Significant New Alternatives Policy Program
Refrigeration and Air Conditioning Sector

Risk Screen on Substitutes for CFC-12 and HCFC-22 in Household Refrigerators and Household Freezers

                             Substitute: Isobutane

This risk screen does not contain Clean Air Act (CAA) Confidential Business Information (CBI) and, therefore, may be disclosed to the public.
1. 	INTRODUCTION

Ozone-depleting substances (ODS) are being phased out of production in response to a series of diplomatic and legislative efforts that have taken place over the past two decades, including the Montreal Protocol and the Clean Air Act Amendments of 1990 (CAAA).  The U.S. Environmental Protection Agency (EPA), as authorized by Section 612 of the CAAA, runs the Significant New Alternatives Policy (SNAP) Program, which identifies acceptable and unacceptable substitutes for ODS in specific end-uses based on assessment of their health and environmental impacts.

EPA's decision on the acceptability of a substitute is based largely on the findings of a screening assessment of potential human health and environmental risks posed by the substitute in specific applications.  EPA has already screened a large number of substitutes in many end-use applications within all of the major ODS-using sectors, including refrigeration and air conditioning, solvent cleaning, foam blowing, aerosols, fire suppression, adhesives, coatings and inks, and sterilization. The results of these risk screens are presented in a series of Background Documents that are available in EPA's docket.

The purpose of this risk screen is to supplement EPA's Background Document on the refrigeration and air conditioning sector (EPA 1994) (hereinafter referred to as the Background Document) by adding to the list of potential substitutes for specific end-uses of CFC-12 and HCFC-22 in this sector.  The proposed end-use application considered in this analysis is household refrigerators and household freezers.  The specific proposed CFC-12 and HCFC-22 substitute examined in this risk screen is isobutane (R-600a).

The Background Document examines the potential risks associated with use of substitutes in residential refrigeration, and includes a detailed discussion of the methodologies used to conduct this risk screen.     Occupational exposure modeling was performed to ensure that use of the proposed substitute in the application listed above did not pose unacceptable risk to workers.  End-use exposure modeling was performed to examine potential catastrophic releases of the substitute.  Lastly, general population exposure modeling was performed to ensure that the proposed substitute would not pose an unacceptable risk to the population at large.

The proposed substitute, isobutane, may contain minute quantities of impurities.  Table 1 details the composition of the substitute, including the maximum estimated concentration of impurities that may be present in the substitute.

                Table 1. Composition of the Proposed Substitute
                                   Component
                                Concentration
                               (Weight Percent)
                                  Substitute
                                   Isobutane
                                    99.44%
                 Potential Impurities (maximum concentration)
                             Propane and N-butane
                                     0.5%
                                 1,3-Butadiene
                                    0.0005%
                                   N-Hexane
                                    0.005%
                                    Benzene
                                    0.0001%
                                    Sulfur
                                    0.0001%
                              Liquid phase water
                                    0.0005%
                                      Air
                                  0.05% (V/V)

Section 2 summarizes the results of the risk screen for the proposed substitute.  The remainder of the risk screen is organized into the following sections:

         * Section 3: Atmospheric Assessment
         * Section 4: Discussion of End-Use Scenarios Modeled
         * Section 5: Flammability Assessment
         * Section 6: Asphyxiation Assessment
         * Section 7: Toxicity Assessment
         * Section 8: Volatile Organic Compound Assessment
         * Section 9: References
2.	 SUMMARY OF RESULTS
Isobutane is recommended for SNAP approval for household refrigerators and freezers.  EPA's risk screen indicates that the use of the proposed substitute will be less harmful to the atmosphere than the continued use of CFC-12 and R-502.  No significant toxicity risks to workers, consumers, or the general population are expected according to occupational and consumer exposure modeling.
Flammability models indicate that risks of explosions are not a concern for consumers, provided the refrigerator or freezer is not used in small, poorly ventilated spaces (see Section 4).  Caution must be used in manufacturing facilities and by refrigeration technicians to minimize explosion risk while in the presence of large quantities of the substitute.  This includes installation of proper safety equipment during manufacturing, transportation, and storage and providing proper training and certification to technicians.  EPA recommends that American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standards 15, 34, and 62 be followed.
3. 	ATMOSPHERIC ASSESSMENT
This section presents an assessment of the potential risks to atmospheric integrity posed by the use of isobutane in the residential refrigeration sector.  The ozone-depletion potential (ODP), global warming potential (GWP), and atmospheric lifetime (ALT) of the proposed substitute are presented in Table 2.

The environmental impacts resulting from use of isobutane are generally in the range of those predicted for other substitutes examined in the Background Document.  The substitute is substantially less harmful to the ozone layer and has less climate impact, and a shorter atmospheric lifetime when compared to CFC-12 and HCFC-22.
   Table 2.  Atmospheric Impacts of Isobutane Compared to CFC-12 and HCFC-22
                                  Refrigerant
                                      ODP
                                      GWP
                                  ALT (years)
                                   Isobutane
                                     0 [a]
                                     8 [a]
                                   <1 [b]
                                    CFC-12
                                     1 [c]
                                  10,900 [d]
                                    100 [d]
                                    HCFC-22
                                   0.055 [c]
                                   1,810 [d]
                                    12 [d]
[a] Isobutane SNAP Submission (GE 2008).
[b] IPCC/TEAP (2005). Atmospheric lifetime (ALT) not provided in SNAP submission.
[c] Montreal Protocol  and available at: http://www.epa.gov/ozone/ods.html.
[d] IPCC 4[th] Assessment Report (Forster et al. 2007).
4. 	DISCUSSION OF END-USE SCENARIOS MODELED
The proposed end-use for this substitute is household food refrigeration.  The specific application includes household refrigerators and freezers.  The submission states that the household refrigerators and freezers with this substitute will have a charge size of 50 grams. This charge size is consistent with the standard UL 250 Supplement SA, which calls for a maximum leak amount of 50 grams for refrigerants with flammability limits and a heat of combustion greater than 19,000 kJ/kg, such as isobutane.
For the analysis, a kitchen with an area of 7.5 m[2] and a height of 2.4 meters was assumed (EPA 1994).  This is equivalent to a volume of 18 m[3].  In the analysis, the full charge of the unit as specified in the submission is assumed to be emitted over the course of one minute and the model conservatively assumes 2.5 air changes occur per hour.  Horizontal stratification is also assumed since isobutane is denser than air and will settle in higher concentrations closer to the ground.  In order to simulate the horizontal concentration gradient that will occur because of the weight differential between the refrigerant and air, it is assumed that 95 percent of the leaked refrigerant mixes evenly into the bottom 0.4 meter of the room, and the rest of the refrigerant mixes evenly in the remaining volume (Kataoka 1999).Table 3 details the assumptions throughout the risk screen for modeling at the end-use (i.e., in Sections 5, 6, and 7.3).
         Table 3. Worst-Case Scenario Model Assumptions for Submission
Parameter
                                  Assumption
Refrigeration Unit
                            Household Refrigerator
Room
                               Household Kitchen
Charge size (g)
                                      50
Length of release (minutes)
                                       1
Room size (volume - m[3])
                                      18
Room ventilation (air changes per hour)
                                      2.5
Horizontal stratification
                                      Yes
5.	       FLAMMABILITY ASSESSMENT
Isobutane is flammable when its concentration in air is in the range of 1.8%-9.6% by volume (18,000 ppm to 96,000 ppm). Due to its flammable nature, isobutane could pose a significant safety concern for workers and consumers if it is not handled carefully.  In the presence of an ignition source (e.g., static electricity, a spark from a switch malfunction, or a cigarette), an explosion or a fire could occur when the concentration of isobutane exceeds its lower flammability limit (LFL) of 18,000 ppm.  Therefore, it is important to ensure that the levels of isobutane not exceed 18,000 ppm.  In production facilities or other facilities where large quantities of the refrigerant will be stored, proper safety precautions should be in place to minimize the risk of explosion.  Household refrigerators and freezers installed with isobutane should be clearly labeled as containing a flammable refrigerant charge and designed to prevent catastrophic leaks.  Furthermore, only refrigerant technicians certified to work with flammable refrigerants should handle these units during manufacturing, installation, servicing, transportation and disposal.

