[Federal Register Volume 80, Number 167 (Friday, August 28, 2015)]
[Proposed Rules]
[Pages 52236-52244]
[FR Doc No: 2015-21401]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2015-0280; FRL-9933-20-Region 9]

Revisions to California State Implementation Plan; Bay Area Air
Quality Management District; Stationary Sources Permits

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing a
limited approval and limited disapproval of Regulation 2, Rules 1 and 2
for the Bay Area Air Quality Management District (BAAQMD or District)
portion of the California State Implementation Plan (SIP) submitted on
April 22, 2013. These revisions consist of significant updates to rules
governing the issuance of permits for stationary sources, including
review and permitting of major sources and major modifications under
parts C and D of title I of the Clean Air Act (CAA). The intended
effect of this proposed limited approval and limited disapproval action
is to update the applicable SIP with current BAAQMD permitting rules
and to set the stage for remedying certain deficiencies in these rules.
If finalized as proposed, this limited disapproval action would trigger
an obligation for EPA to promulgate a Federal Implementation Plan
unless California submits and we approve SIP revisions that correct the
deficiencies within two years of the final action, and for certain
deficiencies the limited disapproval would also trigger sanctions under
section 179 of the CAA unless California submits and we approve SIP
revisions that correct the deficiencies within 18 months of final
action.

DATES: Any comments must arrive by September 28, 2015.

ADDRESSES: Submit comments, identified by docket number EPA-R09-OAR-
2015-0280, by one of the following methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the
online instructions.
    2. Email<EMAIL_ADDRESS>    3. Mail or deliver: Gerardo Rios (Air-3), U.S. Environmental
Protection Agency, Region 9, 75 Hawthorne Street, San Francisco, CA
94105-3901. Deliveries are only accepted during the Regional Office's
normal hours of operation.
    Instructions: All comments will be included in the public docket
without change and may be made available online at www.regulations.gov,
including any personal information provided, unless the comment
includes Confidential Business Information (CBI) or other information
whose disclosure is restricted by statute. Information that you
consider CBI or otherwise protected should be clearly identified as
such and should not be submitted through www.regulations.gov or email.
www.regulations.gov is an ``anonymous access'' system, and EPA will not
know your identity or contact information unless you provide it in the
body of your comment. If you send email directly to EPA, your email
address will be automatically captured and included as part of the
public comment. If EPA cannot read your comment due to technical
difficulties and cannot contact you for clarification, EPA may not be
able to consider your comment. Electronic files should avoid the use of
special characters, any form of encryption, and be free of any defects
or viruses.
    Docket: Generally, documents in the docket for this action are
available electronically at www.regulations.gov and in hard copy at EPA
Region 9, 75 Hawthorne Street, San Francisco, California. While all
documents in the docket are listed at www.regulations.gov, some
information may be publicly available only at the hard copy location
(e.g., copyrighted material, large maps), and some may not be publicly
available in either location (e.g., CBI). To inspect the hard copy
materials, please schedule an appointment during normal business hours
with the contact listed in the FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Shaheerah Kelly, EPA Region 9, (415)
947-4156<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document, the terms ``we,''
``us,'' and ``our'' refer to EPA.

Table of Contents

I. The State's Submittal
    A. What rules did the State submit?
    B. What are the existing BAAQMD rules governing stationary
source permits in the California SIP?
    C. What is the purpose of this proposed rule?
II. EPA's Evaluation
    A. How is EPA evaluating the rules?
    B. Do the rules meet the evaluation criteria?
    1. Minor New Source Review Requirements
    2. Prevention of Significant Deterioration (PSD) Requirements
    3. Nonattainment New Source Review Requirements
    4. Section 110(l) of the Act
    5. Section 189(e) of the Act
    6. Section 193 of the Act
III. Proposed Action and Public Comment
IV. Incorporation by Reference
V. Statutory and Executive Order Reviews

Definitions

    For the purpose of this document, we are giving meaning to certain
words or initials as follows:
     The word or initials Act or CAA mean or refer to the Clean
Air Act, unless the context indicates otherwise.
     The word or initials BAAQMD or District mean or refer to
the Bay Area Air Quality Management District.
     The initials BACT mean or refer to Best Available Control
Technology.
     The words Bay Area mean or refer to the San Francisco Bay
Area.
     The initials CARB mean or refer to the California Air
Resources Board.
     The initials CFR mean or refer to Code of Federal
Regulations.
     The initials CO mean or refer to carbon monoxide.
     The initials or words EPA, we, us or our mean or refer to
the United States Environmental Protection Agency.
     The initials ERC mean or refer to Emission Reduction
Credit.
     The initials FIP mean or refer to Federal Implementation
Plan.
     The initials FR mean or refer to Federal Register.
     The initials GHG mean or refer to greenhouse gases.
     The initials IBR mean or refer to incorporation by
reference.
     The initials LAER mean or refer to Lowest Achievable
Emission Rate.
     The initials NAAQS mean or refer to National Ambient Air
Quality Standards.
     The initials NOX mean or refer to oxides of nitrogen.
     The initials NPOC mean or refer to non-precursor organic
compound.
     The initials NSR mean or refer to New Source Review.
     The initials PM10 mean or refer to particulate matter with
an aerodynamic diameter of less than or equal to 10 micrometers (coarse
particulate matter).
     The initials PM2.5 mean or refer to particulate matter
with an aerodynamic diameter of less than or equal to 2.5 micrometers
(fine particulate matter).
     The initials PSD mean or refer to Prevention of
Significant Deterioration.
     The initials PTE mean or refer to potential to emit
     The initials SIP mean or refer to State Implementation
Plan.
     The initials SO2 mean or refer to sulfur dioxide.
     The initials TSD mean or refer to the technical support
document for this action.
     The initials VOC mean or refer to volatile organic
compound.

I. The State's Submittal

A. What rules did the State submit?

    On April 22, 2013, CARB submitted amended rules, BAAQMD Regulation
2, Rules 1 and 2 for approval as a revision to the BAAQMD portion of
the California SIP under the CAA. Regulation 2 contains the District's
air quality permitting programs. Regulation 2, Rule 1 contains general
requirements that apply to all District air quality permitting
programs. Regulation 2, Rule 2 contains the District's New Source
Review (NSR) permit programs for both attainment and nonattainment
pollutants. This SIP revision submittal represents a comprehensive
revision to BAAQMD's preconstruction review and permitting program and
is intended to satisfy the requirements of part C (PSD) and part D
(nonattainment NSR) of title I of the Act as well as the general
preconstruction review requirements for minor sources \1\ under section
110(a)(2)(C) of the Act.\2\ These preconstruction review and permitting
programs are often collectively referred to as NSR.
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    \1\ We note that any references to the term ``source'' in
Regulation 2, Rules 1 and 2, as well as in the District's other SIP
rules, refer to the ``emission unit'' rather than the ``stationary
source.''
    \2\ Parts C and D of the federal Clean Air Act regulate the
construction of new major stationary sources and major
modifications. BAAQMD's NSR rules do not distinguish between major
sources and major modifications in the same way as the federal Clean
Air Act. Throughout this document, any references to major sources
or major modifications means those new sources and modifications
exceeding the major source and modification thresholds specified in
the federal Clean Air Act.
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    Table 1 lists the rules addressed by this proposal with the dates
that they were adopted by BAAQMD and submitted to EPA by CARB, which is

the governor's designee for California SIP submittals.

                                            Table 1--Submitted Rules
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                                                                                Adopted/
             Regulation & Rule No.                         Rule title                 Amended        Submitted
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Regulation 2, Rule 1 (2-1)....................  Permits, General Requirements...        12/19/12         4/22/13
Regulation 2, Rule 2 (2-2)....................  Permits, New Source Review......        12/19/12         4/22/13
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    On June 26, 2013, the April 22, 2013 submittal of Regulation 2,
Rules 1 and 2 was deemed to meet the completeness criteria in 40 CFR
part 51, appendix V, which must be met before formal EPA review. The
submittal includes evidence of public notice and adoption of the
amended rules. While we can act only on the most recently submitted
version of each regulation (which supersedes earlier submitted
versions), we have reviewed materials provided with previous
submittals. Our TSD provides additional background information on our
evaluation of Regulation 2, Rules 1 and 2.

B. What are the existing BAAQMD rules governing stationary source
permits in the California SIP?

    The existing SIP-approved NSR program for new or modified
stationary sources in the Bay Area consists of the rules identified
below in Table 2. Collectively, these rules establish the NSR
requirements for both major and minor stationary sources under BAAQMD
jurisdiction in California, including requirements for the generation
and use of emission reduction credits in nonattainment areas.
    Consistent with the District's stated intent to have the submitted
NSR rules replace the existing SIP-approved NSR program in its
entirety, EPA's approval of the regulations identified above in Table 1
would have the effect of entirely superseding our prior approval of
these two rules (including a prior approval of a single subsection) in
the current SIP-approved program. Table 2 lists the existing rules in
the California SIP governing NSR for stationary sources under BAAQMD
jurisdiction.

