[Federal Register Volume 84, Number 29 (Tuesday, February 12, 2019)]
[Proposed Rules]
[Pages 3384-3387]
[FR Doc No: 2019-01883]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R03-OAR-2018-0626; FRL-9989-13--Region 3]

Approval and Promulgation of Air Quality Implementation Plans;
Delaware; Revisions to the Regulatory Definition of Volatile Organic
Compounds

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to
approve a state implementation plan (SIP) revision formally submitted
by the State of Delaware. This revision pertains to amendments made to
the definition of ``volatile organic compound'' (VOC) in the Delaware
Administrative Code to conform with EPA's regulatory definition of VOC.
The EPA found that certain compounds have a negligible photochemical
reactivity and therefore has exempted them from the regulatory
definition of VOC in several rulemaking actions, as discussed below.
This revision to the Delaware SIP requested the exemption of these
compounds from the regulatory definition of VOC to match the actions
EPA has taken. The revision also requested minor changes to the format
of some of the chemical formulas for VOCs that are already excluded
from the definition of VOC in the Delaware SIP. EPA is approving these
revisions to update the definition of VOC in the Delaware SIP under the
Clean Air Act (CAA).

DATES: Written comments must be received on or before March 14, 2019.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R03-
OAR-2018-0626 at http://www.regulations.gov, or via email to
<EMAIL_ADDRESS>For comments submitted at Regulations.gov,
follow the online instructions for submitting comments. Once submitted,
comments cannot be edited or removed from Regulations.gov. For either
manner of submission, 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. 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, please contact the person
identified in the FOR FURTHER INFORMATION CONTACT section. For the full
EPA public comment policy, information about CBI or multimedia
submissions, and general guidance on making effective comments, please
visit http://www2.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Elizabeth Gaige,<PHONE_NUMBER>, or by
email at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: On May 25, 2018, the State of Delaware,
through the Department of Natural Resources and Environmental Control
(DNREC), formally submitted a SIP revision requesting that the
definition of VOC in the Delaware SIP be updated to conform to several
EPA rulemakings that exempted compounds from the regulatory definition
of VOC in 40 CFR 51.100(s). The May 25, 2018 SIP revision requested
that the definition of VOC in the Delaware SIP be updated to add the
following compounds to the list of compounds excluded from the
definition of VOC: t-butyl acetate (also known as tertiary butyl
acetate or TBAC), HFE-7000 (1,1,1,2,2,3,3-heptafluoro-3-methoxy-
propane), HFE-7500 [3-ethoxy-1,1,1,2,3,4,4,5,5,6,6,6-dodecafluoro-2-
(trifluoromethyl) hexane], HFC-227ea (1,1,1,2,3,3,3-
heptafluoropropane), methyl formate, HFE-7300 (1,1,1,2,2,3,4,5,5,5-
decafluoro-3-methoxy-4-trifluoromethyl-pentane), propylene carbonate
and dimethyl carbonate. These compounds were excluded from the
regulatory definition of VOC in 40 CFR 51.100(s) by EPA in several
rulemakings, which are discussed in more detail later in this notice of
proposed rulemaking (NPRM). Delaware's May 25, 2018 SIP revision also
requested minor changes to the format of some of the chemical formulas
for VOCs that are already excluded from the definition of VOC in the
Delaware SIP.\1\
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    \1\ The SIP revision requests that the format of the chemical
formulas for the following compounds be revised to incorporate
subscripts: 1,1,1,2,2,3,3,4,4-nonafluoro-4-methoxy-butane
(C4F9OCH3), 2-
(difluoromethoxymethyl)-1,1,1,2,3,3,3-heptafluoropropane
((CF3)2CFCF2OCH3), 1-
ethoxy-1,1,2,2,3,3,4,4,4-nonafluorobutane
(C4F9OC2H5), and 2-
(ethoxydifluoromethyl)-1,1,1,2,3,3,3-heptafluoropropane
((CF3)2CFCF2OC2H5
).
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I. Background

