[Federal Register: March 18, 2010 (Volume 75, Number 52)]
[Notices]
[Page 13176-13181]
[DOCID:fr18mr10-113]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61690; File No. SR-NASD-2003-140]

Self-Regulatory Organizations; National Association of Securities
Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.);
Notice of Filing of Proposed Rule Change, as Modified by Amendment No.
3, Relating to the Prohibition of Certain Abuses in the Allocation and
Distribution of Shares in Initial Public Offerings (``IPOs'')

March 11, 2010.
    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 September 15, 2003, the National Association of Securities Dealers,
Inc. (``NASD'') (n/k/a Financial Industry Regulatory Authority, Inc.
(``FINRA'')) \3\ 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
substantially by FINRA. NASD amended the proposed rule change on
December 9, 2003 and August 4, 2004. FINRA amended the proposed rule
change on February 17, 2010.\4\ The Commission is publishing this
notice to solicit comments on the proposed rule change, as modified by
Amendment No. 3, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On July 26, 2007, the Commission approved a proposed rule
change filed by the NASD to amend the NASD's Certificate of
Incorporation to reflect its name change to Financial Industry
Regulatory Authority, Inc., or FINRA, in connection with the
consolidation of the member firm regulatory functions of NASD and
NYSE Regulation, Inc. See Securities Exchange Act Release No. 56146
(July 26, 2007), 72 FR 42190 (August 1, 2007) (SR-NASD-2007-053).
    \4\ The text of the proposed rule change in Amendment No. 3
replaces and supersedes the text in the original rule filing and
Amendment Nos. 1 and 2 thereto.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA is proposing Amendment No. 3 to SR-NASD-2003-140, a proposed
rule change to further and more specifically prohibit certain abuses in
the allocation and distribution of shares in initial public offerings
(``IPOs''). The text of the proposed rule change in Amendment No. 3
replaces and supersedes the text in the original rule filing and
Amendment Nos. 1 and 2 thereto.
    The text of the proposed rule change is available on FINRA's Web
site at http://www.finra.org, at the principal office of FINRA 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, FINRA 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. FINRA 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
    On September 15, 2003, NASD (n/k/a FINRA) filed with the SEC SR-
NASD-2003-140, a proposed rule change to adopt new FINRA Rule 5131
(originally proposed as NASD Rule 2712) to address disclosure and
management of conflicts of interests that may adversely affect the
allocation and distribution of IPOs. The proposed rule change also is
intended to sustain public confidence in the IPO process, which is
critical to the continued success of the capital markets. The SEC
published the proposed rule change for notice and comment on December
20, 2004 and received twelve comment letters.\5\
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    \5\ See Securities Exchange Act Release No. 50896 (December 20,
2004), 69 FR 77804 (December 28, 2004) (``Proposing Release'').
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    FINRA is filing this Amendment No. 3 to address the substantive
issues raised by commenters and to clarify and streamline the proposed
rule. Among other things, the revisions simplify the spinning
provision, clarify the scope of the lock-up disclosure and returned
shares provisions and propose several new defined terms.

Proposed Rule 5131(b)--Spinning

    FINRA is eliminating the presumption that any allocation within the
prior six months of the receipt of investment banking business would
violate the spinning provision. Instead, FINRA is proposing an outright
prohibition on allocations in certain specified situations where a
client relationship exists, where compensation has been received or
where a member intends to provide or expects to be retained for
investment banking services. Specifically, FINRA is proposing
amendments to clarify that the spinning prohibition would apply to
allocations to the account of an executive officer or director of a
current investment banking client of the member in addition to
companies from which the member has received investment banking
compensation during the past twelve months. Further, FINRA is proposing
to narrow the forward-looking window to three months in order to
capture circumstances during such period where the member intends to
provide, or expects to be retained by the company for, investment
banking services within the next three months.
    FINRA is adding Supplementary Material .01 to provide that the
spinning prohibition would not apply to allocations of securities that
are directed in writing by the issuer, its affiliates or selling
shareholders, so long as the member has no involvement or influence,
directly or indirectly, in the allocation decisions of the issuer, its
affiliates or selling shareholders with respect to such issuer-directed
securities. In addition, to clarify the scope of the types of accounts
to which the spinning restrictions would apply, FINRA is proposing a
new defined term ``account of an executive officer or director.'' The
proposed definition would mean any account in which an executive
officer or director of a company, or a person materially supported by
such executive officer or director, has a financial interest or over
which such executive officer, director,

