           Supporting Statement for a Request for OMB Review under
                          The Paperwork Reduction Act

1	IDENTIFICATION OF THE INFORMATION COLLECTION

      1(a)	Title and Number of the Information Collection

      Title: EPA's Design for the Environment (DfE) Formulator Product Recognition
      Program

      	EPA ICR No.:   2302.02	OMB Control No.:   2070-0178

      1(b)	Short Characterization

      This renewal information collection request (ICR) addresses the submission of applications to EPA for recognition under the Formulator Product Recognition Program (Formulator Program). DfE's Formulator Program recognizes safer products where all ingredients have an environmental and human health profile showing that they are the safest in their functional use class.  Under the encouragement of the current Formulator Program, leading companies have already made great progress in developing safer, highly effective chemical products.  Since the program's inception in 1997, formulators have been using the program as a portal to OPPT's unique chemical expertise, information resources, and guidance on greener chemistry.  DfE Formulator partners enjoy Agency recognition, including the use of the DfE label on products with the safest possible formulations.  This ICR would enable DfE to accommodate participation by more than nine formulators each year, enhance program transparency, and further promote chemical safety.
      DfE participates in the development of CleanGredients(TM), a database of safer cleaning product ingredients, which identifies safer formulations and makes forming partnerships easier.  Organized by product functional use class (e.g., surfactants, solvents, etc.), CleanGredients(TM) facilitates a green marketplace where formulators can select functionally appropriate and safer ingredients.
      The redesign of chemical products offers opportunities to:
      * Remove hazardous chemicals from formulations before they can enter the workplace, home, or environment.
      * Advance energy and water efficiency, resource conservation, and innovative technologies.
      * Qualify for environmentally preferred product status, increasingly sought by government, retailer and consumer purchasers.

Companies formulate products from a broad range of chemicals with a variety of applications.  The Formulator Program is particularly involved with safer cleaning products, holding tank treatments/deodorizers, industrial coatings, and inks.  Cleaning products make up the majority of partnership products, and cleaning product manufacturers make up the lion's share of demand for program participation by potential partners.  Third-party profilers review all cleaning product applications prior to DfE submission.  All other product applications are submitted directly to DfE for review.

      The review team carefully reviews each product component.  A literature review, and when appropriate, structural activity relationships, are used to understand each chemical's health and environmental characteristics. The review includes all chemicals, including those in proprietary raw material blends, which ingredient suppliers share with DfE in confidentiality. The review team then compares an ingredient's characteristics to other chemicals in the same use class, considers possible negative synergies between ingredients, and places the ingredient on a continuum of improvement relative to other similar chemicals.  By means of its review team and methodology, DfE provides information to formulators that helps them select from among the safest chemicals in an ingredient class.  Only formulations containing exclusively safer ingredients are recognized by DfE.

2.	NEED FOR AND USE OF THE COLLECTION

	2(a)	Need/Authority for the Collection

      Authority for the Formulator Program derives from Section 6604(b)(5) of the Pollution Prevention Act (PPA), 42 U.S.C. 13103(b)(5) (see Attachment A), which directs EPA to facilitate the adoption of source-reduction techniques by businesses, and the Toxic Substances Control Act (15 U.S.C. 2601 et seq.), which encourages safety in technological innovation in chemistry.  In recognition of this statutory directive, and through consultation with a broad range of stakeholders, EPA developed the Formulator Program.

      Formulator Program information collection activities will assist the Agency in meeting the goals of the PPA by providing resources and recognition for businesses committed to promoting and using safer chemical products.  In turn, the Formulator Program will help businesses meet corporate sustainability goals by providing the means to, and an objective measure of, environmental stewardship. Investment analysts and advisers seek these types of measures in evaluating a corporation's sustainability profile and investment worthiness.  It is not surprising then that EPA has heard from many organizations that Formulator Program partnership is an important impetus for prioritizing and completing the transition to safer chemical products.  The Formulator Program is also needed to promote greater use of safer chemical products by companies unaware of the benefits of such a change.

      DfE has carefully tailored its request for information, and especially the Formulator Program application forms, to ensure that it only asks for information essential to verifying applicants' eligibility for recognition.

	2(b)	Practical Utility/Users of the Data

      The information collected by the Formulator Program is not designed or intended to support regulatory decision-making by EPA. EPA uses the information collected in the Formulator Program application to: (1) review products and their components; (2) complete chemical profiles for each product component to determine its key health and environmental characteristics; and (3) establish a partnership agreement with the company outlining how the company and EPA/DfE will work together to continually improve the health and environmental profile of the product(s).

3.     NON-DUPLICATION, CONSULTATIONS, AND OTHER COLLECTION CRITERIA

	3(a)	Non-Duplication

      Respondents will not be asked to provide information that has been or is currently being collected by EPA, other federal or state agencies, or proprietary sources. The information collected by the Formulator Program is unique and is not duplicative of previous information collection requests.  As due diligence, EPA also checked with trade associations and potential partners to confirm that the information being collected by the Formulator Program does not exist elsewhere.

	3(b)	Public Notice Required Prior to ICR Submission to OMB

      Prior to submission to OMB, this ICR will be made available to the public for comment through a Federal Register notice.  The public will have 60 days to provide comments.  Any comments received will be given consideration when completing the supporting statement that is submitted to OMB.

	3(c)	Consultations

      Under 5 CFR 1320.8(d)(1) OMB requires agencies to consult with potential ICR respondents and data users about specific aspects of ICRs before submitting an original or renewal ICR to OMB for review and approval.  In accordance with this regulation, EPA will pursue additional consultations with interested parties during the development of the renewal of this collection.

	3(d)	Effects of Less Frequent Collection

      Formulator Program applications will be received on an ongoing basis over the three years covered by this ICR.

      The applications are designed to be one-time information submissions for organizations that wish to participate in the Formulator Program, with the opportunity to renew the partnership agreement at the end of the three-year partnership period.  This means that once every three years, the organization will submit a renewal application to confirm that no changes have been made to ingredients; this step is done in response to correspondence from DfE that reminds organizations of the terms of their partnership agreements. Without this information collection mechanism, DfE will not have the ability to assist formulators in developing safer, highly effective chemical products or to formally recognize formulators who have successfully done so.

	3(e)	General Guidelines

      The information collection activities discussed in this renewal ICR comply with all regulatory guidelines under 5 CFR 1320.5(d)(2).

	3(f)	Confidentiality

      Some information collected by EPA under the Formulator Program involves confidential business or trade secret information.  The Formulator Program handles all information claimed as such as confidential business information in accordance with Agency confidentiality procedures (see 40 CFR part 2, subpart B).  The Formulator Program uses information provided by formulators solely for purposes related to forming the partnership and discloses the information only to EPA employees and EPA contractors cleared for confidential information with a specific need to know.

	3(g)	Sensitive Questions

      The information collection activities discussed in this document do not involve any sensitive questions.

4.	THE RESPONDENTS AND THE INFORMATION REQUESTED

	4(a)	Respondents and NAICS Codes

      The Formulator Program seeks partners from establishments engaged in the formulation of end-use, for-sale chemical products.

      Below is a list of representative North American Industry Classification System (NAICS) codes and associated industries that may be affected by information collection requirements covered under this ICR. This list is intended to be illustrative; entities from other industries may elect to apply for recognition through the Formulator Program. However, EPA expects that most applications will come from the following industries:

      NAICS Code	Affected Industry
      325510	Paint and Coating Manufacturing
      325611	Soap and Other Detergent Manufacturing
      325612	Polish and Other Sanitation Good Manufacturing
      325910	Printing Ink Manufacturing
      325992	Photographic Film, Paper, Plate, and Chemical Manufacturing
      325998	All Other Miscellaneous Chemical Product and Preparation Manufacturing

	4(b)	Information Requested

      Once a company with an interest in partnership with the Formulator Program reviews the program materials and decides to apply, the next step for the organization is to submit the appropriate application.

      (i) Data items:

      Applicants for this voluntary program submit information items that vary depending upon the class of product.  The items include:

Partnership Applications for Cleaning and Non-Cleaning Products

      Cleaning product manufacturers will submit ingredient information, as described here, to a qualified third-party profiler before submittal to EPA.