Under the catastrophic release scenario (see Section 4), the maximum instantaneous concentration of isobutane in the lower stratum of the room would be approximately 37 percent of its LFL for the average room size assumed, as shown in Table 4.  The maximum instantaneous concentration is lower in the upper stratum of the room, as only five percent of the leaked refrigerant is present in this stratum, and this stratum has a greater volume than the lower stratum.
                       Table 4.  Flammability Assessment
                           Room Type/Appliance Type
                        Reasonable Worst-Case Scenario
                        Flammability Threshold Scenario

                               Room Size (m[3])
                     Maximum Instantaneous Concentration
                                 (ppm) [a][,b]
                               Room Size (m[3])
                     Maximum Instantaneous Concentration
                                  (ppm) [a,b]
                             Kitchen/Refrigerator
                                18 (635 ft[3])
                                     6,647
                                 7 (247 ft[3])
                                    17,006
[a] Lower Flammability Limit of isobutane is equal to 18,000 ppm.  If 18,000 ppm were used in the analysis, the room size required to reach the threshold of flammability would be 6.6 m[3] or 234 ft[3].
[b] Values provided in these columns refer to the concentration in the lower stratum of the room.

For flammability to be of concern under the conservative (protective) assumptions described in Section 4, the volume of the kitchen would have to be about 7 m3 (247 ft[3]) (see Table 4).  Assuming a square room with a ceiling height of 2.4 m (8.0 ft), this equates to a 1.7 x 1.7 m (5.6 x 5.6 ft) kitchen.  Although very limited data are available regarding the distribution of kitchen volumes in the United States, an analysis by Murray (1997) which aggregated data from over 60 different projects reported the minimum kitchen volume encountered as 31 m[3].  Further, only one percent of houses sampled had a kitchen smaller than 53 m[3].

To avoid the risk of fire and explosion, it is recommended that the refrigerators not be installed in small, poorly ventilated spaces such as very small `galley' kitchens or storage closets (especially as other equipment or appliances in the space would reduce the effective volume of the room).  However, based on the available data regarding kitchen volumes, it is not likely that a kitchen would exist which would be small enough for flammability to be a concern, even under a reasonable worst-case scenario.  For full-sized kitchens, the risk of explosion is minimal.  The installation of leak prevention devices would further protect against the very limited risk of explosion.

To mitigate the risks of flammability at the end-use, it is recommended that isobutane refrigerators' and freezers' charge sizes are determined according to the UL 250 Supplement SA standard.  Per the UL standard, the maximum permissible leak for refrigerants with limits of flammability and heat of combustion greater than 19,000 kJ/kg (such as isobutane) is 50 g.  Additional charge is not prohibited, however, if the amount of refrigerant leaked during testing does not exceed 50 grams.  This is also consistent with EPA's proposed use condition for hydrocarbon refrigerants that limits the refrigerant charge size of any refrigerator, freezer, or combination refrigerator and freezers to 57 grams, assuming that roughly 12% of the refrigerant charge is retained in the compressor oil and 88% of the charge leaks. By ensuring isobutane refrigerators and freezers conform to the aforementioned standard, flammability risks associated with the use of isobutane in these appliances should be mitigated.

Catastrophic releases of large quantities of refrigerant during servicing and manufacturing, especially in areas where large amounts of refrigerant are stored, could cause an explosion.  For this reason, it is important that only properly trained and certified refrigerant technicians handle isobutane.  The submitter has provided additional information regarding its training program for service technicians.  The program includes detailed information regarding proper recovery of the refrigerant prior to service as well as information on servicing the refrigerator and charging the system with isobutane (GE 2008).  This training should be provided for all technicians who will be servicing refrigerators that use isobutane.     As a further precaution, isobutane storage and transport equipment, including the recovery cylinders used to recover refrigerant on-site during the initial product run (GE 2008), should be installed with safety devices that minimize the likelihood of catastrophic releases.  For example, NFPA 58 Liquefied Petroleum Gas Code (NFPA 2008) requires the use of overfill protection devices (OPD) on cylinders to minimize the likelihood of leaks.  The NPFA 58 Code also contains storage and transportation requirements/guidelines.  Similar equipment safety and procedural requirements should be implemented for this substitute during servicing and manufacture.

It is important that the strictest standards be followed during manufacturing.  It is recommended that refrigerants be properly stored and caution used within manufacturing facilities to minimize explosion risk and that workers adhere to the requirements set by OSHA under 29 CFR Part 1910.  OSHA requirements include proper ventilation and storage practices within manufacturing facilities to prevent fire and explosion.  Proper ventilation should be maintained at all times during the manufacture of equipment containing isobutane through adherence to good manufacturing practices. If refrigerant levels in the air surrounding the equipment rise above one-fourth of the lower flammability limit, it is recommended that the space should be evacuated and re-entry should only occur after the space has been properly ventilated.  Ventilation is also of the utmost importance to mitigate the risk of fire or explosion when servicing equipment using isobutane.  During servicing operations, technicians should ensure that proper ventilation is in place through the use of fans (or other mechanical ventilation devices) and portable refrigerant detectors should be used to alert technicians to the presence of flammable gases in the area.
6.                ASPHYXIATION ASSESSMENT
The risk of asphyxiation for a reasonable "worst-case" scenario was investigated for isobutane.  This analysis does not consider conditions that are likely to occur that would reduce the levels to which individuals would be exposed, such as open doors or windows, fans operating, conditioned airflow (either heated or cooled), or even seepage between the door and door frame.  If the substitute passes the screening analysis with these restrictive assumptions in place, it can be reasonably assumed that no risks of asphyxiation will be present under real-world conditions.
The results of the asphyxiation assessment are summarized in Table 5 below.  The maximum charge of isobutane necessary to reduce the oxygen levels to 12 percent in air, in a kitchen of volume 18 m[3] (635 ft[3]) (see Section 4), was calculated, assuming horizontal stratification of the refrigerant and the air.  Assuming that nitrogen and oxygen retain the same relative volumes in the rooms with the balance composed entirely of isobutane, and that the pressure of the room does not increase significantly with the addition of the refrigerant, a charge of approximately 625 g would be necessary to reach 12 percent oxygen in the lower stratum.  This amount represents more than twelve times the intended charge of approximately 50 g for a single isobutane refrigerator or freezer.  Charge requirements to reach the same effect in the upper stratum would be even higher because of the stratum's larger volume.  For asphyxiation to be of concern with the proposed charge size, under the conservative (protective) assumptions described above, the volume of the kitchen would have to be about 1.5 m[3] (53 ft[3]) (see Table 5).  Assuming a square room with a ceiling height of 2.4 m (8.0 ft), this equates to a 0.8 x 0.8 m (2.6 x 2.6 ft) kitchen.
                       Table 5.  Asphyxiation Assessment
                           Room Type/Appliance Type
                             Appliance Charge (g)
                        Reasonable Worst-Case Scenario
                        Asphyxiation Threshold Scenario

