[Federal Register Volume 81, Number 210 (Monday, October 31, 2016)]
[Notices]
[Pages 75477-75478]
[FR Doc No: 2016-26147]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[Docket No. FRA-2000-7257, Notice No. 83]

Railroad Safety Advisory Committee; Notice of Meeting

AGENCY: Federal Railroad Administration (FRA), Department of
Transportation.

ACTION: Announcement of Railroad Safety Advisory Committee (RSAC)
meeting.

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SUMMARY: FRA announces the fifty-seventh meeting of the RSAC, a Federal
Advisory Committee that develops railroad safety regulations through a
consensus process. The RSAC meeting agenda topics will include: Opening
remarks from the FRA Administrator and the FRA Associate Administrator
for Railroad Safety and Chief Safety Officer; status reports from the
Remote Control Locomotive, Track Standards, Hazardous Materials Issues,
Rail Integrity Working Groups, and the Engineering Task Force; an
informational presentation on the high-speed passenger rail equipment
(Tier III) rulemaking; and an update on the status of Positive Train
Control implementation. This agenda is subject to change, including
possibly adding further proposed tasks.

DATES: The RSAC meeting is scheduled to commence at 9:30 a.m. on
Thursday, January 26, 2017, and will adjourn by 4:30 p.m.

ADDRESSES: The RSAC meeting will be held at the National Association of
Home Builders, National Housing Center, located at 1201 15th Street
NW., Washington, DC 20005. The meeting is open to the public on a
first-come, first-served basis, and is accessible to individuals with
disabilities. Sign and oral interpretation can be made available if
requested 10 calendar days before the meeting.

FOR FURTHER INFORMATION CONTACT: Kenton Kilgore, RSAC Administrative

Officer/Coordinator, FRA, 1200 New Jersey Avenue SE., Mailstop 25,
Washington, DC 20590,<PHONE_NUMBER>; or Robert Lauby, Associate
Administrator for Railroad Safety and Chief Safety Officer, FRA, 1200
New Jersey Avenue SE., Mailstop 25, Washington, DC 20590, (202) 493-
6474.

SUPPLEMENTARY INFORMATION: Under Section 10(a)(2) of the Federal
Advisory Committee Act (Pub. L. 92-463), FRA is giving notice of a
meeting of the RSAC. The RSAC was established to provide advice and
recommendations to FRA on railroad safety matters. The RSAC is composed
of 59 voting representatives from 38 member organizations, representing
various rail industry perspectives. In addition, there are non-voting
advisory representatives from the agencies with railroad safety
regulatory responsibility in Canada and Mexico, the National
Transportation Safety Board, and the Federal Transit Administration.
The diversity of the RSAC ensures the requisite range of views and
expertise necessary to discharge its responsibilities. See the RSAC Web
site for details on prior RSAC activities and pending tasks at http://rsac.fra.dot.gov/. Please refer to the notice published in the Federal
Register on March 11, 1996 (61 FR 9740), for additional information
about the RSAC.

    Issued in Washington, DC, on October 25, 2016.
Robert C. Lauby,
Associate Administrator for Railroad Safety, Chief Safety Officer.
[FR Doc. 2016-26147 Filed 10-28-16; 8:45 am]
 BILLING CODE 4910-06-P


[Federal Register Volume 88, Number 175 (Tuesday, September 12, 2023)]
[Notices]
[Pages 62612-62618]
[FR Doc No: 2023-19593]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98304; File No. SR-CBOE-2023-044]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To Adopt a Quote Protection Timer

September 6, 2023.
    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 August 30, 2023, Cboe Exchange, Inc. (``Exchange'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
prepared by the Exchange. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to amend Rule 5.32. The text of the proposed rule change is provided in
Exhibit 5.
    The text of the proposed rule change is also available on the
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend Rule 5.32 to adopt a passive quote
protection mechanism.
    The options market is driven by Market-Maker quotes, and thus
Market-Maker quotes are critical to provide liquidity to the market and
contribute to price discovery for investors. If Market-Makers do not
have sufficient time to refresh their resting quotes (the primary
source of liquidity for customers in the market) in response to market
updates before executing against incoming interest that has
incorporated those market updates, this increased risk of execution at
stale prices may cause Market-Makers to widen their quotes to the
detriment of investors or otherwise withhold liquidity. This reduced
liquidity may reduce execution opportunities or cause executions to
occur at worse prices for customers. Further, Market-Makers must comply
with various obligations, including to provide continuous electronic
quotes and to update quotes in response to market conditions.\3\ It
takes time for Market-Makers to update quotes in series in their
appointed classes, which may not take effect until after faster market
participants have updated orders. The Exchange believes it is
appropriate to provide Market-Maker quotes with a reasonable amount of
protection to allow them to execute at prices reflective of market
updates given not only the Exchange-imposed requirements to provide and
updates such quotes but also the resources Market-Makers expend to
comply with those requirements.
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    \3\ See Rule 5.51.
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    Market-Maker quotes are based generally on pricing models that rely
on various factors, including the price of the underlying security and
that security's volatility. As these variables change, a Market-Maker's
pricing model automatically will enter updates to a number of its bids
and offers. Additionally, a Market-Maker's system may also
automatically enter orders in response to changes in those variables as
part of their market-making activity, such as hedging. As a result,
there can be a multitude of instances in which the bids and offers of
multiple Market-Makers attempting to update their quotes and submit
orders in response to market changes inadvertently interact with each
other, which can lead to significant risk and exposure. This may occur,
for example, when one Market-Maker's price update system is faster than
systems used by other Market-Makers. In this respect, a Market-Maker's
system that updates options prices microseconds, or even nanoseconds,
faster than another Market-Maker's system may lock or cross its bids
(offers) against the other Market-Maker's offers (bids) every time its
bid (offer) adjusts to the offer (bid) of the second Market-Maker even
if the second Market-Maker's system was also in the process of updating
that offer (bid).
    For example, suppose three Market-Makers for class XYZ have the
following displayed markets:

Market-Maker A: (10) 10.00-10.20 (10)
Market-Maker B: (5) 10.05-10.20 (5)
Market-Maker C: (5) 9.95-10.15 (5)

Each of the Market-Maker's systems identify an increase in the price of
stock XYZ, which causes those systems to send updated quotes. However,
Market-Maker A, as a result of its own technological investment, has
the fastest system, which received the updated price of stock XYZ three
microseconds before the systems of the other two Market-Makers, and
thus sent its updated quotes to the Exchange three microseconds before
the systems of the other two Market-Makers. Market-Maker a sent a
revised two-sided market of (10) 10.20-10.40 (10) based on the updated
price of XYZ. Because the quotes for Market-Maker A's updated market
reached the Exchange before the updated markets of Market-Makers B and
C, Market-Maker A's bid will execute against Market-Maker C's offer of
10.15 and Market-Maker B's offer of 10.20, which offers were based on a
lower stock price. Market-Maker B's and C's updated markets of (5)
10.25-10.40 (5) and (5) 10.15-10.35 (5) reached the Exchange after this
execution, despite those Market-Makers no longer being interested in
selling at the price of 10.15 or 10.20. Market-Maker A likely submitted
its updated market to display liquidity available for customer prices
at an updated price, rather than remove liquidity from other liquidity
providers at outdated prices. This could happen contemporaneously in a
large number of series within the class, such that instead of locking
one quote, Market-Maker A may lock 20 of Market-Maker B's and Market-
Maker C's quotes. This may expose each Market-Maker to significant risk
due to these unintended executions and prevent orders intended to
provide liquidity in the Book from doing so.