      Information submitted to third-party profilers:
      * Company name and Web site URL
      * Number of employees
      * Company headquarters address and manufacturing address
      * Name, title, phone number, and e-mail address of the candidate's signatory contact person (e.g., CEO, or vice president for health and environment)
      * Name, title, phone number, and e-mail address of candidate's technical contact person
      * Name, title, phone number, and e-mail address of candidate's marketing/outreach contact person
      * Product information (name, UPC, sector, production volume, pH, product form)
      * Product characteristics on whether or not the product is:
           o An EPA registered pesticide
           o A direct release product
           o A concentrate
           o Contains enzymes, fragrance, or VOCs
           o Requires hazard labeling
           o Ingredient disclosure and performance data submitted
      * Packaging information:
           o Percent sourced, manufactured, transported, and recycled using renewable energy
           o Percent optimizing the use of renewable or recycled source materials
           o Percent manufactured using clean production technologies and best practices
           o Percent made from materials healthful in all probably end-of-life scenarios
           o Percent physically designed to optimize materials and energy use
           o Percent recovered and used in biological or industrial closed-loop cycles
           o Packing material type and percent recycled content
           o If the packaging contains heavy metals, BPA, or phthalates
      * Description of all chemical ingredients in product:
           o CAS number
           o Chemical name
           o Trade name
           o Percent composition
           o Ingredient class
           o Supplier name
      * Raw material information (EPA Form XXXX-X) (see Attachment C)
      * Other product information, including product packaging description, product flashpoint, and flushability / compostability
      * An MSDS for the product and each ingredient
      * Product performance testing (any method of demonstrating product performance is acceptable as long as it is a commonly used industry standard)
      * If available, any supplemental product or ingredient environmental health and safety information., such as:
           o Biodegradation tests on individual ingredients
           o Acute aquatic toxicity tests on product as a whole or individual ingredients
           o Human health and safety tests
      * Description of the type of training the company provides to customers on environmental and worker safety matters.

      Information submitted to EPA:
                 * Summary report, containing same data items as above

Adding Third-Party Partners and Products

      Cleaning product manufacturers will submit information about third-party additions to DfE. To be label-eligible, third-party products must contain ingredients identical to those in an already DfE-recognized product. The three types of third-party partners and products are private labels, licensees, and toll manufacturers.

	Information submitted to EPA:
      * DfE Form for Adding Third-Party Partners and Products (Private Label Companies, Licensees, or Toll Manufacturers) (EPA Form XXXX-X) (See Attachment D)

      (ii) Respondent activities:

      Applicants for Cleaning and Non-Cleaning Product Formulation Partnerships
         * Review program information, including instructions on submitting information to third-party profilers
         * Submit information described in section 4(b)(i) of this supporting statement to third-party profiler
         * Establish agreement with third-party profiler
         * Submit summary report to DfE
         * Negotiate / establish Partnership Agreement with DfE
         * Renew partnership, with no changes needed
         * Site audit (See Attachment E)

      Adding Third-Party Partners and Products
      * Review program information
      * Fill out and submit DfE Form for Adding Third-Party Partners and Products (Private Label Companies, Licensees, or Toll Manufacturers)

5.      	THE INFORMATION COLLECTED  -  AGENCY ACTIVITIES, COLLECTION METHODOLOGY, AND INFORMATION MANAGEMENT

	5(a)	Agency Activities

      Under the Formulator Program, EPA engages in the following activities related to the Formulator application and decision process.

    * Distribute applications to third-party profilers for distribution to potential participants;
    * Answer questions posed by potential applicants regarding recognition under the Program;
    * Receive the completed applications, review for accuracy, and place any necessary follow-up calls;
    * Apply EPA's chemical tools and expertise to understand toxicological characteristics of chemical ingredients and to ensure that they are the safest within their functional use class; and
    * Approve candidates for recognition and notify both successful and unsuccessful applicants of the decisions.

	5(b)	Collection Methodology and Management

      Cleaning and non-cleaning product manufacturers may obtain applications for providing ingredient information for the chemical summaries that will be developed by third-party profilers by downloading them directly from the web site of the third-party profilers. The completed applications can be faxed, mailed, or, if they do not contain CBI or trade secret information, they can be scanned and emailed to EPA.

      In collecting and analyzing the information associated with this ICR, EPA will use a telephone system, personal computers, and applicable database software. EPA will ensure the accuracy and completeness of collected information by reserving the right to request proof of the list of ingredients (e.g., bills of lading, invoices) or other relevant documentation at any time to confirm that candidates have the achieved the criteria for recognition.

	5(c)	Small Entity Flexibility

      EPA expects that some of the participants in the Formulator Program will be small entities. EPA has designed its application form to minimize respondent burden while obtaining sufficient and accurate information.  In addition, given the voluntary nature of the collection, EPA expects that respondents will participate only if the benefits of participation outweigh the information collection burden.

	5(d)	Collection Schedule

      Organizations may submit an application for recognition at any time.

6.	ESTIMATING THE BURDEN AND COST OF THE COLLECTION

	6(a)	Estimating Respondent Burden

      The average respondent burden is estimated to be 25.5 hours for cleaning and non-cleaning product formulators and 9.5 hours for cleaning product formulators wishing to add third-party partners and products (see Exhibit 6.2). EPA used professional judgment to arrive at a burden estimate and then consulted representatives from the participant categories to make sure the burden estimates were reasonable (see section 3(c)).

      EPA expects that for a typical cleaning or non-cleaning product formulator, program and application review will take about 2 hours (1 managerial, 1 technical).  Filling out and submitting third-party profiler information request forms will take about 7.5 hours (6 technical, 1.5 clerical), and then establishing an agreement with the third-party profiler will take about 3 hours (1 managerial, 1 technical, 1 clerical).  Submitting a summary report to DfE will take about 2 hours (1 managerial, 1 technical).  Finally, establishing a Partnership Agreement DfE will take 3 hours (1 managerial, 2 technical).

      For a typical addition of a third-party partner and products, program and application review will take about 2 hours (1 managerial, 1 technical). Filling out and submitting one DfE Form for Adding Third-Party Partners and Products (Private Label Companies, Licensees, or Toll Manufacturers) is estimated to take about 2.5 hours (2 technical, 0.5 clerical). On average, a partner will fill out 3 third-party partners and products forms annually. Therefore, it is estimated that it will take one respondent 7.5 hours (6 technical, 1.5 clerical) to add third-party partners and products.

      In addition to the burden associated with first-time submission of applications, each formulator has the opportunity to renew its Partnership Agreement at the end of the three-year partnership period. This means that once every three years, the formulator re-submits its application for each partnership product to confirm that no changes have been made to ingredients.  EPA then evaluates the application.  EPA estimates that the partnership renewal process will take 5 hours (4 technical, 1 clerical) for cleaning and non-cleaning product formulators.

      For purposes of this ICR, EPA expects that 96 (see Section 6(e) on estimating the respondent universe) cleaning and non-cleaning product formulators will choose to renew their partnerships.  Furthermore, EPA anticipates that one in ten cleaning and non-cleaning product formulators over the three-year period of this ICR will need to make improvements to their formulations so that they contain the safest ingredients within each functional use class; in these cases, a new partnership approval process, as described above, will be triggered.  The associated burden for completing the new partnership approval process is assumed to be the same as first-time submission.  For purposes of estimating annual cost and burden in Exhibit 6.2, it is assumed that one-third of the 96 formulators (or 29 cleaning product and 3 non-cleaning product formulators) over the three-year period
of this ICR will renew their partnership agreements each year.  It is also assumed that over the three-year period of this ICR, one in ten formulators (or 3 cleaning product and 1 non-cleaning product formulators) will need to go through a new partnership approval process, which on an annual basis translates into two formulators per year (1 cleaning product and 1 non-cleaning product formulator).