                               Room Size (m[3])
                       Charge Causing Impairment (g)[a]
                      Room Size Causing Impairment (m[3])
                           Assumed Leak Size (g)[a]
                             Kitchen/Refrigerator
                                      50
                                18 (635 ft[3])
                                      625
                                1.5 (53 ft[3])
                                      50
[a] Values provided in these columns refer to the charge required to cause impairment in the lower stratum of the room.  In this scenario, 100% of the charge size leaks. Charge requirements to reach the same effect in the upper stratum would be even higher because of the stratum's larger volume.

It is recommended that isobutane refrigerators not be installed in small, poorly ventilated spaces, such as very small `galley' kitchens, to avoid the risk of asphyxiation.  However, based on the available data regarding kitchen volumes (see Section 4), it is not likely that a kitchen would exist which would be small enough for asphyxiation to be a concern, even under a reasonable worst-case scenario.  Further, as the "threshold" room sizes for asphyxiation risks are smaller than those for flammability risks, flammability risks would be realized before asphyxiation risks. Therefore, EPA does not believe that the use of isobutane in this end-use poses a significant risk of asphyxiation or impaired coordination to consumers.
7. 		TOXICITY ASSESSMENT
Section 7 summarizes the results of the toxicity assessment for isobutane in the household refrigeration sector. This section is organized as follows:
   * Section 7.1: Toxicity Reference Values
   * Section 7.2: Occupational Exposure
   * Section 7.3: End-Use Exposure
   * Section 7.4: General Population Exposure

7.1 	TOXICITY REFERENCE VALUES
To assess potential health risks from exposure to this substitute in the residential refrigeration sector, EPA identified the relevant toxicity threshold values for comparison to modeled exposure concentrations for different scenarios.  For the occupational exposure analysis, potential risks from chronic and acute worker exposure were evaluated by comparing exposure concentrations to available occupational exposure limits.  Occupational exposure limits are typically established for either an eight-hour or ten-hour time period for long-term exposure, such as the Workplace Guidance Levels (WGLs), or for a 10 to 30-minute period for short-term exposure, such as the Emergency Guidance Levels (EGLs), as shown in Table 6.  Because they are designed to assess risks from acute exposure, emergency guidance levels are used to assess risks from short-term consumer exposures.  Reference concentrations (RfCs) are used to assess risks to the general population from exposure to ambient air releases and to assess potential risks associated with chronic consumer exposures.  Table 6 lists the relevant toxicity limits.  Table 7 provides definitions of the acronyms used in Table 6.  EPA's approach for identifying or developing these values is discussed in Chapter 3 of the Background Document.
        Table 6.  Toxicity Levels of Isobutane and Potential Impurities

                              Long-term Exposure
                                      ppm
                              Short-term Exposure
                                      ppm
                         Reference Concentration (RfC)
                                    mg/m[3]
                                  Substitute
                                   Isobutane
                              800 [a] (NIOSH REL)
                               18000 [b] (NOAEL)
                                   0.95 [c]
                             Potential Impurities
                                    Propane
                                    1000 d
                             (OSHA PEL/NIOSH REL)
                     10,000 ppm [e][,][f] (10 min AEGL-1)
                          6,900 ppm f (30 min AEGL-1)
                                    0.9 [c]
                                   n-Butane
                               800 g (NIOSH REL)
                                      NA
                                   0.95 [c]
                                 1,3-Butadiene
                                1 h (OSHA PEL)
            5 h (OSHA PEL - STEL)
670 i (10 minute interim AEGL-1)
                                 2 x 10-3 [j]
                                   N-Hexane
                               50 k (NIOSH REL)
                                1100 [k] (IDLH)
                                    0.7 [l]
                                    Benzene
                              0.1 [m] (NIOSH REL)
                         1 m (NIOSH STEL)
500 k (IDLH)
                                 3 x 10 -2 [n]
                                    Sulfur
                                      NA
                                      NA
                                      NA
   NA  = Not Available
   [a] http://www.cdc.gov/niosh/npg/npgd0350.html
   [b] OSHA (2004) notes the following regarding isobutane: "OSHA does not have a PEL for isobutane, which is affirmed as "generally recognized as safe" as a direct human food ingredient (21 CFR 184.1165). No toxic effects reported below 18,000 ppm."
   [c] SNAP Refrigerant Background Document (EPA 1994).
   [d] http://www.cdc.gov/Niosh/npg/npgd0524.html
   [e] An IDLH of 2,100 ppm has been established for propane.  However, NIOSH (1996) states that "[b]ased on acute inhalation toxicity data in humans (ACGIH 1991; Braker 1980), a value much greater than 10,000 ppm would have been appropriate. However, the revised IDLH for propane is 2,100 ppm based strictly on safety considerations (i.e., being 10% of the lower explosive limit of 2.1%)."  Therefore, as this IDLH value is based on flammability concerns and not toxicity concerns, it is not used in the evaluation of toxicity risks in this risk screen.
   [f] http://www.epa.gov/oppt/aegl/pubs/results96.htm
   g http://www.cdc.gov/niosh/npg/npgd0068.html
   [h] http://www.cdc.gov/niosh/npg/npgd0067.html
   [i] http://www.epa.gov/opptintr/aegl/pubs/rest148.htm
   [j] http://www.epa.gov/ncea/iris/subst/0139.htm#refinhal
   [k] http://www.cdc.gov/niosh/npg/npgd0322.html
   l http://www.epa.gov/ncea/iris/subst/0486.htm#refinhal
   m http://www.cdc.gov/niosh/npg/npgd0049.html
   n http://www.epa.gov/iris/subst/0276.htm#refinhal
             Table 7.  Explanation of Toxicity-Related Acronyms[a]
Organization
Definition
OSHA
Occupational Safety and Health Administration
NIOSH
National Institute for Occupational Safety and Health
Exposure Limit
Definition
Explanation
AEGL-1
Acute Exposure Guideline Level
The AEGL-1 "is the airborne concentration... above which it is predicted that the general population, including susceptible individuals, could experience notable discomfort, irritation, or certain asymptomatic nonsensory effects. However, the effects are not disabling and are transient and reversible upon cessation of exposure" (EPA 2008a).
IDLH
Immediately Dangerous to Life and Health
If exposed to this concentration, room occupants are expected to be able to escape the room within 30 minutes without experiencing escape-impairing or irreversible health effects.
NOAEL
No Observed Adverse Effect Limit
"The highest exposure level at which there are no biologically significant increases in the frequency or severity of adverse effect between the exposed population and its appropriate control; some effects may be produced at this level, but they are not considered adverse or precursors of adverse effects[a][b]
PEL
Permissible Exposure Limit