    VOCs are organic compounds of carbon that, in the presence of
sunlight, react with sources of oxygen molecules, such as nitrogen
oxides (NOX) and carbon monoxide (CO), in the atmosphere to
produce tropospheric ozone, commonly known as smog. Common sources that
may emit VOCs include paints, coatings, housekeeping and maintenance
products, and building and furnishing materials. Outdoor emissions of
VOCs are regulated by EPA primarily to prevent the formation of ozone.
    VOCs have different levels of volatility, depending on the
compound, and react at different rates to produce varying amounts of
ozone. VOCs that are non-reactive or of negligible reactivity to form
ozone react slowly and/or form less ozone; therefore, reducing their
emissions has limited effects on local or regional ozone pollution.
Section 302(s) of the CAA specifies that EPA has the authority to
define the meaning of VOC and what compounds shall be treated as VOCs
for regulatory purposes. It is EPA's policy that organic compounds with
a negligible level of reactivity should be excluded from the regulatory
definition of VOC in order to focus control efforts on compounds that
significantly affect ozone concentrations. EPA uses the reactivity of
ethane as the threshold for determining whether a compound has
negligible reactivity. Compounds that are less reactive than, or
equally reactive to, ethane under certain assumed conditions may be
deemed negligibly reactive and, therefore, suitable for exemption by
EPA from the regulatory definition of VOC. The policy of excluding
negligibly reactive compounds from the regulatory definition of VOC was
first laid out in the ``Recommended Policy on Control of Volatile
Organic Compounds'' (42 FR 35314, July 8, 1977) and was supplemented
subsequently with the ``Interim Guidance on Control of Volatile Organic
Compounds in Ozone State Implementation Plans'' (70 FR 54046, September
13, 2005). The regulatory definition of VOC as well as a list of
compounds that are designated by EPA as negligibly reactive can be
found at 40 CFR 51.100(s).
    On September 30, 1999, EPA proposed to revise the regulatory
definition of VOC in 40 CFR 51.100(s) to exclude TBAC as a VOC (64 FR
52731). In most cases, when a negligibly reactive VOC is exempted from
the definition of VOC, emissions of that compound are no longer
recorded, collected, or reported to states or the EPA as part of VOC
emissions. However, EPA's final rule excluded TBAC from the definition
of VOC for purposes of VOC emissions limitations or VOC content
requirements but continued to define TBAC as a VOC for purposes of all
recordkeeping, emissions reporting, photochemical dispersion modeling,
and inventory requirements that apply to VOC (69 FR 69290, November 29,
2004) (2004 Final Rule).\2\
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    \2\ On February 25, 2016, EPA revised the regulatory definition
of VOC under 40 CFR 51.100(s) to remove the recordkeeping and
reporting requirements for TBAC (81 FR 9341). EPA's rationale for
this action is explained in more detail in the final rule for that
action. However, Delaware's May 25, 2018 SIP revision retains the
recordkeeping and reporting requirements for TBAC as these updates
were adopted August 14, 2009 and became effective September 10,
2009, which was prior to EPA's final rule removing the recordkeeping
and reporting requirements for TBAC.

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    On November 29, 2004 (69 FR 69290), EPA promulgated a final rule
revising the regulatory definition of VOC in 40 CFR 51.100(s) to add
HFE-7000, HFE-7500, HFC 227ea, and methyl formate to the list of
compounds excluded from EPA's regulatory definition of VOC. On January
18, 2007 (72 FR 2193) and January 21, 2009 (74 FR 3437) EPA promulgated
additional final rules revising the regulatory definition of VOC in 40
CFR 51.100(s) to add HFE-7300, propylene carbonate and dimethyl
carbonate, to the list of compounds excluded from the regulatory
definition of VOC. These actions were based on EPA's consideration of
the compounds' negligible reactivity and low contribution to ozone as
well as the low likelihood of risk to human health or the environment.
EPA's rationale for these actions is explained in more detail in the
final rules for these actions.