      As part of the application process, the third-party profiler will also reserve the right to visit site facilities to verify that each partnership product contains the same ingredients, in the same volumes, that are reported by the company as part of the DfE recognition process.  The site auditor will review batch tickets associated with each recognized product to ensure that ingredient claims are accurate.  For purposes of estimating annual cost and burden in Exhibit 6.2, it is assumed that about 33% of formulators will get audited each year over the three-year period of this ICR (i.e., 10 cleaning product and 1 non-cleaning product formulators).  Each audit is estimated to require two hours of a technical person's time and one hour of a clerical person's time. Additional information about the audit process can be found in Attachment E of this ICR.

      6(b)	Estimating Respondent Costs

      EPA estimates an average loaded hourly labor rate (base hourly rate plus fringe and overhead) of $71 for managerial staff, $65 for technical staff, and $30 for clerical staff.  These three labor rate estimates are based upon manufacturing industry wage data from the Bureau of Labor Statistics (BLS) Employer Costs for Employee Compensation, Supplementary Tables from March 2012.  The hourly labor rates include a 17% overhead; this overhead rate is used for consistency with OPPT economic analyses for two major rulemakings: Wage Rates for Economic Analyses of the Toxics Release Inventory Program and the Revised Economic Analysis for the Amended Inventory Update Rule: Final Report.  In addition, the hourly labor rates have been rounded for the purposes of this ICR.  The type of staff needed to complete the Formulator's applications and their associated hourly labor rates were verified by contacting representatives from the participant categories.

      The derivation of labor rates for managerial, technical and clerical staff is shown in Exhibit 6.1.

Exhibit 6.1.  Derivation of Loaded Wage Rates in 2012$
                                Labor category
                                     Wage
                                Fringe Benefit
                               Fringes as % wage
                                Overhead % wage
                           Fringe + overhead factor
                                 Loaded Wages
                            Loaded Wages (rounded)

                                      (a)
                                      (b)
                                  (c)=(b)/(a)
                                      (d)
                                 (e)=(c)+(d)+1
                                (f)=(a)  (e)

                                  Managerial
                                    $43.21
                                    $20.53
                                    47.51%
                                      17%
                                     1.65
                                    $71.09
                                    $71.00
                                 Professional/
                                 Technical[2]
                                    $38.71
                                    $19.71
                                    50.92%
                                      17%
                                     1.68
                                    $65.00
                                    $65.00
                                  Clerical[2]
                                    $17.87
                                     $9.03
                                    50.53%
                                      17%
                                     1.68
                                    $29.94
                                    $30.00

      Exhibit 6.2 shows the breakdown of burden costs, assuming 25.5 hours for cleaning and non-cleaning product manufacturers and 9.5 hours for cleaning product formulators wishing to add third-party partners and products. The third-party profiler verification process for cleaning products also adds an operating and management (O&M) cost of about $12,400 per company per application.  This cost estimate is from NSF International, which has experience as a third-party profiler of ingredient characteristics.  For this ICR, it is assumed that typical cleaning and non-cleaning product manufacturers will submit four products in an application.  Each product is assumed to contain 2 ingredients at $650 each, 1 proprietary ingredient at $1,300 each, and 3 CleanGredients(TM) ingredient at no charge, for a total of $2,600 per product.  In addition, a $500 administrative fee per product is assumed. The total will be $12,400 per company per application. No additional capital or O&M costs are incurred by respondents under this ICR.
Exhibit 6.2.  Estimated Annual Burden and Costs to Respondents
Collection activity
                        Hours and Costs Per Respondent
                             Total Hours and Costs

                                     Mgr.
                                     Tech.
                                     Cler.
                               Response Hours/Yr
                                Labor Cost/Year
                                    Capital
                                O & M Cost*
                              Number of Respon.**
                                Total Hours/Yr
                                 Total Cost/Yr

                                    $71/Hr
                                    $65/Hr
                                    $30/Hr

                                     Cost

Cleaning and Non-Cleaning Products
Review program information
                                                                           1.0
                                                                           1.0
                                                                           -
                                                                           2.0
                                                                           $136
                                                                             $0
                                                                             $0
                                                                            34
                                                                            68
                                                                         $4,624
Fill out and submit third-party information request form
                                                                           -
                                                                           6.0
                                                                           1.5
                                                                           7.5
                                                                           $435
                                                                             $0
                                                                             $0
                                                                            34
                                                                           255
                                                                        $14,790
Establish agreement with third-party profiler
                                                                           1.0
                                                                           1.0
                                                                           1.0
                                                                           3.0
                                                                           $166
                                                                             $0
                                                                        $12,400
                                                                            34
                                                                           102
                                                                       $427,244
Submit summary report to DfE
                                                                           1.0
                                                                           1.0
                                                                           -
                                                                           2.0
                                                                           $136
                                                                             $0
                                                                             $0
                                                                            34
                                                                            68
                                                                         $4,624
Negotiate / establish Partnership Agreement with DfE
                                                                           1.0
                                                                           2.0
                                                                           -
                                                                           3.0
                                                                           $201
                                                                             $0
                                                                             $0
                                                                            34
                                                                           102
                                                                         $6,834
Renew partnership, with no changes needed
                                                                           -
                                                                           4.0
                                                                           1.0
                                                                           5.0
                                                                           $290
                                                                             $0
                                                                             $0
                                                                            32
                                                                           160
                                                                         $9,280
Site audit
                                                                           -
                                                                           2.0
                                                                           1.0
                                                                           3.0
                                                                           $160
                                                                             $0
                                                                             $0
                                                                            11
                                                                            33
                                                                         $1,760
Subtotal
                                                                           4.0
                                                                          17.0
                                                                           4.5
                                                                          25.5
                                                                         $1,524
                                                                             $0
                                                                        $12,400
                                                                            32
                                                                           788
                                                                       $469,156
Adding Third-Party Partners and Products
Review program information
                                                                           1.0
                                                                           1.0
                                                                           -
                                                                           2.0
                                                                           $136
                                                                             $0
                                                                             $0
                                                                            34
                                                                            68
                                                                         $4,624
Fill out and submit DfE Form for Adding Third-Party Partners and Products
                                                                           -
                                                                           6.0
                                                                           1.5
                                                                           7.5
                                                                           $435
                                                                             $0
                                                                             $0
                                                                            34
                                                                           255
                                                                        $14,790
Subtotal
                                                                           1.0
                                                                           7.0
                                                                           1.5
                                                                           9.5
                                                                           $571
                                                                             $0
                                                                             $0
                                                                            34
                                                                           323
                                                                        $19,414
TOTAL

                                                                            66
                                                                         1,111
                                                                       $488,570
* The cost for third-party profiler review and verification assumes that the typical application submitted by a cleaning product manufacturer will contain four products.  Each product will contain 2 ingredients at $650 each and 1 proprietary ingredient at $1,300, for a total of $2,600 per product.  Also assumes a $500 administrative fee per product. The total cost per product is $3,100. The total will be $12,400 per company per application.
**This column reports the number of annual respondents after accounting for the partnership renewal process and site audits.  Assumes that one in ten formulators over the three-year period will need to make changes to their formulations and go through a new partnership process which includes same collection steps.  On an annual basis, this translates to 1 of 29 cleaning product formulators (for a total of 30) and 1 of 3 non-cleaning product formulators (for a total of 4).  Also assumes that about 33% of cleaning product formulators (i.e., 10) and non-cleaning product formulators (i.e., 1) will be subject to site audits each year. See Section 6(a) for additional explanation. Assumes that 34 partners will submit applications to add third-party partners and products based on historical data. See Section 6(e) for additional explanation.
      6(c)	Estimating Agency Burden

      Exhibit 6.3 presents the estimated Agency burden hours and costs associated with the information collection activities under this ICR.  EPA based its burden estimates on its experience managing other voluntary programs.

      EPA expects that review of the program application forms for a typical cleaning or non-cleaning product formulator will take about 1 hour (1 technical).  Reviewing the third-party profiler information summary report will take about 10.5 hours (10.5 technical). Establishing a Partnership Agreement with the formulator will take about 6 hours (2 managerial, 4 technical). Reviewing the partnership renewal and assuming that no changes are needed is estimated at 2 hours (1 managerial, 1 technical).