or materially supported person has discretion or control, other than
(A) an investment company registered under the Investment Company Act
of 1940 and (B) any other investment fund over which neither an
executive officer, director, or materially supported person has
discretion or control, provided that executive officers, directors, and
materially supported persons collectively own interests representing no
more than 25% of the assets of such fund.

Proposed Rules 5131(d)(2)(B) and 5131(d)(3) and (4)--IPO Pricing and
Trading Practices

    FINRA is proposing to exempt from the notice and disclosure
requirements releases and waivers effected solely to permit transfers
of securities that are not for consideration where the transferee has
agreed in writing to be bound by the same lock-up agreement terms in
place for the transferor. FINRA believes that, where the transfer is
not for consideration and the transferee is bound by the same terms,
the concerns that generally would prompt the need for disclosure under
the proposal are mitigated.
    In addition, FINRA is proposing to amend the provision addressing
the agreement among underwriters, which provides that the agreement
between the book-running lead manager(s) and other syndicate members
must require that any shares returned by a purchaser to a syndicate
member after secondary market trading commences be used to: (a) Offset
the existing syndicate short position, or (b) if no syndicate short
position exists, the member must offer returned shares at the public
offering price to unfilled customers' orders pursuant to a random
allocation methodology. Because the allocation concerns underlying the
proposed rule only exist where the market price of the returned shares
is above the IPO price, FINRA is proposing to amend the proposed rule
to provide that the returned shares provision would only be applicable
where such shares are trading at a premium to their IPO price. In
addition, because a reallocation of returned shares may extend the
distribution of the securities for the purposes of SEC Regulation M,
FINRA reminds members of their responsibility to undertake
reallocations under the proposal in a manner that also is not
inconsistent with SEC Regulation M.
    FINRA also is proposing to limit the prohibition on the acceptance
of market orders to the period prior to the commencement of secondary
market trading in the IPO. Therefore, once a trading price on the
secondary market has been established, members may accept market orders
from customers, even on the first day of trading. FINRA believes that
this revised approach strikes an appropriate balance by helping to
avoid inadvertent purchases at prices that do not reflect an investor's
true investment decision nor reasonable expectations, while limiting
the scope and duration of the prohibition to address the pre-open entry
of market orders occurring prior to the availability of last trade
price information.

Definitions

    FINRA is proposing to add a definition of ``investment banking
services'' substantially similar to that found in the research rules.
The proposed definition of ``investment banking services'' would
include ``acting as an underwriter, participating in a selling group in
an offering for the issuer or otherwise acting in furtherance of a
public offering of the issuer; acting as a financial adviser in a
merger, acquisition or other corporate reorganization; providing
venture capital, equity lines of credit, private investment, public
equity transactions (PIPEs) or similar investments or otherwise acting
in furtherance of a private offering of the issuer; or serving as
placement agent for the issuer.''
    FINRA also is proposing a definition of ``IPO'' to mean the
``initial public offering of an issuer's equity securities, which
offering is registered under the Securities Act of 1933 and as a result
of which the issuer becomes a public company.'' The proposed definition
of ``public company'' means ``any company that is registered under
Section 12 of the Securities Exchange Act of 1934 or files periodic
reports pursuant to Section 15(d) thereof.''
    FINRA will announce the effective date of the proposed rule change
in a Regulatory Notice to be published no later than 60 days following
Commission approval. The effective date will be no less than 90 and no
more than 180 days following publication of the Regulatory Notice
announcing Commission approval.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\6\ which require, among
other things, that FINRA rules be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. FINRA believes that the new, specifically targeted
provisions in the proposed rule change will aid member compliance
efforts and help to maintain investor confidence in the capital
markets.
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    \6\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.