           Table 2--Existing SIP Rules Governing NSR for Stationary Sources Under BAAQMD Jurisdiction
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                                                                                Federal
  Regulation & Rule No. & Section No.          Rule title             BAAQMD       EPA approval      Register
                                                                   adoption date       date          citation
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2-1...................................  Permits, General               11/1/1989       1/26/1999      64 FR 3850
                                         Requirements.
2-1-429...............................  Permits, General               6/15/1994        4/3/1995     60 FR 16799
                                         Requirements; Federal
                                         Emissions Statement.
2-2...................................  Permits, New Source            6/15/1994       1/26/1999      64 FR 3850
                                         Review.
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C. What is the purpose of this proposed rule?

    The purpose of this proposed rule is to present our evaluation
under the CAA and EPA's regulations of the amended NSR rules submitted
by CARB on April 22, 2013, as identified in Table 1. We provide our
reasoning in general terms below but provide a more detailed analysis
in our TSD, which is available in the docket for this proposed
rulemaking.

II. EPA's Evaluation

A. How is EPA evaluating the rules?

    EPA has reviewed BAAQMD Regulation 2, Rules 1 and 2 for compliance
with the CAA's general requirements for SIPs in CAA section 110(a)(2),
part C of title I (sections 160 through 169) for the PSD program, and
part D of title I (sections 172, 173, 182(a) and 189(e)) for the
nonattainment NSR program. EPA also evaluated the rules for compliance
with the CAA requirements for SIP revisions in CAA sections 110(l), 193
and 302(z). In addition, EPA evaluated the submitted rules for
consistency with the regulatory provisions of 40 CFR part 51, subpart I
(Review of New Sources and Modifications) (i.e., 40 CFR 51.160-51.166)
and 40 CFR 51.307.
    Among other things, section 110 of the Act requires that SIP rules
be enforceable, and provides that EPA may not approve a SIP revision if
it would interfere with any applicable requirements concerning
attainment and reasonable further progress or any other requirement of
the CAA. Section 110(a)(2) and section 110(l) of the Act require that
each SIP or revision to a SIP submitted by a State must be adopted
after reasonable notice and public hearing.
    Section 110(a)(2)(C) of the Act requires each SIP to include a
program to regulate the modification and construction of any stationary
source within the areas covered by the SIP as necessary to assure
attainment and maintenance of the NAAQS. In addition to the permit
programs required under parts C and D of title I of the Act for PSD and
nonattainment NSR sources, respectively, EPA's regulations at 40 CFR
51.160-51.164 provide general programmatic requirements to implement
this statutory mandate commonly referred to as the ``minor NSR
program.''
    Part C of title I of the Act establishes the general statutory
requirements for a PSD permit program. Additionally, 40 CFR 51.166 sets
forth EPA's regulatory requirements for a SIP-approved PSD program. 40
CFR 52.21 is EPA's FIP containing regulatory requirements to implement
a PSD program and its provisions may be incorporated by reference into
a SIP-approved PSD program.
    Part D of title I of the Act contains certain procedural
requirements for developing and revising SIPs, and establishes general
statutory requirements for a nonattainment NSR permit program. Subpart
4 of part D of title I of the Act includes section 189(e), which
requires the control of major stationary sources of PM10
precursors (and hence PM2.5 precursors) ``except where the
Administrator determines that such sources do not contribute
significantly to PM10 [and PM2.5] levels

which exceed the standard in the area.'' Additionally, 40 CFR 51.165
sets forth EPA's regulatory requirements for SIP-approval of a
nonattainment NSR permit program.
    Our TSD, which can be found in the docket for this rule, contains a
more detailed evaluation and discussion of the approval criteria. As
described below, EPA is proposing a limited approval and limited
disapproval of the submitted NSR rules.

B. Do the rules meet the evaluation criteria?

    With respect to procedural requirements, CAA sections 110(a)(2) and
110(l) require that revisions to a SIP be adopted by the State after
reasonable notice and public hearing. EPA has promulgated specific
procedural requirements for SIP revisions in 40 CFR part 51, subpart F.
These requirements include publication of notices, by prominent
advertisement in the relevant geographic area, of a public hearing or
notice of an opportunity for a public hearing on the proposed
revisions, and a public comment period of at least 30 days.
    Based on our review of the public process documentation included in
the April 22, 2013 submittal, we find that the BAAQMD has provided
sufficient evidence of public notice, and an opportunity for comment
and a public hearing prior to adoption and submittal of these rules to
EPA.
    With respect to substantive requirements, we have evaluated
Regulation 2, Rules 1 and 2, in accordance with the CAA and regulatory
requirements that apply to: (1) General preconstruction review programs
for minor sources under section 110(a)(2)(C) of the Act, (2) PSD permit
programs under part C of title I of the Act, and (3) nonattainment NSR
permit programs under part D of title I of the Act. For the most part,
the submitted NSR rules satisfy the applicable requirements for these
three permit programs and will strengthen the applicable SIP by
updating the rules and adding requirements to address new or revised
NSR permitting provisions promulgated by EPA in the last several years.
However, the submitted NSR rules also contain a few deficiencies which
prevent full approval. Below, we discuss generally our evaluation of
BAAQMD's submitted rules and the deficiencies that are the basis for
our proposed limited disapproval of these rules. Our TSD contains a
more detailed evaluation and recommendations for program improvements.
1. Minor New Source Review Requirements
    Section 110(a)(2)(C) of the Act requires that each SIP include a
program to provide for ``regulation of the modification and
construction of any stationary source within the areas covered by the
plan as necessary to assure that national ambient air quality standards
are achieved, including a permit program as required in parts C and D''
of title I of the Act. Thus, in addition to the permit programs
required in parts C and D of title I of the Act, which apply to new or
modified major stationary sources of pollutants, each SIP must include
a program to regulate the construction and modification of any
stationary source within the area as necessary to assure that the NAAQS
are achieved. These general pre-construction requirements are commonly
referred to as ``minor NSR'' and are subject to EPA's implementing
regulations in 40 CFR 51.160-51.164. Regulation 2, Rules 1 and 2
satisfy most of the statutory and regulatory requirements for minor NSR
programs, but we have identified the following three deficiencies that
form part of the basis for our proposed limited disapproval.
    First, the definition of ``Agricultural Source'' in section 2-1-239
and the provision concerning the loss of an exemption in section 2-1-
424 cross-reference and rely on requirements in other District rules
that are not approved in the SIP. Specifically, subsection 2-1-239.1
and section 2-1-424 rely on requirements in Regulation 2, Rule 10
(Large Confined Animal Facility Operations). In addition, subsection 2-
1-239.3 relies on requirements in Regulation 2, Rule 6 (Major
Facility),\3\ which is also not approved in the SIP. The District may
resolve this deficiency by incorporating the specific threshold(s) or
requirement(s) from these District rules into Regulation 2, Rule 1.
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    \3\ Regulation 2, Rule 6 (Major Facility) contains the District
Title V operating permit program.
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    Second, section 2-2-308 specifies that the District's APCO shall
not issue an Authority to Construct (ATC) for a new or modified
emission unit or stationary source that will result in a ``significant
net increase'' (i.e., a major modification) in emissions of any NAAQS
pollutant unless the APCO determines that such increase will not cause
or contribute to an exceedance of any NAAQS for that pollutant. Because
this provision only prohibits issuance of an ATC for a source or
project that will result in a ``significant net increase'' rather than
any projects (i.e., both minor or major modifications) that would cause
or contribute to a NAAQS violation, this provision does not satisfy the
requirements of 40 CFR 51.160(a) and is therefore deficient.
    Lastly, the rule submittal is deficient because it does not contain
a prohibition on the issuance of an ATC if the project does not meet
all applicable requirements of the control strategy as required in 40
CFR 51.160(a).
    Compared to the provisions in the existing SIP that are used to
implement the minor NSR program, the submitted rule revisions represent
an overall strengthening of BAAQMD's minor NSR program. For example,
the rule revisions include: (1) more specific criteria for permit
applications and conditions for permit issuance, (2) new provisions to
prevent emissions from new or modified sources from causing or
contributing to a violation of a NAAQS, (3) new provisions for public
notification and comment for minor NSR projects that result in a
significant net emission increase, and (4) new and revised provisions
that clarify what new and modified sources are exempt from obtaining an
ATC permit. Overall, we expect the submitted revisions will allow for
more effective implementation and enforcement of the requirements
applicable to minor stationary sources in the Bay Area.
2. Prevention of Significant Deterioration (PSD) Requirements
    Part C of title I of the Act contains the provisions for the
prevention of significant deterioration of air quality in areas
designated ``attainment'' or ``unclassifiable'' for the NAAQS,
including preconstruction permit requirements for new major sources or
major modifications proposing to construct in such areas. EPA's
regulations for PSD permit programs are found in 40 CFR 51.166. EPA's
FIP implementing the PSD program in areas without a SIP-approved
program is found at 40 CFR 52.21. BAAQMD is currently designated as
``attainment'' or ``unclassifiable/attainment'' for all NAAQS
pollutants, except for the 2008 8-hour ozone (marginal) and 2006 24-
hour PM2.5 (moderate) NAAQS.
    Regulation 2, Rules 1 and 2 contain the requirements for review and
permitting of PSD sources. Regulation 2, Rule 1 contains some general
NSR definitions, the major modification applicability determination
procedures, and certain administrative requirements that apply to the
issuance of all permits covered under Regulation 2, including PSD
permits. Regulation 2, Rule 2 contains most of the NSR and PSD
definitions, and all of the substantive