II. Summary of SIP Revision and EPA Analysis

    In order to conform with EPA's current regulatory definition of VOC
in 40 CFR 51.100(s), Delaware amended the definition of VOC in 7 DE
Admin. Code 1101--Definitions and Administrative Principles, to add
HFE-7000, HFE-7500, HFC 227ea, methyl formate, HFE-7300, propylene
carbonate, and dimethyl carbonate to the list of compounds excluded
from the regulatory definition of VOC. Delaware also amended the
definition of VOC in 7 DE Admin. Code 1101 to exclude TBAC from the
definition of VOC for the purposes of VOC emissions limitations or VOC
content requirements, but continued to define TBAC as a VOC for
purposes of all recordkeeping, emissions reporting, photochemical
dispersion modeling, and inventory requirements that apply to VOC.\3\
Delaware also made minor formatting changes to some of the chemical
formulas for VOCs that are already excluded from the definition of VOC
in the Delaware SIP.\1\ These revisions were adopted by Delaware on
August 14, 2009 and were effective September 10, 2009. DNREC formally
submitted these amendments to the regulatory definition of VOC as a SIP
revision on May 25, 2018.
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    \3\ As stated previously, on February 25, 2016, EPA revised the
regulatory definition of VOC under 40 CFR 51.100(s) to remove the
recordkeeping and reporting requirements for TBAC (81 FR 9341).
However, Delaware's May 25, 2018 SIP revision retains the
recordkeeping and reporting requirements for TBAC as these updates
were adopted August 14, 2009 and became effective September 10,
2009, which was prior to EPA's final rule removing the recordkeeping
and reporting requirements for TBAC.
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    Delaware's amendments to the definition of VOC in 7 DE Admin. Code
are in accordance with EPA's regulatory changes to the definition of
VOC in 40 CFR 51.100(s) and are therefore approvable for the Delaware
SIP in accordance with CAA section 110. Also, because EPA has made the
determination that HFE-7000, HFE-7500, HFC 227ea, methyl formate, HFE-
7300, propylene carbonate, dimethyl carbonate and TBAC are of
negligible reactivity and therefore have low contributions to ozone as
well as low likelihood of risk to human health or the environment,
removing these chemicals from the definition of VOC in the Delaware SIP
will not interfere with attainment of any NAAQS, reasonable further
progress, or any other requirement of the CAA. Thus, the addition of
these compounds to the list of compounds excluded from the regulatory
definition of VOC is in accordance with CAA section 110(l).

III. Proposed Action

    EPA is proposing to approve Delaware's May 25, 2018 SIP revision
because it meets the requirements of CAA section 110. This revision
updates the regulatory definition of VOC in the Delaware SIP to add
HFE-7000, HFE-7500, HFC 227ea, methyl formate, HFE-7300, propylene
carbonate and dimethyl carbonate to the list of compounds excluded from
the regulatory definition of VOC. The revision also updates the
regulatory definition of VOC in the Delaware SIP to exclude TBAC from
the definition of VOC for purposes of VOC emissions limitations or VOC
content requirements, but continues to define TBAC as a VOC for
purposes of all recordkeeping, emissions reporting, photochemical
dispersion modeling, and inventory requirements that apply to VOC. The
revision also makes minor changes to the format of some of the chemical
formulas for VOCs that are already excluded from the definition of VOC
in the Delaware SIP.\1\ EPA is soliciting public comment on the issues
discussed in this document. These comments will be considered before
taking final action.

IV. Incorporation by Reference

    In this document, EPA is proposing to include in a final EPA rule
regulatory text that includes incorporation by reference. In accordance
with requirements of 1 CFR 51.5, EPA is proposing to incorporate by
reference the updated definition of VOC in 7 DE Admin. Code 1101--
Definitions and Administrative Principles, which adds HFE-7000, HFE-
7500, HFC 227ea, methyl formate, HFE-7300, propylene carbonate,
dimethyl carbonate and TBAC to the list of compounds excluded from the
regulatory definition of VOC, and makes minor formatting changes to the
chemical formulas for several compounds already excluded from the
definition of VOC in the Delaware SIP.\4\ EPA has made, and will
continue to make, these materials generally available through http://www.regulations.gov and at the EPA Region III Office (please contact
the person identified in the FOR FURTHER INFORMATION CONTACT section of
this preamble for more information).
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    \4\ As stated previously, TBAC continues to be defined in
Delaware's regulations as a VOC for purposes of all recordkeeping,
emissions reporting, photochemical dispersion modeling, and
inventory requirements that apply to VOC. EPA expects that Delaware
will amend its regulations in the near future to remove these
remaining requirements now that EPA has removed these requirements
from the Federal regulations.
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V. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP
submission that complies with the provisions of the CAA and applicable
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in
reviewing SIP submissions, EPA's role is to approve state choices,
provided that they meet the criteria of the CAA. Accordingly, this
action merely approves state law as meeting Federal requirements and
does not impose additional requirements beyond those imposed by state
law. For that reason, this proposed action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Orders
12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21,
2011);
     Is not an Executive Order 13771 (82 FR 9339, February 2,
2017) regulatory action because SIP approvals are exempted under
Executive Order 12866.
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in
Executive

Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the CAA; and
     Does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, this proposed rule, amending the definition of VOC in
the Delaware SIP to conform with the regulatory definition of VOC in 40
CFR 51.100(s), does not have tribal implications as specified by
Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP
is not approved to apply in Indian country located in the state, and
EPA notes that it will not impose substantial direct costs on tribal
governments or preempt tribal law.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide,
Incorporation by reference, Intergovernmental relations, Ozone,
Reporting and recordkeeping requirements, Volatile organic compounds.

    Authority: 42 U.S.C. 7401 et seq.

    Dated: December 20, 2018.
Cosmo Servidio,
Regional Administrator, Region III.
[FR Doc. 2019-01883 Filed 2-11-19; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 80, Number 219 (Friday, November 13, 2015)]
[Notices]
[Pages 70268-70271]
[FR Doc No: 2015-28808]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76384; File No. SR-NASDAQ-2015-131]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Regarding NASDAQ Last Sale Plus

November 6, 2015.
    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 October 30, 2015, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, 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

    The Exchange proposes to amend NASDAQ Rule 7039 (NASDAQ Last Sale
and NASDAQ Last Sale Plus Data Feeds) with language clarifying that the
data consolidation component of the fees for NASDAQ Last Sale Plus
(``NLS Plus''), a comprehensive data feed offered by NASDAQ OMX
Information LLC,\3\ will be charged solely to firms that are Internal
Distributors and External Distributors (collectively, ``Distributors''
of the data feed) that receive a NLS Plus direct data feed.\4\
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    \3\ NASDAQ OMX Information LLC is a subsidiary of Nasdaq, Inc.
(formerly, The NASDAQ OMX Group, Inc.), separate and apart from The
NASDAQ Stock Market LLC. The primary purpose of NASDAQ OMX
Information LLC is to combine publicly available data from the three
filed last sale products of the exchange subsidiaries of Nasdaq,
Inc. and from the network processors for the ease and convenience of
market data users and vendors, and ultimately the investing public.
In that role, the function of NASDAQ OMX Information LLC is
analogous to that of other market data vendors, and it has no
competitive advantage over other market data vendors; NASDAQ OMX
Information LLC performs precisely the same functions as Bloomberg,
Thomson Reuters, and other market data vendors.
    \4\ ``Internal Distributors'' are Distributors that receive
NASDAQ Last Sale Plus data and then distribute that data to one or
more Subscribers within the Distributor's own entity. ``External
Distributors'' are Distributors that receive NASDAQ Last Sale Plus
data and then distribute that data to one or more Subscribers
outside the Distributor's own entity. Internal Distributors and
External Distributors are together known as ``Distributors''.
Proposed NASDAQ Rule 7039(d)(1).
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    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaq.cchwallstreet.com, at the principal office of
the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of this proposal is to amend NASDAQ Rule 7039 with
language clarifying that the data consolidation component of the fees
for NLS Plus will be charged solely to firms that are Distributors that
receive an NLS Plus direct data feed.\5\
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    \5\ Thus, the fee does not apply to persons that receive the NLS
Plus data feed indirectly, through an Internal Distributor or
External Distributor.
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    NLS Plus \6\ allows data distributors to access last sale products
offered by each

