S. Equities Market Volume
Summary, available at http://markets.cboe.com/us/equities/market_share/.
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    The Exchange is proposing these changes in the context of a
competitive environment in which market participants can and do shift
order flow, or discontinue or reduce use of certain categories of
products, in response to fee changes. Because ports are used by member
organizations to trade electronically on the Exchange, fees associated
with ports are subject to these same competitive forces. The Exchange
therefore believes that the proposal would not impose an undue burden
on intermarket competition because the purpose of this filing is not to
change the rates charged for ports or to offset the Exchange's
continuing costs of supporting legacy ports but rather to provide
member organizations with more time to effect an orderly transition to
upgraded technology without needing to incur any additional costs.

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

    No written comments were solicited or received with respect to the
proposed rule change.

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

    The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \24\ of the Act and subparagraph (f)(2) of Rule
19b-4 \25\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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    \24\ 15 U.S.C. 78s(b)(3)(A).
    \25\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such 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 under
Section 19(b)(2)(B) \26\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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    \26\ 15 U.S.C. 78s(b)(2)(B).
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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-NYSE-2020-68 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-NYSE-2020-68. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSE-2020-68, and should be submitted on
or before September 14, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
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    \27\ 17 CFR 200.30-3(a)(12), (59).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-18462 Filed 8-21-20; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 109 (Tuesday, June 7, 2011)]
[Notices]
[Pages 33022-33023]
[FR Doc No: 2011-13945]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Eighty-Sixth Meeting: RTCA Special Committee 159: Global
Positioning System (GPS)

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of RTCA Special Committee 159 meeting: Global
Positioning System (GPS).

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SUMMARY: The FAA is issuing this notice to advise the public of a
meeting of RTCA Special Committee 159: Global Positioning System (GPS).

DATES: The meeting will be held June 13-17, 2011, from 9 a.m. to 4:30
p.m.

ADDRESSES: The meeting will be held at RTCA, Inc., Conference Rooms,
1828 L Street, NW., Suite 805, Washington, DC 20036.

FOR FURTHER INFORMATION CONTACT: RTCA Secretariat, 1828 L Street, NW.,
Suite 805, Washington, DC 20036; telephone<PHONE_NUMBER>; fax (202)
833-9434; Web site http://www.rtca.org.

SUPPLEMENTARY INFORMATION: Pursuant to section 10(a)(2) of the Federal
Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App. 2), notice is
hereby given for a Special Committee 159: Global Positioning System
(GPS) meeting. The agenda will include:

Specific Working Group Sessions

Monday, June 13, 2011

 All Day, Working Group 2C, GPS/Inertial, Colson Board Room.

Tuesday, June 14, 2011

 All Day, Working Group 2, GPS/WAAS, Colson Board Room.

Wednesday, June 15, 2011

 All Day, Working Group 2, GPS/WAAS, Colson Board Room.

Thursday, June 16, 2011

 All Day, Working Group 4--Precision Landing Guidance (GPS/
LAAS), MacIntosh--NBAA Room and Hilton--ATA Room:
     9 a.m.-12 p.m.--Working Group 6, Interference (GPS/
Interface), Colson Board Room.
     12 p.m.-4:30 p.m.--Working Group

7, Antenna (GPS Antenna), Colson Board Room.

Plenary Session--See Agenda Below

Friday, June 17, 2011

 Chairman's Introductory Remarks.
 Approval of Summary of the Eighty-Fourth and Eighty-Fifth
Meetings held February 11, 2011 and May 26, 2011, RTCA Paper No. 082-
11/SC159-991 and RTCA Paper No. 099-11/SC159-995, respectively.
 Review Working Group (WG) Progress and Identify Issues for
Resolution.
     GPS/3rd Civil Frequency (WG-1).
     GPS/WAAS (WG-2).
     GPS/GLONASS (WG-2A).
     GPS/Inertial (WG-2C).
     GPS/Precision Landing Guidance (WG-4).
     GPS/Airport Surface Surveillance (WG-5).
     GPS/Interference (WG-6).
     GPS/Antennas (WG-7).
 Review of EUROCAE Activities.
 ADS-B GAP Analysis Ad Hoc--Report.
 Assignment/Review of Future Work.
 Other Business.
 Date and Place of Next Meeting.
 Adjourn.
    Attendance is open to the interested public but limited to space
availability. With the approval of the chairman, members of the public
may present oral statements at the meeting. Persons wishing to present
statements or obtain information should contact the person listed in
the FOR FURTHER INFORMATION CONTACT section. Members of the public may
present a written statement to the committee at any time.

    Issued in Washington, DC, on May 26, 2011.
Robert L. Bostiga,
RTCA Advisory Committee.
[FR Doc. 2011-13945 Filed 6-6-11; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 76, Number 86 (Wednesday, May 4, 2011)]
[Notices]
[Pages 25382-25384]
[FR Doc No: 2011-10854]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64355; File No. SR-SCCP-2011-02]

Self-Regulatory Organizations; The Stock Clearing Corporation of
Philadelphia; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Relating to Amendments to the By-Laws of Its Parent
Corporation, The NASDAQ OMX Group, Inc.