and administrative requirements for review of PSD permit applications
and for the approval of PSD permits. These rules satisfy most of the
statutory and regulatory requirements for PSD permit programs, thus
forming part of the basis for our limited approval. However, these
rules also contain four deficiencies that form part of the basis for
our proposed limited disapproval, as discussed below.
    First, subsection 2-1-234.2.2 provides an adequate definition of
major modification by incorporating 40 CFR 51.166(b)(2) by reference.
However, the second sentence of section 2-1-234.2 attempts to satisfy
these requirements by incorporating by reference the substantive
requirements of the PSD applicability procedures for determining if a
project will result in a major modification. (See 40 CFR 51.166(a)(7))
The BAAQMD rules cannot incorporate 40 CFR 51.166(a)(7) by reference
because it consists of instructions to the State and not requirements
for an applicant seeking a PSD permit. When provisions are incorporated
by reference, the exact wording of the provision is read into the text
of the rule. Therefore, the text of 40 CFR 51.166(a)(7) does not
contain the necessary wording to require a source to perform the
calculations required by the PSD applicability procedures in 40 CFR
51.166(a)(7). Similarly, the recordkeeping provisions required when
projected actual emissions are used to determine emission increases are
set forth in 40 CFR 51.166(r)(6) and (r)(7). For the same reason, these
provisions cannot be incorporated by reference. These deficiencies may
be resolved by incorporating by reference the provisions contained in
40 CFR 52.21 for specifying the applicability procedures, applicable
definitions, and recordkeeping requirements.
    Second, the definition of ``PSD Pollutant'' in section 2-2-223
begins by referencing EPA's definition of a regulated NSR pollutant in
40 CFR 52.21(b)(50). However, section 2-2-223 then excludes from the
definition any pollutants for which the Bay Area has been designated as
nonattainment for a NAAQS. Excluding nonattainment pollutants conflicts
with the federal definition of ``regulated NSR pollutant'' in 40 CFR
52.21(b)(50) which includes all NAAQS pollutants, regardless of
attainment status. Because this definition is used for determining
whether a source is a ``Major PSD Facility,'' as defined in subsection
2-2-224.1, the rule is deficient for PSD applicability purposes. A
stationary source is considered a major stationary source if any
pollutant emitted by the source exceeds the applicable major source
thresholds (100 or 250 tpy), regardless of the area's designation.\4\
Additionally, since the definition of ``PSD Pollutant'' is used for
determining whether a modification to a stationary source is a ``PSD
Project'' pursuant to section 2-2-224, we also find that section 2-2-
224 is deficient. To resolve this deficiency, the District may remove
the exclusion of nonattainment pollutants from the definition of ``PSD
Pollutant'' or address applicability as it relates to nonattainment
pollutants in determining whether a source is a ``Major PSD Facility''
in subsection 2-2-224.1.
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    \4\ While 40 CFR 51.166(i)(2) provides that the PSD program
requirements contained in paragraphs (j) through (r) need not apply
to nonattainment pollutants, PSD major source applicability must be
determined for all regulated NSR pollutants, as defined in
51.166(b)(49), which includes all pollutants for which a NAAQS has
been promulgated.
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    Third, the air quality analysis and modeling requirements in
subsection 2-2-305.3 provide that where an air quality model specified
in 40 CFR part 51, appendix W (Guideline on Air Quality Models) is
inappropriate, the model may be modified or another model substituted
upon written approval by the Air Pollution Control Officer (APCO) after
public notice and opportunity for public comment under the procedures
set forth in section 2-2-404. This provision is deficient because
subsection 3.2.2 of 40 CFR 51, appendix W, regarding the use of
alternative models, requires written approval by the Administrator
prior to using any modification or substitution of a model, and
subsection 2-2-305.3 does not require this approval. The District may
resolve this deficiency by revising subsection 2-2-305.3 such that it
requires approval by the EPA, as well as the APCO.
    Finally, the fugitive emission calculation procedure in Section 2-
2-611 provides that fugitive emissions shall be included only if the
facility is in one of the 28 source categories listed in section 169(1)
of the Act. However, 40 CFR 51.166(b)(1)(iii)(aa) includes an
additional source category: ``any other stationary source category
which, as of August 7, 1980, is being regulated under section 111 or
112 of the Act.'' Therefore, we find that Regulation 2, Rule 2 is
deficient for PSD purposes because it does not require fugitive
emissions from all listed source categories.
    Although BAAQMD's existing SIP rules in Regulation 2, Rule 2
contained certain PSD-related provisions, the District has never had a
SIP-approved PSD permitting program. The BAAQMD has been conducting PSD
evaluations and issuing PSD permits under a delegation agreement
between the District and the EPA pursuant to 40 CFR 52.21(u).\5\
Accordingly, the applicable requirements governing the issuance of PSD
permits in the BAAQMD are currently the FIP implementing the PSD
program at 40 CFR 52.21. The EPA's approval of Regulation 2, Rules 1
and 2 into the California SIP, if finalized, will give the District a
SIP-approved PSD permit program.
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    \5\ On June 21, 2004, the EPA issued a PSD delegation agreement,
which was updated on January 20, 2006, February 4, 2008, and March
9, 2011.
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    Approval of Regulation 2, Rules 1 and 2 represents an overall
strengthening of BAAQMD's SIP rules because it includes updated PSD
provisions, is mostly consistent with EPA's requirements in the CAA and
40 CFR 51.166, and results in a SIP-approved PSD program to regulate
new or modified major stationary sources of attainment or
unclassifiable NAAQS pollutants.
3. Nonattainment New Source Review Requirements
    Part D of title I of the Act contains the general requirements for
areas designated ``nonattainment'' for a NAAQS, including
preconstruction permit requirements for new major sources or major
modifications proposing to construct in such nonattainment areas,
commonly referred to as ``Nonattainment New Source Review'' or ``NSR.''
EPA's regulations for NSR permit programs are found in 40 CFR 51.165.
BAAQMD is currently designated nonattainment for the 2008 8-hour ozone
(marginal) and 2006 24-hour PM2.5 (moderate) NAAQS.\6\ (See
40 CFR 81.305.)
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    \6\ The BAAQMD was designated nonattainment of both the 1-hour
ozone (moderate) and 1997 8-hour ozone (marginal) NAAQS at the time
those standards were revoked. While BAAQMD is no longer
``designated'' nonattainment for these two revoked standards,
certain requirements based on these previous designations may still
apply if those requirements are more stringent than those imposed
under the current nonattainment designations.
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    Regulation 2, Rules 1 and 2 contain the NSR requirements for review
and permitting of major sources and major modifications located in the
Bay Area. Similar to the District's PSD program, Regulation 2, Rule 1
contains some general NSR definitions, the major modification
applicability procedures, and certain administrative requirements that
apply to the issuance of all permits covered under Regulation 2,
including major nonattainment NSR permits. Regulation 2, Rule 2
contains most of the NSR-specific definitions, and most