This is an 8-hour time-weighted average exposure limit set by OSHA.
PEL - STEL
Permissible Exposure Limit - Short-term exposure limit.
This is a 15-minute time-weighted average exposure limit set by OSHA.
REL
Recommended Exposure Limit
This is a 10-hour time-weighted average exposure limit set by NIOSH.
RfC
Reference Concentration
A concentration "designed to protect the general population against adverse systemic (i.e., noncancer) effects."
   [a]All information in this table taken from EPA (1994), except where noted otherwise.
   [b] From http://www.epa.gov/riskassessment/glossary.htm#n
7.2  	OCCUPATIONAL EXPOSURE
Occupational exposure modeling was performed for the proposed substitute to ensure that use of the substitute does not pose an unacceptable risk to workers.  The methodology used for this screening assessment is based on the one used in the occupational exposure and hazard analysis described in Chapter 5 of the Background Document. A box-model approach was used to evaluate potential worker exposure to alternative refrigerants.  This approach has been widely used for many years to estimate probable exposures of workers to hazardous airborne materials, and has been described in detail by the National Institute for Occupational Safety and Health (NIOSH).  This model takes into consideration the duration and magnitude of the resulting exposure which is influenced by 1) duration and intensity of the release, 2) rate at which contaminated air is diluted with uncontaminated air, 3) proximity of the worker to the source of the release, and 4) the length of time the worker remains in the affected space.

Estimates of refrigerant release per event for various release scenarios and data on number of events were obtained from the Vintaging Model.  The release per event was conservatively assumed to be 1 percent of the equipment charge during manufacturing and 3 percent of the equipment charge during disposal.  The release rate per event was multiplied by the number of events estimated to occur over a workday.  For equipment manufacturing, the number of events per workday was assumed to equal the number of units containing the substitute produced per plant per year divided by 365 workdays per year.  For the purposes of this model, it is assumed that isobutane will have a market penetration rate of 0.1% and that one production facility will be in operation (GE 2008).  These assumptions result in approximately 44 events/manufacturing facility/day.  For disposal, it was conservatively assumed that 100 units are disposed during an 8-hour work day.

The maximum time weighted average (TWA) exposure was estimated for each occupational exposure scenario, and this value compared to the Workplace Guidance Levels (WGLs) for isobutane and the potential impurities in the substitute.  The modeling results indicate that both the short-term (15-minute and 30-minute) and long-term (8-hour) worker exposure concentrations at no point exceed 2 percent of the WGLs.  Table 8 displays the maximum estimated 15-minute TWA occupational exposure levels of isobutane and the potential impurities in the substitute.  The maximum estimated 15-minute TWA occupational exposure levels are the most conservative of the modeled results and indicate the highest predicted exposure concentrations of the short-term (15-minute and 30-minute) and long-term (8-hour) exposure scenarios.  Even the maximum estimated short-term occupational levels for isobutane and the potential impurities are significantly lower than their 8-hour or 10-hour long-term WGLs.  Therefore, occupational exposure to the substitute is not considered a toxicity threat.
                    Table 8.  Occupational Risk Assessment

           Maximum 15-minute TWA Occupational Exposure Levels (ppm)
                          Workplace Guidance Levels
                                    (ppm) a
                     Workplace Guidance Levels Time Period
                                  Substitute
                                   Isobutane
                                     10.16
                                      800
                                  10-hour TWA
                             Potential Impurities
                            Propane and Butane [b]
                                 5.8 x 10[-2]
                                1000 (propane)
                                 800 (butane)
                                10-hour TWA[c]
                                 1,3-butadiene
                                 5.5 x 10[-5]
                                       1
                                  8-hour TWA
                                   n-Hexane
                                 3.4 x 10[-4]
                                      50
                                  10-hour TWA
                                    Benzene
                                 7.6 x 10[-6]
                                      0.1
                                  10-hour TWA
                                    Sulfur
                                 1.9 x 10[-5]
                                      NA
                                      NA
              NA = Not Available
              [a] See Table 5 for more information.
              [b] Propane and Butane weight percentage in substitute presented as one single value in submission.  Exposure level is well below the WGL for either constituent.
              [c] The WGL for Propane is set as a 1000 ppm 8-hr TWA by OSHA and a 10-hr TWA by NIOSH.  The Butane value is a 10-hr TWA.

7.3	END-USE EXPOSURE
This section presents estimates of potential consumer exposures to isobutane in home appliances.  A consumer exposure analysis was performed to examine potential catastrophic release of the substitute under a reasonable "worst-case" scenario.  Estimates for acute/short-term consumer exposures resulting from catastrophic leakage of refrigerant from residential refrigerators were examined.  The analysis was undertaken to determine the 15- and 30-minute TWA for the substitute, which were then compared to the standard toxicity limits presented in Table 6 to assess the risk to consumers.  However, the TWA values are fairly conservative as the analysis does not consider opened windows, fans operating, conditioned airflow (either heated or cooled) and other variables that would reduce the levels to which individuals would be exposed.

The scenario modeled (see Section 4) involves a refrigerant leak from a refrigerator into an enclosed kitchen of volume 18 m[3] (635 ft[3]). The model assumes that the individual is present at the start of the leak and the individual remains in the room while the refrigerant is released. It is also assumed that horizontal stratification causes most of the refrigerant to settle in higher concentrations closer to the ground.  Considering the horizontal stratification is important because children, a particularly vulnerable segment of the population, breathe air that is closer to the ground.  In order to simulate the horizontal concentration gradient that will occur because of the weight differential between the refrigerant and air, it is assumed that 95 percent of the leaked refrigerant mixes evenly into the bottom 0.4 meter of the room, and the rest of the refrigerant mixes evenly in the remaining volume (Kataoka 1999).  Exposure concentrations were calculated using the box model described in the Background Document, which was adapted to estimate concentrations on a minute-by-minute basis.  It was assumed that 100 percent of the unit's charge would be released during a time span of 1 minute, at which time the concentration of isobutane will peak, and then steadily decline onwards. The highest expected levels of consumer exposure based on this analysis are presented in Table 9 below.
                     Table 9.  End-Use Exposure Assessment

                     15-minute TWA End-Use Exposure (ppm)
                     30-minute TWA End-Use Exposure (ppm)
                                  Substitute
                                   Isobutane
                                     5,025
                                     3,844
                             Potential Impurities
                           Propane and n-Butane [a]
                                      29
                                      22
                                 1,3-butadiene
                                     0.03
                                     0.02
                                   n-Hexane
                                     0.17
                                     0.13
                                    Benzene
                                     0.004
                                     0.003
                                    Sulfur
                                     0.009
                                     0.007
               TWA = Time Weighted Average
               [a]. Propane and n-Butane weight percentage in substitute presented as one single value in submission.  Exposure level is well below the exposure limits for either constituent.