April 27, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on April 14, 2011, the Stock
Clearing Corporation of Philadelphia (``SCCP'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change described in Items I, II, and III below, which Items have been
prepared primarily by SCCP. SCCP filed the proposal pursuant to Section
19(b)(3)(A)(iii) of the Act \2\ and Rule 19b-4(f)(6) \3\ thereunder so
that the proposal was effective upon filing with the Commission. The
Commission is publishing this notice to solicit comments on the rule
change from interested parties.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \3\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    The proposed rule change relate to amendments to the By-Laws of
SCCP's parent corporation, The NASDAQ OMX Group, Inc. (``NASDAQ OMX'').

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

    In its filing with the Commission, SCCP 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. SCCP has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.\4\
---------------------------------------------------------------------------

    \4\ The Commission has modified the text of the summaries
prepared by SCCP.
---------------------------------------------------------------------------

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

    NASDAQ OMX recently made certain clarifying amendments to its By-
Laws.\5\ Specifically, the recently approved NASDAQ OMX rule change:
(i) Amended the name of the Nominating Committee to the Nominating &
Governance Committee; (ii) amended the NASDAQ OMX PHLX, Inc. reference
to reflect a recent conversion to a limited liability company; and
(iii) clarified By-Law Article IV, Section 4.4 that broker nonvotes are
not counted as a vote cast either ``for'' or ``against'' a director in
an uncontested election.\6\
---------------------------------------------------------------------------

    \5\ Securities Exchange Act Release No. 34-64285 (April 8, 2011)
76 FR 21085 (April 14, 2011) (File No. SR-NASDAQ-2011-025)
(``Approval Order''). SR-NASDAQ-2011-025 was filed by NASDAQ Stock
Market LLC on behalf of NASDAQ OMX to amend the By-Laws of its
parent corporation.
    \6\ Id.
---------------------------------------------------------------------------

    NASDAQ OMX By-Laws previously provided for a Nominating Committee,
which is appointed pursuant to the By-Laws. In addition to the
responsibilities listed in By-Law Article IV, Section 4.13(h), the
Nominating Committee also conducts certain governance functions such as
consulting with the Board of Directors (``Board'') and the management
to determine the characteristics, skills, and experience desired for
the Board as a whole and for its individual members, overseeing the
annual director evaluation, and reviewing the overall effectiveness of
the Board. Accordingly, NASDAQ OMX renamed and changed all references
to the ``Nominating Committee'' in the By-Laws, to the ``Nominating &
Governance Committee'' so that the title of the committee accurately
reflects all of its current functions, including those that are deemed
governance functions. The proposal to rename the Nominating Committee
did not change the function of the committee but was intended to
clarify the current functions and its governance role with respect to
the Board selection process.
    Additionally, NASDAQ OMX amended Article 1, Section (o) of NASDAQ
OMX's By-Laws to change the reference to ``NASDAQ OMX PHLX, Inc.'' to
``NASDAQ OMX PHLX LLC'' to reflect a recently filed rule change to
convert NASDAQ OMX PHLX, Inc. from a Delaware corporation to a Delaware
limited liability company.\7\
---------------------------------------------------------------------------

    \7\ Securities Exchange Act Release No. 34-62783 (August 27,
2010), 75 FR 54204 (September 3, 2010) (File No. SR-Phlx-2010-104).
---------------------------------------------------------------------------

    Finally, NASDAQ OMX added the words ``and broker nonvotes'' to
NASDAQ OMX's By-Law Article IV,

Section 4.4 to make clear that broker nonvotes will not be counted as
votes cast either ``for'' or ``against'' that director's election. In
its filing to amend NASDAQ OMX's By-Laws, NASDAQ Stock Market LLC noted
that NASDAQ OMX's past practice has been to not count a broker nonvote
as a vote cast either for or against a director's election.\8\
Accordingly, this change clarifies this practice by codifying it into
the By-Laws, especially in light of NASDAQ OMX's recent change to a
majority vote standard in the uncontested election of directors.
---------------------------------------------------------------------------

    \8\ Securities Exchange Act Release No. 34-63925 (February 17,
2011), 76 FR 10418 (February 24, 2011) (File No. SR-NASDAQ-2011-
025).
---------------------------------------------------------------------------

    In 2010, NASDAQ OMX amended its By-Laws to state that in an
uncontested election, a majority voting standard would apply to the
election of its directors, requiring directors to be elected by the
holders of a majority of the votes cast at any meeting for the election
of directors at which a quorum is present in an uncontested
election.\9\ A plurality standard would still remain in a contested
election. While in its filing to amend NASDAQ OMX's By-Laws, NASDAQ
Stock Market LLC noted that it has always been NASDAQ OMX's practice to
not count broker nonvotes ``for'' or ``against'' in director elections,
the Commission noted in its Approval Order that the impact of the
broker nonvote and how such votes are counted will take on added
significance under NASDAQ OMX's newly adopted majority vote standard
for director elections. Although in its filing NASDAQ Stock Market LLC
stated that under Delaware case law,\10\ broker nonvotes are not
considered as votes cast for or against a proposal or director nominee,
SCCP proposes the change for clarity and transparency purposes.
---------------------------------------------------------------------------

    \9\ Securities Exchange Act Release No. 34-61786 (April 8,
2010), 75 FR 19436 (April 14, 2010) (File No. SR-NASDAQ-2010-025).
    \10\ Berlin v. Emerald Partners, 552 A.2d 482 494 (Del Supr.
1988).
---------------------------------------------------------------------------