    The Exchange understands Market-Makers primarily use bulk message
quotes to input and update quote prices for purposes of providing
liquidity, as bulk messages allow Market-Makers to update efficiently
quotes in multiple series using a single message. To protect these
quotes--Market-Makers' primary liquidity source--from inadvertent
executions as well as executions at stale prices due to technological
disparities between Market-Maker systems, the Exchange adopted the
functionality in current Rules 5.6(c)(3) and 5.32(c)(6), which prevents
executions of incoming Market-Maker interest against resting Market-
Maker interest. The purpose of this functionality is to provide resting
Market-Maker quotes with time to update before execution so that
executions occur at prices based on then-current market, which the
Exchange believes encourages Market-Makers to provide competitive
markets on the Exchange. Specifically, Rule 5.32(c)(6) provides that
the System cancels or rejects a Cancel Back \4\ Book Only \5\ bulk
message bid (offer) or order bid (offer) (or unexecuted portion)
submitted by a Market-Maker with an appointment in the class through a
bulk port if it would execute against or lock a resting offer (bid)
with a Capacity of M. In other words, a Cancel Back Book Only Market-
Maker quote or order submitted through a bulk port will be rejected if
it would execute against resting Market-Maker interest. Additionally,
pursuant to Rule 5.32(b), the System adjusts the price of a Price
Adjust (i.e., an order designated Price Adjust or not designated as
Cancel Back) Book Only bulk message quote submitted through a bulk port
if, at the time of entry, would lock or cross a resting order or quote
with Capacity M.\6\ In other words, a Price Adjust Book Only Market-
Maker quote or order submitted through a bulk port will rest on the
Book at one increment away from a resting order or quote with Capacity
M. This functionality is designed to protect resting Market-Maker
quotes from executions at potentially stale prices due to technology
disparities (1) rather than the intention of Market-Maker quote and
order updates to trade against resting Market-Maker quotes (and thus
eliminate displayed liquidity) and (2) against incoming Market-Maker
orders (that may be submitted for the purpose of providing liquidity or
to trade for other Market-Maker purposes, such as hedging) with prices
that have incorporated market updates.
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    \4\ A ``Cancel Back'' order is an order (including a bulk
message) designated to not be subject to the price adjust process
pursuant to Rule 5.32 (as described below) that the System cancels
or rejects if displaying the order on the Book would create a locked
or crossed market or if the order cannot otherwise be executed or
displayed in the Book at its limit price. See Rule 5.6(c)
(definition of ``Cancel Back'').
    \5\ A ``Book Only'' order is an order the System ranks and
executes pursuant to Rule 5.32, subjects to the price adjust process
pursuant to Rule 5.32, or cancels, as applicable (in accordance with
User instructions), without routing away to another exchange. See
Rule 5.6(c) (definition of ``Book Only'').
    \6\ Rule 5.32(b) describes additional price adjust scenarios,
but these scenarios are not relevant to the proposed rule change.
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    The protection in Rule 5.32(c)(6) specifically prevents incoming
appointed Market-Maker interest (which may be Book Only and thus
otherwise eligible for execution against resting interest on the Book)
from executing against resting Market-Maker interest. To further
protect liquidity of Market-Makers in appointed classes (which
liquidity is subject to quoting obligations, as noted above), Rule
5.6(c)(3) provides that bulk messages used by Market-Makers in non-
appointed classes may be Post Only only, which would prevent executions
of these incoming quotes against resting interest (including resting
appointed Market-Maker interest) in those classes.
    This current functionality also recognizes that resting Market-
Maker interest needs protection from orders (in addition to quotes) of
all users, including non-Market-Makers, as orders submitted through
bulk ports by Users other than appointed Market-Makers may also only be
Post Only, which again would prevent executions of these incoming
orders against resting interest (including resting appointed Market-
Maker interest). Given the primary purpose of bulk ports is to allow
Market-Makers and other users to provide liquidity to the Book, the
Exchange adopted functionality to prevent executions of interest
submitted through bulk ports against resting Market-Maker interest due
to technological disparities (as demonstrated in the example above to
protect the primary liquidity source to the Exchange.
    While this current functionality protects resting Market-Maker
interest from execution at stale prices against incoming Market-Maker
and non-Market-Maker interest submitted through bulk ports, resting
Market-Maker interest remains unprotected from Market-Maker orders that
may be submitted through non-bulk ports. As noted above, Market-Makers
may submit orders for other market-making purposes, such as hedging,
which orders can be generated from the same systems generating bulk
message quotes. As a result, resting Market-Maker interest remains
subject to risk of execution at stale prices against incoming Market-
Maker non-bulk port orders due to technological disparities. Given the
critical role Market-Makers play in the options market, the Exchange
believes it is imperative to have the ability to protect Market-Makers'
resting quotes from execution at stale prices against incoming Market-
Maker interest resulting from technological disparities between Market-
Makers. The Exchange believes it should be able to extend this
protection to incoming interest from Market-Makers, regardless of the
type of port through which it was submitted, as it can expose Market-
Makers to the same level of risk. Ultimately, this exposure may
negatively impact liquidity to the detriment of the entire market.
Unlike quotes and orders submitted through bulk ports, the primary
purpose of which is generally to rest on the Book and provide
liquidity, it is likely the intention of orders submitted through non-
bulk ports to execute against the resting interest (including Market-
Maker quotes). As a result, the Exchange believes it is important to
balance the need to protect resting Market-Maker quotes from executions
at stale prices with the need to provide opportunities for this
incoming interest to execute against those quotes.
    The proposed rule change proposes to adopt a quote protection timer
(``QPT'') to provide the Exchange with the ability to provide Market-
Maker quotes with this additional protection. The purpose of QPT is to
provide Market-Makers with opportunities to update the prices of their
resting quotes prior to execution against aggressing non-bulk port
incoming Market-Maker interest while still providing that incoming
interest with the opportunity to execute against resting liquidity.
Specifically, the Exchange proposes to adopt Rule 5.32(h), which
provides the Exchange with the ability to determine on a class basis to
activate a QPT. In a class in which the Exchange has activated the QPT,
if an incoming order (including an incoming complex order legging into
the Book pursuant to Rule 5.33(g), but excluding paired orders, orders
(or unexecuted portions) that routed to another exchange(s), and orders
routed from PAR) enters the Book \7\ in that class