OSHA (2004) states no toxic effects are reported with exposures to isobutane below 18,000 ppm.  Even under the very conservative assumptions used in the consumer exposure modeling, both the estimated 15-minute and 30-minute consumer exposures to isobutane are lower than this level and thus should not pose a toxicity threat.  The exposure levels of the impurities are also lower than their respective short-term toxicity levels (see Table 6) and thus should not pose a toxicity threat.
7.4  	GENERAL POPULATION EXPOSURE
In the SNAP Background document for refrigerants (EPA 1994), the RfC value for isobutane is 0.95 mg/m[3].  We compared this RfC to estimated factory releases and on-site releases.  This gives a ratio of exposure concentration to RfC that varies between 1.3 x 10[-5] to 1.7 x 10[-1], depending on the type of release scenario.  Ratios of exposure concentration to RfC for the substitute's impurities were even lower.  Since the exposure concentrations for the substances are lower than the RfC values, the substitute is not expected to pose a toxicity threat to the general population.
8. 	VOLATILE ORGANIC COMPOUND (VOC) ASSESSMENT
Isobutane has not been exempted as a VOC under the CAA (40 CFR 51.000).  VOC emissions from the production of refrigerators and freezers using isobutane as a refrigerant are controlled through standard industry practices, and as such, emissions from manufacture of units are likely to be minimal.  For units in operation for consumer applications, using leak estimates from the Vintaging Model, the annual release rate (including operating, servicing, and disposal leak rates) for household refrigerators was calculated to be approximately 4% of refrigerant charge size, annually.  Assuming this release rate, two assessments were performed to compare the annual VOC emissions from use of isobutane in household refrigerators to other anthropogenic sources of VOC emissions.  The first assessment approximates the annual VOC emissions that would be emitted from isobutane refrigerators produced in one year, assuming the submitter's current production plans.  The second analysis approximates the annual VOC emissions if all refrigerators in U.S. households were charged with isobutane.
                   Table 10.  VOC Annual Emissions Analysis
                            Set of Sources Assessed
Annual Isobutane VOC Emissions Compared to VOC Emissions from All Anthropogenic Sources[a] (%)
            Isobutane Refrigerators Produced by GE in One Year[b]
                                  3.0x10[-7]%
                      All U.S. Household Refrigerators[c]
                                  3.4x10[-3]%
[a] Calculations based on 2008 EPA annual VOC emissions data (EPA 2009b).
[b] 2010 manufacture projections based on 2006 GE sales data (GE 2008).
[c] Calculations based on GE SNAP Submission and 2010 Residential Equipment Stock Projections (GE 2008 and U.S. EIA 2011).

As illustrated in Table 10, the VOC emissions from the use of isobutane under both scenarios are minimal compared to other sources of VOC emissions.  Assuming the submitter's current production plans, the resulting VOC emissions from isobutane refrigerators manufactured in one year would be equal to approximately 2.7x10[-][3] percent of the VOC emissions caused by the generation of electricity used to power household refrigerators and freezers, 4.8x10[-][4] percent of all the VOC emissions caused by the generation of electricity for all refrigeration and air conditioning applications, or 3.0x10[-7] percent of all annual anthropogenic VOC emissions in the U.S.

Moreover, if all the refrigerators in U.S. households were charged with isobutane (the second, more conservative, scenario), the resulting VOC emissions would be equal to approximately 3.4x10-3 percent of all annual anthropogenic VOC emissions in the U.S.  Because these emissions of isobutane are several orders of magnitude lower than the VOC emissions generated by other anthropogenic emissions, and the VOC emissions from the anticipated production of refrigerators by the submitter is only a small fraction of VOC emissions from the use of electricity to power household refrigerators and freezers, the environmental impacts of these VOCs are not considered a threat.

9.  	REFERENCES
Calm, J.M. and G.C. Hourahan.  2007. "Refrigerant Data Update."  Heating and Refrigerant Data Update.  79(1):50-64.  January 2007.
DOE 2011. 2011 Buildings Data Energy Book. Available online at <http://buildingsdatabook.eren.doe.gov/docs/xls_pdf/1.1.5.pdf>.
EIA 2011. Annual Energy Outlook 2011 with Projections to 2035. Independent Statistics & Analysis Table Browser. Accessed September 2011. Available online at <http://www.eia.gov/oiaf/aeo/tablebrowser/>.

EIA 2010. Electric Power Industry 2009: Year in Review.Electric Power Annual. Retrieved September 16, 2011.  Available online at <http://www.eia.gov/cneaf/electricity/epa/epa_sum.html>.

EPA 2009a. 2008 National Emissions Inventory Air Pollutant Emissions Trends Data. Last updated 09 June 2009. Available online at <http://www.epa.gov/ttn/chief/trends/index.html#tables>.
EPA 2009b.  Volatile Organic Compounds  -  National Summary of VOC Emissions.  Last updated 04 November 2009.  Accessed 16 May 2011. Available online at <http://www.epa.gov/air/emissions/voc.htm>.
EPA 2008a.  Acute Exposure Guideline Levels: Definitions.  Accessed 27 February 2009.  Available online at<http://www.epa.gov/opptintr/aegl/pubs/define.htm>.
EPA 2008b.  Volatile Organic Compounds  -  National Summary of VOC Emissions.  Last updated 21 October 2008.  Accessed 4 March 2009. Available online at <http://www.epa.gov/air/emissions/voc.htm>.
EPA 1994.  Significant New Alternatives Policy Technical Background Document:  Risk Screen on the Use of Substitutes for Class I Ozone-depleting Substances: Refrigeration and Air Conditioning.  Stratospheric Protection Division.  March, 1994.
Forster, P., V. Ramaswamy, P. Artaxo, T. Berntsen, R. Betts, D.W. Fahey, J. Haywood, J. Lean, D.C. Lowe, G. Myhre, J. Nganga, R. Prinn, G. Raga, M. Schulz and R. Van Dorland. 2007.  Changes in Atmospheric Constituents and in Radiative Forcing. In: Climate Change 2007:The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change [Solomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L. Miller (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.
GE 2008. Significant New Alternatives Policy Program Submission to the United States Environmental Protection Agency, October 2008.
ICF 1997. Physiological Effects of Alternative Fire Protection Agents - Hypoxic Atmospheres Conference. Stephanie Skaggs prepared the proceedings of the conference held May 22, 1997 in New London, CT.
IPCC 2007. Climate Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. Solomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M. Tignor and H.L. Miller (Eds.). Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.
IPCC/TEAP 2005. IPCC/TEAP Special Report: Safeguarding the Ozone Layer and the Global Climate System.  Bert Metz, Lambert Kuijpers, Susan Solomon, Stephen O. Andersen, Ogunlade Davidson, José Pons, David de Jager, Tahl Kestin, Martin Manning, and Leo Meyer (Eds).  Cambridge University Press, UK. pp 478.