of Nasdaq, Inc.'s three U.S. equity exchanges.\7\ NLS Plus includes all
transactions from these exchanges, as well as FINRA/NASDAQ TRF data
that is included in the current NLS product. In addition, NLS Plus
features total cross-market volume information at the issue level,
thereby providing redistribution of consolidated volume information
(``consolidated volume'') from the securities information processors
(``SIPs'') for Tape A, B, and C securities.\8\ Thus, NLS Plus covers
all securities listed on NASDAQ and New York Stock Exchange (``NYSE'')
(now under the Intercontinental Exchange (``ICE'') umbrella), as well
as US ``regional'' exchanges such as NYSE MKT, NYSE Arca, and BATS
(also known as BATS/Direct Edge).\9\
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    \6\ See Securities Exchange Act Release Nos. 75257 (June 22,
2015), 80 FR 36862 (June 26, 2015) (SR-NASDAQ-2015-055) (order
approving proposed rule change regarding NLS Plus); 75600 (August 4,
2015), 80 FR 47968 (August 10, 2015) (SR-NASDAQ-2015-088) (notice of
filing and immediate effectiveness regarding fees for NLS Plus) (the
``NLS Plus fee proposal''); 75763 (August 26, 2015), 80 FR 52817
(September 1, 2015) (SR-Phlx-2015-72) (notice of filing and
immediate effectiveness regarding NLS Plus on PSX); 75890 (September
10, 2015), 80 FR 55692 (September 16, 2015) (SR-Phlx-2015-76)
(notice of filing and immediate effectiveness regarding fees for NLS
Plus on PSX); 75709 (August 14, 2015), 80 FR 50671 (August 20, 2015)
(SR-BX-2015-047) (notice of filing and immediate effectiveness
regarding NLS Plus on BX); and 75830 (September 3, 2015), 80 FR
54640 (September 10, 2015) (SR-BX-2015-054) (notice of filing and
immediate effectiveness regarding fees for NLS Plus on BX).
    \7\ The NASDAQ OMX U.S. equity markets include the Exchange
NASDAQ OMX BX (``BX''), and NASDAQ OMX PSX (``PSX'') (together known
as the ``NASDAQ OMX equity markets''). PSX and BX are filing
companion proposals similar to this one. NASDAQ's last sale product,
NASDAQ Last Sale, includes last sale information from the FINRA/
NASDAQ Trade Reporting Facility (``FINRA/NASDAQ TRF''), which is
jointly operated by NASDAQ and the Financial Industry Regulatory
Authority (``FINRA''). See Securities Exchange Act Release No. 71350
(January 17, 2014), 79 FR 4218 (January 24, 2014) (SR-FINRA-2014-
002). For proposed rule changes submitted with respect to NASDAQ
Last Sale, BX Last Sale, and PSX Last Sale, see, e.g., Securities
Exchange Act Release Nos. 57965 (June 16, 2008), 73 FR 35178, (June
20, 2008) (SR-NASDAQ-2006-060) (order approving NASDAQ Last Sale
data feeds pilot); 61112 (December 4, 2009), 74 FR 65569, (December
10, 2009) (SR-BX-2009-077) (notice of filing and immediate
effectiveness regarding BX Last Sale data feeds); and 62876
(September 9, 2010), 75 FR 56624, (September 16, 2010) (SR-Phlx-
2010-120) (notice of filing and immediate effectiveness regarding
PSX Last Sale data feeds).
    \8\ Tape A and Tape B securities are disseminated pursuant to
the Security Industry Automation Corporation's (``SIAC'')
Consolidated Tape Association Plan/Consolidated Quotation System, or
CTA/CQS (``CTA''). Tape C securities are disseminated pursuant to
the NASDAQ Unlisted Trading Privileges (``UTP'') Plan. NLS Plus
reflects real-time trading activity for Tape C securities and 15-
minute delayed information for Tape A and Tape B securities.
    \9\ Registered U.S. exchanges are listed at http://www.sec.gov/divisions/marketreg/mrexchanges.shtml.
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    NLS Plus is currently codified in NASDAQ Rule 7039(d). The fees for
NLS Plus are set forth in NASDAQ Rule 7039(d)(1)-(d)(3) as follows:
    (1) Firms that receive NASDAQ Last Sale Plus shall pay the annual
administration fees for NASDAQ Last Sale, BX Last Sale, and PSX Last
Sale,\10\ and a data consolidation fee of $350 per month.
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    \10\ Annual administrative fees are in BX Rule 7035, NASDAQ Rule
7035, and NASDAQ OMX PSX Fees Chapter VIII. These remain unchanged
at: $1,000 for NASDAQ, $1,000 for BX, and $1,000 for PSX. For
purposes of conformity, ``administration'' is changed to
``administrative'' in NASDAQ Rule 7039(d)(1), discussed below.
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    (2) Firms that receive NASDAQ Last Sale Plus would either be liable
for NASDAQ Last Sale fees or NASDAQ Basic fees.
    (3) In the event that NASDAQ OMX BX and/or NASDAQ OMX PHLX adopt
user fees for BX Last Sale and/or PSX Last Sale, firms that receive NLS
Plus would also be liable for such fees.
    The Exchange now proposes to clarify how the data consolidation fee