    SCCP believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\11\ in general, and with Sections
6(b)(1) and 6(b)(5) of the Act,\12\ in particular, in that the proposal
enables SCCP to be so organized as to have the capacity to be able to
carry out the purposes of the Act, the rules and regulations
thereunder, and self-regulatory organization rules, and is 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.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(1), (5).
---------------------------------------------------------------------------

    SCCP believes that changing the name of the Nominating Committee to
the Nominating and Governance Committee and amending references to an
exchange name to reflect a corporate change to a limited liability
company are both clarifying in nature. The changes will ensure that the
committee's title accurately reflects its functions and will ensure
that the By-Laws accurately and properly reflect an exchange entity
name. As discussed above, the amendment that broker nonvotes will not
be counted as a vote either ``for'' or ``against'' in director
elections will codify NASDAQ OMX's past practice, providing clarity and
transparency. Accordingly SCCP believes that the amendments are
consistent with investor protection and the public interest.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    SCCP does not believe that the proposed rule change will have any
impact or impose any burden on competition.

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

    Written comments relating to the proposed rule change have not been
solicited or received. SCCP will notify the Commission of any written
comments received by SCCP.

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

    The foregoing proposed rule change has become effective upon filing
pursuant to Section 19(b)(3)(A)(iii) of the Act \13\ and Rule 19b-
4(f)(6) \14\ thereunder because the proposed rule change 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 after the date of the filing, or such
shorter time as the Commission may designate. 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.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give 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.
NASDAQ OMX PHLX LLC has satisfied this requirement.
---------------------------------------------------------------------------

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 e-mail to<EMAIL_ADDRESS>Please include
File Number SR-SCCP-2011-002 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-SCCP-2011-002. This file
number should be included on the subject line if e-mail 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
a.m. and 3 p.m. Copies of such filings also will be available for
inspection and copying at the principal office of SCCP and on SCCP's
Web site at http://

nasdaqomxphlx.cchwallstreet.com/NASDAQOMXPHLX/pdf/sccp-filings/2011/SR-
SCCP-2011-02.pdf.
    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-SCCP-2011-02
and should be submitted on or before May 25, 2011.

    For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-10854 Filed 5-3-11; 8:45 am]
BILLING CODE 8011-01-P


(2) Contracts and documents memorializing the sale of renewable fuel to parties who blend the fuel into gasoline or diesel fuel to produce a transportation fuel, heating oil or jet fuel
   relied upon in § 80.1426(f)(X);

   (3) Such other records as may be requested by the Administrator.

(m) Requirements for independent third-party auditors. Any independent third-party auditor (as described at §80.1471) must keep all of the following records for a period of at least five (5) years:

   (1) Copies of all reports submitted to EPA under §80.1451(g), as applicable.

   (2) Records related to the implementation of a QAP under §80.1469 for each facility including records from facility audits and ongoing and quarterly monitoring activities.

   (3) Records related to the verification of RINs under §80.1471(e).

   (4) Copies of communications sent to and received from renewable fuel producers or foreign renewable fuel producers, feedstock suppliers, purchasers of RINs, and obligated parties.

   (5) Copies of all notes relating to the implementation of a QAP under §80.1469.

   (6) List of RINs reported to EPA and renewable fuel producers or foreign renewable fuel producers as potentially invalidly generated under §80.1474 compliance.

   (7) Records related to the professional liability insurance requirement under §80.1471(c).

   (8) Copies of all records related to any financial assurance instrument as required under §80.1470 under a quality assurance plan implemented under §80.1469(a).

   (9) Such other records as may be requested by the Administrator.

(n) The records required under paragraphs (a) through (d) and (f) through (l) of this section and under §80.1453 shall be kept for five years from the date they were created, except that records related to transactions involving RINs shall be kept for five years from the date of the RIN transaction.

(o) The records required under paragraph (e) of this section shall be kept through calendar year 2022.

(p) On request by EPA, the records required under this section and under §80.1453 must be made available to the Administrator or the Administrator's authorized representative. For records that are electronically generated or maintained, the equipment or software necessary to read the records shall be made available; or, if requested by EPA, electronic records shall be converted to paper documents.

(q) The records required in paragraphs (b)(3) and (c)(1) of this section must be transferred with any renewable fuel sent to the importer of that renewable fuel by any foreign producer not generating RINs for his renewable fuel.

(r) Copies of all reports required under §80.1464.

14.  Section 80.1460 is amended by adding paragraphs (g), (h), and (i) as follows.

§ 80.1460   What acts are prohibited under the RFS program?

*     *     *     *     *

(g) Failing to retire RINs when fuel for which RINs have been generated is designated for use in an application other than transportation fuel, heating oil or jet fuel.  No person shall designate fuel for which RINs were generated for a non-qualifying fuel use, unless the requirements of 80.1433 have been met.

(h)  RIN Separation Violations.  No person shall do any of the following:

   (1)	Separate RINs in EMTS using the wrong separation reason code
   (2)  Separate RINs in EMTS without having a qualifying separation event pursuant to 80.1429
   (3)  Separate more than 2.5 RINs per gallon of renewable fuel that has a valid qualifying separation event pursuant to §80.1429.
   (4)  Separate RINs outside of the requirements in §80.1452(c).
   (5)  [Reserved]
   (6)  Improperly separate RINs in any other way not listed in paragraphs (i)(1)-(5) of this section.