of the substantive and administrative requirements for review of major
nonattainment NSR applications and for the approval of these permits.
These rules satisfy most of the statutory and regulatory requirements
for NSR permit programs, thus forming part of the basis for our limited
approval. However, these rules also contain seven deficiencies that
form part of the basis for our proposed limited disapproval, as
discussed below.
    First, the language in subsection 2-1-234.2.1 for nonattainment
pollutants fails for the same reasons discussed above for the PSD
program. Specifically, while it is appropriate to incorporate 40 CFR
51.165(a)(1)(v) by reference, the second sentence of this subsection
cannot incorporate the applicability procedures in 40 CFR 51.165(a)(2)
by reference because it provides direction to States rather than to
applicants seeking a nonattainment NSR permit. For the same reason, the
recordkeeping requirements of 40 CFR 51.165(a)(6) and (a)(7) cannot be
incorporated by reference. These deficiencies may be resolved by
including the specific requirements contained in 40 CFR 51.165(a)(2),
as well as (a)(6), and (a)(7). Our TSD has a further discussion of this
issue and potential remedies.
    Second, subsection 2-2-401.4 requires any application for a new
major stationary source or major modification located in or within 100
km of a Class I area, to provide an analysis of potential impacts to
air quality related values (including visibility) for each affected
Class I area. However, Regulation 2, Rule 2 is deficient because it
only requires a visibility analysis for sources that are located within
100 km of a Class I area, rather than for any source that ``may have an
impact on visibility in any mandatory Class I Federal Area,'' as
required by 40 CFR 51.307(b)(2). The NSR program must include this
requirement as it pertains to any new major stationary source or major
modification subject to nonattainment NSR permitting.
    Third, subsection 2-2-411.2, pertaining to offset refunds, allows
the District to provide an ``offset refund'' to a stationary source if
excess offsets were provided at the time of permit issuance or for an
emission unit that has not been constructed (or is constructed but
never operated) and for which offsets have been provided. The provision
does not specify a time after which a stationary source can no longer
obtain an offset refund. It would not be appropriate to allow a source
to request such a refund years after the project has been completed or
canceled. To correct this deficiency, BAAQMD must remove this provision
or amend the rule to provide an appropriate timeframe for obtaining an
offset refund.
    Fourth, the ``Demonstration of NOX and POC Offset
Program Equivalence'' required by section 2-2-412 is deficient because
it does not provide a remedy if the District fails to make the required
demonstration. BAAQMD must add a remedy provision, and identify a
deadline to eliminate any offset shortfall if the District's Small
Facility Banking Account does not contain sufficient surplus emission
reductions to demonstrate that Rule 2 provides offset program
equivalence. Such a remedy, at a minimum must provide that the offsets
for any new or modified major stationary source must comply with all
federal offset criteria, rather than the offset criteria provided in
the rule, until equivalence is re-established.
    Fifth, subsection 2-2-605.2 is deficient because it allows existing
``fully-offset'' sources to generate ERCs based on the difference
between the post-modification PTE and the surplus adjusted pre-
modification PTE. ERCs intended to be used as offsets for emissions
from new major sources or major modifications are only creditable if
they are reductions of actual emissions, consistent with the
requirement in CAA section 173(c)(1), not reductions in the PTE of the
source. To resolve this deficiency, BAAQMD may revise the calculation
method for ``fully offset'' sources to be the same as for sources that
are not ``fully offset''. Alternatively, BAAQMD may add provisions to
differentiate between state and federally compliant ERCs (i.e., ERCs
based on actual emission reductions) and provide that new major sources
and major modifications must use federally compliant ERCs.
    Sixth, subsection 2-2-606.2 is deficient as it applies to major
modifications because it allows ``fully-offset'' sources to calculate
the emission increases from a proposed modification based on the
difference between the post-modification PTE and pre-modification
adjusted PTE. 40 CFR 51.165(a)(3)(ii)(J) requires that offsets must be
provided for the actual increase in emissions from a major modification
based on an actual to PTE emissions increase test. BAAQMD may resolve
this deficiency by developing separate procedures based on the
difference between the allowable emissions (i.e. PTE) after the
modification and the actual emissions before the modification for
calculating the quantity of offsets required for an emission unit or
modification subject to the major NSR preconstruction review
requirements. Alternatively, BAAQMD may revise the offset equivalency
provisions of Section 2-2-412 to track the difference in the quantity
of offsets required under the rule and as required by the CAA, and
demonstrate that in the aggregate, an equivalent amount of offsets are
provided. We note that if the District addresses this deficiency in
section 2-2-412, offsets must be addressed for PM2.5 and the
PM2.5 precursors (NOX and SO2) in
addition to the ozone precursors already addressed in this provision.
    Finally, for the same reasons stated above in our evaluation of the
PSD program, we find that section 2-2-611 of Regulation 2, Rule 2 is
deficient because it does not require fugitive emissions from all
listed source categories to be included when determining major source
applicability for major nonattainment NSR review.
    Compared to the provisions in the existing SIP, the submitted rule
revisions represent an overall strengthening of BAAQMD's nonattainment
NSR program. For example, the rule revisions include: (1) Incorporation
of new requirements (e.g., District BACT (equivalent to federal LAER),
offsets, and emissions measurement methods for regulating
PM2.5 emissions and the applicable PM2.5
precursors,\7\ (2) new requirements for ensuring protection of air
quality related values in Class I areas, (3) specific calculation
procedures for determining if a project will result in a major
modification, and (4) several minor revisions that clarify definitions
of important NSR terms, and substantive and administrative procedures
consistent with EPA's requirements in 40 CFR 51.165.
---------------------------------------------------------------------------

    \7\ As discussed below in section II.B.5 and in our TSD, with
respect to the PM2.5 precursors applicable to the Bay
Area, the District's current SIP-approved rule already included BACT
provisions in section 2-2-302 for VOC, NOX and
SO2. Additionally, the rule already included offset
requirements for VOC and NOX, and the District
incorporated new offset provisions in section 2-2-303 for
SO2.
---------------------------------------------------------------------------

4. Section 110(l) of the Act
    We are proposing to find that Regulation 2, Rules 1 and 2 satisfy
the requirements of section 110(a)(2)(C) and parts C and D of title I
of the Act. Section 110(l) of the CAA states that each SIP revision
submitted by a State shall be adopted by such State after reasonable
notice and public hearing. It also states that the Administrator shall
not approve a SIP revision if the revision would interfere with any
applicable requirement concerning attainment and reasonable further
progress, or any other CAA applicable requirement.

    With respect to the procedural requirements of CAA section 110(l),
based on our review of the public process documentation included in the
April 22, 2013 SIP submittal package, we find that BAAQMD has provided
sufficient evidence of public notice and opportunity for comment and
public hearings prior to adoption and submittal of these rules to EPA.
See the TSD for additional details.
    With respect to the substantive requirements of section 110(l), we
have determined that our approval of the BAAQMD NSR SIP submittal, as
described in more detail in our TSD, represents a strengthening of
BAAQMD's NSR program as compared to the District's current SIP-approved
NSR program that was approved on January 26, 1999 (64 FR 3850), and
that our limited approval of this SIP submittal would not interfere
with any applicable requirement concerning attainment and RFP or any
other applicable requirement of the Act. Therefore we are proposing
limited approval and limited disapproval of the BAAQMD SIP revision
under section 110(l) of the Act.
5. Section 189(e) of the Act
    CAA title I, Part D, subpart 4 includes section 189(e), which
requires the control of major stationary sources of PM10 and
PM2.5 precursors ``except where the Administrator determines
that such sources do not contribute significantly to PM10
levels which exceed the standard in the area.'' The provisions of
subpart 4, do not define the term ``precursor'' for purposes of
PM2.5, nor does subpart 4 explicitly require the control of
any specifically identified particulate matter precursor. The statutory
definition of ``air pollutant,'' however, provides that the term
``includes any precursors to the formation of any air pollutant, to the
extent the Administrator has identified such precursor or precursors
for the particular purpose for which the term ``air pollutant'' is
used.'' (See CAA section 302(g)) The EPA has identified the main
precursor gases associated with PM2.5 formation as
SO2, NOX, VOC, and ammonia. Accordingly, the
nonattainment NSR permit program for PM2.5 presumptively
must apply to emissions of all four precursors listed above, and direct
PM2.5, when emitted from major sources in the Bay Area. The
BAAQMD's revisions to Regulation 2, Rule 2 regulate SO2,
NOX and VOC, but not ammonia.
    With respect to VOC and NOX emissions, both new and
modified sources of these emissions are subject to BAAQMD's BACT
requirements (equivalent to federal LAER) at a 10 lb/day emission rate
threshold under its nonattainment NSR program. Also, Section 2-2-302 of
the District's revised Rule 2 requires VOC and NOX emissions
to be offset at a 1:1 ratio for any facility with a PTE greater than 10
tpy but less than 35 tpy of NOX or VOC, and a 1:1.15 ratio
for any facility with a PTE of 35 tpy or more of NOX or VOC.
These applicability thresholds are well below the BACT and offset
thresholds of 100 tpy for new sources and 40 tpy for major
modifications that would be required under federal requirements for a
PM2.5 precursor. The offset ratio for sources with a PTE of
35 tpy or more is also higher than the 1:1 offset ratio required
federally for PM2.5 precursors. In addition, Regulation 2,
Rule 2, also requires BACT (equivalent to federal LAER) and offsets for
major sources and modifications of SO2 in sections 2-2-301
and 2-2-303.
    Because Regulation 2, Rule 2 contains control and offset
requirements for VOC, NOX and SO2 that are
consistent with, or more stringent than, the federal nonattainment NSR
requirements for those PM2.5 precursors, we are proposing to
approve Regulation 2, Rule 2 as satisfying the requirements of CAA
section 189(e) for VOC, NOX and SO2.
    The only PM2.5 precursor that is not regulated by
Regulation 2 is ammonia, which the BAAQMD has excluded. In reviewing
any determination of the State (in this case the BAAQMD) to exclude a
PM2.5 precursor (in this case ammonia) from the required
evaluation of potential nonattainment NSR applicability and regulation,
the EPA considers both the magnitude of the precursor's contribution to
ambient PM2.5 concentrations in the nonattainment area and
the sensitivity of ambient PM2.5 concentrations in the area
to reductions in emissions of that precursor.\8\ To determine if the
District appropriately excluded ammonia emissions from the requirements
of Regulation 2, Rule 2, EPA is relying primarily on three sources of
information: (1) The District's December 22, 2014 letter regarding
compliance with PM2.5 precursor requirements in CAA Title I,
Part D, Subpart 4 (District 189(e) letter); (2) the District's July 15,
2015 letter regarding the quantity of ammonia emitted from major
sources compared to the overall ammonia emission inventory (District EI
letter); and (3) EPA's PM2.5 Clean Data Determination for
the BAAQMD, published in the Federal Register on January 9, 2013 (78 FR
1760) (CDD).
---------------------------------------------------------------------------