Kataoka  1999.  "Allowable Charge Limit of Flammable Refrigerants and Ventilation Requirements."  Draft Proposal.  O. Kataoka/Daikin/Japan, June, 1999.

Murray, D.M.  1997.  "Residential House and Zone Volumes in the United States: Empirical and Estimated Parametric Distributions."  Risk Analysis.  17(4): 439-446.

NFPA 2008.  NFPA 58: Liquefied Petroleum Gas Code.  National Fire Protection Agency.

OSHA 2004.  "Safety and Health Topics: Isobutane."  February 2004.  Available online at <http://www.osha.gov/dts/chemicalsampling/data/CH_247840.html>.

Sheldon, L.S., et al.  1989. "An Investigation of Infiltration and Indoor Air Quality."  New York State Energy Research & Development Authority, Report 90-11.

WMO (World Meteorological Organization), Scientific Assessment of Ozone Depletion: 2006, Global Ozone Research and Monitoring Project -- Report No. 50, 572 pp., Geneva, Switzerland, 2007.


[Federal Register Volume 82, Number 49 (Wednesday, March 15, 2017)]
[Notices]
[Page 13806]
[FR Doc No: 2017-05126]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings #1

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

    Docket Numbers: EC17-47-000.
    Applicants: Wisconsin Power and Light Company, Wisconsin Public
Service Corporation, Madison Gas and Electric Company.
    Description: Supplement to December 13, 2016 Joint Application
(Additional Information) under Section 203 of the Federal Power Act of
Wisconsin Power and Light Company, et al.
    Filed Date: 3/3/17.
    Accession Number: 20170303-5184.
    Comments Due: 5 p.m. ET 3/13/17.

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

    Docket Numbers: ER14-1883-002.
    Applicants: Allegheny Energy Supply Company, LLC.
    Description: Compliance filing: Informational Filing to be
effective N/A.
    Filed Date: 3/8/17.
    Accession Number: 20170308-5031.
    Comments Due: 5 p.m. ET 3/29/17.

    Docket Numbers: ER17-1113-000.
    Applicants: NorthWestern Corporation.
    Description: Sec.  205(d) Rate Filing: SA 803--Utility Relocation
Agreement with City of Billings (Grand Avenue) to be effective 3/8/
2017.
    Filed Date: 3/7/17.
    Accession Number: 20170307-5212.
    Comments Due: 5 p.m. ET 3/28/17.

    Docket Numbers: ER17-1114-000.
    Applicants: PacifiCorp.
    Description: Notice of Termination of Tri-State Letter Agreement
Rate Schedule No. 334 of PacifiCorp.
    Filed Date: 3/7/17.
    Accession Number: 20170307-5215.
    Comments Due: 5 p.m. ET 3/28/17.

    Docket Numbers: ER17-1115-000.
    Applicants: Power Ventures Group, LLC.
    Description: Petition of Power Ventures Group, LLC for Limited
Waiver of the PJM Open Access Transmission Tariff Competitive Entry
Exemption Deadline.
    Filed Date: 3/7/17.
    Accession Number: 20170307-5246.
    Comments Due: 5 p.m. ET 3/28/17.

    Docket Numbers: ER17-1118-000.
    Applicants: PJM Interconnection, L.L.C.
    Description: Sec.  205(d) Rate Filing: Queue Position AB1-163,
Original Service Agreement No. 4644 to be effective 2/8/2017.
    Filed Date: 3/8/17.
    Accession Number: 20170308-5048.
    Comments Due: 5 p.m. ET 3/29/17.

    Docket Numbers: ER17-1119-000.
    Applicants: James River Genco, LLC.
    Description: Sec.  205(d) Rate Filing: CIS & Revisions re Limiting
MBR Authority to PJM to be effective 3/9/2017.
    Filed Date: 3/8/17.
    Accession Number: 20170308-5050.
    Comments Due: 5 p.m. ET 3/29/17.

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

    Dated: March 8, 2017.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2017-05126 Filed 3-14-17; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register: April 17, 2006 (Volume 71, Number 73)]
[Notices]
[Page 19771-19774]
[DOCID:fr17ap06-112]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53629; File No. SR-CBOT-2006-02]

Self-Regulatory Organizations; Board of Trade of the City of
Chicago, Inc.; Notice of Filing and Order Granting Accelerated Approval
to a Proposed Rule Change Relating to Security Futures Market Maker
Registration Policy and Procedures

April 10, 2006.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 16, 2006, the Board of Trade of the City of Chicago, Inc.
(``CBOT'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the CBOT.
The Commission is publishing this notice and order to solicit comments
on the proposed rule change from interested persons and to grant
accelerated approval to the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The CBOT proposes to adopt a new Security Futures Market Maker
Registration Policy and Procedures. The text of the proposed rule
change appears below. New language is in italics.
* * * * *

Chicago Board of Trade Security Futures Market Maker

Registration Policy and Procedures

Security Futures Market Maker Program

    Pursuant to CBOT[supreg] Rule 225.00, the Exchange has adopted a
security futures market maker program under which an individual member
or member firm (each referred to as a ``member'' herein) may be
registered with the CBOT as a ``Security Futures Dealer'' with respect
to one or more security futures contracts traded on the Exchange, to
provide liquidity and orderliness in the market for such contracts. In
order to be registered as a Security Futures Dealer, the member must
complete and file with the Exchange, a CBOT Security Futures Dealer
Registration Form (attached below). The member will be required to
identify all CBOT security futures contracts for which it seeks to be
registered as a Security Futures Dealer and to elect one of the
categories of market maker obligations set forth in CBOT Regulation
431.07(c), which are described below. By signing the Registration Form,
the member will confirm that it meets and will continue to meet the
requirements to act as a security futures market maker under CBOT Rules
and Regulations.

Market Maker Exclusion From Security Futures Customer Margin
Requirements

    A member that is a security futures market maker will be excluded
from the security futures customer margin requirements set forth in
CBOT Regulation 431.07, if the member meets all of the following
qualifications:
    (i) The member must be registered with the Exchange as a dealer in
security futures as defined in Section 3(a)(5) of the Securities
Exchange Act of 1934 (``Exchange Act''); and
    (ii) The member must be registered as a floor broker or a floor
trader under section 4f(a)(1) of the Commodity Exchange Act (``CEA''),
or be registered as a dealer with the Securities and Exchange
Commission (``SEC'') under Section 15(b) of the Exchange Act; and
    (iii) The member must maintain records sufficient to prove
compliance with the requirements set forth in CBOT Regulation 431.07
and Commodity Futures Trading Commission (``CFTC'') Regulation
41.42(c)(2)(v) or SEC Regulation 242.400(c)(2)(v), as applicable,
including without limitation, trading account statements and other
financial records sufficient to detail activity; and
    (iv) The member must hold itself out as being willing to buy and
sell security futures for its own account on a regular or continuous
basis.
    CBOT Regulation 431.07 also provides that any market maker that
fails to comply with applicable CBOT, CFTC, or SEC Rules or
Regulations, shall be subject to disciplinary action in accordance with
Chapter 5 of the CBOT Rulebook. Appropriate sanctions in the case of
any such failure shall include, without limitation, a revocation of the
market maker's registration with the Exchange as a Security Futures
Dealer.