with Capacity M that a User submitted through a non-bulk port (the
``initial aggressor order'') and that is marketable against a resting
bulk message quote (except for a quote offer a price equal to the
minimum increment for the class) \8\ with Capacity M (the ``initial
protected quote'') at the time the initial aggressor order enters the
Book, the initial aggressor order executes against any resting orders
and quotes with a Capacity other than M at the same price as the
initial protected quote.\9\ After that, as set forth in proposed Rule
5.32(h)(2), except for a non-ISO IOC order for which the Trading Permit
Holder (``TPH'') opts out of QPT (in which case the System cancels any
portion of the order not executed pursuant to proposed subparagraph
(1)),\10\ the System initiates the QPT,\11\ the start time of which is
the time when the initial aggressor order enters (or a complex order
\12\ Legs into) the Book (the ``quote protection period''), provided if
there is an ongoing QPT in every leg of a complex order that Legs into
the Book, the length of the QPT for the complex order equals the
longest remaining time of the leg QPTs.\13\
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    \7\ This includes Immediate-or-Cancel (``IOC'') orders and
Intermarket Sweep Orders (``ISOs''). See Rule 5.6(c). Contingent
orders (i.e., stop, stop-limit, market-on-close, and limit-on-close)
are excluded from the QPT (except for market-on-close and limit-on-
close orders submitted to the Exchange within the specified amount
of time set by the Exchange pursuant to Rule 5.6(d), as they would
just be market or limit orders at that point), as by definition
these orders are not executable upon entry (they become executable
once the applicable contingency is satisfied), so it is unnecessary
to prevent from immediate execution against resting Market-Maker
quotes. The Exchange believes the proposed exclusions are
appropriate, as they would by definition provide resting quotes with
time to update before potential execution. For example, paired
orders would go through an auction (such as pursuant to Rule 5.37 or
5.38 (the automated improvement mechanism for simple and complex
orders)), during which Market-Maker quotes could update before they
would potentially execute against those orders after the auction.
Similarly, if an order routes away to another exchange because that
exchange has better prices available than those on the Exchange, by
the time any portion of that order comes back to the Exchange for
execution against the Book, any resting Market-Maker quotes could
have been updated before executing against that returned order.
Likewise, if an order routes from PAR for electronic execution, it
would have first been handled by a person on the trading floor after
entry and before execution against interest in the Book, giving
quotes sufficient time for update before potential execution against
that order.
    \8\ The Exchange believes this exclusion is appropriate, as
there would be no price at which an incoming bid could adjust to and
rest during the quote protection period if the resting offer is
equal to the minimum increment for the class. For example, if the
minimum increment for a class is $0.05, and the market is $0-$0.05
on the Exchange, if an incoming order is priced at $0.05, as further
described below, during the quote protection period, the price of
the order is adjusted to one increment below the offer to prevent a
locked market. However, that would make the adjusted price of the
incoming order $0, which is not a permissible price for an order.
    \9\ See proposed Rule 5.32(h)(1).
    \10\ The Exchange believes it is appropriate to permit TPHs to
opt out of QPT for their non-ISO IOC orders (and just have them
execute against any resting interest with a Capacity other than M,
cancelling any remainder) because it is consistent with the IOC
instruction, pursuant to which a user desires execution in whole or
in part as soon as the System receives it. See Rule 5.6(d)
(definition of IOC time-in-force instruction).
    \11\ The Exchange determines the length of the timer in
microseconds on a class basis, which may not exceed five
milliseconds. The Exchange believes this flexibility is reasonable
so it can apply a timer length that appropriately reflects market
structure differences among classes, as discussed above regarding
why it is appropriate to provide the Exchange with flexibility to
determine whether to apply QPT on a class basis. The Exchange has
this same flexibility for other Exchange functionality, such as
auction timers. See, e.g., Rule 5.37(c)(3) (providing the Exchange
with flexibility to determine the length of an AIM auction period on
a class basis).
    \12\ The Exchange understands complex orders may similarly cause
executions against protected quotes due to technical disparities in
the same manner as simple orders.
    \13\ The Exchange believes this is appropriate, as the resting
quotes in each leg of the complex order that are intended to be
protected by this proposed functionality will be subject to the full
length of the quote protection period before the legs of the complex
order in this scenario can execute against them.
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    The Exchange believes it is reasonable to permit the Exchange to
determine whether to activate QPT on a class basis to address market
structure differences that apply to different classes. This is
consistent with other Exchange functionality, such as auctions, which
the Exchange may activate on a class basis.\14\ For example, in classes
in which there is high retail customer order volume, the Exchange
believes Market-Makers may be willing to accept additional execution
risk for the additional opportunities to execute against a significant
number of customer orders, which may ultimately offset any stale-priced
executions against faster-acting professional customers. To the
contrary, in low volume classes or classes comprised mostly of
professional investor volume, the execution risk is greater as there
are fewer potential executions against customers to offset the risk.
Additionally, in classes with smaller minimum increments, the execution
risk is higher because Market-Maker quote updates may be more granular
and thus more frequent. Therefore, in a non-penny class, a ``stale''
execution price may be wider than it might be in a penny class and thus
still within a Market-Maker's pricing parameters and risk profile. The
Exchange notes it does not believe this class flexibility is necessary
for its current protection functionality (which applies to all
classes), as the Exchange understands Market-Makers primarily use bulk
port functionality to provide liquidity and satisfy their quoting
obligations. As there are Market-Makers appointed to all classes
trading on the Exchange, the Exchange believes it is appropriate to
prevent this interest (orders and bulk messages) submitted through bulk
ports in all classes from executing against resting Market-Maker
interest, as much of the incoming interest was likely submitted to rest
on the Book (and satisfy quoting obligations to provide liquidity to
the market) rather than execute upon entry.
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    \14\ See, e.g., Rule 5.37(a)(1) (permitting the Exchange to
determine in which classes orders may be submitted into an automated
improvement mechanism (``AIM'') auction for potential price
improvement).
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    The Exchange also believes limiting the proposed rule change to
orders of Market-Makers (Capacity M) is appropriate because it is
consistent with current and prior functionality, which protected
resting Market-Maker interest from incoming Market-Maker interest.\15\
As noted above, Market-Maker systems may automatically generate order
and quote updates in response to market changes. The Exchange believes
resting Market-Maker interest should be protected from stale execution
against all incoming Market-Maker interest generated by those same
systems, regardless of the type of port through which the interest is
submitted.
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    \15\ The Exchange notes current functionality also prevents
execution of orders with Capacities other than M against resting
Market-Maker quotes. See Rule 5.5(c)(3) (requiring users other than
appointed Market-Makers to submit orders through bulk ports as Post
Only, which cannot execute upon entry against resting interest). If
the Securities and Exchange Commission (``Commission'') approves the
proposed rule change, the Exchange may determine to submit a
separate rule filing to propose to extend QPT to other Capacities.
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    Pursuant to proposed Rule 5.32(h)(3), during the quote protection
period, neither the initial aggressor order (or unexecuted portion) nor
any other incoming marketable orders with Capacity M received during
the quote protection period (together with the initial aggressor order,
the ``aggressor orders'') may execute against the protected quote or
any other contra-side bulk message quotes with Capacity M that enter
the Book (together with the initial protected quote, the ``protected
quotes''), and the System ranks (in time priority) and displays the
aggressor orders at one minimum price variation below (above) the price
of the displayed protected offer (bid).\16\ In other words, during the
quote protection period, no aggressor orders may execute against
protected quotes resting in the Book. Therefore, all aggressor orders
in a series that are entered during an ongoing quote protection period
are similarly prevented from executing against any protected quote
(whether