    \8\ 80 FR 1816, Approval and Promulgation of Implementation
Plans; Designation of Areas for Air Quality Planning Purposes;
California; San Joaquin Valley Moderate Area Plan and
Reclassification as Serious Nonattainment for the 2006
PM2.5 NAAQS; (Proposed Rule), January 13, 2015, page
1822. 80 FR 24281, Approval of Air Quality Implementation Plans;
California; South Coast Air Quality Management District; Stationary
Source Permits; May 1, 2015.
---------------------------------------------------------------------------

    First, the District's EI letter indicates that the magnitude of
actual ammonia emissions from major sources in the San Francisco Bay
Air Basin is small. There are only three major sources of ammonia
emissions (i.e., 100 tpy or greater of actual ammonia emissions). These
three major sources contribute 686 tpy of ammonia emissions while all
sources of ammonia in the Bay Area Air Basin emit 12,407 tpy. The
relative contribution of the existing major sources to the overall
ammonia emissions in the area, therefore, is 5.5 percent.
    Second, the District's 189(e) letter states that the District
evaluated the impacts that ammonia emissions within the Bay Area may
have on secondary particulate matter formation. The District conducted
a modeling study in 2009 to evaluate this issue, and based on that
study the District concluded that ammonia was not a significant
contributor to secondary particulate matter formation that warranted
inclusion in the District's NSR program at the time of the study.\9\
This study showed the ammonia emissions are predominately from area
sources. Modeling results from the study showed that a 20 percent
reduction in ammonia emissions (around 15 tons per day) would reduce
secondary PM2.5 levels by an average of 2 percent.
---------------------------------------------------------------------------

    \9\ See BAAQMD's Fine Particulate Matter Data Analysis and
Modeling in the Bay Area, Research and Modeling Section Publication
No. 200910-004-PM, October 2009.
---------------------------------------------------------------------------

    Third, based on EPA's PM2.5 Clean Data Determination,
EPA has determined that the Bay Area is currently attaining the 2006
24-hour PM2.5 NAAQS.
    As noted above, section 189(e) of the Act requires nonattainment
NSR to apply to major stationary sources of PM2.5 precursors
``except where the Administrator determines that such sources do not
contribute significantly to [PM2.5] levels which exceed the
standard in the area.'' Given the relatively small amount of ammonia
emissions from major point sources, the District's 2009 modeling
analysis showing that ammonia was not a significant contributor to
secondary particulate matter formation and the fact that the BAAQMD is
currently attaining the PM2.5 NAAQS, we are proposing to
conclude that the PM2.5 impacts from major stationary
sources of ammonia emissions are insignificant and do not

contribute significantly to PM2.5 levels that exceed the
PM2.5 NAAQS in the Bay Area nonattainment area. Therefore,
this requirement is satisfied.
6. Section 193 of the Act
    Section 193 of the Act, which was added by the Clean Air Act
Amendments of 1990, includes a savings clause which provides, in
pertinent part: ``No control requirement in effect, or required to be
adopted by an order, settlement agreement, or plan in effect before
November 15, 1990, in any area which is a nonattainment area for any
air pollutant may be modified after November 15, 1990, in any manner
unless the modification insures equivalent or greater emission
reductions of such air pollutant.''
    We have reviewed the provisions included in BAAQMD's NSR SIP
submittal and find that they would ensure equivalent or greater
emission reductions compared to the current SIP-approved NSR program.
The BACT and offset requirements, which are the primary control
requirements of a NSR program, are equivalent or more stringent in the
submitted rules as are contained in the existing SIP approved NSR
rules. Therefore, we can approve the submitted NSR program under
section 193 of the Act. Our TSD contains a more detailed evaluation.

III. Proposed Action and Public Comment

    Because the rule deficiencies described above are inappropriate for
inclusion in the SIP, EPA cannot grant full approval of this rule under
section 110(k)(3) of the Act. Pursuant to section 110(k)(3) of the Act,
EPA is proposing a limited approval and limited disapproval of the
submitted rules. We are proposing to approve the submitted rules based
on our determination that the most of the rules satisfy the applicable
statutory and regulatory provisions governing regulation of stationary
sources under CAA section 110(a)(2)(C), including the permitting
requirements for major stationary sources in parts C and D of title I
of the Act. In support of this proposed action, we have concluded that
our limited approval of the submitted rules would comply with sections
110(l) and 193 of the Act because the amended rules as a whole would
not interfere with continued attainment of the NAAQS in the Bay Area,
and do not relax control technology and offset requirements. We
recommend limited disapproval to correct the deficiencies listed above.
The intended effect of our proposed limited approval and limited
disapproval action is to update the applicable SIP with current BAAQMD
rules and to set the stage for remedying the rule deficiencies. If we
finalize this action as proposed, our action would be codified through
revisions to 40 CFR 52.220 (identification of plan).
    If finalized as proposed, our limited disapproval action would
trigger an obligation on EPA to promulgate a Federal Implementation
Plan unless the deficiencies are corrected, and EPA approves the
related plan revisions, within two years of the final action.
Additionally, for those deficiencies that relate to the nonattainment
NSR requirements under part D of title I of the Act, the offset
sanction in CAA section 179(b)(2) would apply in the Bay Area
nonattainment area 18 months after the effective date of a final
limited disapproval, and the highway funding sanctions in CAA section
179(b)(1) would apply six months after the offset sanction is imposed.
Neither sanction will be imposed under the CAA if California submits
and we approve, prior to the implementation of the sanctions, SIP
revisions that correct the deficiencies that we identify in our final
action.

IV. Incorporation by Reference

    In this rule, the 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, the EPA is proposing to incorporate by
reference BAAQMD Regulation 2, Rule 1 (Permits, General Requirements)
and BAAQMD Regulation 2, Rule 2 (Permits, New Source Review) which are
discussed in section I.A. of this preamble. The EPA has made, and will
continue to make, this document generally available electronically
through www.regulations.gov and in hard copy at the appropriate EPA
office (see the ADDRESSES section of this preamble for more
information).

V. Statutory and Executive Order Reviews

A. Executive Order 12866, Regulatory Planning and Review

    This action is not a ``significant regulatory action'' under the
terms of Executive Order (EO) 12866 (58 FR 51735, October 4, 1993) and
is therefore not subject to review under the EO.

B. Paperwork Reduction Act

    This action does not impose an information collection burden under
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.,
because this proposed SIP disapproval under section 110 and subchapter
I, part D of the Clean Air Act will not in-and-of itself create any new
information collection burdens but simply disapproves certain State
requirements for inclusion into the SIP. Burden is defined at 5 CFR
1320.3(b).