in NASDAQ Rule (d)(1) will be charged. Specifically, the Exchange
proposes to clarify that firms that are Distributors that receive a
NASDAQ Last Sale Plus direct data feed shall pay a data consolidation
fee of $350 per month. Thus, only Distributors that receive NLS Plus
would be charged the data consolidation fee. As proposed to be amended,
NASDAQ Rule 7039(d)(1) would state:
    (1) Firms that receive NASDAQ Last Sale Plus shall pay the annual
administrative fees for NASDAQ Last Sale, BX Last Sale, and PSX Last
Sale. Additionally, Internal Distributors or External Distributors
shall pay a data consolidation fee of $350 per month.\11\ ``Internal
Distributors'' are Distributors that receive NASDAQ Last Sale Plus data
and then distribute that data to one or more Subscribers within the
Distributor's own entity. ``External Distributors'' are Distributors
that receive NASDAQ Last Sale Plus data and then distribute that data
to one or more Subscribers outside the Distributor's own entity.\12\
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    \11\ The Exchange notes that those that have received NLS Plus
directly from the Exchange have all, in fact, been firms. While the
NLS Plus feed is available to all that subscribe and pay the
requisite costs, the Exchange believes that in light of such costs
it will continue to experience only firms receiving the feed
directly from the Exchange.
    \12\ NASDAQ Rule 7039(d)(2) would remain unchanged. For
conformity with Rule 7039 language, ``NLS'' in Rule 7039(d)(3) would
be changed to ``NASDAQ Last Sale''.
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    The NLS Plus fee structure as amended continues to be designed to
ensure that vendors could compete with the Exchange by creating a
product similar to NLS Plus.\13\ The proposed fee structure reflects
the cost of the data feeds underlying NLS Plus (including user fees and
annual administrative fees), as well as the incremental cost of the
aggregation and consolidation function (the ``consolidation function'')
for NLS Plus. Accordingly, the Exchange believes that the fee structure
would not result in charges for NLS Plus that are lower than the cost
to a vendor creating a competing product, including the cost of
receiving the underlying data feeds and consolidating them. The data
consolidation fee recognizes that NLS Plus is created from data derived
from NASDAQ Last Sale, BX Last Sale, PSX Last Sale, and data from the
SIPs to which a consolidation function is applied. Charging the
consolidation fee will not impede an entity receiving the underlying
direct data feeds from creating a competing product to the NLS Plus
feed based on combining individual data feeds, and charging its clients
a fee that it believes reflects the value of the consolidation
function. The Exchange believes that the incremental cost of
aggregation to an entity that wants to re-create NLS Plus will be
factored into the entity's revenue opportunity and may be
inconsequential where the vendor has in place systems to perform these
functions as part of creating its proprietary market data products and
allocating costs over numerous products and customer relationships. For
these reasons, the Exchange believes that vendors could readily offer a
product similar to the NLS Plus on a competitive basis at a similar
cost.
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    \13\ For additional discussion regarding potential competition
with NLS Plus, see supra note 6 and filings cited therein.
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    The amendment to clarify that the consolidation fee applies to
Distributors that receive the NLS Plus data feed directly but does not
apply to persons that receive NLS Plus indirectly through a Distributor
is designed to ensure that the Exchange charges the fee only to those
persons that directly benefit from the consolidation function.
Specifically, if a person wished to combine the products that underlie
NLS Plus and distribute them to customers or internal users, it would
incur its own consolidation costs. By purchasing NLS Plus for
distribution, a Distributor foregoes these costs and instead opts to
pay the Exchange to perform the consolidation function for it. Thus,
imposing this fee upon Distributors is a logical corollary to the
service being provided. By contrast, imposing the fee upon persons
receiving the product through Distributors would effectively impose a
duplicative charge, since such persons consume the data but are not in
the business of distributing it and therefore do not forego
consolidation costs when receiving the product. The