the initial protected quote or any protected quote in that series that
is entered during the quote protection period and rests on the Book).
Additionally, by having incoming aggressor orders ``join'' the initial
aggressor order and incoming protected quotes ``join'' the initial
protected quotes, a series with protected quotes will be subject to a
full quote protection period for the protected quotes in that series.
---------------------------------------------------------------------------

    \16\ This is similar to the Exchange's Price Adjust
functionality (see Rule 5.32(b)), which prevents the Exchange from
disseminating a locked or crossed market.
---------------------------------------------------------------------------

    The TPH that submitted any aggressor order during the quote
protection period, or the Market-Maker that submitted any protected
quote during the quote protection period, may update the price of its
order or quote, as applicable; however, those orders and quotes remain
firm at their displayed prices in accordance with Rule 5.59 until
updated. Therefore, aggressor orders and protected quotes may continue
to execute at their resting prices (which is an adjusted price with
respect to aggressor orders, as described above) against incoming
interest. This provides other interest that enters the Book during the
quote protection period with potential execution opportunities.
Specifically:
     an incoming order with a Capacity other than M (``non-
aggressor order'') executes against resting contra-side interest at its
displayed price in accordance with the allocation algorithm applicable
to the class;
     an incoming aggressor order executes against resting non-
protected quote contra-side interest at its adjusted price in
accordance with the allocation algorithm applicable to the class; and
     an incoming contra-side order or quote executes against
resting aggressor and non-aggressor orders at their displayed prices in
accordance with the allocation algorithm applicable to the class.
    If (a) for simple orders, there are no more protected quotes at the
initial prices of any price-adjusted aggressor orders, the System
unadjusts the prices of the aggressor buy (sell) orders to one minimum
price variation below (above) the next lowest (highest) priced
protected quote (to their limit prices); or (b) for complex orders, the
SBO (SBB) increases (decreases), the System unadjusts the prices of the
aggressor buy (sell) complex orders to one minimum variation below
(above) the then-current SBO (SBB) (to their limit prices).
    Proposed Rule 5.32(h)(4) provides at the conclusion of the quote
protection period, the System unadjusts the prices of the aggressor
orders (or unexecuted portions) to their initial prices, which then
execute (in time priority) against any remaining marketable contra-side
interest, including the protected quotes, in accordance with the
allocation algorithm applicable to the class; \17\ and any unexecuted
portions of aggressor orders rest on the Book and unexecuted portions
of protected quotes remain on the Book.\18\
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    \17\ See Rule 5.33(a).
    \18\ If the market closes or the Exchange halts trading in the
affected series prior to the conclusion of the quote protection
period, the QPT concludes without execution.
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    The Exchange believes the proposed rule change to delay execution
of resting Market-Maker quotes against incoming aggressor Market-Maker
interest is appropriate, rather than prevention of execution (as occurs
in current functionality described above), because as noted above,
unlike interest submitted through bulk ports (the primary purpose of
which is to provide liquidity on the Book), the primary purpose of
orders submitted through non-bulk ports is to execute against interest
resting on the Book.\19\ Therefore, the Exchange believes it is
important to provide this incoming interest with execution
opportunities, after a slight delay, to provide Market-Makers with
opportunities to effect their quote updates. Additionally, execution of
bulk messages (which may only be submitted through bulk ports) exposes
Market-Makers to increased risk compared to order execution. For
example, the System will not determine whether a Market-Maker's risk
monitor mechanism \20\ thresholds have been exceeded until all quotes
within a bulk message have been processed, unlike orders, which may
result in execution in only one series before the System determines
whether those thresholds have been exceeded. The Exchange believes the
proposed rule change will close a gap that currently exposes Market-
Maker liquidity resting on the Book to executions at potentially stale
prices due to technology disparities against the orders submitted by
Market-Makers through non-bulk ports. The quote protection timer will
provide a balance between protecting resting Market-Maker quotes in
order to maintain liquidity and providing incoming Market-Maker
interest with execution opportunities.
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    \19\ It is possible some liquidity providers, including Market-
Makers, are submitting orders through non-bulk ports for the
provision of liquidity, but the Exchange believes this represents a
small portion of non-bulk port order flow.
    \20\ See Rule 5.34(c)(4), pursuant to which a user's (including
a Market-Maker's) interest may be cancelled after that user's risk
limits have been exceeded. As a result, quotes in a bulk message
will complete executions before determination of whether a user's
risk limits have been exceeded. This makes execution risk of bulk
message greater than an order, which only has a bid or offer for one
series.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\21\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \22\ 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) \23\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ Id.
---------------------------------------------------------------------------

    In particular, the Exchange believes the proposed rule change will
promote just and equitable principles of trade, remove impediments to
and perfect the mechanism of a national market system, and protect
investors. The proposed rule change is intended to prevent incoming
Market-Maker orders submitted through non-bulk ports from immediately
executing against resting Market-Maker interest at potentially stale
prices due to technological disparities between Market-Makers. The
Exchange believes the proposed functionality will reduce execution of
resting Market-Maker interest at prices that do not reflect the then-
current market, which executions may impede certain liquidity
providers' ability to competitively price their bids and offers.
Specifically, this increased risk of execution at stale prices may
cause Market-Makers to widen their quotes or otherwise withhold
liquidity to the detriment of investors. The Exchange expects the
proposed rule change to increase liquidity and enhance competition in
the market, because Market-Makers may be able to quote more
aggressively with less concern about exposure to execution risk due to
technological disparities in their quoting systems compared to other