      The burden for reviewing the DfE Form for adding third-party partners and products is estimated to take about 3 hours (3 technical).

      6(d)	Estimating Agency Costs

      Agency labor costs are calculated based on hourly basic rates for federal employees in the Washington-Baltimore area published by the Office of Personnel Management effective January 2012.  The average hourly labor rate for managerial staff is estimated as the rate for a GS-13 Step 5 employee, for technical staff as a GS-10 Step 10 employee, and for clerical staff as GS-5 Step 1.  These GS-level assumptions are consistent with those used in past EPA OPPT ICRs.  The hourly rates were multiplied by an assumed loading factor of 1.6 to reflect Federal fringe benefits and overhead.  This loading factor is from an EPA guide, Instructions for Preparing Information Collection Requests (ICRs) (OPPE, 1992, page 30, footnote 9).

      The resulting average hourly labor rates, rounded to the nearest dollar amount, are $77 for managerial staff, $57 for technical staff, and $26 for clerical staff.  The Agency expects most activities related to this ICR to be performed by managerial staff (25 percent) and technical staff (75 percent).
Exhibit 6.3.  Annual Agency Burden/Cost
Collection activity
                        Hours and Costs Per Respondent
                             Total Hours and Costs

                                  Mgr. $77/Hr
                               Technical $57/Hr
                                Agency Hours/Yr
                                Labor Cost/Year
                             Capital/ Startup Cost
                                O & M Cost
                              Number of Respon.*
                                Total Hours/Yr
                                 Total Cost/Yr

Cleaning and Non-Cleaning Products
Review program application forms
                                                                           -
                                                                           1.0
                                                                           1.0
                                                                            $57
                                                                             $0
                                                                             $0
                                                                            34
                                                                            34
                                                                         $1,938
Review third-party profiler summary
                                                                           -
                                                                          10.5
                                                                          10.5
                                                                           $599
                                                                             $0
                                                                             $0
                                                                            34
                                                                           357
                                                                        $20,349
Negotiate / establish Partnership Agreement with formulator
                                                                           2.0
                                                                           4.0
                                                                           6.0
                                                                           $382
                                                                             $0
                                                                             $0
                                                                            34
                                                                           204
                                                                        $12,988
Review partnership renewal, with no changes needed
                                                                           1.0
                                                                           1.0
                                                                           2.0
                                                                           $134
                                                                             $0
                                                                             $0
                                                                            32
                                                                            64
                                                                         $4,288
Subtotal
                                                                           3.0
                                                                          16.5
                                                                          19.5
                                                                         $1,172
                                                                             $0
                                                                             $0
                                                                            32
                                                                           659
                                                                        $39,563
Adding Third-Party Partners and Products
Review DfE Form for Adding Third-Party Partners and Products
                                                                           -
                                                                           3.0
                                                                           3.0
                                                                           $171
                                                                             $0
                                                                             $0
                                                                            34
                                                                           102
                                                                         $5,814
Subtotal
                                                                           -
                                                                           3.0
                                                                           3.0
                                                                           $171
                                                                             $0
                                                                             $0
                                                                            34
                                                                           102
                                                                         $5,814
TOTAL

                                                                            66
                                                                           761
                                                                        $45,377
 *This column reports the number of respondents after accounting for the partnership renewal process.  Assumes that one in ten formulators will need to make changes to their formulations and go through a new partnership process which includes same collection steps  -  i.e., 1 of 29 cleaning product formulators (for a total of 30) and 1 of 3 non-cleaning product formulators (for a total of 4). Assumes that 34 partners will submit applications to add third-party partners and products based on historical data.
      6(e)	Estimating the Respondent Universe and Total Burden and Costs

      EPA estimates that 96 formulators will submit applications over the three-year life of the clearance.  EPA expects the participation will ramp up over the three year period, but for the purposes of estimating annual cost and burden in Exhibit 6.2, it is assumed that 32 cleaning and non-cleaning products formulators will submit applications per year.  This estimate is based on historical data and the assumption that participation will increase over the next three years in response to greater consumer demand for green products.  EPA also estimates that of the applications, about 90 percent (or 29 per year) will be cleaning products, with the remainder being non-cleaning products.  The EPA estimates that an additional 34 applications will be received annually to add third-party partners and products. This estimate is based on the number of partners that submitted third-party partners and products applications over the last year and is expected to remain constant over the course of this ICR period. Therefore, it is estimated that a total of 66 respondents will submit applications under the Formulator program each year. The annual burden hours and cost associated with this information collection are 1,111 hours and $488,570 respectively.

	6(f)	Bottom Line Burden Hours and Cost Tables

      a.	Respondent Tally

      Exhibit 6.4 below summarizes the total annual estimated respondent burden and cost.  These estimates represent the average burden in any given year over the three years covered by this ICR.

Exhibit 6.4.  Total Annual Estimated Respondent Burden and Cost Summary
                            Total # of Respondents
                             Average Burden Hours
                                  Annual Cost
                                      66
                                     1,111
                                   $488,570

      b.	Agency Tally

      Exhibit 6.5 below summarizes the total annual estimated agency burden and cost.  These estimates represent the average burden in any given year over the three years covered by this ICR.

Exhibit 6.5.  Total Annual Estimated Agency Burden and Cost Summary
                                 Burden Hours
                                  Annual Cost
                                      761
                                    $45,377

	6(g)	Reasons for Change in Burden

      There is a an increase of 420 hours (from 691 hours to 1,111 hours) in the total estimated respondent burden compared with that identified in the ICR currently approved by OMB. This increase reflects EPA's estimate of the number of applications the Agency will receive annually to add third-party partners and products. This estimate is based on the historical number of respondents that submitted third-party partners and products applications in the last year; this number is expected to remain constant over the next three years. EPA did not consider this factor in the previous ICR submission.

	6(h)	Burden Statement

      The annual public burden for this collection of information is estimated to be 25.5 hours per response for formulators of cleaning and non-cleaning products and 9.5 hours for cleaning product formulators wishing to add third-party partners and products, including time for reviewing instructions, gathering information, and completing and reviewing the application.  Burden is defined in 5 CFR 1320.3(b).  An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.  The OMB control number for this information collection appears above.  The OMB control numbers for EPA's regulations in title 40 of the CFR, after appearing in the Federal Register, are listed in 40 CFR part 9 and included on the related collection instrument or form, if applicable.

      The Agency has established a public docket for this ICR under Docket ID No. EPA-HQ-OPPT-2012-0675, which is available for online viewing at www.regulations.gov, or in-person viewing at the Pollution Prevention and Toxics Docket in the EPA Docket Center (EPA/DC).  The EPA/DC Public Reading Room is located in the EPA West Building, Room 3334, 1301 Constitution Ave., N.W., Washington, DC.  The EPA/DC Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays.  The telephone number for the EPA/DC Public Reading Room is<PHONE_NUMBER>, and the telephone number for the Pollution Prevention and Toxics Docket is<PHONE_NUMBER>.

      You may submit comments regarding the Agency's need for this information, the accuracy of the provided burden estimates and any suggested methods for minimizing respondent burden, including the use of automated collection techniques. Submit your comments, referencing Docket ID No.  EPA-HQ-OPPT-2012-0675 and OMB Control No. 2070-0178, to (1) EPA online using www.regulations.gov (our preferred method), or by mail to: Pollution Prevention and Toxics Docket, Environmental Protection Agency Docket Center (EPA/DC), Mailcode: 28221T, 1200 Pennsylvania Ave., N.W., Washington, DC 20460, and (2) OMB by mail to: Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), Attention: Desk Officer for EPA, 725 17th Street, N.W., Washington, DC 20503.


[Federal Register: October 19, 2005 (Volume 70, Number 201)]
[Notices]
[Page 60819-60822]
[DOCID:fr19oc05-69]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. AD05-17-000]

Electric Energy Market Competition Task Force; Notice Requesting
Comments on Wholesale and Retail Electricity Competition

October 13, 2005.