 (i) Independent third-party auditor violations.  No person shall do any of the following:

(1) Fail to fully and competently implement a QAP approved under §80.1469.

(2) Fail to notify appropriate parties of potentially invalid RINs under §80.1474(b).

(3)  Identify a RIN as verified in accordance with §80.1471(e) that is invalid under §80.1431.

15. Section 80.1461 is amended by revising paragraphs (a)(1) and (a)(2) as follows.

§ 80.1461 Who is liable for violations under the RFS program?

*    *    *    *    *

(a) *     *     *

      (1) Any person who violates a prohibition under §80.1460(a) through (d) or §80.1460(g) through (h) is liable for the violation of that prohibition.

      (2) Any person who causes another person to violate a prohibition under §80.1460(a) through (d) or §80.1460(g) through (h) is liable for a violation of §80.1460(e).

16.  Section 80.1469 is added as follows:

§80.1469 Requirements for Quality Assurance Plans

This section specifies the requirements for two types of Quality Assurance Plan (QAP).

(a) Option A QAP Requirements.

	(1) Feedstock-related components.

		(i) Components requiring ongoing monitoring:

         (A) Feedstocks are renewable biomass as defined in §80.1401.
         (B) Feedstocks are being separated according to a separation plan, if applicable under §80.1426(f)(5)(ii).
         (C) Crop and crop residue feedstocks meet land use restrictions, or alternatively the aggregate compliance provisions of §80.1454(g).
         (D) If applicable, verify that feedstocks with additional recordkeeping requirements meet requirements of §80.1454(d).
         (E) Feedstocks are valid for the D code being used, and are consistent with information recorded in EMTS.(F) Feedstock is consistent with production process and D code being used as permitted under Table 1 to Section 80.1426 or a petition approved through section 80.1416.
         (G) Feedstock is not renewable fuel for which RINs were previously generated.

		(ii) Components requiring quarterly monitoring:

         (A) Separated food waste or separated yard waste plan is accepted and up to date, if applicable under §80.1426(f)(5)(ii).
         (B) Separated municipal solid waste plan is approved and up to date, if applicable under §80.1426(f)(5)(ii).
         (C) Contracts or agreements for feedstock acquisition are sufficient for facility production.
         (D) Feedstock processing and storage equipment are sufficient and are consistent with engineering review under §80.1450(b)(2).
         (E) If applicable, accuracy of feedstock energy (FE) calculation factors related to feedstocks, including average moisture content m and feedstock energy content E.

	(2) Production process-related components.

		(i) Components requiring ongoing monitoring:

         (A) Production process is consistent with that reported in EMTS.
         (B) Production process is consistent with D code being used as permitted under Table 1 to §80.1426 or a petition approved through §80.1416.
         (C) Certificates of analysis verifying fuel type and quality, as applicable.

		(ii) Components requiring quarterly monitoring:

         (A) Mass and energy balances are appropriate for type and size of facility.
         (B) Workforce size is appropriate for type and size of facility, and sufficient workers are on site for facility operations.
         (C) If applicable, process-related factors used in feedstock energy (FE) calculation are accurate, in particular the converted fraction (CF).
         (D) Verify existence of quality process controls designed to ensure that fuel continues to meet applicable property and quality specifications.
         (E) Volume production is consistent with that reported to EPA and EIA, as well as other federal or state reporting.
         (F) Volume production is consistent with storage and distribution capacity.
         (G) Volume production capacity matches RFS registration.

	(3) RIN  generation-related components.

		(i) Components requiring ongoing monitoring:

         (A) Standardization of volumes pursuant to §80.1426(f)(8) are accurate.
         (B) Renewable fuel type matches the D code being used.
         (C) RIN generation is consistent with wet gallons produced or imported.
         (D) Fuel shipments are consistent with production volumes.
         (E) If applicable, renewable content R is accurate pursuant to 80.1426(f)(9).
         (F) Equivalence value EV is accurate and appropriate.
         (G) Renewable fuel was intended and sold for qualifying uses as transportation fuel, heating oil, or jet fuel.
         (H) Verify that appropriate RIN generation calculations are being followed under §80.1426(f)(3), (4), or (5), as applicable.

		(ii) Components requiring quarterly monitoring:

			(A) Registration, reporting and recordkeeping components.

	(4) RIN separation-related components.

		(i) Components requiring ongoing monitoring:

         (A) If applicable, verify that RIN separation is appropriate under §80.1429(b)(4).
         (B)  If applicable, verify that RINS were retired for any fuel that the producer produced and exported.

		(ii) Components requiring quarterly monitoring:

         (A) Verify that annual attestation report is accurate.

(b) Option B QAP Requirements.

All components specified in this paragraph(b) require quarterly monitoring.

	(1) Feedstock-related components.
		(i) Feedstocks are renewable biomass as defined in §80.1401.
      (ii) If applicable, separated food waste or separated yard waste plan under §80.1426(f)(5)(ii) is accepted and up to date.
      (iii) If applicable, separated municipal solid waste plan under §80.1426(f)(5)(ii) is approved and current.
      (iv) Feedstocks are being separated according to a separation plan, if applicable under §80.1426(f)(5)(ii).
      (v) Crop and crop residue feedstocks meet land use restrictions, or alternatively the aggregate compliance provisions of §80.1454(g).
      (vi) Feedstock is consistent with production process and D code being used as permitted under Table 1 to Section 80.1426 or a petition approved through section 80.1416, and is consistent with information recorded in EMTS.
      (vii) Feedstock is not renewable fuel for which RINs were previously generated.
      (viii) If applicable, accuracy of feedstock energy (FE) calculation factors related to feedstocks, including average moisture content m and feedstock energy content E.