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency
to conduct a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements unless the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities. Small entities include small
businesses, small not-for-profit enterprises, and small governmental
jurisdictions. For purposes of assessing the impacts of today's rule on
small entities, small entity is defined as: (1) A small business as
defined by the Small Business Administration's (SBA) regulations at 13
CFR 121.201; (2) a small governmental jurisdiction that is a government
of a city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field.
    After considering the economic impacts of today's proposed rule on
small entities, I certify that this action will not have a significant
impact on a substantial number of small entities. This rule does not
impose any requirements or create impacts on small entities. This
proposed SIP disapproval under section 110 and subchapter I, part D of
the Clean Air Act will not in-and-of itself create any new requirements
but simply disapproves certain State requirements for inclusion into
the SIP. Accordingly, it affords no opportunity for EPA to fashion for
small entities less burdensome compliance or reporting requirements or
timetables or exemptions from all or part of the rule. The fact that
the Clean Air Act prescribes that various consequences (e.g., higher
offset requirements) may or will flow from this disapproval does not
mean that EPA either can or must conduct a regulatory flexibility
analysis for this action. Therefore, this action will not have a
significant economic impact on a substantial number of small entities.
    We continue to be interested in the potential impacts of this
proposed rule on small entities and welcome comments on issues related
to such impacts.

D. Unfunded Mandates Reform Act

    This action contains no Federal mandates under the provisions of
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C.
1531-1538 for State, local, or tribal governments or the private
sector. EPA has determined that the proposed disapproval action does
not include a Federal mandate that may result in estimated costs of
$100 million or more to either State, local, or tribal governments in
the aggregate, or to the private sector. This action proposes to
disapprove pre-existing requirements under State or local law, and
imposes no new requirements. Accordingly, no additional costs to State,
local, or tribal governments, or to the private sector, result from
this action.

E. Executive Order 13132, Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August
10, 1999), requires EPA to develop an accountable process to ensure
``meaningful and timely input by State and local officials in the
development of regulatory policies that have federalism implications.''
``Policies that have federalism implications'' is defined in the
Executive Order to include regulations that 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.''
    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, as
specified in Executive Order 13132, because it merely disapproves
certain State requirements for inclusion into the SIP and does not
alter the relationship or the distribution of power and
responsibilities established in the Clean Air Act. Thus, Executive
Order 13132 does not apply to this action.

F. Executive Order 13175, Coordination With Indian Tribal Governments

    This action does not have tribal implications, as specified in
Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP
EPA is proposing to disapprove would not apply on any Indian
reservation land or in any other area where EPA or an Indian tribe has
demonstrated that a tribe has jurisdiction, and EPA notes that it will
not impose substantial direct costs on tribal governments or preempt
tribal law. Thus, Executive Order 13175 does not apply to this action.

G. Executive Order 13045, Protection of Children From Environmental
Health Risks and Safety Risks

    EPA interprets EO 13045 (62 FR 19885, April 23, 1997) as applying
only to those regulatory actions that concern health or safety risks,
such that the analysis required under section 5-501 of the EO has the
potential to influence the regulation. This action is not subject to EO
13045 because it is not an economically significant regulatory action
based on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997). This proposed SIP disapproval under section 110
and subchapter I, part D of the Clean Air Act will not in-and-of itself
create any new regulations but simply disapproves certain State
requirements for inclusion into the SIP.

H. Executive Order 13211, Actions That Significantly Affect Energy
Supply, Distribution, or Use

    This proposed rule is not subject to Executive Order 13211 (66 FR
28355, May 22, 2001) because it is not a significant regulatory action
under Executive Order 12866.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note)
directs EPA to use voluntary consensus standards in its regulatory
activities unless to do so would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., materials specifications, test methods, sampling
procedures, and business practices) that are developed or adopted by
voluntary consensus standards bodies. NTTAA directs EPA to provide
Congress, through OMB, explanations when the Agency decides not to use
available and applicable voluntary consensus standards.
    The EPA believes that this action is not subject to requirements of
Section 12(d) of NTTAA because application of those requirements would
be inconsistent with the Clean Air Act.

J. Executive Order 12898: Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Population

    Executive Order (EO) 12898 (59 FR 7629, Feb. 16, 1994) establishes
federal executive policy on environmental justice. Its main provision
directs federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission
by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.
    EPA lacks the discretionary authority to address environmental
justice in this rulemaking.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Nitrogen dioxide, Ozone,
Particulate matter, Reporting and recordkeeping requirements.

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

    Dated: August 19, 2015.
Jared Blumenfeld,
Regional Administrator, Region IX.
[FR Doc. 2015-21401 Filed 8-27-15; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 88, Number 97 (Friday, May 19, 2023)]
[Notices]
[Pages 32262-32263]
[FR Doc No: 2023-10686]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97506; File No. SR-Phlx-2023-09]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Order Granting
Approval of Proposed Rule Change To Permit the Listing and Trading of
Options on the Nasdaq-100 ESG Index

May 15, 2023.

I. Introduction

    On March 28, 2023, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission''), pursuant
to section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'')
\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to permit the
listing and trading of options on the Nasdaq-100 ESG Index. The
proposed rule change was published for comment in the Federal Register
on April 6, 2023.\3\ The Commission has received no comments on the
proposed rule change. This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 97232 (March 31,
2023), 88 FR 20582 (``Notice'').
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to permit the listing and trading of options
on the Nasdaq-100 ESG Index (``NDXESG''; and such options, ``NDXESG
options''). The NDXESG is a broad-based, modified ESG Risk Rating
Score-adjusted market capitalization-weighted index that is designed to
measure the performance of the companies in the Nasdaq-100 Index
(``NDX'') that meet specific environmental, social, and governance
(``ESG'') criteria outlined in the NDXESG's methodology.\4\ The NDXESG
at all times consists of a selection of securities in the NDX.\5\ The
Exchange believes there is unmet market demand for exchange-listed
security options on the NDXESG,\6\ and that the introduction of NDXESG
options will attract order flow to the Exchange, increase the variety
of listed options to investors, and provide a valuable hedging tool to
investors.\7\
---------------------------------------------------------------------------

    \4\ See Notice, 88 FR at 20583 and n.5.
    \5\ See id. at 20583.
    \6\ See id. at 20585.
    \7\ See id. at 20584.
---------------------------------------------------------------------------

    The Exchange states that the NDXESG meets the ``broad-based index''
definition set forth in the Exchange's rules at Phlx Options 4A,
section 2(a)(13).\8\ The Exchange also states that the NDXESG meets,
and NDXESG options would meet, the Exchange's initial and maintenance
listing criteria for a broad-based index and options thereon, as set
forth in Phlx Options 4A, sections 3(d) and 3(e).\9\ NDXESG options
could have up to twelve near-term expiration months, as well as long-
term options series.\10\ In addition, the NDXESG options would be a.m.-
settled and cash-settled contracts with European-style exercise.\11\
Strike price intervals would be at no less than $2.50 intervals.\12\
The minimum trading increment for NDXESG options would be $0.05 for
options trading below $3.00 and $0.10 for all other options, and NDXESG
options would be available for trading during the Exchange's standard
trading hours for index options.\13\ NDXESG options would also be
subject to the same margin and suitability rules that apply to the
Exchange's other index options.\14\
---------------------------------------------------------------------------

    \8\ See id. at 20583.
    \9\ See id.
    \10\ See id.
    \11\ See id.
    \12\ See id.
    \13\ See id. at 20584.
    \14\ See id.
---------------------------------------------------------------------------

    The position and exercise limits for NDXESG options would be 25,000
contracts on the same side of the market.\15\ Each member or member
organization that maintains a position in NDXESG options on the same
side of the market in excess of 100,000 contracts for its own account
or for the account of a customer would be required to file a report
with the Exchange pursuant to proposed Phlx Options 4A, section
6(c).\16\ The position and exercise limits for FLEX options on the
NDXESG would also be 25,000 contracts on the same side of the
market.\17\
---------------------------------------------------------------------------

    \15\ See id. The proposed position and exercise limits are in
accordance with Phlx Options 4A, section 6(a), and Options 4A,
section 10.
    \16\ See id.
    \17\ See proposed Phlx Options 8, section 34(e).
---------------------------------------------------------------------------

    The Exchange states that it has, and that it believes the Options
Price Reporting Authority (``OPRA'') has, the necessary systems
capacity to handle additional quotations and message traffic associated
with the proposed listing and trading of NDXESG options.\18\ The
Exchange also states that index options are integrated into the
Exchange's existing surveillance system architecture and are thus
subject to the relevant surveillance processes.\19\ The Exchange states
that it has adequate surveillance procedures to monitor trading in
NDXESG options, thereby aiding in the maintenance of a fair and orderly
market.\20\
---------------------------------------------------------------------------

    \18\ See Notice, 88 FR at 20584.
    \19\ See id.
    \20\ See id.
---------------------------------------------------------------------------