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

    The SEC published the proposed rule change for notice and comment
on December 20, 2004 and received twelve comment letters.\7\ Commenters
generally supported rules to address abuses in the allocation and
distribution of IPOs, but expressed concerns regarding the operation of
specific proposed provisions and requested clarification, as further
discussed below.
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    \7\ See Letter from Christopher J. Ailman, Chief Investment
Officer, California State Teachers' Retirement System (CalSTRS), to
Jonathan Katz, Secretary, SEC, dated March 27, 2006; Letter from
Christianna Wood, Senior Investment Officer, CalPERS Global Equity,
to Jonathan Katz, Secretary, SEC, dated March 13, 2006; Letter from
Phil Angelides, California State Treasurer; Michael Fitzgerald, Iowa
State Treasurer; Randall Edwards, Oregon State Treasurer; Richard
Moore, North Carolina State Treasurer; Alan Hevesi, New York
Comptroller; George Philip, New York State Teachers' Retirement
System; and Orin S. Kramer, Chairman, New Jersey State Investment
Council, to Jonathan Katz, Secretary, SEC, dated December 30, 2005;
Letter from Eliot Spitzer, Attorney General, Office of the Attorney
General, State of New York, to Jonathan Katz, Secretary, SEC, dated
December 30, 2005; Letter from Michael Touff, Senior Vice President
and General Counsel, M.D.C. Holdings (MDC), to Jonathan Katz,
Secretary, SEC, dated November 1, 2005; Letter from Dixie L.
Johnson, Committee Chair, Committee on Federal Regulation of
Securities, Business Law Section, American Bar Association (ABA), to
Jonathan Katz, Secretary, SEC, dated March 8, 2005; Letter from
Edward M. Alterman, Fried, Frank, Harris, Shriver & Jacobson LLP
(Fried Frank), to Jonathan Katz, Secretary, SEC, dated February 27,
2005; Letter from John Faulkner, Chairman, SIA Capital Markets
Committee, Securities Industry Association (SIA), to Jonathan Katz,
Secretary, SEC, dated February 15, 2005; Letter from Ross Langill,
to the SEC, dated January 20, 2005; Letter from Mark G. Heesen,
President, National Venture Capital Association (NVCA), to Jonathan
Katz, Secretary, SEC, dated January 19, 2005; Letter from
Renaissance Capital, to the SEC, dated January 18, 2005; and Letter
from Dixie L. Johnson, Committee Chair, Committee on Federal
Regulation of Securities, and Peter W. LaVigne, Chair, NASD
Corporate Financing Rules Subcommittee, Committee on Federal
Regulation of Securities, Business Law Section, American Bar
Association, to Jonathan Katz, Secretary, SEC, dated January 4, 2005
(available at http://www.sec.gov/rules/sro/nyse/nyse200412.shtml).
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Prohibition on Abusive Allocation Arrangements
    Proposed Rule 5131(a) (originally proposed as NASD Rule 2712(a))
would