Overview

    Section 1815 of the Energy Policy Act of 2005 requires the Electric
Energy Market Competition Task Force to conduct a study of competition
in wholesale and retail markets for electric energy in the United
States. Over the past several years, wholesale competition has
developed unevenly in many regions of the country. Moreover, fewer than
20 States have adopted retail choice programs that allow some
electricity consumers to choose their retail electric generation
supplier. The purpose of this study is to analyze and report to
Congress on the critical elements for effective wholesale and retail
competition, the status of each element, impediments to realizing each
element, and suggestions for overcoming these impediments.
    In recent years, some states and the Federal government have taken
steps to encourage competition in the electric power industry. In the
Energy Policy Act of 2005, Congress established an inter-agency task
force, known as the ``Electric Energy Market Competition Task Force''
(the Task Force), to conduct a study and analysis of competition within
the wholesale markets and retail markets for electric energy in the
United States. The Task Force consists of 5 members:
    (1) 1 employee of the Department of Justice, appointed by the
Attorney General of the United States--J. Bruce McDonald, Deputy
Assistant Attorney General, Antitrust Division;<PHONE_NUMBER>,
<EMAIL_ADDRESS>
    (2) 1 employee of the Federal Energy Regulatory Commission,
appointed by the Chairperson of that Commission--Michael Bardee,
Associate General Counsel, Office of the General Counsel-Markets,
Tariffs, and Rates;<PHONE_NUMBER><EMAIL_ADDRESS>    (3) 1 employee of the Federal Trade Commission, appointed by the
Chairperson of that Commission--Michael Wroblewski, Assistant General
Counsel for Policy Studies;<PHONE_NUMBER><EMAIL_ADDRESS>    (4) 1 employee of the Department of Energy, appointed by the
Secretary of Energy--David Meyer, Deputy Director, Division of
Permitting, Siting, and Analysis, Office of Electricity Delivery and
Energy Reliability;<PHONE_NUMBER><EMAIL_ADDRESS>    (5) 1 employee of the Rural Utilities Service, appointed by the
Secretary of Agriculture--Karen Larsen, Office of Assistant
Administrator, Electric Programs<PHONE_NUMBER><EMAIL_ADDRESS>    Section 1815(c) of the Energy Policy Act of 2005 requires the Task
Force to ``consult with and solicit comments from any advisory entity
of the task force, the States, representatives of the electric power
industry, and the public.'' This Notice begins this process. The Task
Force also will publish a draft final report for public comment, before
submitting the final version to Congress as required by Section
1815(b)(2)(B).
    Listed below is a series of questions for which the Task Force
seeks public comment. For both wholesale and retail competition for
electric power, we focus on the current state of competition and on
factors that help support competition, or that otherwise may limit
competition, among suppliers and buyers in regional wholesale markets
and retail markets at the state level. The questions listed below are
by no means exhaustive. The Task Force encourages commentors to raise
any other additional factors that affect competition in wholesale and
retail electric power markets. It is not necessary to respond to each
question. Rather, it would be helpful for

respondents to provide, for example, specific information about market
responses to particular governing regulations, or to compare and
contrast the market reaction to the means individual states have used
to address various retail competition issues (e.g., generation siting,
provider of last resort pricing, etc.).

Overview Questions

    1. What are the critical elements or attributes of competition in
wholesale electricity markets that the Task Force should examine?
    2. What are the critical elements or attributes of competition in
retail electricity markets that the Task Force should examine?
    3. What benefits have occurred because of competition in wholesale
and retail electricity markets? What additional benefits are expected?
What benefits were forecasted and have not occurred? Why? What harms
have occurred because of competition in wholesale and retail
electricity markets?
    4. What are the major public policy concerns that the Task Force
should examine in its review of competition in wholesale and retail
electricity markets?
    5. In what significant ways do wholesale and retail electricity
markets differ from other energy or commodity markets? What
implications do their differences have for public policy?

Wholesale Market Questions

    Commentors should answer with a specific regional wholesale market
in mind and should be as specific as possible.

A. Wholesale Supply Trading and Participation

    1. To what extent does wholesale trading help result in an economic
and reliable supply of electricity in each region? What are ways to
improve the provision of an economic and reliable supply of
electricity?
    2. What share of electric power used to serve retail (or ultimate
consumer) load is obtained through wholesale market transactions in
each state or region? In what ways has this share changed over the past
10 years and the past 5 years and why?
    3. What share of electric power used to serve ultimate consumer
load is generated by a utility for its own native load? What share of
electric power used to serve utility customer load comes from utility
affiliates? What share comes from unaffiliated generators?
    4. What opportunities exist for generation owners to sell output in
wholesale markets?
    5. What opportunities exist for wholesale power buyers to purchase
electricity in wholesale markets? Is demand (negawatts) a product that
can be traded in the wholesale market?
    6. Is there an organized regional market or exchange serving buyers
and sellers in the region? What products does the organized market
provide? What percentage of energy supplied is secured through
organized markets and through bilateral trades? Are there liquid
trading points in the region? What are the volumes traded? What is the
trend of bid/ask spreads (getting greater or smaller)?
    7. To what extent do wholesale buyers and sellers participate in
futures or others commodity markets or transactions to balance the
financial risks of competitive electricity markets? How liquid are
forward markets in different regions and how far ahead can one transact
in these markets?
    8. What role have credit issues played in the ability of market
participants to participate in wholesale markets, including forward
markets?
    9. Are there competitive processes by which distribution utilities
solicit proposals for native load or default service?
    10. How can changes and trends in wholesale market prices by region
be measured?
    11. How should the performance of wholesale markets in serving the
needs of various types of power sellers (e.g., marketer, generator,
independent producer, merchant, public utility, nonpublic utility,
qualified facility, renewable power producer, co-generator) be
measured?
    12. How has restructuring of incumbent utility operations and the
introduction of competitive retail markets in retail choice states
affected participation in regional wholesale markets? Has the
introduction of retail markets affected the level of long-term
contracting in wholesale markets?
    13. Please describe instances in which competition has resulted in
relatively higher prices or lower reliability in a specific regional
market.

B. Generation Ownership

    1. How has ownership of electric generating plants changed over the
past 10 years?
    2. In the past 10 years, when generations assets have been sold or
transferred, how much capacity was sold or transferred to (a) Utility
or utility affiliates, (b) existing non-utility market participants;
(c) new market participants?
    3. How much existing merchant or non-utility generation assets have
been sold or transferred? What were the reasons for these transactions?
    4. How much existing capacity has been sold or transferred to
utilities and converted to rate-based assets? Of those how many were
previously affiliated with a utility and how many were purchased from
other entities?

C. Generation Adequacy

    1. How is generation adequacy addressed in each region or system?
Is there a specific enforceable requirement that load serving entities
or market participants must meet? How is planning for generation
adequacy conducted?
    2. Has new generation construction kept pace with demand growth in
the state or market region? If not, why not? What are the most
important factors that affect whether generation will be built?
    3. What role does the ability to enter into long-term contracts
play in financing new generation projects?
    4. What generation facilities have been installed in the past five
years? What was the experience in the process?
    5. What generation facilities have been cancelled in the past five
years and why?
    6. What difficulties, if any, have developers of new generation
facilities encountered in bringing generation supply to market? (E.g.,
difficulties in financing, siting, permitting, licensing,
interconnection, transmission access, fuel supply.) What are ways to
improve the process?
    7. Are there instances in the past five years in which a new
generation facility has been completed that caused prices in a
previously congested area to decline?
    8. How do the approaches and responsibilities for assuring the
availability of sufficient generation capacity to meet peak load and
load growth vary among regions and states that have retail choice and/
or tightly organized regional markets and those that do not?
    9. What incentives do competitive suppliers have to maintain
adequate reserve capacity?
    10. What incentives or responsibilities do load serving utilities
have to maintain adequate reserve capacity?
    11. How can competitive markets assure adequacy of generation
supply? How is reserve sharing to meet state or regional generation
adequacy standards accomplished in competitive markets? How can other
institutions/market processes provide an effective substitute for
reserve sharing?