    The Exchange also proposes to amend its rule text at Phlx Options
8, section 34(e), to directly align the position limits for FLEX index
options with the position limits for the corresponding standard index
options within Phlx Options 4A, section 6. According to the Exchange,
this proposed amendment would not change the current position limits
for FLEX index options, but rather would simply cross-reference the
index option position limits in Phlx Options 4A, section 6, as opposed
to restating each position limit within the rule text. Today, the
position limits for standard index options are identical to the FLEX
index options on the same index, and with this proposed amendment,
those position limits would continue to be identical.\21\ Finally, the
Exchange proposes a technical correction to Phlx Options 4A, section
6(c), to add an ``or'' within that paragraph.\22\
---------------------------------------------------------------------------

    \21\ See id.
    \22\ See id.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder.\23\ In particular, the Commission finds that
the proposed rule change is consistent with section 6(b)(5) of the
Act,\24\ which requires, among other things, that the rules of a
national securities exchange be designed to prevent fraudulent and
manipulative acts and practices, 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; and
section 6(b)(8) of the Act,\25\ which requires that the rules of a
national securities exchange not impose any burden on competition not
necessary or appropriate in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \23\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \24\ 15 U.S.C. 78f(b)(5).
    \25\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    Permitting the trading of options on an index of securities enables
investors to participate in the price movements of the index's
underlying securities and allows investors holding positions in some or
all of such securities to hedge the risks associated with their
portfolios. The Commission believes that the Exchange's proposal to
permit

the listing and trading of NDXESG options could benefit investors by
providing them with additional investment and hedging alternatives. As
the Exchange notes, the proposed NDXESG options could become part of
market participants' investment and hedging strategies related to
positions in both the NDXESG and NDX in light of the relationship
between these two indices.\26\ Moreover, options on broad-based, ESG-
related indexes are not novel. For example, options on the S&P 500 ESG
Index are listed and traded on Cboe Exchange, Inc.\27\ The proposed
NDXESG options could, therefore, promote competition; further,
consistent with section 6(b)(8) of the Act, they are not designed to
impose an unnecessary burden on competition.
---------------------------------------------------------------------------

    \26\ See Notice, 88 FR at 20585.
    \27\ See Securities Exchange Act Release No. 89749 (September 2,
2020), 85 FR 55723 (September 9, 2020).
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    The Commission also believes that the proposal is consistent with
the protection of investors and the public interest. The NDXESG is a
broad-based index under the Exchange's rules, and the NDXESG and
proposed NDXESG options meet the Exchange's criteria for the initial
listing of options on a broad-based index, which previously have been
approved by the Commission.\28\ After initial listing, the Exchange's
maintenance listing criteria, which also have been previously approved
by the Commission, will apply to NDXESG options.\29\ The Commission
believes that the application and satisfaction of these listing
requirements significantly minimize the potential for manipulation of
the NDXESG or for adverse market impact to result from the listing or
trading of NDXESG options.
---------------------------------------------------------------------------

    \28\ See Notice, 88 FR at 20585; Phlx Options 4A, section 3(d);
see also Securities Exchange Act Release No. 54158 (July 17, 2006),
71 FR 41853 (July 24, 2006) (Notice of Filing and Order Granting
Accelerated Approval of a Proposed Rule Change and Amendment Nos. 1
and 2 Thereto Relating to Listing Standards for Broad-Based Index
Options) (``Phlx Listing Standards Approval Order'').
    \29\ See Notice, 88 FR at 20585; Phlx Options 4A, section 3(e);
see also Phlx Listing Standards Approval Order.
---------------------------------------------------------------------------

    In addition, the proposed terms for NDXESG options--such as listing
up to twelve near-term expiration months and LEAPS, the strike
interval, a.m.-settlement, cash-settlement, European-style exercise,
and the minimum trading increment--are consistent with the terms for
other broad-based index options trading on Phlx, including NDX
options.\30\ In the same vein, the Exchange rules applicable to broad-
based index options regarding sales practices, customer accounts,
position and exercise limits, margin requirements, and trading halts
will apply to the NDXESG options.\31\ Likewise, the Exchange's existing
surveillance and reporting safeguards for index options will apply to
NDXESG options.\32\ Further, the Exchange states that it and OPRA have
the necessary systems capacity to handle the additional message traffic
associated with the listing of new option series that may result from
this proposal.\33\ The Commission believes that the Exchange's rules
governing the trading of index options help to ensure the maintenance
of fair and orderly markets, including with respect to the proposed
NDXESG options, which is consistent with the protection of investors
and the public interest.
---------------------------------------------------------------------------

    \30\ See Notice, 88 FR at 20585.
    \31\ See id.
    \32\ See id.
    \33\ See id. at 20584.
---------------------------------------------------------------------------

    Importantly, NDXESG options would be subject to the 25,000 contract
position limit that is generally applicable to broad-based index
options under Phlx Options 4A, section 6(a), and an equivalent exercise
limit under Phlx Options 4A, section 10. Further, under amended Phlx
Options 8, section 34(e), and Phlx Options 8, section 34(f), the
position and exercise limits for FLEX options on the NDXESG would also
be 25,000 contracts on the same side of the market. The Commission
believes that the proposed position and exercise limits also should
help minimize the potential for manipulation and adverse market impact
surrounding the use of the NDXESG options.
    Finally, the Commission believes that the proposed amendments to
correct a technical grammar error in Phlx Options 4A, section 6(c), and
to align the position limits for FLEX index options in Phlx Options 8,
section 34(e), with the position limits for the corresponding standard
index options in Phlx Options 4A, section 6, would clarify the rule
text, reduce the potential for confusion regarding FLEX index option
position and exercise limits, and promote internal consistency within
the Exchange's rules.
    Based on the foregoing, the Commission finds that the proposed rule
change is consistent with the Act and the rules and regulations
thereunder.

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\34\ that the proposed rule change (SR-Phlx-2023-09) be, and hereby
is, approved.
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 78s(b)(2).

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

    \35\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10686 Filed 5-18-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: October 10, 2008 (Volume 73, Number 198)]
[Notices]
[Page 60300-60301]
[DOCID:fr10oc08-83]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2008-N-0038]

General and Plastic Surgery Devices Panel of the Medical Devices
Advisory Committee; Notice of Meeting

AGENCY:  Food and Drug Administration, HHS.

ACTION:  Notice.

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    This notice announces a forthcoming meeting of a public advisory
committee of the Food and Drug Administration (FDA). The meeting will
be open to the public.
    Name of Committee: General and Plastic Surgery Devices Panel of the
Medical Devices Advisory Committee.
    General Function of the Committee: To provide advice and
recommendations to the agency on FDA's regulatory issues.
    Date and Time: The meeting will be held on November 18, 2008, from
8:30 a.m. to 5 p.m., and November 19, 2008, from 8 a.m. to 12:30 p.m.
    Location: Marriott Gaithersburg Washingtonian Center, Salons C and
D, 9751 Washingtonian Blvd., Gaithersburg, MD.
    Contact Person: Lisa M. Lim, Center for Devices and Radiological
Health (HFZ-410), Food and Drug Administration, 9200 Corporate Blvd.,
Rockville, MD 20850,<PHONE_NUMBER>, or FDA Advisory Committee
Information Line, 1-800-741-8138<PHONE_NUMBER> in the Washington, DC
area), code<PHONE_NUMBER>. Please call the Information Line for up-to-date
information on this meeting. A notice in the Federal Register about
last minute modifications that impact a previously announced advisory
committee meeting cannot always be published quickly enough to provide
timely notice. Therefore, you should always check the agency's Web site
and call the appropriate advisory committee hot line/phone line to
learn about possible modifications before coming to the meeting.
    Agenda: On November 18, 2008, the committee will receive an update
on safety information collected on dermal fillers in the commercial
setting, discuss current premarket and postmarket approved study
designs, and make recommendations on general issues concerning the
study of various dermal fillers. In addition, the committee will
discuss the design of clinical trials for future premarket submissions
seeking approval of dermal fillers for new intended uses.
    On November 19, 2008, the committee will discuss and make
recommendations on general issues related to the clinical trials of
cosmetic devices. Specifically, the committee will make recommendations
on how to quantify the effects of devices with various types of energy
sources, such as light-based products, light-based combination devices,
ultrasound devices (including focused ultrasound devices), massagers
combined with other energy modalities, cryogenic energy devices,
radiofrequency ablation devices, and microwave systems, on dermatologic
conditions.
    FDA intends to make background material available to the public no
later than 2 business days before the meeting. If FDA is unable to post
the background material on its Web site prior to the meeting, the
background material will be made publicly available at the location of
the advisory committee meeting, and the background material will be
posted on FDA's Web site after the meeting. Background material is
available at http://www.fda.gov/ohrms/dockets/ac/acmenu.htm, click on
the year 2008 and scroll down to the appropriate advisory committee
link.
    Procedure: Interested persons may present data, information, or
views, orally or in writing, on issues pending before the committee.
Written submissions may be made to the contact person on or before
November 10, 2008. Oral presentations from the public will be scheduled
between approximately 9 a.m. and 10 a.m., and between 1:15 p.m. and
2:15 p.m. on November 18, 2008, and between approximately 8:15 a.m. and
9:15 a.m. on November 19, 2008. Those desiring to make formal oral
presentations should notify the contact person and submit a brief
statement of the general nature of the evidence or arguments they wish
to present, the names and addresses of proposed participants, and an
indication of the approximate time requested to make their presentation
on or before October 31, 2008. Time allotted for each presentation may
be limited. If the number of registrants requesting to speak is greater
than can be reasonably accommodated during the scheduled open public
hearing session, FDA may conduct a lottery to determine the speakers
for the scheduled open public hearing session. The contact person will
notify interested persons regarding their request to speak by November
3, 2008.