prohibit a member from offering or threatening to withhold shares it
allocates in an IPO as consideration or inducement for the receipt of
compensation that is excessive in relation to the services provided by
the member (i.e., quid pro quo allocations). While commenters largely
supported this proposal as an important safeguard against abusive
activity, a few requested clarification with respect to its intended
scope.
    For example, one commenter requested that the proposal be limited
to compensation that is ``clearly excessive.'' \8\ FINRA does not
support this change and believes that the modifier ``clearly''
ironically makes the standard less clear as it would introduce
uncertainty around what is ``excessive'' versus ``clearly excessive.''
Moreover, FINRA believes that compensation that is ``excessive'' is the
appropriate standard for establishing improper quid pro quo activities.
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    \8\ See SIA.
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    Commenters also requested that FINRA provide additional guidance to
clarify that, in determining whether or not compensation is excessive,
all the facts and circumstances surrounding the services provided will
be considered including, among other things, the risk and effort
involved in the transaction.\9\ A commenter further noted that while
some fees can easily be benchmarked, other fees may be more highly
negotiated due to the more customized nature of the services provided
and this should be considered in determining whether or not a fee is
excessive.\10\ Commenters also requested that FINRA clarify that
trading fees earned from certain wash sale transactions would not be
deemed excessive if entered into for a valid purpose.\11\
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    \9\ See ABA and SIA.
    \10\ See SIA.
    \11\ See ABA.
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    FINRA agrees that an assessment of whether compensation is
excessive will be based upon all of the relevant facts and
circumstances including, where applicable, the level of risk and effort
involved in the transaction and the rates generally charged for such
services. Likewise, given that a determination of what is ``excessive''
compensation will involve a consideration of all the relevant facts and
circumstances, FINRA cannot clarify whether or not compensation for a
particular wash sale transaction will be deemed excessive. While NASD
(n/k/a FINRA) has stated in the Proposing Release that trading activity
that serves no economic purpose other than to generate compensation for
the member (such as certain wash sales) would be considered excessive,
if a wash sale has an economic purpose, that factor will be considered
in assessing whether the transaction has an economic purpose, and in
turn whether the trading fees for such sales are excessive.\12\
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    \12\ We note this would not affect the determination as to
whether the wash sale transaction violated the anti-fraud provisions
of the securities laws.
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Prohibition on Spinning
    Proposed Rule 5131(b) (originally proposed as NASD Rule 2712(b))
would prohibit the allocation of IPO shares to an executive officer or
director of a company, or to persons materially supported by such
person, if the member received compensation from the company for
investment banking services in the past 12 months or expects to receive
or intends to seek investment banking business from the company in the
next 6 months. The proposal included a rebuttable presumption that,
where a firm allocates IPO shares to an executive officer or director
of a company and then subsequently receives investment banking business
from that company, the allocations would be deemed to have been made
with the expectation or intent to receive such business. Finally, the
proposed provision would prohibit allocations made on the express or
implied condition that the executive officer or director, on behalf of
the company, would direct future investment banking business to the
member.
    Commenters generally supported the adoption of a rule that would
address the practice of spinning, but expressed concern that the
proposal is overbroad and would lead to compliance difficulties.\13\
Specifically, commenters opposed the six-month forward-looking
presumption in that it would shift the burden of proof to member firms
to demonstrate that a past allocation was not part of a quid pro quo
arrangement for investment banking business.\14\ In addition,
commenters were concerned that the length of the presumption had the
potential to implicate too many past IPO allocations that were
unrelated to a subsequent award of investment banking business.\15\ In
addition, some commenters proposed that, if adopted, the six-month
forward-looking period should be reduced to three months, which is the
standard currently required for addressing conflicts of interest in the
research analyst rules.\16\
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    \13\ See ABA and SIA.
    \14\ See ABA, MDC and SIA.
    \15\ See ABA.
    \16\ See SIA.
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    FINRA is proposing to narrow the forward-looking window to prohibit
allocations in cases where the member intends to provide, or expects to
be retained by the company for, investment banking services over the
next three months. FINRA believes that a three-month window, combined
with the prohibition on allocations based on the express or implied
condition that the member will be retained for future investment
banking business as set forth in paragraph 5131(b)(3), will
sufficiently addresses this conflict of interest.
    In addition, FINRA has eliminated the presumption that all
allocations within the prior specified period are violations of the
rule. Where an executive officer or director receives an IPO allocation
and the investment bank is subsequently retained for the performance of
investment banking services within the three-month window by such
executive officer or director's employing firm, FINRA will investigate
what particular information about the business relationship was known
by the firm, including a review of the communications between the
broker-dealer and the investment banking client as well as the member's
systems for logging and managing prospective and current client and
transaction information.
    FINRA also is proposing revisions to clarify that the spinning
prohibition would apply to allocations to an executive officer or
director of a current investment banking client of the member (in
addition to companies from which the member has received investment
banking compensation during the past twelve months). FINRA believes
that, in all cases, allocations to executive officers and directors of
existing clients should be prohibited, and that allocations should not
be permitted due to the compensation schedule between the client and
the member where the business relationship falls within the specified
windows.
    Commenters also raised concerns regarding the provision prohibiting
the allocation of IPO shares to an executive officer or director on the
``express or implied'' condition that such executive officer or
director, on behalf of the company, will retain the member for the
performance of future investment banking services.\17\ Commenters
expressed concern that the prohibition on IPO allocations based on an
``implied condition'' to retain the member for future investment
banking business injects a level of uncertainty that may prevent
members from selling IPO securities to executive officers and