market participants' order entry systems. As a result, the Exchange
believes this protection for resting Market-Maker interest, and
resulting increased liquidity and competition, would ultimately remove
impediments to the market and benefit all investors.
    Given the critical role Market-Makers play in the options market,
the Exchange believes it is imperative to have the ability to protect
Market-Makers' resting quotes from execution at stale prices against
incoming Market-Maker interest due to technological disparities between
Market-Makers. The Exchange believes it should be able to extend this
protection to incoming Market-Maker interest from non-bulk ports, as
technological disparities between Market-Makers can expose Market-
Makers to the same level of risk regardless of which type of port
Market-Makers submit interest. Ultimately, this exposure to risk from
may negatively impact liquidity to the detriment of the entire market.
Unlike quotes and orders submitted through bulk ports, the primary
purpose of which is generally to rest on the Book and provide
liquidity, it is likely the intention of orders submitted through non-
bulk ports to execute against the resting interest (including Market-
Maker quotes). As a result, the Exchange believes it is important to
balance the need to protect resting Market-Maker quotes from executions
at stale prices with the need to provide opportunities for this
incoming interest to execute against those quotes. The Exchange
believes the proposed rule change to slightly delay execution of
certain aggressing interest provides an equitable balance between the
need to protect resting Market-Maker interest and provide incoming
interest with execution opportunities.
    The Exchange believes the proposed rule change is not designed to
permit unfair discrimination by providing the Exchange with the ability
to provide Market-Maker quotes with additional protection. The options
market is driven by Market-Maker quotes, and thus Market-Maker quotes
are critical to provide liquidity to the market and contribute to price
discovery for investors. If Market-Makers do not have sufficient time
to refresh their resting quotes (the primary source of liquidity for
customers in the market) in response to market updates before executing
against incoming interest that has incorporated those market updates,
this increased risk of execution at stale prices may cause Market-
Makers to widen their quotes to the detriment of investors or otherwise
withhold liquidity. This reduced liquidity may reduce execution
opportunities or cause executions to occur at worse prices for
customers. Further, Market-Makers must comply with various obligations,
including to provide continuous electronic quotes and to update quotes
in response to market conditions.\24\ It takes time for Market-Makers
to update quotes in series in their appointed classes, which may not
take effect until after faster market participants have updated orders.
The Exchange believes it is appropriate to provide Market-Maker quotes
with a reasonable amount of protection (as the proposed rule change
would provide) to allow them to execute at prices reflective of market
updates given the Market-Makers' need to comply with these obligations
and the resources they expend to comply with these obligations.\25\ As
described above, the protected quotes and aggressor orders will remain
firm during the quote protection period, and executions will continue
during that period.
---------------------------------------------------------------------------

    \24\ See Rule 5.51.
    \25\ See id.
---------------------------------------------------------------------------

    Further, the Exchange believes the proposed rule change to provide
the Exchange with flexibility to determine whether to enable QPT on a
class basis, and in such classes to provide the Exchange with
flexibility to determine the length of the quote protection period, is
not designed to permit unfair discrimination. The Exchange believes
this flexibility is appropriate to address market structure
differences, including differences among market participants and
activity levels, within different classes, which flexibility the
Exchange has with respect to other functionality, such as auctions.\26\
For example, in classes in which there is high retail customer order
volume, the Exchange believes Market-Makers may be willing to accept
additional execution risk for the additional opportunities to execute
against a significant number of customer orders, which may ultimately
offset any stale-priced executions against faster-acting professional
customers. To the contrary, in low volume classes or classes comprised
mostly of professional investor volume, the execution risk is greater
as there are fewer potential executions against customers to offset the
risk. Additionally, in classes with smaller minimum increments, the
execution risk is higher because Market-Maker quote updates may be more
granular and thus more frequent. Therefore, in a non-penny class, a
``stale'' execution price may be wider than it might be in a penny
class. The Exchange notes it does not believe this class flexibility is
necessary for its current protection functionality (which applies to
all classes), as the Exchange understands Market-Makers primarily use
bulk port functionality to provide liquidity and satisfy their quoting
obligations. As there are Market-Makers appointed to all classes
trading on the Exchange, the Exchange believes it is appropriate to
prevent this interest (orders and bulk messages) submitted through bulk
ports in all classes from executing against resting Market-Maker
interest, as much of the incoming interest was likely submitted to rest
on the Book (and satisfy quoting obligations to provide liquidity to
the market) rather than execute upon entry.
---------------------------------------------------------------------------

    \26\ See, e.g., Rule 5.37(a)(1) (permitting the Exchange to
determine in which classes orders may be submitted into an AIM
auction for potential price improvement) and (c)(3) (permitting the
Exchange to determine the length of the AIM auction period on a
class basis).
---------------------------------------------------------------------------

    The Exchange also believes limiting the proposed rule change to
orders of Market-Makers (Capacity M) is appropriate because it is
consistent with current and prior functionality, which protected
resting Market-Maker interest from incoming Market-Maker interest.\27\
As noted above, Market-Maker systems may automatically generate order
and quote updates in response to market changes. The Exchange believes
resting Market-Maker interest should be protected from stale execution
against all incoming Market-Maker interest generated by those same
systems, regardless of the type of port through which the interest is
submitted. Therefore, the Exchange believes the proposed rule change to
close this current gap exposing resting Market-Maker interest to
execution risk against incoming Market-Maker interest submitted through
non-bulk ports due to technological disparities will remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and protect investors and the public interest.
---------------------------------------------------------------------------

    \27\ The Exchange notes current functionality also prevents
execution of orders with Capacities other than M against resting
Market-Maker quotes. See Rule 5.5(c)(3) (requiring users other than
appointed Market-Makers to submit orders through bulk ports as Post
Only, which cannot execute upon entry against resting interest). If
the Securities and Exchange Commission (``Commission'') approves the
proposed rule change, the Exchange may determine to submit a
separate rule filing to propose to extend QPT to other Capacities.
---------------------------------------------------------------------------

    The Exchange notes the underlying purpose of this proposed rule
change, which is to provide resting Market-Maker quotes with time to
update in response to market condition changes, is the same as the
primary purpose of functionality and previously available

on the Exchange.\28\ The Exchange believes the proposed rule change to
delay execution of resting Market-Maker quotes against incoming
aggressor interest is appropriate, rather than prevention of execution
(as occurs in current functionality described above), because as noted
above, unlike interest submitted through bulk ports (the primary
purpose of which is to provide liquidity on the Book), the primary
purpose of orders submitted through non-bulk ports is to execute
against interest resting on the Book.\29\ Therefore, the Exchange
believes it is important to provide this incoming interest with
execution opportunities, after a slight delay, to provide Market-Makers
with opportunities to effect their quote updates. Additionally,
execution of bulk messages (which may only be submitted through bulk
ports) exposes Market-Makers to increased risk compared to order
execution. For example, the System will not determine whether a Market-
Maker's risk monitor mechanism \30\ thresholds have been exceeded until
all quotes within a bulk message have been processed, unlike orders,
which may result in execution in only one series before the System
determines whether those thresholds have been exceeded. The Exchange
believes the proposed rule change will close a gap that currently
exposes Market-Maker liquidity resting on the Book to executions at
potentially stale prices due to technology disparities against Market-
Maker orders submitted through non-bulk ports. The quote protection
timer will provide a balance between protecting resting Market-Maker
quotes in order to maintain liquidity and providing incoming interest
with execution opportunities.
---------------------------------------------------------------------------