D. Transmission Investment and Regulation

    1. What are the most important factors that affect whether
transmission will be built? What are ways to improve the process? What
difficulties have transmission owners had in upgrading or building new
transmission facilities? What are the prospects for merchant
transmission?
    2. Over the past 10 years, what have been the trends in investments
in transmission by utilities by state or region? Are there any
prevailing patterns in transmission investments in upgrades and
replacement of existing plant versus new lines, interconnections,
automation? Have these patterns of investment shifted over this period?
Are there any projected changes in patterns of transmission investment
over the next 5 years?
    3. How are transmission needs of merchant generators and renewable
energy projects included in regional or utility transmission planning
and upgrades?
    4. How has the establishment of Regional Transmission Organizations
(RTOs) changed transmission operations, transmission planning, and
investment patterns?
    5. Within a region or RTO, is there a different process for
transmission upgrades that are not required for reliability but would
increase access to lower priced power in areas with economic
congestion?
    6. In the absence of RTOs, how is transmission planning, siting,
and construction for regional needs coordinated among utilities,
generators, and State regulators? What challenges do transmission
owners face upgrading or building new transmission facilities?
    7. How have transmission costs changed for transmission owners and
for transmission customers over the past 10 years? What are the reasons
for any increases or decreases?

E. Wholesale Market Transparency and Information

    1. Do purchasers and sellers view markets as providing stable,
transparent prices? Are there differences among products and markets?
    2. Is there sufficient timely and accurate publicly available
information to assure that market participants can adequately assess
the economics of proposed wholesale power transactions or assess the
financial implications of self build versus competitive alternatives
for generation supply?
    3. How can any information deficits be remedied to improve the
utility of market information? Are there any competitive risks
associated with greater transparency of prices or of other information
about market participants?
    4. Are there open and transparent processes by which load serving
entities solicit proposals for generation from independent firms and/or
from affiliated generators?

Retail Market Questions

    Commentors can answer the following questions based on their
knowledge and experience in any state with retail competition:

A. Retail Markets Overview

    1. What factors or measures should the Task Force examine in
reviewing state retail choice experiences? How should these factors and
measures be evaluated?
    2. How should the Task Force assess the performance of evolving
competitive retail markets?
    3. How can the performance of competitive retail markets for retail
customers be measured in the absence of competitive suppliers for
residential and small business customers in many areas?
    4. Why did your state implement a retail electric choice program?
    5. Why did your state decide not to implement a retail electric
choice program?

B. State Retail Choice Experience

    1. How have consumers benefited from retail electric competition?
How have consumers been harmed by retail electric competition?
    2. How have retail customer prices changed since the beginning of
the transition to retail choice? Have the changes been comparable
across all classes of customers?
    3. How many alternative competitive retail suppliers are currently
soliciting or accepting new customers in each service area? Has the
number increased or decreased since the state introduced retail choice?
    4. Does the availability of alternative competitive suppliers
differ among service areas, customer classes, load size, rural and
urban areas, or other geographic areas, or by credit policies? If so,
why? If not, why not?
    5. Have suppliers offered new types of products and services (e.g.,
time of day pricing, interruptible contracts, green power, etc.) in
states where retail competition has been implemented? If so, describe
the products and what customer response has been.
    6. How do retail customers obtain information about competitive
alternatives? Do retail consumers have enough information to readily
make informed choices among competing suppliers?
    7. Does the state allow groups of retail customers to aggregate
their electricity demand? How are they structured? What customer groups
are included? Is participation on an opt-in or an opt-out basis? Has
aggregation enabled consumers to benefit from retail electricity
competition? If not, why not?
    8. Now that many state-mandated transition periods to phase-in
retail competition are ending, what issues do states face to ensure
competitive retail markets?

C. Retail Supply Questions in States With Retail Competition

    1. How does the state program address assurance of adequate
generation supplies for default service customers (i.e., customers
that: (a) Do not choose a competitive provider, or (b) have lost their
competitive supplier for whatever reason)?
    2. How do default service obligations affect retail power
competition? Do the transmission services allowed for default service
obligations affect retail competition and, if so, how? What changes, if
any, would you suggest in these transmission services?
    3. How has the development of RTOs affected the development of
retail competition in the state?
    4. Did the state require that the incumbent utility divest all or
some of its generation assets used to serve its retail native load when
retail competition was introduced? Did incumbent utilities voluntarily
divest generation assets as part of restructuring to implement retail
competition? Did incumbent utilities transfer ownership of generation
assets used to serve native load to an affiliated entity?
    5. What has been the result of generation ownership transfers
serving the state or region since the start of retail competition? Has
there been a consolidation of generation ownership in the state or
region?
    6. If a retail load serving utility no longer owns sufficient
generation assets to meet its obligations to its retail customers
(existing customers, or as the supplier of last resort or default
service provider) what mechanism (e.g., spot market purchases, buy back
or output contracts, etc.) does it use to obtain generation services to
fulfill these obligations? What share of a utility's load is obtained
via the different mechanisms? How are these shares trending?
    7. How do non-utility retail service providers in the state secure
access to transmission and distribution services

needed to deliver power to their retail customers?
    8. What difficulties have retail supplier entrants encountered in
entering the market? What conditions/incentives attract suppliers to
retail markets?

D. Demand Side Participation

    1. How do rate structures affect the incentives of large, medium,
or small electric customers to participate in demand side response
programs? Does this effect differ if a state has a retail choice
program?
    2. What measures have states taken to make customer demand
responsive to changes in availability and price of electricity supply?
Do these measures differ if a state has a retail choice program?
    3. What mechanisms allow for the participation of load response
measures `` interruptible load, self-generation, demand-side
management, conservation and energy efficiency measures as alternatives
in wholesale electric markets and or load serving utility resource
portfolios? How has the performance of these measures been monitored?
    4. Have states adopted alternatives to average cost pricing to
encourage demand response?
    5. What has been the effect on demand and demand elasticity in
light of these measures?
    6. How prevalent is the use of distributed resources (e.g.,
distributed generation and distributed energy storage) within the
state?
    7. To what extent are retail customers within the state or region
increasing use of distributed resources and what types of resources are
involved?

E. Rising Fuel Prices

    1. Are changes in prices for oil, natural gas, and coal affecting
the results of competitive wholesale markets and viability of
competitive suppliers and if so, how?
    2. How are changes in prices for oil, natural gas, and coal
affecting retail electricity costs?
    3. Are there differences in retail price impacts between states
and/or utility systems operating under retail competition models and
those that operate under traditional utility cost based rate models?

How To File Comments

    Any interested person may submit a written comment that will be
considered part of the public record. Comments may be filed
electronically via the e-Filing link on the Federal Energy Regulatory
Commission's Web site at http://www.ferc.gov for Docket No. AD05-17-

000. Most standard word processing formats are accepted, and the e-
Filing link provides instructions for how to Login and complete an
electronic filing. First-time users will have to establish a user name
and password. User assistance for electronic filing is available at
202-208-0258 or by e-mail to efiling at ferc.gov. Comments should not
be submitted to the e-mail address. Commentors filing electronically do
not need to make a paper filing. Commentors that are not able to file
comments electronically must send an original of their comments to:
Federal Energy Regulatory Commission, Office of the Secretary, 888
First Street NE., Washington, DC 20426.
    This filing is accessible on-line at http://www.ferc.gov, using the

``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. For assistance with any FERC
Online service, please e-mail<EMAIL_ADDRESS>or call (866)
208-3676 (toll free). For TTY, call<PHONE_NUMBER>.
    Comment Date: 5 p.m. eastern time on November 18, 2005.

Magalie R. Salas,
Secretary.
[FR Doc. 05-20896 Filed 10-18-05; 8:45 am]

BILLING CODE 5717-01-P


[Federal Register Volume 85, Number 157 (Thursday, August 13, 2020)]
[Notices]
[Pages 49407-49411]
[FR Doc No: 2020-17670]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89509; File No. SR-MEMX-2020-03]

Self-Regulatory Organizations; MEMX LLC; Notice of Filing and
Order Granting Accelerated Approval of a Proposed Rule Change To Amend
Rule 8.15 and To Add the Consolidated Audit Trail Industry Member
Compliance Rules to the List of Minor Rule Violations in Rule 8.15.01

August 7, 2020.
    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 July 31, 2020, MEMX LLC (``MEMX'' or the ``Exchange'') 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 and approving the proposal on an accelerated basis.
---------------------------------------------------------------------------

    \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

    The Exchange is filing with the Commission a proposed rule change
to add the Consolidated Audit Trail (``CAT'') industry member
compliance

rules (``CAT Compliance Rules'') to the list of minor rule violations
in Rule 8.15 and to make an additional change to paragraph (a) of Rule
8.15. The text of the proposed rule change is provided in Exhibit 5.