directors as the result of a legitimate business relationship and,
therefore, may interfere with the ability of members to allocate
securities to customers.\18\ FINRA does not believe that the
commenters' concerns warrant a change to the proposed rule. An
effective prohibition on spinning must, in FINRA's view, address
express as well as implied relationships and arrangements.
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    \17\ See ABA.
    \18\ See ABA.
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    Several commenters requested an exemption from the spinning
provision for allocations to executive officers and directors that were
directed by the issuer (``issuer-directed shares'').\19\ Commenters
believed that, because underwriters do not control these allocations,
they do not give rise to the regulatory concerns that the proposed rule
change is intended to address.\20\ Commenters further noted that
issuers have long included their own officers and directors in directed
share programs, and that it would be a dramatic departure from that
practice if the final rules did not include an exception for issuer-
directed shares.\21\ Commenters requested that an exception be provided
for allocations directed by an issuer, its affiliates or selling
shareholders.\22\
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    \19\ See ABA, Fried Frank and SIA.
    \20\ See ABA and SIA.
    \21\ See SIA.
    \22\ See ABA and SIA.
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    FINRA believes that so long as the member has no involvement or
influence, directly or indirectly, in the allocation decisions of an
issuer, its affiliates or selling shareholders, allocations directed by
such parties should fall outside of the spinning prohibitions.
Accordingly, FINRA is adding Supplementary Material .01 to provide that
the spinning prohibition would not apply to allocations of securities
that are directed in writing by the issuer, its affiliates or selling
shareholders, so long as the member has no involvement or influence,
directly or indirectly, in the allocation decisions of the issuer, its
affiliates or selling shareholders with respect to such issuer-directed
shares.
    Along with the carve-out for issuer-directed sharers, commenters
also requested an exemption for allocations made by a separately
organized investment adviser.\23\ While FINRA notes that the Voluntary
Initiative, in addition to exempting issuer-directed allocations, also
exempted allocations directed by a separately organized investment
adviser, FINRA is not proposing a similar carve-out for investment
advisers. FINRA believes that the purpose of providing an exception for
issuer-directed shares is to clarify that, in cases where the member is
effecting an allocation made by the issuer, its affiliates or selling
shareholders without the direct or indirect involvement or influence of
the member, the member would not be prohibited from carrying out such
directives. In contrast, where an allocation is being directed by a
party other than the issuer (e.g., a separately organized investment
adviser), there is a higher risk that improper incentives would
motivate such party's decision to allocate shares to the account of an
executive officer or director of a company that falls within the
purview of the proposed rule. Providing an exception for allocations by
separately organized investment advisers would create a significant
loophole through which the member and its affiliates may indirectly
engage in the same abusive conduct the spinning rule is designed to
address.
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    \23\ See ABA and SIA.
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    To comply with the proposed spinning provision, members would be
required to determine whether an account is an ``account of an
executive officer or director'' prior to making an allocation of IPO
shares in order to avoid violating the rule. Commenters expressed
concern regarding the compliance burden of tracking executive officers
and directors and those materially supported by them, and requested
that the rule be limited to apply only to the officers and directors
themselves and immediate family members living in the same
household.\24\ FINRA believes that limiting the scope of the rule only
to relatives residing in the same household is too narrow and could
open up means of circumventing the rule. In addition, the proposed
definition of ``material support'' is substantively similar to that
found in FINRA Rule 5130 (Restrictions on the Purchase and Sale of
Initial Equity Public Offerings), with respect to the purchase and sale
of ``new issue'' securities. FINRA believes that members can comply
with the proposed provision by developing policies and procedures
reasonably designed to identify those persons covered within the scope
of the proposed rule. Therefore, FINRA believes that the appropriate
scope of the rule is to reach executive officers and directors as well
as those who they ``materially support.''
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    \24\ See ABA and SIA.
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    Commenters also stated that the rule should be limited to officers
and directors of a U.S. public company or where the securities of the
officer or director's company are principally traded in the U.S.\25\
FINRA believes that the proposed prohibitions should apply to member
conduct in the area prescribed, irrespective of where the recipient's
company is domiciled or in what jurisdiction the securities of the
recipient's company principally trade. Furthermore, spinning abuses
also are possible where the recipient's company is not yet a public
company, e.g., companies seeking to conduct their first initial public
offering are often actively solicited by member firms.\26\
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    \25\ See SIA.
    \26\ FINRA notes, however, that the proposed new definition of
an ``IPO'' (discussed below) is limited to the securities of a U.S.
registered company.
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    In addition, in order to clarify the scope of the types of accounts
to which the spinning restrictions would apply, FINRA is proposing a
new defined term ``account of an executive officer or director.'' The
proposed definition would mean any account in which an executive
officer or director of a company, or a person materially supported by
such executive officer or director, has a financial interest or over
which such executive officer, director, or materially supported person
has discretion or control, other than (A) an investment company
registered under the Investment Company Act of 1940 and (B) any other
investment fund over which neither an executive officer, director, or
materially supported person has discretion or control, provided that
executive officers, directors, and materially supported persons
collectively own interests representing no more than 25% of the assets
of such fund. FINRA believes that the proposed exceptions for
registered investment companies and any other fund in which covered
persons' collective interests are limited to 25% of the fund's assets
will prevent firms from indirectly allocating IPOs to executive
officers and directors.
IPO Pricing and Trading Practices
    Commenters generally supported the proposals related to IPO Pricing
and Trading Practices; however some commenters expressed concern
regarding certain provisions. Commenters argued that the notice and
public disclosure requirements relating to lock-up agreements would
result in a flood of meaningless information and that, therefore, at a
minimum, only the release of a significant amount of shares should be
required to be disclosed.\27\ Commenters also requested that FINRA
require notification two days prior to