    \28\ See Rules 5.5(c)(3) and 5.32(c)(6); see also Securities
Exchange Act Release Nos. 86374 (July 15, 2019), 84 FR 34963 (July
19, 2019) (SR-CBOE-2019-033) (adoption of current Rules 5.5(c)(3)
and 5.32(c)(6)); and 51822 (June 10, 2005), 70 FR 35321 (June 17,
2005) (SR-CBOE-2004-87) (adoption of former Cboe Rule 6.45(c)).
    \29\ It is possible some liquidity providers, including Market-
Makers, are submitting orders through non-bulk ports for the
provision of liquidity, but the Exchange believes this represents a
small portion of non-bulk port order flow.
    \30\ See Rule 5.34(c)(4), pursuant to which a user's (including
a Market-Maker's) interest may be cancelled after that user's risk
limits have been exceeded. As a result, quotes in a bulk message
will complete executions before determination of whether a user's
risk limits have been exceeded. This makes execution risk of bulk
message greater than an order, which only has a bid or offer for one
series.
---------------------------------------------------------------------------

    The proposed temporary adjustment of aggressor order prices will
further perfect the mechanism of a free and open market and national
market system, as it will prevent the display of a locked or crossed
market consistent with the Linkage Plan.\31\ This proposed handling of
these orders is also consistent with the Exchange's current Price
Adjust functionality.\32\
---------------------------------------------------------------------------

    \31\ See Rule 5.66.
    \32\ See Rule 5.32(g).
---------------------------------------------------------------------------

    As noted above, the options market is driven by Market-Maker
quotes, and thus Market-Maker quotes are critical to provide liquidity
to the market and contribute to price discovery for investors. The
proposed functionality is designed to permit the Exchange to provide
Market-Makers with further protection against executions at potentially
stale prices due to technology disparities while still providing
incoming Market-Maker orders submitted through non-bulk ports with
execution opportunities. The Exchange believes the proposed enhanced
functionality will permit liquidity providers to more efficiently enter
and update bids and offers. This may cause Market-Makers to quote
tighter and deeper markets, which will increase liquidity and enhance
competition to the ultimate benefit of all market participants.

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 Exchange does not
believe the proposed rule change will impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act, because it will apply in the same manner to all
incoming Market-Maker orders in non-bulk ports. The primary purpose of
the proposed rule change is to permit the Exchange to provide
additional protection to resting Market-Maker quotes from executions
against incoming Market-Maker interest at potentially stale prices
before they have the opportunity to update in response to market
condition changes. The Exchange believes it is reasonable to provide
additional protection to Market-Makers given their unique and critical
role in the options market and the various obligations that Market-
Makers must satisfy, as discussed above. Additionally, as noted above,
the proposed functionality supplements similar functionality currently
available on the Exchange, which similarly protects resting Market-
Maker interest against executions at potentially stale prices.\33\ The
Exchange does not believe the proposed flexibility to apply QPT on a
class basis, or determine the length of the timer on a class basis,
will impose any burden on intramarket competition that is not necessary
or appropriate in furtherance of the purposes of the Act, as such
flexibility is reasonable to address market structure differences among
classes, as discussed above.
---------------------------------------------------------------------------

    \33\ See Rule 5.32(c)(6).
---------------------------------------------------------------------------

    The Exchange does not believe the proposed rule change will impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act, because it
applies solely to the timing of executions against resting Market-Maker
quotes on the Exchange. As noted above, the proposed rule change is
consistent with the Linkage Plan.\34\
---------------------------------------------------------------------------

    \34\ See Rule 5.66.
---------------------------------------------------------------------------

    Additionally, the Exchange believes the proposed rule change will
relieve any burden on, or otherwise promote, competition. As discussed
above, the Exchange believe the proposed rule change may encourage the
provision of more aggressive liquidity, which may result in more
trading opportunities and tighter spreads, which contributes to price
discovery. This may improve overall market quality and enhance
competition on the Exchange.

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

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

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) by order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
file number SR-CBOE-2023-044 on the subject line.

Paper Comments

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

All submissions should refer to file number SR-CBOE-2023-044. 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 (https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-CBOE-2023-044 and should be
submitted on or before October 3, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\35\
---------------------------------------------------------------------------

    \35\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-19593 Filed 9-11-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 59 (Thursday, March 26, 2020)]
[Notices]
[Page 17088]
[FR Doc No: 2020-06280]

-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2020-N-0001]

Preparation for International Cooperation on Cosmetics Regulation
14th Annual Meeting; Public Meeting; Cancellation

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice of cancellation of public meeting.

-----------------------------------------------------------------------

SUMMARY: The Food and Drug Administration (FDA or we) is announcing the
cancellation of following public meeting entitled ``International
Cooperation on Cosmetics Regulation (ICCR)--Preparation for ICCR-14
Meeting.'' The purpose of the public meeting was to invite public input
on various topics pertaining to the regulation of cosmetics.

DATES: The public meeting was to be held on April 14, 2020, from 2 p.m.
to 4 p.m.

ADDRESSES: The public meeting was to be held at the Food and Drug
Administration, Center for Food Safety and Applied Nutrition, 5001
Campus Dr., Wiley Auditorium (first floor), College Park, MD 20740.

FOR FURTHER INFORMATION CONTACT: Deborah Smegal, Office of Cosmetics
and Colors, Food and Drug Administration, 5001 Campus Dr. (HFS-100),
College Park, MD 20740,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

    FDA, like other government agencies, is taking the necessary steps
to ensure the Agency is prepared to continue our vital public health
mission in the event that our day-to-day operations are impacted by the
COVID-19 public health emergency. Therefore, we are canceling or
postponing all non-essential meetings through the month of April. We
will reassess on an ongoing basis for future months.
    Accordingly, the FDA public meeting entitled, ``International
Cooperation on Cosmetics Regulation (ICCR)--Preparation for ICCR--14
Meeting'' announced in the Federal Register of March 3, 2020 (85 FR
12569), is canceled. Additionally, we will be closing the docket to
public comments, since the purpose of the docket was to obtain
information for the FDA public meeting and to help FDA prepare for the
ICCR-14 meeting. Thus, because we are canceling the FDA public meeting,
public comments are no longer necessary.
    As of March 20, 2020, the status of the ICCR-14 meeting itself
remains to be determined.
    Please contact Deborah Smegal in FDA's Office of Cosmetics and
Colors (See FOR FURTHER INFORMATION CONTACT) with questions.

    Dated: March 20, 2020.
Lowell J. Schiller,
Principal Associate Commissioner for Policy.
[FR Doc. 2020-06280 Filed 3-25-20; 8:45 am]
 BILLING CODE 4164-01-P


Index of Documents to Be Used in the Registration Review Decision of Trichoderma spp.