	(2) Production process-related components.

      (i) Production process is consistent with that reported in EMTS.
      (ii) Production process is consistent with D code being used as permitted under Table 1 to §80.1426 or a petition approved through §80.1416.
      (iii) Mass and energy balances are appropriate for type and size of facility.
      (iv) If applicable, process-related factors used in feedstock energy (FE) calculation are accurate, in particular the converted fraction CF.

	(3) RIN generation -related components.

      (i) Renewable fuel was intended and sold for qualifying uses as transportation fuel, heating oil, or jet fuel.
      (ii) Certificates of analysis verifying fuel type and quality, as applicable.
      (iii) Renewable fuel type matches the D code being used.
      (iv) If applicable, renewable content R is accurate pursuant to 80.1426(f)(9).
      (v) Equivalence value EV is accurate and appropriate.
      (vi) Volume production capacity matches RFS registration.
      (vii) Verify that appropriate RIN generation calculations are being followed under §80.1426(f)(3), (4), or (5), as applicable.

	(4) RIN separation-related components.

   (i) If applicable, verify that RIN separation is appropriate under §80.1429(b)(4).
      (ii) Verify that fuel that is exported was not used to generate RINs, or alternatively that were generated but retired.
      (iii) Verify that annual attestation report is accurate.

(c) Each QAP shall represent a specific RIN-generating pathway as provided in Table 1 to §80.1426 or as approved by the Administrator pursuant to §80.1416, and shall contain elements specific to particular feedstocks, production processes, and fuel types as applicable.

(d) Submission and approval of a QAP.

   (1) Each independent third-party auditor shall annually submit a QAP to the EPA which demonstrates adherence to the requirements of paragraphs (a) and (c) or (b) and (c) of this section, as applicable, and request approval on forms and using procedures specified by the Administrator.

   (2) No third-party independent auditor may present a QAP as approved by the EPA without having received written approval from the EPA.

   (3) A QAP is approved on the date that EPA notifies the third-party independent auditor of such approval.

   (4) EPA may revoke its approval of a QAP for cause, including, but not limited to, an EPA determination that the approved QAP has proven to be inadequate in practice.

   (5) EPA may void ab initio its approval of a QAP upon EPA's determination that the approval was based on false information, misleading information, or incomplete information, or if there was a failure to fulfill, or cause to be fulfilled, any of the requirements of the QAP.

(e) Conditions for revisions of a QAP.

   (1) A new QAP shall be submitted to EPA according to paragraph (d) of this section whenever the following changes occur at a production facility audited by a third-party independent auditor using an approved QAP:

      (i) Change in feedstock.
      (ii) Change in type of fuel produced.
      (iii) Change in facility operations or equipment that may impact the capability of the QAP to verify that RINs are validly generated.

    (2) An original QAP ceases to be valid as the basis for verifying RINs until a new QAP, submitted to EPA under this paragraph (e), is approved pursuant to paragraph (d).

17.  Section 80.1470 is added as follows:

§80.1470	 RIN Replacement Mechanisms for Option A Independent Third Party Auditors.

(a) Applicability.  This section applies to independent third party auditors using a QAP approved under Option A pursuant to §80.1469(a) and (c).

(b) Requirements. An independent third party auditor must establish or participate in the establishment of a RIN replacement mechanism. The RIN replacement mechanism must fulfill, at a minimum, the following conditions:

   (1) The RIN replacement mechanism must be capable of fulfilling the independent third party auditor's RIN replacement responsibility, as described in section 1474(b)(5)(i) of this subpart.

   (2) The independent third party auditor is responsible for calculating and maintaining the minimum coverage afforded by the RIN replacement mechanism at all times.

   (3) RINs held by the RIN replacement mechanism (if any) must be identified in a unique EMTS account designated for the exclusive use of the replacement mechanism.

   (4) Distribution and removal of RINs from the replacement mechanism may not be under the sole operational control of the third-party auditor.

   (5) An originally signed duplicate of the agreement or contract establishing the RIN replacement mechanism must be submitted to EPA by the independent third party auditor in accordance with 40 CFR § 1450(g)(7).

   (6) Any substantive change to the agreement establishing the RIN replacement mechanism must be submitted to EPA within 30 days of the change.

(c) Cap on RIN Replacement for Independent Third Party Auditors of A-RINs.

   (1) The cap on RIN replacement for auditors of A-RINs shall apply to A-RINs generated in 2013, 2014, and 2015.

   (2) If required to replace invalid A-RINs pursuant to paragraph (b) of this section, the independent third party auditor shall be required to replace no more than 2% of each D code of A-RINs verified by the auditor in the current calendar year and four previous calendar years.

   (3) The auditor's potential replacement responsibility for a given RIN will expire at the end of the fourth calendar year after the calendar year in which the RIN was verified.