the ``sale'' rather than the ``release'' or ``waiver'' of a lock-
up.\28\
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    \27\ See ABA and SIA.
    \28\ See generally ABA and SIA.
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    FINRA continues to believe that public disclosure should be
required for releases and waivers permitting the transfer of securities
subject to a lock-up agreement, and that such disclosure should be made
two business days prior to the impending release. However, FINRA is
proposing to exempt from the notice and disclosure requirements
releases and waivers effected solely to permit a transfer of securities
that are not for consideration and where the transferee has agreed in
writing to be bound by the same lock-up agreement terms in place for
the transferor. Where the transfer is not for consideration and the
transferee is bound by the same terms, the concerns that generally
would prompt the need for disclosure under the proposal are mitigated.
    Commenters requested that FINRA permit the disclosure of the
required information through any method permitted under SEC Regulation
FD.\29\ A commenter also requested that FINRA clarify that the natural
expiration of a lock-up need not be preceded by a public announcement
where such expiration is disclosed in the IPO prospectus.\30\
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    \29\ See ABA and SIA.
    \30\ See SIA.
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    FINRA believes that any news service used by issuers for providing
public disclosure of material information pursuant to SEC Regulation FD
would satisfy the proposed rule's requirement that public disclosure be
made ``through a major news service.'' FINRA also agrees that notice
and public disclosure is not necessary for the natural expiration of a
lock-up already disclosed in the prospectus. However, FINRA does not
believe that it is necessary to make these clarifications in the rule
text.
    One commenter requested that FINRA clarify that the notice
requirement would be fulfilled by providing an announcement to a major
news organization irrespective of whether the news organization
ultimately publishes the announcement.\31\ FINRA believes that, as
required pursuant to Regulation FD, it is important that members
utilize a method (or combination of methods) of disclosure reasonably
designed to provide broad, non-exclusionary distribution of the
required information to the public.\32\ Therefore, in announcing the
required information, members are expected to select a method that is
likely to result in the actual public dissemination of the specified
information.
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    \31\ See SIA.
    \32\ See 17 CFR Sec.  234.101(e)(2).
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    Commenters also expressed concern regarding the proposed
requirements applicable to returned shares.\33\ The proposal provides
that the agreement between the book-running lead manager(s) and other
syndicate members must require that any shares returned by a purchaser
to a syndicate member after secondary market trading commences be used
to (a) offset the existing syndicate short position, or (b) if no
syndicate short position exists, the member must offer returned shares
at the public offering price to unfilled customers' orders pursuant to
a random allocation methodology. Commenters expressed concern that the
proposal does not provide an alternative to address cases where the
current market price is lower than the public offering price, making
allocating shares to unfilled indications of interest
inappropriate.\34\ FINRA believes that if the current market price of
returned shares is below the IPO price, then the concerns underlying
the proposed rule are non-existent, as the ability to purchase at the
public offering price does not confer an economic benefit. Accordingly,
FINRA proposes to amend the proposed rule change to apply the returned
share provisions only to shares that are trading at a premium to their
IPO price.
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    \33\ See ABA and SIA.
    \34\ See ABA and SIA.
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    Commenters further requested clarification regarding the
requirements for returned shares. Commenters argued that certain
scenarios should be exempted from the rule, including where the
securities returned were the subject of a bona fide sale but the
investor failed to pay for the securities.\35\ FINRA disagrees and does
not believe that the circumstance under which IPO shares are returned
to the firm should influence whether the firm can then award them to
favored customers. The proposed rule change, as amended, addresses the
potential conflicts of the member in awarding a customer shares at the
IPO price when they are already trading at a premium on the secondary
market; the manner and circumstances surrounding the return of the
shares does not alter the analysis as to how the member should proceed
with a reallocation.
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    \35\ See ABA and SIA.
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    Commenters also raised concern that the reallocation of shares
subsequent to the commencement of aftermarket trading may be considered
to be new sales of securities that continue the distribution of the IPO
shares with the result that members' market-making purchases in the
aftermarket may be deemed to be in violation of SEC Regulation M.\36\
FINRA has revised the proposed rule change to specifically address the
need to comply with SEC Regulation M, and FINRA intends to work with
SEC staff in applying the proposed rule change in a manner that does
not conflict with Regulation M.
---------------------------------------------------------------------------