Market Maker Categories

    CBOT Regulation 431.07(c) specifies three alternative ways for a
member to satisfy the requirement that a market maker hold itself out
as being willing to buy and sell security futures for its own account
on a regular or continuous basis. Each member seeking market maker
designation must register for one of the following three market maker
categories and will undertake to perform all of the obligations set
forth in the elected category:

Category 1 (CBOT Regulation 431.07(c)(1))

    The market maker will provide continuous two-sided quotations
throughout the trading day for all delivery months of security futures
contracts representing a meaningful proportion of the total trading
volume of security futures contracts on the Exchange,* subject to
relaxation during unusual market conditions as determined by the
Exchange (such as a fast market in either a security futures contract
or a security underlying a security futures contract) at which times
the market maker must use its best efforts to quote continuously and
competitively. The market maker must provide quotations for a minimum
quantity of one (1) contract with a maximum bid/ask spread of no more
than the greater of $0.20 or 150% of the bid/ask spread in the primary
market for the underlying security.

Category 2 (CBOT Regulation 431.07(c)(2))

    The market maker will respond to at least 75% of the requests for
quotation for all delivery months of security futures contracts
representing a meaningful proportion of the total trading volume of
security futures contracts on the Exchange,* subject to relaxation
during unusual market conditions as determined by the Exchange (such as
a fast market in either a security futures contract or a security
underlying a security futures contract) at which times the market maker
must use its best efforts to quote competitively. When responding to
requests for quotation, the market maker must quote within five seconds
for a minimum quantity of one (1) contract with a maximum bid/ask
spread of no more than the greater of $0.20 or 150% of the bid/ask
spread in the primary market for the underlying security.
---------------------------------------------------------------------------

    \*\ Beginning on the 181st calendar day after the commencement
of trading of security futures contracts on the Exchange, a
``meaningful proportion of the total trading volume of security
futures contracts on the Exchange'' will mean a minimum of 20% of
such trading volume.
---------------------------------------------------------------------------

Category 3 (CBOT Regulation 431.07(c)(3))

    (i) The market maker will be assigned to a group of security
futures contracts listed on the Exchange that is either unlimited in
nature (``Unlimited Assignment'') or will be assigned to no more than
20% of the security futures contracts listed on the Exchange (``Limited
Assignment''); and
    (ii) At least 75% of the market maker's total trading activity in
CBOT

security futures contracts must be in its assigned security futures
contracts, measured on a quarterly basis; and
    (iii) During at least 50% of the trading day, the market maker must
have bids or offers in the market that are at or near the best market,
except in unusual market conditions as determined by the Exchange (such
as a fast market in either a security futures contract or a security
underlying a security futures contract), with respect to at least 25%
(in the case of an Unlimited Assignment) or at least one (1) (in the
case of a Limited Assignment) of its assigned security futures
contracts; and
    (iv) The requirements in (ii) and (iii) must be satisfied on at
least the following percentages of trading days in each calendar
quarter:
    (a) 90% (in the case of an Unlimited Assignment);
    (b) 80% (in the case of a Limited Assignment); or
    (c) 80% (in the case of either an Unlimited Assignment or a Limited
Assignment if the Exchange is listing four or fewer security futures
contracts).

Qualification for ``60/40'' Tax Treatment

    To qualify as a ``dealer'' in security futures contracts within the
meaning of section 1256(g)(9) of the Internal Revenue Code of 1986, as
amended (``Code''), a member is required to:
    (i) Register as a Security Futures Dealer for purposes of the
Exchange's security futures margin rules under Category 1 or Category 2
above; and
    (ii) Undertake in its registration form to provide quotations for
all products specified for the market maker exclusion from the CBOT
security futures margin rules; and
    (iii) Quote a minimum size of:
    (a) Ten (10) contracts for each security futures product not
covered by (b) or (c) below;
    (b) Five (5) contracts for each security futures product specified
by the member to the extent such quotations are provided for delivery
months other than the next two delivery months then trading; and
    (c) One (1) contract for any single stock futures contract where
the average market price for the underlying security was $100 or higher
for the preceding calendar month or for any futures contract on a
narrow-based security index, as defined by section 1a(25) of the CEA.

Products

    As noted above, in completing the CBOT Security Futures Dealer
Registration Form, a member must specify all CBOT security futures
contracts for which it intends to act as a market maker. The Exchange
will assign to the member all of the security futures contracts listed,
unless the CBOT provides written notice to the member identifying any
security futures contracts for which such assignment is not being
granted. A member may change the list of contracts for which it
undertakes to act as a market maker for any calendar quarter by filing
a revised CBOT Security Futures Dealer Registration Form with the
Exchange on any business day prior to the last trading day of the
quarter, and the change shall be effective retroactive to the first
trading day of the quarter. Each market maker shall be responsible for
maintaining books and records that confirm that it has fulfilled its
quarterly obligations under the market maker category specified on its
Registration Form with respect to all CBOT security futures contracts
assigned for that calendar quarter.
* * * * *

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. Statement of the Purpose of, and Statutory Basis for, the Proposed
Rule Change

1. Purpose
    Pursuant to CBOT Rule 225.00, the Exchange has adopted a security
futures market maker program under which an individual member or member
firm (each referred to as a ``member'' herein) may be registered with
the CBOT as a Security Futures Dealer \3\ with respect to one or more
security futures contracts traded on the Exchange to provide liquidity
and orderliness in the market for such contracts. The proposed rule
change sets forth the procedures necessary for members to be registered
as CBOT Security Futures Dealers and the policies that apply to such
registration.
---------------------------------------------------------------------------

    \3\ A Security Futures Dealer is defined in proposed CBOT
Regulation 431.07, which is the subject of SR-CBOT-2006-01. The
Commission is today approving SR-CBOT-2006-01. See Securities
Exchange Act Release No. 53626 (``Customer Margin Requirements
Approval Order'').
---------------------------------------------------------------------------

    The proposed rule change restates the qualifications that members
must meet under proposed CBOT Regulation 431.07 to qualify for the
market maker exclusion from CBOT security futures customer margin
requirements.\4\ In addition, the proposed rule change reminds members
that failure to comply with applicable CBOT rules or regulations or
rules or regulations under the Act or the Commodity Exchange Act
(``CEA'') is subject to disciplinary action under Chapter 5 of the
Exchange's Rulebook. The appropriate sanctions for any such failure
include, without limitation, revocation of the market maker's
registration as a CBOT Security Futures Dealer.
---------------------------------------------------------------------------

    \4\ See id.
---------------------------------------------------------------------------