   (4)  The minimum RIN replacement coverage (RRC) that must be held by the third-party auditor's RIN replacement mechanism is the lesser of:

      (i)
      RRCy=i=040.02x ARINVERy-i

         Where:

         RRCy =	RIN replacement coverage in year y in units of A-RINs that the mechanism is capable of replacing
         y =	The current year
         ARINVERy-i =	The sum of all A-RINs of a particular D code verified by the third-party auditor in year y - i

      or

      (ii)
                    RRCy = 0.02 x ARINVERy + RRCy-1  ARINREPy-1
         ,
         Where:

         RRCy =	RIN replacement coverage in year y in units of A-RINs that the mechanism is capable of replacing
         y =	The current year
         ARINVERy =	The sum of all A-RINs of a particular D code verified by the third-party auditor in year y
         RRCy-1 =	RIN replacement coverage in year y-1 in units of A-RINs that the mechanism is capable of replacing
         ARINREPy-1 =	The sum of all A-RINs of a particular D code that were replaced by the third-party auditor in year y-1

(d) The cap on RIN replacement does not apply when invalid verified RINs are a result of auditor error, omission, negligence, fraud, collusion with the renewable fuel producer, or a failure to implement the QAP properly or fully.

18.  Section 80.1471 is added as follows:

§80.1471 Requirements for QAP Auditors

(a) QAP audits conducted pursuant to §80.1472 must be conducted by an independent third-party auditor that is a professional engineer, as specified in paragraphs §80.1450(b)(2)(i)(A) and §80.1450(b)(2)(i)(B).

(b) To be considered an independent third-party auditor under paragraph §80.1471(a):

   (1) The independent third-party auditor shall not be owned or operated by the renewable fuel producer or foreign ethanol producer, or any subsidiary or employee of the renewable fuel producer or foreign ethanol producer.

   (2) The independent third-party auditor shall be free from any interest in the renewable fuel producer or foreign ethanol producer's business.

   (3) The renewable fuel producer or foreign renewable fuel producer shall be free from any interest in the third-party auditor's business.

   (4) The independent third-party auditor must not be debarred, suspended, or proposed for debarment pursuant to the Government-wide Debarment and Suspension regulations, 40 CFR part 32, or the Debarment, Suspension and Ineligibility provisions of the Federal Acquisition Regulations, 48 CFR, part 9, subpart 9.4.

(c) Independent third-party auditors shall maintain professional liability insurance, as defined in 31 CFR 50.5(q), of a minimum amount equal to 2% of the RINs the auditor verifies in a year to cover replacement of any invalid verified RINs due to auditor error, omission, or negligence.  Independent third-party auditors shall use insurance providers that possess a financial strength rating in the top four categories from either Standard & Poor's or Moody's, i.e., AAA, AA, A or BBB for Standard & Poor's and Aaa, Aa, A, or Baa for Moody's.  Replacement of any such invalid verified RINs is not subject to the cap on RIN replacement set forth in §80.1474(e).

(d)(1) In the event that an independent third-party auditor identifies a RIN that may have been invalidly generated, the independent third-party auditor shall, within 24 hours, send notification of the potentially invalidly generated RIN to EPA and the renewable fuel producer that generated the RIN.

	(2) The independent third-party auditor shall provide the notification required under paragraph (d)(1) of this section in writing (which includes e-mail or facsimile) and, if requested by the party being notified of a potentially invalidly generated RIN, by telephone.

(e) The independent third-party auditor shall identify RINs generated from a renewable fuel producer or foreign renewable fuel producer as having been verified under a QAP.

   (1)	For RINs verified under QAP Option A pursuant to §80.1469(a), RINs shall be designated as A-RINs.

   (2) For RINs verified under QAP Option B pursuant to §80.1469(b), RINs shall be designated as B-RINs.

   (3) The independent third-party auditor shall not indentify RINs generated from a renewable fuel producer or foreign renewable fuel producer as having been verified under a QAP if a revised QAP must be submitted to and approved by EPA under §80.1469(e).

(f)	(1) Except as specified in paragraph (f)(2) of this section, auditors may only verify RINs that have been generated after the audit required under §80.1472 has been completed.

      (i) For A-RINs, ongoing monitoring must have been initiated.

      (ii) Verification of RINs may continue for no more than 100 days following an audit.

   (2)	Auditors may verify RINs that were generated before the audit required under §80.1472 has been completed, under the following conditions:

      (i) The RINs in question were generated between January 1, 2013 and December 31, 2013 inclusive.

      (ii) The audit is completed between January 1, 2013 and the effective date of the final rule.

      (iii) The audit is performed in accordance with the elements specified in a QAP that has been approved by the EPA per §80.1469(c).

      (iv) The audit requirements of §80.1472(e)(1) are met for every batch of renewable fuel for which RINs were generated and are being verified.

      (v) The auditor may not perform more than one (1) audit under this subparagraph for any single RIN generator.

(g) The independent third-party auditor shall permit any representative of EPA to monitor at any time the implementation of QAPs and renewable fuel production facility audits.

(h) Any person who fails to meet a requirement under (f)(1) of this section shall be subject to a separate violation pursuant to section 1460(f) of this subpart.

19.  Section 80.1472 is added as follows:

§80.1472 Requirements for Quality Assurance Audits

(a) General requirements.

   (1) An audit shall be performed by an auditor who meets the requirements of §80.1471.

   (2) An audit shall be based on either an Option A QAP per §80.1469(a) or an Option B QAP per §80.1469(b).

   (3) Each audit shall verify every element contained in an applicable and approved QAP.