Exchange further notes that the consolidation fee for BATS One, an
analogous product of competing exchanges, is charged solely to external
distributors of that product.\14\
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    \14\ See, e.g., Securities Exchange Act Release No. 73918
(December 23, 2014), 79 FR 78920 (December 31, 2014) (SR-BATS-2014-
055; SR-BYX-2014-030; SR-EDGA-2014-25; SR-EDGX-2014-25) (order
approving market data product called BATS One Feed being offered by
four affiliated exchanges).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\15\ in general, and with
Sections 6(b)(4) and (5) of the Act,\16\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees, and
other charges among its members, issuers and other persons using its
facilities, and does not unfairly discriminate between customers,
issuers, brokers or dealers. All recipients of the NLS Plus data
offering continue to pay the underlying data feed fees and annual
administrative fees for NLS, BX Last Sale, and PSX Last Sale. The
Exchange is simply clarifying that the data consolidation component of
the fees for NLS Plus will be charged solely to firms that receive a
NASDAQ Last Sale Plus direct data feed and are Distributors.
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    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(4) and (5).
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    This change is reasonable and consistent with an equitable
allocation of fees because it is designed to ensure that the Exchange
charges the fee only to those persons that directly benefit from the
consolidation function. Specifically, if a person wished to combine the
products that underlie NLS Plus and distribute them to customers or
internal users, it would incur its own consolidation costs. By
purchasing NLS Plus for distribution, a Distributor foregoes these
costs and instead opts to pay the Exchange to perform the consolidation
function for it. Thus, imposing this fee upon Distributors is a logical
corollary to the service being provided. The change is also not
unfairly discriminatory. Indeed, imposing the fee upon persons
receiving NLS Plus indirectly through Distributors would effectively
impose a duplicative charge upon them, since such persons consume the
data but are not in the business of distributing it and therefore do
not forego consolidation costs when receiving the product. The Exchange
further notes that the consolidation fee for BATS One, an analogous
product of competing exchanges, is charged solely to external
distributors of that product.\17\ Accordingly, the exchanges that
distribute BATS One take an analogous approach, in that they do not
charge a consolidation fee to indirect recipients of the product, but
rather charge the fee only to a subset of its distributors.
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    \17\ See, e.g., Securities Exchange Act Release No. 73918
(December 23, 2014), 79 FR 78920 (December 31, 2014) (SR-BATS-2014-
055; SR-BYX-2014-030; SR-EDGA-2014-25; SR-EDGX-2014-25) (order
approving market data product called BATS One Feed being offered by
four affiliated exchanges).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The change proposed herein is
designed to ensure that the consolidation fee for NLS Plus is
appropriately assessed to Distributors of the product that benefit from
the consolidation function performed by NASDAQ OMX Information LLC in
creating the product and insures that a duplicative charge is not also
assessed against indirect recipients of the product. Thus, the change
will avoid the imposition of fees on certain product recipients, while
not increasing fees for any recipients.
    The market for data products is extremely competitive and firms may
freely choose alternative venues and data vendors based on the
aggregate fees assessed, the data offered, and the value provided. This
rule proposal does not burden competition, which is reflected in the
offerings of other exchanges that sell alternative data products \18\
and in the ability of competing data feed vendors to combine underlying
data feeds in direct competition with NLS Plus. NASDAQ OMX Information
LLC was constructed specifically to establish a level playing field
with market data vendors and to preserve fair competition between them.
NASDAQ OMX Information LLC receives NLS, BX Last Sale, and PSX Last
Sale from each NASDAQ-operated exchange in the same manner, at the same
speed, and reflecting the same fees as for all market data vendors.
Therefore, NASDAQ OMX Information LLC has no competitive advantage with
respect to these last sale products and NASDAQ commits to maintaining
this level playing field in the future. In other words, NASDAQ will
continue to disseminate separately the underlying last sale products to
avoid creating a latency differential between NASDAQ OMX Information
LLC and other market data vendors, and to avoid creating a pricing
advantage for NASDAQ OMX Information LLC.
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    \18\ Id.
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    NLS Plus exists in a market for proprietary last sale data products
that is currently competitive and inherently contestable because there
is fierce competition for the inputs necessary to the creation of
proprietary data and strict pricing discipline for the proprietary
products themselves. Numerous exchanges compete with each other for
listings, trades, and market data itself, providing virtually limitless
opportunities for entrepreneurs who wish to produce and distribute
their own market data. This proprietary data is produced by each
individual exchange, as well as other entities, in a vigorously
competitive market. Similarly, with respect to the FINRA/NASDAQ TRF
data that is a component of NLS and NLS Plus, allowing exchanges to
operate TRFs has permitted them to earn revenues by providing
technology and data in support of the non-exchange segment of the
market. This revenue opportunity has also resulted in fierce
competition between the two current TRF operators, with both TRFs
charging extremely low trade reporting fees and rebating the majority
of the revenues they receive from core market data to the parties
reporting trades.
    Transaction execution and proprietary data products are
complementary in that market data is both an input and a byproduct of
the execution service. In fact, market data and trade execution are a
paradigmatic example of joint products with joint costs. The decision
whether and on which platform to post an order will depend on the
attributes of the platform where the order can be posted, including the
execution fees, data quality and price, and distribution of its data
products. Without trade executions, exchange data products cannot
exist. Moreover, data products are valuable to many end users only
insofar as they provide information that end users expect will assist
them or their customers in making trading decisions.
    The costs of producing market data include not only the costs of
the data distribution infrastructure, but also the costs of designing,
maintaining, and operating the exchange's transaction execution
platform and the cost of regulating the exchange to ensure its fair
operation and maintain investor confidence. The total return that a
trading platform earns reflects the revenues it receives from both
products and the joint costs it incurs. Moreover, the operation of the
exchange is characterized by high fixed costs and low marginal costs.
This cost structure