    Persons attending FDA's advisory committee meetings are advised
that the agency is not responsible for providing access to electrical
outlets.
    FDA welcomes the attendance of the public at its advisory committee
meetings and will make every effort to accommodate persons with
physical disabilities or special needs. If you require special
accommodations due to a disability, please contact AnnMarie Williams,
Conference Management Staff, at<PHONE_NUMBER> at least 7 days in advance
of the meeting.
    FDA is committed to the orderly conduct of its advisory committee
meetings. Please visit our Web site at http://www.fda.gov/oc/advisory/
default.htm for procedures on public conduct during advisory committee
meetings.

    Dated: October 3, 2008.
Randall W. Lutter,
Deputy Commissioner for Policy.
[FR Doc. E8-24163 Filed 10-9-08; 8:45 am]

BILLING CODE 4160-01-S


[Federal Register Volume 79, Number 168 (Friday, August 29, 2014)]
[Notices]
[Pages 51641-51642]
[FR Doc No: 2014-20636]

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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

[Docket No. FMCSA-2012-0032]

Commercial Driver's License Standards: Application for Exemption;
Daimler Trucks North America (Daimler)

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Notice of final disposition; granting of application for
exemption.

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SUMMARY: FMCSA announces its decision to grant Daimler Trucks North
America's (Daimler) application for an exemption for a Daimler driver
to drive commercial motor vehicles (CMV) in the United States without
possessing a commercial driver's license (CDL) issued by one of the
States. The driver is Dr. Wolfgang Bernhard, head of the Daimler Trucks
and Bus Division, who will test-drive Daimler vehicles on U.S. roads to
better understand product requirements for these vehicles in ``real
world'' environments and verify results. He holds a valid German CDL
but lacks the U.S. residency necessary to obtain a CDL issued by one of
the States. FMCSA believes that the process for obtaining a German-
issued CDL is comparable to or is effective as the U.S. CDL
requirements and ensures that this driver will likely achieve a level
of safety that is equivalent to or greater than the level of safety
that would be obtained in the absence of the exemption.

DATES: This exemption is effective August 29, 2014 and expires August
29, 2016.

FOR FURTHER INFORMATION CONTACT: Mr. Richard Clemente, FMCSA Driver and
Carrier Operations Division; Office of Carrier, Driver and Vehicle
Safety Standards; Telephone:<PHONE_NUMBER>. Email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Legal Basis

    The Secretary of Transportation (the Secretary) has the authority
to grant exemptions from any of the Federal Motor Carrier Safety
Regulations (FMCSRs) issued under chapter 313 or Sec.  31136 of title
49, United States Code, to a person(s) seeking regulatory relief (49
U.S.C. 31136(e), and 31315(b)) as added by Section 4007(a) of the
Transportation Equity Act for the 21st Century (TEA-21) (Pub. L. 105-
178, 112 Stat. 107, 401, June 9, 1998)). Prior to granting an
exemption, the Secretary must request public comment and make a
determination that the exemption is likely to achieve a level of safety
that is equivalent to, or greater than, the level of safety that would
be obtained in the absence of the exemption. Exemptions may be granted
for a period of up to 2 years and may be renewed.
    The FMCSA Administrator has been delegated authority under 49 CFR
1.87(e)(1) and (f) to carry out the functions vested in the Secretary
by 49 U.S.C. chapter 313 and subchapters I and III of chapter 311,
relating, respectively, to the commercial driver's license program and
to commercial motor vehicle (CMV) programs and safety regulation.

Background

    In the July 22, 2014, Federal Register (79 FR 42626), FMCSA granted
Daimler and one of its drivers a similar exemption. Prior to that, in
the May 25, 2012, Federal Register (77 FR 31422) FMCSA granted a
similar exemption for two of their other test drivers. These
individuals each held a valid German CDL but lacked the U.S. residency
necessary to obtain a CDL in the United States. FMCSA concluded that
the process for obtaining a German CDL is comparable to or as effective
as the U.S. CDL requirements and ensures that these drivers will likely
achieve a level of safety equivalent to or greater than the level that
would be obtained in the absence of the exemption. These three drivers
were not reported to be involved in any crashes or other safety-related
incidents.

Daimler Application for Exemption

    Daimler applied for an exemption for Dr. Wolfgang Bernhard from 49
CFR 383.23, requiring drivers operating CMVs to have a CDL issued by
one of the States. Notice of the application was published on July 2,
2014 (79 FR 37839). Five comments were received which were mixed in
support or opposition to the application for exemption for Dr.
Bernhard, however no substantive comments were received. A copy of the
Daimler request is in the docket identified at the beginning of this
notice. The exemption allows Dr. Wolfgang Bernhard to operate CMVs to
support Daimler field tests to meet future vehicle safety and
environmental requirements and to promote the development of technology
and advancements in vehicle safety systems and emissions reductions. He
will typically drive for no more than 6 hours per day for 2 consecutive
days, and 10 percent of the test driving will be on two-lane state
highways, while 90 percent will be on interstate highways. The driving
will consist of no more than 200 miles per day, for a total of 400
miles during a two-day period on a quarterly basis.
    Section 383.21 requires CMV drivers in the United States to have a
CDL issued by a State. Dr. Bernhard is a citizen and resident of
Germany. Only residents of a State can apply for a CDL. Without the
exemption, Dr. Bernhard would not be able to test-drive Daimler
prototype CMVs on U.S. roads.
    Dr. Bernhard holds a valid German CDL and is an experienced
operator of CMVs. In the application for exemption, Daimler also
submitted documentation showing his safe German driving record.

Method To Ensure an Equivalent or Greater Level of Safety

    According to Daimler, the requirements for a German-issued CDL
ensure that the same level of safety is met or exceeded as if these
drivers had a CDL issued by one of the States. Dr. Bernhard is familiar
with the operation of CMVs worldwide and will be accompanied at all
times by a driver who holds a U.S.-issued CDL and is

familiar with the routes to be traveled. FMCSA has determined that the
process for obtaining a CDL in Germany is comparable to that for
obtaining a CDL issued by one of the States and adequately assesses the
driver's ability to safely operate CMVs in the United States.

FMCSA Decision

    Based upon the merits of this application, including Dr. Bernhard's
extensive driving experience and safety record, and the fact that he
has successfully completed the requisite training and testing to obtain
a German CDL, FMCSA concluded that the exemption would likely achieve a
level of safety that is equivalent to or greater than the level that
would be achieved absent such exemption, in accordance with Sec.
381.305(a).

Terms and Conditions for the Exemption

    FMCSA grants Daimler and Dr. Wolfgang Bernhard an exemption from
the CDL requirement in 49 CFR 383.23 to allow Dr. Bernhard to drive
CMVs in this country without a U.S. State-issued CDL, subject to the
following terms and conditions: (1) The driver and carrier must comply
with all other applicable provisions of the Federal Motor Carrier
Safety Regulations (FMCSRs) (49 CFR parts 350-399), (2) the driver must
be in possession of the exemption document and a valid German CDL, (3)
the driver must be employed by and operating the CMV within the scope
of his duties for Daimler, (4) Daimler must notify FMCSA within 5
business days in writing of any accident, as defined in 49 CFR 390.5,
involving this driver, and (5) Daimler must notify FMCSA in writing if
this driver is convicted of a disqualifying offense under Sec.  383.51
or Sec.  391.15 of the FMCSRs.
    In accordance with 49 U.S.C. 31315 and 31136(e), the exemption will
be valid for 2 years unless revoked earlier by the FMCSA. The exemption
will be revoked if: (1) Dr. Bernhard fails to comply with the terms and
conditions of the exemption; (2) the exemption results in a lower level
of safety than was maintained before it was granted; or (3)
continuation of the exemption would be inconsistent with the goals and
objectives of 49 U.S.C. 31315 and 31136.

    Issued on: August 21, 2014.
Anne S. Ferro,
Administrator.
[FR Doc. 2014-20636 Filed 8-28-14; 8:45 am]
BILLING CODE 4910-EX-P