   (4) Each audit shall include direct contact with all feedstock suppliers to the facility to obtain documents related to the feedstocks used in the production of renewable fuel at the facility.

   (5) Each audit shall include a review of documents generated by the renewable fuel producer.

   (6) Each audit shall include direct contact with all purchasers of renewable fuel produced at the facility to obtain documents related to renewable fuel purchased from the facility.

(b) On-site visits.

   (1) Option A QAP.

      (i) The auditor shall conduct an on-site visit at the renewable fuel production facility at least 4 times per calendar year.

      (ii) The on-site visits specified in paragraph (b)(1)(i) of this section shall occur at least 60 days apart.  The 60-day period shall start the day after the previous on-site ends.

      (iii) The on-site visit shall include verification of all QAP elements that require inspection or evaluation of the physical attributes of the renewable fuel production facility, except for any physical attribute that is verified through remote monitoring equipment per the applicable QAP.

   (2) Option B QAP.

      (i) The auditor shall conduct an on-site visit at the renewable fuel production facility at least 4 times per calendar year.

      (ii) The on-site visit specified in paragraph (b)(2)(i) of this section shall be occur at least 60 days after the previous on-site visit.  The 60-day period shall start the day after the previous on-site visit ends.

      (iii) An on-site visit shall include verification of all QAP elements that require inspection or evaluation of the physical attributes of the renewable fuel production facility.

20.  Section 80.1473 is added as follows:

§80.1473 Affirmative Defenses

(a) Any person who engages in actions that would be a violation of the provisions of either §80.1460(b)(2) or (c)(1), other than the generator of an invalid RIN, will not be deemed in violation if the person demonstrates that the criteria under §80.1473 (c) or (d) are met.

(b) Applicability of affirmative defenses.  The following provisions apply to affirmative defenses asserted under subsection (a) of this section:

   (1) Affirmative defenses only apply to RINs that were invalidly generated and verified through a quality assurance audit using an EPA-approved Option A or Option B QAP.

   (2) Affirmative defenses only apply in situations where an invalidly generated verified RIN is either transferred to another person (violation of §80.1460(b)(2)) or used for compliance for an obligated party's RVO (violation of §80.1460(c)(1)).

   (3) Affirmative defenses do not apply to the generator of an invalid RIN.

(c) Asserting an affirmative defense for invalid A-RINs.  To establish an affirmative defense to a violation of §80.1460 (b)(2) or (c)(1) involving invalid A-RINs, the person must meet the notification requirements of §80.1473(e) and prove by a preponderance of evidence that:

   (1) The RIN in question was verified through a quality assurance audit pursuant to §80.1472 using an approved Option A QAP as defined in §80.1469(a).

   (2) The person did not know or have reason to know that the RINs were invalidly generated prior to being verified by the independent third-party auditor.

   (3) If the person self-identified the RIN as having been invalidly generated, the person notified EPA within the next business day of discovering the invalidity.

   (4) The person did not cause the invalidity.

   (5) The person did not have a financial interest in the company that generated the invalid RIN.

(d) Asserting an affirmative defense for invalid B-RINs.  To establish an affirmative defense to a violation of §80.1460 (b)(2) or (c)(1) involving invalid B-RINs, the person must meet the notification requirements of §80.1473(e) and prove by a preponderance of evidence that:

   (1) The RIN in question was verified through a quality assurance audit pursuant to §80.1472 using an approved Option B QAP as defined in §80.1469(b).

   (2) The person did not know or have reason to know that the RINs were invalidly generated at the time of transfer or use for compliance, unless a remedial action as defined in §80.1474 was implemented.

   (3) If the person self-identified the RIN as having been invalidly generated, the person notified EPA within the next business day of discovering the invalidity.

   (4) The person did not cause the invalidity.

   (5) The person did not have a financial interest in the company that generated the invalid RIN.

   (6) If the person used the invalid B-RIN for compliance, the person adjusted its records, reports, and compliance calculations in which the invalid B-RIN was used as required by §80.1431, unless a remedial action as defined in §80.1474 was implemented.

(e) Notification Requirements.  A person asserting an affirmative defense to a violation of §80.1460 (b)(2) or §80.1460(c)(1), arising from the transfer or use of an invalid A-RIN or B-RIN, must submit a written report to the EPA, including all pertinent supporting documentation, demonstrating that the requirements of §80.1473(c) or (d) were met.  The written report must be submitted within 30 days of the person discovering the invalidity.

21.  Section 80.1474 is added as follows:

§ 80.1474  Replacement Requirements for Invalidly Generated RINs.

(a) Responsibility for replacement of invalid verified RINs.

   (1) The generator of the A-RIN and the independent third-party auditor that verified the A-RIN are required to replace invalidly generated A-RINs with valid RINs pursuant to the procedures specified in paragraph (b) of this section.

   (2) The generator of the B-RIN and the obligated party that owns the B-RIN are required to replace invalidly generated B-RINs with valid RINs pursuant to the procedures specified in paragraph (b) of this section.

   (3) The producer of an unverified RIN and the obligated party that owns an unverified RIN are required to replace invalidly generated and unverified RINs pursuant to the procedures specified in paragraph (b) of this section.

(b) Identification and treatment of Potentially Invalid RINs (PIRs)

   (1) Any RIN can be identified as a PIR by the RIN generator, an independent third-party auditor that verified the RIN, or EPA.