    Under the proposed rule change, a member who wishes to be a
security futures market maker entitled to exclusion from the security
futures customer margin requirements must file a CBOT Security Futures
Dealer Registration Form with the Exchange. The registration form
requires members to identify all CBOT security futures contracts for
which they are seeking assignment as market makers, as well as the
qualifying market maker category under proposed CBOT Regulation
431.07(c). By signing the registration form, the member confirms that
it meets and will continue to meet the requirements to act as a
security futures market maker under the Exchange's rules. The
registration form requires members to list all CBOT security futures
contracts for which they will act as market makers. The registration
form also requires a member to identify the qualifying market maker
category under proposed CBOT Regulation 431.07(c).\5\
---------------------------------------------------------------------------

    \5\ Under proposed CBOT Regulation 431.07(c), there are three
alternative ways for a member to satisfy the requirement that a
security futures dealer hold itself out as being willing to buy and
sell security futures for its own account on a regular or continuous
basis. See Customer Margin Requirements Approval Order, supra note
3.
---------------------------------------------------------------------------

    The proposed rule change establishes that the Exchange will assign
to the member all security futures contracts listed on its registration
form, unless the Exchange provides written notice to the member
identifying any security futures contracts for which such assignment is
not being granted. Under the proposed rule change, for any calendar
quarter, a market maker may change the list of security futures
contracts to which it is assigned by filing a revised CBOT Security
Futures Dealer Registration Form prior to the last trading day in the
calendar quarter. Such change in contract designation will be effective

retroactive to the first trading day of such quarter. The proposed rule
change also makes clear that each market maker is responsible for
maintaining books and records that confirm that it has fulfilled its
quarterly obligations under the market maker category specified on its
registration form for all assigned security futures contracts for that
quarter. Specifically, the proposal states that a security futures
market maker must maintain records sufficient to prove compliance with
the requirements set forth in proposed CBOT Regulation 431.07 and
applicable regulations under the Act and the CEA, including without
limitation, trading account statements and other financial records
sufficient to detail activity.
    The proposed rule change sets forth the requirements that must be
met to qualify as a ``dealer'' in security futures contracts within the
meaning of section 1256(g)(9) of the Internal Revenue Code of 1986, as
amended (``Code'').\6\ Under the proposed rule change, to qualify as a
dealer within the meaning of the Code, a member must: (i) Register as a
CBOT Security Futures Dealer for purposes of the Exchange's security
futures customer margin rules under Category 1 or Category 2 (proposed
CBOT Regulation 431.07(c)(1) or (c)(2)); (ii) undertake in its
registration form to provide quotations for all contracts specified for
the market maker exclusion from the Exchange's security futures
customer margin rules; and (iii) quote a minimum size of:
---------------------------------------------------------------------------

    \6\ 26 U.S.C. 1256(g)(9).
---------------------------------------------------------------------------

    (a) Ten (10) contracts for each security futures product not
covered by (b) or (c) below;
    (b) Five (5) contracts for each security futures product specified
by the market maker to the extent such quotations are provided for
delivery months other than the next two delivery months then trading;
and
    (c) One (1) contract for any single stock futures contract where
the average market price for the underlying security was $100 or higher
for the preceding calendar month or for any futures contract on a
narrow-based security index, as defined by section 1a(25) of the
CEA.\7\
---------------------------------------------------------------------------

    \7\ 7 U.S.C. 1a(25).
---------------------------------------------------------------------------

2. Statutory Basis
    The CBOT believes that the proposal is consistent with section 6(b)
of the Act,\8\ in general, and section 6(b)(5) of the Act,\9\ in
particular, which requires, among other things, that exchange rules be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, and, in general, to
protect investors and the public interest. The Exchange believes that
the proposed rule change establishes procedures and policies for its
security futures market maker program, which, according to the
Exchange, are designed to provide liquidity and orderliness in the
markets for CBOT security futures contracts. Thus, the CBOT believes
that the proposed rule change promotes just and equitable principles of
trade and protects investors and the public interest.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Statement of Burden on Competition

    The CBOT 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.

C. Comments on the Proposed Rule Change Received From Members,
Participants, or Others

    The Exchange has not solicited or received any written comments
regarding the proposed rule change, nor will any such comments be
solicited.

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.
);     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-CBOT-2006-02 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOT-2006-02. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all

written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Section. Copies of such
filing also will be available for inspection and copying at the
principal office of the CBOT. All comments received will be posted
without change; the Commission does not edit identifying personal
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File No. SR-CBOT-2006-02 and should be submitted on or before May 8,
2006.

IV. Commission 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.\10\ In
particular, the Commission believes that the proposed rule change is
consistent with the requirements of section 6(b)(5) of the Act,\11\
which requires, among other things, that the rules of the Exchange be
designed to promote just and equitable principles of trade and, in
general, to protect investors and the public interest. In addition, the
Commission believes that the proposed rule change is consistent with
section 7(c)(2)(B) of the Act,\12\ which provides, among other things,
that the margin requirements for securities futures must preserve the
financial integrity of markets trading security futures and prevent
systemic risk. The Commission also believes that the proposed rule
change is consistent with Rule 400(c)(2)(v) under the Act,\13\ which
permits a national securities exchange to adopt rules containing
specific requirements for security futures dealers to qualify for an
exclusion from the margin requirements for securities futures under
section 7(c)(2)(B) of the Act.\14\ The Commission believes that the
proposed obligations for market makers satisfy this requirement.
Specifically, the

Commission believes that the Exchange's market maker registration
policy and procedures, and the qualification requirements for ``60/40''
tax treatment, should help ensure that market makers provide liquidity
and orderliness in the CBOT market.
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    \10\ In approving the proposed rule, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78g(c)(2)(B).
    \13\ 17 CFR 242.400(c)(2)(v).
    \14\ 15 U.S.C. 78g(c)(2)(B).
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    The CBOT has requested that the Commission approve the proposed
rule change prior to the thirtieth day after publication of notice of
the filing in the Federal Register. The Commission believes that the
market maker registration policy and procedures and the qualification
requirement for ``60/40'' tax treatment are an extension of the
obligations adopted in connection with the CBOT's customer margin
rules, which set forth the standards under which a CBOT member may be
excluded from the Exchange's margin requirements as a ``market maker,''
and therefore should raise no novel regulatory issues related to margin
requirements.\15\ Furthermore, the Commission notes that the proposed
rule change is substantially similar to OneChicago, LLC's market maker
registration policy and procedures, which were approved by the
Commission. Accordingly, the Commission finds good cause, consistent
with section 19(b)(2) of the Act,\16\ to approve the proposed rule
change prior to the thirtieth day after publication of the notice of
filing thereof in the Federal Register.
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    \15\ See Securities Exchange Act Release No. 50115 (July 29,
2004) 69 FR 48261 (August 9, 2004).
    \16\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the Act
\17\ that the proposed rule change (SR-CBOT-2006-02) is hereby approved
on an accelerated basis.
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    \17\ Id.
    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\18\
Nancy M. Morris,
Secretary.
 [FR Doc. E6-5611 Filed 4-14-06; 8:45 am]

BILLING CODE 8010-01-P