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
    In order to implement the National Market System Plan Governing the
Consolidated Audit Trail (the ``CAT NMS Plan'' or ``Plan''), the
Exchange codified the CAT Compliance Rules in Rules 4.5 through 4.16 as
part of its initial Rules.\3\ The CAT NMS Plan was filed by the Plan
Participants to comply with Rule 613 of Regulation NMS under the
Act,\4\ and each Plan Participant accordingly has adopted the same
compliance rules as in Exchange Rules 4.5 through 4.16. The common
compliance rules adopted by each Plan Participant are designed to
require industry members to comply with the provisions of the CAT NMS
Plan, which broadly calls for industry members to record and report
timely and accurate customer, order, and trade information relating to
activity in NMS Securities and OTC Equity Securities.
---------------------------------------------------------------------------

    \3\ On May 4, 2020, the Commission approved the MEMX Form 1
application for registration as a national securities exchange. See
Securities Exchange Release No. 88806 (May 4, 2020), 85 FR 27451
(May 8, 2020).
    \4\ 17 CFR 242.613.
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    Rule 8.15 provides for disposition of certain violations through
assessment of fines in lieu of conducting a formal disciplinary
proceeding. Rule 8.15.01, specifically, sets forth the list of specific
Exchange Rules under which any member of the Exchange (``Member''),
associated person of a Member, or registered or non-registered employee
of a Member may be subject to a fine for violations of such Rules. The
Exchange proposes to amend Rule 8.15.01 to add the CAT Compliance Rules
in Rules 4.5 through 4.16 to the list of rules in Rule 8.15.01 eligible
for disposition pursuant to a minor fine; specifically, under proposed
Rule 8.15.01(h).\5\ Proposed Rule 8.15.01(h) provides that for failures
to comply with the Consolidated Audit Trail Compliance Rule
requirements of Rules 4.5 through 4.16, the Exchange may impose a minor
rule violation fine of up to $2,500. The Exchange may seek other
disciplinary action for more serious violations.
---------------------------------------------------------------------------

    \5\ FINRA's maximum fine for minor rule violations under FINRA
Rule 9216(b) is $2,500. The Exchange will apply an identical maximum
fine amount for eligible violations of Rules 4.5 through 4.16 to
achieve consistency with FINRA and also amend its minor rule
violation plan (``MRVP'') to include such fines. Like FINRA, the
Exchange would be able to pursue a fine greater than $2,500 for
violations of Rules 4.5 through 4.16 in a regular disciplinary
proceeding or a letter of consent under Chapter 8 as appropriate.
Any fine imposed in excess of $2,500 or not otherwise covered by
Rule 19d-1(c)(2) of the Act would be subject to prompt notice to the
Commission pursuant to Rule 19d-1 under the Act. As noted below, in
assessing the appropriateness of a minor rule fine with respect to
CAT Compliance Rules, the Exchange will be guided by the same
factors that FINRA utilizes. See text accompanying notes 9-10,
infra.
---------------------------------------------------------------------------

    The Exchange is coordinating with the Financial Industry Regulatory
Authority, Inc. (``FINRA'') and other Plan Participants to promote
harmonized and consistent enforcement of all the Plan Participants' CAT
Compliance Rules. The Commission recently approved a Rule 17d-2 Plan
under which the regulation of CAT Compliance Rules will be allocated
among Plan Participants to reduce regulatory duplication for industry
members that are members of more than one Participant (``common
members'').\6\ Under the Rule 17d-2 Plan, the regulation of CAT
Compliance Rules with respect to common members that are members of
FINRA is allocated to FINRA. Similarly, under the Rule 17d-2 Plan,
responsibility for common members of multiple other Plan Participants
and not a member of FINRA will be allocated among those other Plan
Participants, including to the Exchange. For those non-common members
who are allocated to MEMX pursuant to the Rule 17d-2 Plan, the Exchange
and FINRA have entered into a Regulatory Services Agreement (``RSA'')
pursuant to which FINRA will assist the Exchange with conducting
surveillance, investigation, examination, and enforcement activity in
connection with the CAT Compliance Rules on the Exchange's behalf. The
Exchange expects that the other exchanges will be entering into similar
RSAs.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 88366 (March 12,
2020), 85 FR 15238 (March 17, 2020).
---------------------------------------------------------------------------

    The Exchange notes that this proposal is based upon the FINRA
filing to amend FINRA Rule 9217 in order to add FINRA's corresponding
CAT Compliance Rules to FINRA's list of rules that are eligible for
minor rule violation plan treatment.\7\ The Exchange also notes that
the New York Stock Exchange LLC (``NYSE'') submitted a filing to amend
its Minor Rule Violation Plan (``MRVP'') to add its CAT Compliance
Rules in a manner consistent with FINRA's proposal,\8\ and other Plan
Participants intend to submit the same. Thus, in order to achieve
consistency with FINRA and the other Plan Participants, the Exchange
proposes to adopt fines up to $2,500 in connection with minor rule
fines for violations of the CAT Compliance Rules (Rules 4.5 through
4.16) in proposed Rule 8.15.01(h) under the Exchange's MRVP. In
connection with FINRA's proposed amendment to FINRA Rule 9217 to make
FINRA's CAT Compliance Rules MRVP eligible, FINRA has stated that it
will apply the minor fines for CAT Compliance Rules in the same manner
that FINRA has for its similar existing audit trail-related rules.\9\
Accordingly, in order to promote regulatory consistency, the Exchange
plans to do the same. Specifically, application of a minor fine with
respect to CAT Compliance Rule violations will be guided by the same
factors that FINRA references in its filing. However, more formal
disciplinary proceedings may be warranted instead of minor rule
dispositions in certain circumstances such as where violations prevent
regulatory users of the CAT from performing their regulatory functions.
Where minor rule dispositions are appropriate, the following factors
help guide the determination of fine amounts:
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    \7\ See Securities Exchange Act Release No. 88870 (May 14,
2020), 85 FR 30768 (May 20, 2020) (SR-FINRA-2020-013).
    \8\ See Securities Exchange Act Release No. 89123 (June 23,
2020), 85 FR 39016 (June 29, 2020) (SR-NYSE-2020-51).
    \9\ See supra note 7; see also FINRA Notice to Members 04-19
(March 2004) available at https://www.finra.org/rules-guidance/notices/04-19 (providing specific factors used to inform
dispositions for violations of OATS reporting rules).
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     Total number of reports that are not submitted or
submitted late;
     The timeframe over which the violations occur;
     Whether violations are batched;
     Whether the violations are the result of the actions of
one individual or the result of faulty systems or procedures;