   (2) For PIRs identified by the RIN generator, the generator is required to notify EPA within 24 hours of the identification, including a detailed explanation of why the RIN is believed to be invalid, and is required to take one of the following corrective actions within 30 days:

   	(i) Retire the PIR, or
   	(ii) Retire a valid RIN meeting the requirements of paragraph (c) of this section.

   (3) For PIRs identified by the independent third-party auditor that verified the RIN, the independent third-party auditor is required to notify EPA and the RIN generator in writing within 24 hours of the identification, including a detailed explanation of why the RIN is believed to be invalid.

   (4)	Within 30 days of being notified by EPA or the independent third-party auditor that verified the RIN that a RIN is a PIR, the RIN generator is required to take one of the following actions:

      (i)  In the event that EPA identifies a RIN as a PIR:
      	(A)	Retire the PIR,
      	(B)	Retire a valid RIN following the requirements of paragraph (c) of this section, or
      	(C) Submit a demonstration in writing to EPA that the PIR is valid.
         	(1) If EPA determines that the demonstration is satisfactory, the PIR will be deemed to be a valid RIN.
         	(2) If EPA determines that the demonstration is not satisfactory, the PIR will be deemed invalid and the PIR generator must retire the PIR or a valid RIN following the requirements of paragraph (c) of this section within 30 days of notification by EPA.

      (ii)  In the event that the independent third-party auditor identifies a RIN as a PIR:
      	(A)	Retire the PIR,
      	(B)	Retire a valid RIN following the requirements of paragraph (c) of this section, or
      	(C) Submit a demonstration in writing to the independent third-party auditor that the 	PIR is valid.
         	(1) If the independent third-party auditor determines that the demonstration is satisfactory, the PIR will be deemed to be a valid RIN.
         	(2) If the independent third-party auditor determines that the demonstration is not satisfactory, EPA will then make a determination whether the demonstration is not satisfactory, and if so, the PIR will be deemed invalid and the PIR generator must retire the PIR or a valid RIN following the requirements of paragraph (c) of this section within 30 days of notification by EPA.

   (5) Within 60 days of receiving a notification from EPA that a PIR generator has failed to perform a corrective action required pursuant to this section,

      (i)	For A-RINs, the independent third-party auditor that verified the PIR is required to retire valid RINs meeting the requirements of paragraph (c) of this section.

      (ii)	For B-RINs and unverified RINs, the obligated party that owns the PIR is required to either

         (A) Retire the PIR.
         (B) If the PIR has already been used for compliance with the obligated party's RVO, correct the RVO to subtract the PIR.

(c) The following specifications apply when retiring valid RINs to replace PIRs or invalid RINs:

   (1) When a RIN is retired to replace a PIR or invalid RIN, it must be of the same verification type, either A-RIN, B-RIN, or unverified. The D code of the retired RIN must be eligible to be used towards meeting all the renewable volume obligations as the PIR or invalid RIN it is replacing, as specified in paragraph (a)(2) of §80. 1427.

   (2) The number of RINs retired must be equal to the number of PIRs or invalid RINs being replaced, subject to paragraph (d) of this section and paragraph (c) of §80.1470.

 (d) Limited Exemption for invalid B-RINs.

   (1) In the event that an obligated party is required to retire or replace a PIR that is a B-RIN pursuant to paragraph (b) of this section, the obligated party will be afforded a "limited exemption" equal to 2% of its annual Renewable Volume Obligation (RVO) for calendar years 2013 and 2014.

   (2)	Limited exemptions are calculated as follows:

                             LECB,i = 0.02 x RVOCB,i
                            LEBBD,i = 0.02 x RVOBBD,i
                             LEAB,i = 0.02 x RVOAB,i
                             LERF,i = 0.02 x RVORF,i

   Where:

      LECB,i =	Limited exemption for cellulosic biofuel for year i
      LEBBD,i = 	Limited exemption for biomass-based diesel for year i
      LEAB,i = 	Limited exemption for advanced biofuel for year i
      LERF,i = 	Limited exemption for renewable for year i
                  RVOCB,i =	The Renewable Volume Obligation for cellulosic biofuel for the obligated party for calendar year i, in gallons, pursuant to §80.1407.
                  RVOBBD,i =	The Renewable Volume Obligation for biomass-based diesel for the obligated party for calendar year i after 2010, in gallons, pursuant to §80.1407.
                  RVOAB,i =	The Renewable Volume Obligation for advanced biofuel for the obligated party for calendar year i, in gallons, pursuant to §80.1407.
                  RVORF,i =	The Renewable Volume Obligation for renewable fuel for the obligated party for calendar year i, in gallons, pursuant to §80.1407.

   (3) If the number of invalidly generated B-RINs required to be retired or replaced in a calendar year is less than or equal to LE as calculated in paragraph (d)(2) of this section, the entire RIN retirement obligation is excused.

   (4) If the number of invalidly generated B-RINs required to be retired or replaced in a calendar year is greater than LE as calculated in paragraph (d)(2) of this section, the retirement of a number of B-RINs equal to 2% of the obligated party's RVO is excused.

   (5)	The limited exemption applies only in calendar years 2013 and 2014.

(e)  Failure to Take Corrective Action.  Any person who fails to meet a requirement under paragraph (b)(5) of this section shall be liable for full performance of such requirement, and each day of non-compliance shall be deemed a separate violation pursuant to section 1460(f) of this subpart.