Docket Number EPA-HQ-EPA-2006-0245 for Trichoderma spp. in

Master Docket EPA-HQ-EPA-2007-0037

Document Title	Source (author, database, etc.)	Document Date

Index of documents	Shanaz Bacchus	March 2007

Federal Register Notice Announcing the Opening of the Docket	Federal Register	April 2007

Summary Document	Shanaz Bacchus	March 24, 2007

Endangered Species NA Determination – T-22	Zigfridas Vaituzis, BPPD March 21, 2007

Data Waiver Request and Endangered Species NA Determination – T-75 &T-76	Zigfridas Vaituzis, BPPD	December 27, 1987

Trichoderma (Binab T) EPA Pesticide Fact Sheet 7/89

(T-75&T-76)	Registration Division	July, 1989

T-22 – most recent risk assessment – new End-use Product registration	Joel Gagliardi, Ph.D.	Sept., 29, 2004

 PAGE

 PAGE   1


[Federal Register Volume 83, Number 123 (Tuesday, June 26, 2018)]
[Rules and Regulations]
[Pages 29691-29694]
[FR Doc No: 2018-13714]

=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 35

[EPA-HQ-OW-2016-0569; FRL-9979-90-OW]

Previously-Incurred Costs in the WIFIA Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Interim final rule.

-----------------------------------------------------------------------

SUMMARY: With this interim final rule Environmental Protection Agency
(EPA) is amending the Water Infrastructure Finance and Innovation Act
(WIFIA) regulations to clarify the process for, and conditions under
which, a recipient of WIFIA credit assistance can include costs
incurred, and the value of integral in-kind contributions made, before
receipt of assistance in the calculation of total eligible costs, and
can be reimbursed for certain of those costs by WIFIA loan proceeds.
This interim final rule pertains to a matter involving a federal loan
and loan guarantee program and is therefore exempt from the rulemaking
requirements of the Administrative Procedure Act. As such, EPA is
issuing this rule as interim final.

DATES: This rule is effective on June 26, 2018. Comments must be
received on or before August 27, 2018.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OW-
2016-0569, at http://www.regulations.gov. Follow the online
instructions for submitting comments. Once submitted, comments cannot
be edited or removed from Regulations.gov. The EPA may publish any
comment received to its public docket. Do not submit electronically any
information you consider to be Confidential

Business Information (CBI) or other information whose disclosure is
restricted by statute. Multimedia submissions (audio, video, etc.) must
be accompanied by a written comment. The written comment is considered
the official comment and should include discussion of all points you
wish to make. The EPA will generally not consider comments or comment
contents located outside of the primary submission (i.e., on the web,
cloud, or other file sharing system). For additional submission
methods, the full EPA public comment policy, information about CBI or
multimedia submissions, and general guidance on making effective
comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Jordan Dorfman, Water Infrastructure
Division, Office of Wastewater Management, Mail Code 4201C,
Environmental Protection Agency, 1200 Pennsylvania Avenue NW,
Washington, DC, 20460; telephone number:<PHONE_NUMBER>; email address:
[email protected].

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    This action only applies to entities seeking credit assistance
under the WIFIA program for the development and construction of a water
infrastructure project. EPA has promulgated regulations to implement
this program. A list of eligible entities and eligible projects can be
found at 33 U.S.C. 3904 and 3905 and the Interim Final Rule at 40 CFR
35.10005.

B. What should I consider as I prepare my comments for EPA?

    Submitting Confidential Business Information (CBI). Do not submit
this information to EPA through regulations.gov or email. Clearly mark
the part or all of the information that you claim to be CBI. For CBI
information on a disk, CD-ROM, or flash drive that you mail to EPA,
mark the outside of the disk, CD-ROM, or flash drive as CBI and then
identify electronically within the disk, CD-ROM, or flash drive the
specific information that is claimed as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
    Tips for preparing your comments. When submitting comments,
remember to:
     Identify the document by docket ID number and other
identifying information (subject heading, Federal Register date and
page number).
     Explain why you agree or disagree; suggest alternatives
and substitute language for your requested changes.
     Describe any assumptions and provide any technical
information and/or data that you used.
     If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
     Provide specific examples to illustrate your concerns and
suggest alternatives.
     Explain your views as clearly as possible.
     Make sure to submit your comments by the comment period
deadline identified.

II. Background

A. What action is the Agency taking?

    Section 5008(c)(2) of the Water Infrastructure Improvements for the
Nation Act, Public Law 114-322, added section 5029(b)(10) (33 U.S.C.
3908(b)(10)) to the WIFIA authorizing legislation. This section
requires that any eligible project costs incurred, and the value of any
integral in-kind contributions made, before receipt of assistance be
credited toward the 51 percent of project costs to be provided by
sources of funding other than a WIFIA loan. 33 U.S.C. 3908(b)(10). This
section provides WIFIA borrowers the opportunity to include costs
incurred prior to receipt of assistance and the value of integral in-
kind contributions made before receipt of assistance, in the
calculation of total eligible costs in order to calculate the size of
the loan. However, it does not address what costs can be reimbursed.
The size of the project is important in determining the amount of
funding that may be awarded to the WIFIA borrower (``size of the
loan'') because the statute, at 33 U.S.C. 3908(b)(2)(A), limits the
size of the loan to 49 percent of the total reasonably anticipated
eligible costs for the project. Instead of addressing the reimbursement
of costs, 33 U.S.C. 3908(b)(10) uses the term ``credited'' and directs
that certain costs be credited toward a category of costs, the 51
percent to be provided by a non-WIFIA source. Importantly, the statute
does not prohibit the use of a WIFIA loan to reimburse eligible costs
incurred prior to receipt of assistance. The WIFIA loan can therefore
be used to reimburse any eligible cost, whether or not incurred prior
to the receipt of assistance, except for the value of in-kind
contributions which do not represent out-of-pocket costs to a borrower
and are not costs for which a borrower would typically seek
reimbursement or payment.
    For these reasons, EPA is clarifying current regulations by adding
to 40 CFR 35.10010(c) the clause ``value of any integral in-kind
contributions made'' to allow these costs to be included in the
calculation of eligible project costs and by changing ``prior to a
project sponsor's submission of an application for credit assistance''
to ``before receipt of credit assistance'' to ensure that all such
costs and integral in-kind contributions are included. EPA is also
adding the clause, ``such costs, excluding the value of any integral
in-kind contributions, are payable from the proceeds of the WIFIA
credit instrument'' to ensure that such costs may be reimbursed from
WIFIA loan proceeds.
    Crediting prior costs and the value of integral in-kind
contributions to the project increases the size of the project and, by
extension, may increase the size of the WIFIA loan. For example, if a
borrower has incurred $110 million in costs prior to the receipt of
assistance, and anticipates incurring $90 million in costs after
receipt of assistance, the size of the project would be $200 million.
Looking at 33 U.S.C. 3908(b)(2)(A) in isolation, EPA could potentially
fund up to 49 percent of that $200 million, or $98 million. However, by
further directing that the costs incurred and contributions made prior
to receipt of assistance be credited toward the 51 percent of project
costs to be provided by sources of funding other than WIFIA,
3908(b)(10) serves to limit the size of the loan if the borrower has
completed a substantial portion of the overall project. In this example
project, the size of the loan would be limited to $90 million because
the $110 million of costs incurred prior to receipt of assistance must
be credited to the 51 percent category of costs to be provided by non-
WIFIA sources of funding, leaving only $90 million to be funded by
WIFIA.
    Costs and in-kind contributions must be directly related to the
development or execution of the project including, for example,
preliminary design, right-of-way acquisition, National Environmental
Policy Act (NEPA) compliance related costs, and construction related
costs. The WIFIA program retains the right to ask for appropriate
documentation as evidence of such costs and in-kind contributions for
sizing of the WIFIA loan and, in the