is common in content and content distribution industries such as
software, where developing new software typically requires a large
initial investment (and continuing large investments to upgrade the
software), but once the software is developed, the incremental cost of
providing that software to an additional user is typically small, or
even zero (e.g., if the software can be downloaded over the internet
after being purchased).\19\ In NASDAQ's case, it is costly to build and
maintain a trading platform, but the incremental cost of trading each
additional share on an existing platform, or distributing an additional
instance of data, is very low. Market information and executions are
each produced jointly (in the sense that the activities of trading and
placing orders are the source of the information that is distributed)
and are each subject to significant scale economies. In such cases,
marginal cost pricing is not feasible because if all sales were priced
at the margin, NASDAQ would be unable to defray its platform costs of
providing the joint products. Similarly, data products cannot make use
of TRF trade reports without the raw material of the trade reports
themselves, and therefore necessitate the costs of operating,
regulating,\20\ and maintaining a trade reporting system, costs that
must be covered through the fees charged for use of the facility and
sales of associated data.
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    \19\ See William J. Baumol and Daniel G. Swanson, ``The New
Economy and Ubiquitous Competitive Price Discrimination: Identifying
Defensible Criteria of Market Power,'' Antitrust Law Journal, Vol.
70, No. 3 (2003).
    \20\ It should be noted that the costs of operating the FINRA/
NASDAQ TRF borne by NASDAQ include regulatory charges paid by NASDAQ
to FINRA.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

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

    Pursuant to Section 19(b)(3)(A)(ii) of the Act,\21\ the Exchange
has designated this proposal as establishing or changing a due, fee, or
other charge imposed on any person, whether or not the person is a
member of the self-regulatory organization, which renders the proposed
rule change effective upon filing.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2015-131 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2015-131. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml).
    Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly.
    All submissions should refer to File Number SR-NASDAQ-2015-131 and
should be submitted on or before December 4, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-28808 Filed 11-12-15; 8:45 am]
BILLING CODE 8011-01-P