     Whether the firm has taken remedial measures to correct
the violations;
     Prior minor rule violations within the past 24 months;
     Collateral effects that the failure has on customers; and
     Collateral effects that the failure has on the Exchange's
ability to perform its regulatory function.\10\
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    \10\ See id.
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    Upon effectiveness of this rule change, the Exchange will publish a
regulatory notice notifying its Members of the rule change and the
specific factors that will be considered in connection with assessing
minor rule fines described above.
    For the foregoing reasons, the Exchange believes that the proposed
rule change will result in a coordinated, harmonized approach to CAT
Compliance Rule enforcement across Plan Participants that will be
consistent with the approach FINRA has taken with the CAT rules.
    In addition to the changes set forth above, the Exchange proposes
to remove a sentence from its current Rule 8.15(a) given the
possibility that it may cause confusion. Specifically, as set forth
above, the provisions of Rule 8.15 are intended to provide for a way to
resolve violations of Exchange Rules that are minor in nature. However,
current paragraph (a) of Rule 8.15 states that the Exchange may, if no
exceptional circumstances are present, impose a fine based upon a
determination that there exists a pattern or practice of violative
conduct. Given the fact that most violations involving a ``pattern or
practice'' of violative conduct are not considered to be minor in
nature, the Exchange believes this language might cause confusion and
proposes to delete this sentence.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\11\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \12\ 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) \13\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ Id.
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    Minor rule fines provide a meaningful sanction for minor or
technical violations of rules when the conduct at issue does not
warrant stronger, immediately reportable disciplinary sanctions. The
inclusion of a rule in the Exchange's MRVP does not minimize the
importance of compliance with the rule, nor does it preclude the
Exchange from choosing to pursue violations of eligible rules through a
letter of consent if the nature of the violations or prior disciplinary
history warrants more significant sanctions. Rather, the Exchange
believes that the proposed rule change will strengthen the Exchange's
ability to carry out its oversight and enforcement responsibilities in
cases where full disciplinary proceedings are unwarranted in view of
the minor nature of the particular violation. The Exchange believes the
option to impose a minor rule sanction gives the Exchange additional
flexibility to administer its enforcement program in the most effective
and efficient manner while still fully meeting the Exchange's remedial
objectives in addressing violative conduct.\14\ Specifically, the
proposed rule change is designed to prevent fraudulent and manipulative
acts and practices because it will provide the Exchange the ability to
issue a minor rule fine for violations of the CAT Compliance Rules in
Rules 4.5 through 4.16 where a more formal disciplinary action may not
be warranted or appropriate consistent with the approach of other Plan
Participants for the same conduct. For the same reason, the Exchange
believes its proposal to amend Rule 8.15(a) is consistent with the Act
as it is designed to prevent fraudulent and manipulative acts and
practices because it would remove a reference to an action brought
under the Exchange's MRVP when the applicable violation is a pattern or
practice violation.
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    \14\ Pursuant to Rule 8.15(a) and (e), the Exchange has the
discretion to impose a fine in lieu of commencing a disciplinary
proceeding for a violation that is minor in nature. Rule 8.15(e)
states specifically that nothing in Rule 8.15 requires the Exchange
to impose a fine pursuant to Rule 8.15 with respect to the violation
of any Rule included in any such listing.
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    In connection with the fine level specified in the proposed rule
change, adding proposed Rule 8.15.01(h) to specifically provide that
for violations of the CAT Compliance Rules in Rules 4.5 through 4.16
the Exchange may impose a fine not to exceed $2,500 would further the
goal of transparency within the Exchange's rules. Adopting the same cap
as FINRA for minor rule fines in connection with the CAT Compliance
Rules would also promote regulatory consistency across self-regulatory
organizations.
    The Exchange further believes that the proposed amendment to Rule
8.15.01 is consistent with Section 6(b)(6) of the Act,\15\ which
provides that members and persons associated with members shall be
appropriately disciplined for violation of the provisions of the rules
of the exchange, by expulsion, suspension, limitation of activities,
functions, and operations, fine, censure, being suspended or barred
from being associated with a member, or any other fitting sanction. As
noted, the proposed rule change would provide the Exchange the ability
to sanction minor or technical violations of Rules 4.5 through 4.16
pursuant to the Exchange's rules.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b)(6).
---------------------------------------------------------------------------

    Finally, the Exchange also believes that the proposed change is
designed to provide a fair procedure for the disciplining of members
and persons associated with members, consistent with Sections 6(b)(7)
and 6(d) of the Act.\16\ Rule 8.15 does not preclude a Member,
associated person of a Member, or registered or non-registered employee
of a Member from contesting an alleged violation and receiving a
hearing on the matter with the same procedural rights through a
litigated disciplinary proceeding.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78f(b)(7) and 78f(d).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not intended to address competitive issues but rather is concerned
solely with making the CAT Compliance Rules in Rules 4.5 through 4.16
eligible for a minor rule fine disposition, thereby strengthening the
Exchange's ability to carry out its oversight and enforcement functions
and deter potential violative conduct. Also, as stated above, the
proposed rule

change is consistent with similar proposals recently filed by FINRA and
NYSE, and other Plan Participants intend to submit the same.

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. 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-MEMX-2020-03 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-MEMX-2020-03. 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-MEMX-2020-03 and should be submitted on
or before September 3, 2020.

IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change

    The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\17\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\18\ which requires that the
rules of an exchange be designed to promote just and equitable
principles of trade, to remove impediments and to perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest. The Commission
also believes that the proposal is consistent with Sections 6(b)(1) and
6(b)(6) of the Act \19\ which require that the rules of an exchange
enforce compliance with, and provide appropriate discipline for,
violations of Commission and Exchange rules. Finally, the Commission
finds that the proposal is consistent with the public interest, the
protection of investors, or otherwise in furtherance of the purposes of
the Act, as required by Rule 19d-1(c)(2) under the Act,\20\ which
governs minor rule violation plans.
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    \17\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ 15 U.S.C. 78f(b)(1) and 78f(b)(6).
    \20\ 17 CFR 240.19d-1(c)(2).
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    As stated above, the Exchange proposes to add the CAT Compliance
Rules to the list of minor rule violations in Rule 8.15 to be
consistent with the approach FINRA has taken for minor violations of
its corresponding CAT Compliance Rules.\21\ The Commission has already
approved FINRA's treatment of CAT Compliance Rules violations when it
approved the addition of CAT Compliance Rules to FINRA's MRVP.\22\ As
noted in that order, and similarly herein, the Commission believes that
Exchange's treatment of CAT Compliance Rules violations as part of its
MRVP provides a reasonable means of addressing violations that do not
rise to the level of requiring formal disciplinary proceedings, while
providing greater flexibility in handling certain violations. However,
the Commission expects that, as with FINRA, the Exchange will continue
to conduct surveillance with due diligence and make determinations
based on its findings, on a case-by-case basis, regarding whether a
sanction under the rule is appropriate, or whether a violation requires
formal disciplinary action. Accordingly, the Commission believes the
proposal raises no novel or significant issues. In addition, the
Exchange proposes to amend Rule 8.15(a) to remove a reference to an
action brought under the Exchange's MRVP when the applicable violation
is a pattern or practice violation. The Commission believes that
removal of such reference makes clear that a pattern or practice of
violative conduct may require discipline beyond the scope of the
Exchange's MRVP, and is therefore consistent with the Act.
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    \21\ As discussed above, the Exchange has entered into a Rule
17d-2 Plan and an RSA with FINRA with respect to the CAT Compliance
Rules. The Commission notes that, unless relieved by the Commission
of its responsibility, as may be the case under the Rule 17d-2 Plan,
the Exchange continues to bear the responsibility for self-
regulatory conduct and liability for self-regulatory failures, not
the self-regulatory organization retained to perform regulatory
functions on the Exchange's behalf pursuant to an RSA. See
Securities Exchange Release No. 61419 (January 26, 2010), 75 FR 5157
(February 1, 2010) (SR-BATS-2009-031), note 93 and accompanying
text.
    \22\ See SR-FINRA-2020-013.
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    For the same reasons discussed above, the Commission finds good
cause, pursuant to Section 19(b)(2) of the Act,\23\ for approving the
proposed rule change prior to the thirtieth day after the date of
publication of the notice of the filing thereof in the Federal
Register. The proposal merely adds the CAT Compliance Rules to the
Exchange's MRVP, harmonizes its application with FINRA's application of
CAT Compliance Rules under its own MRVP, and amends Rule 8.15(a) to
remove a pattern or practice of violative conduct from the Exchange's
MRVP. Accordingly, the Commission believes that a full notice-and-
comment period is not necessary before approving the proposal.
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    \23\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\24\ and Rule 19d-1(c)(2) thereunder,\25\ that the proposed rule change
(SR-MEMX-2020-03) be, and hereby is, approved on an accelerated basis.
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    \24\ 15 U.S.C. 78s(b)(2).
    \25\ 17 CFR 240.19d-1(c)(2).

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    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-17670 Filed 8-12-20; 8:45 am]
BILLING CODE 8011-01-P