case of incurred costs, for reimbursement.
    In addition, 40 CFR 35.10010(c) is amended by removing ``[i]n
addition, applicants shall not include application charges or any other
expenses associated with the application process (such as charges
associated with obtaining the required preliminary rating opinion
letter) among the eligible project costs.'' This sentence is redundant
because 40 CFR 35.10005 provides a definition of eligible project costs
from which the determination of eligibility of a cost can be
determined. It causes confusion because it implies that fees charged by
the WIFIA program cannot be included as an eligible project cost even
though they are specifically allowed to be financed as part of a WIFIA
loan by statute at 33 U.S.C. 3908(b)(7)(B). Furthermore, EPA has
determined that the cost of obtaining rating opinion letters is
eligible under 33 U.S.C. 3906(4) which states that ``capitalized
interest necessary to meet market requirements, reasonably required
reserve funds, capital issuance expenses, and other carrying costs
during construction'' are eligible costs.

B. What is the Agency's authority for taking this action?

    This interim final rule is issued under the authority of 33 U.S.C.
3908(b)(10) and 3911.

III. Statutory and Executive Orders Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 13563: Improving Regulation and Regulatory Review

    This action is not a significant regulatory action.

B. Executive Order 13771

    This rule is not an E.O. 13771 regulatory action because this rule
is not significant under E.O. 12866.

C. Paperwork Reduction Act

    This action does not impose an information collection burden under
the PRA because this rule merely establishes the process for, and
conditions under which, a recipient of WIFIA credit assistance can
include costs incurred, and the value of integral in-kind contributions
made, before receipt of assistance in the calculation of total eligible
costs, and can be reimbursed for certain of those costs by WIFIA loan
proceeds.

D. Regulatory Flexibility Act

    I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. In
making this determination, the impact of concern is any significant
adverse economic impact on small entities. An agency may certify that a
rule will not have a significant economic impact on a substantial
number of small entities if the rule relieves regulatory burden, has no
net burden or otherwise has a positive economic effect on the small
entities subject to the rule. With this interim final rule, the EPA is
amending the WIFIA regulations to clarify the process for, and
conditions under which, a recipient of WIFIA credit assistance can
include costs incurred, and the value of integral in-kind contributions
made, before receipt of assistance in the calculation of total eligible
costs, and can be reimbursed for certain of those costs by WIFIA loan
proceeds. This interim final rule does not impose costs on small
entities applying for a WIFIA loan. I have therefore concluded that
this action will have no net regulatory burden for all directly
regulated small entities.

E. Unfunded Mandates Reform Act (UMRA)

    This action does not contain an unfunded mandate of $100 million or
more as described in UMRA, 2 U.S.C. 1531-1538, and does not
significantly or uniquely affect small governments. The action imposes
no enforceable duty on any state, local, or tribal governments or the
private sector.

F. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government.

G. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

    This action does not have tribal implications as specified in
Executive Order 13175. While a tribal government, or a consortium of
tribal governments may apply for WIFIA credit assistance, this action
does not have substantial direct effects on one or more Indian tribes,
on the relationship between the Federal Government and Indian tribes,
or on the distribution of power and responsibilities between the
Federal Government and Indian tribes.

H. Executive Order 13045: Protection of Children From Environmental
Health Risks and Safety Risks

    This action is not subject to Executive Order 13045 because it is
not economically significant as defined in Executive Order 12866, and
because environmental health or safety risks are not addressed by this
action.

I. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use

    This action is not a ``significant energy action'' because it is
not likely to have a significant adverse effect on the supply,
distribution or use of energy. This rulemaking simply establishes the
process for, and conditions under which, a recipient of WIFIA credit
assistance can include costs incurred, and the value of integral in-
kind contributions made, before receipt of assistance in the
calculation of total eligible costs, and can be reimbursed for certain
of those costs by WIFIA loan proceeds.

J. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

K. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations

    This action is not subject to Executive Order 12898 (59 FR 7629,
February 16, 1994) because it does not establish an environmental
health or safety standard.

L. National Environmental Policy Act

    Each project obtaining assistance under this program is required to
adhere to the National Environmental Policy Act of 1969, as amended (42
U.S.C. 4321-4370). This rulemaking simply establishes the process for,
and conditions under which, a recipient of WIFIA credit assistance can
include costs incurred, and the value of integral in-kind contributions
made, before receipt of assistance in the calculation of total eligible
costs, and can be reimbursed for certain of those costs by WIFIA loan
proceeds; therefore, by itself, this rulemaking will not have any
effect on the quality of the environment.

List of Subjects in 40 CFR Part 35

    Environmental protection, Reporting and recordkeeping requirements,
and Water finance.

    Dated: June 18, 2018.
E. Scott Pruitt,
Administrator.

    For the reasons set forth in the preamble, 40 CFR part 35 is
amended as follows:

PART 35--STATE AND LOCAL ASSISTANCE

0
1. The authority citation for part 35 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.; 33 U.S.C. 1251 et seq.; 42
U.S.C. 300f et seq.; 42 U.S.C. 6901 et seq.; 7 U.S.C. 136 et seq.;
15 U.S.C. 2601 et seq.; 42 U.S.C. 13101 et seq.; Pub. L. 104-134,
110 Stat. 1321, 1321-299 (1996); Pub. L. 105-65, 111 Stat. 1344,
1373 (1997), 2 CFR 200.

0
2. Amend Sec.  35.10010 by revising paragraph (c) to read as follows:

Sec.  35.10010   Limitations on assistance.

* * * * *
    (c) Costs incurred, and the value of any integral in-kind
contributions made, before receipt of credit assistance may be
considered in calculating eligible project costs only upon approval of
the Administrator. Such costs and integral in-kind contributions must
be directly related to the development or execution of the project and
must be eligible project costs as defined in Sec.  35.10005. In
addition, such costs, excluding the value of any integral in-kind
contributions, are payable from the proceeds of the WIFIA credit
instrument and shall be considered incurred costs for purposes of
paragraph (f) of this section. Capitalized interest on the WIFIA credit
instrument is not eligible for calculating eligible project costs.
* * * * *

[FR Doc. 2018-13714 Filed 6-25-18; 8:45 am]
 BILLING CODE 6560-50-P