    \36\ See ABA.
---------------------------------------------------------------------------

    The proposed rule change also provides that no member may accept a
market order for the purchase of IPO shares during the first day that
the IPO shares commence trading on the secondary market. Commenters
expressed concern that this provision would increase volatility in
secondary market trading and also would be technologically cumbersome
and costly for members to implement.\37\ As discussed in the Proposing
Release, the IPO Report noted that IPOs are inherently more volatile
than stocks with a public trading history. In addition, FINRA notes
that institutional investors have generally relied on limit orders for
IPOs in the aftermarket. FINRA also notes that market orders may result
in an investor inadvertently purchasing a security at prices that
neither reflect their true investment decisions nor their reasonable
expectations. Such complaints were not uncommon during the market
bubble that led the IPO Advisory Committee to make this recommendation.
---------------------------------------------------------------------------

    \37\ See SIA.
---------------------------------------------------------------------------

    FINRA notes that technological advancements since the time of the
initial filing have resulted in improved access to real-time price
information, making it less likely that a customer's market order would
result in the purchase of a security at a price that is unrelated to
the customer's expectations. Thus, FINRA proposes to modify the
prohibition on the acceptance of market orders to apply only to orders
entered prior to the commencement of secondary market trading in an
IPO. FINRA believes that this revision more precisely focuses the rule
to the time posing greatest potential for investor harm.
Definitions
    Commenters requested several amendments to the definitional section
with respect to certain terms used in the proposal. Commenters
requested that a definition of ``investment banking services'' be added
and that such definition be based on the research analyst rules.\38\ In
response to comments, FINRA is proposing to add a

definition of ``investment banking services'' that is substantially
similar to that found in the research rules. The proposed definition of
``investment banking services'' would include ``acting as an
underwriter, participating in a selling group in an offering for the
issuer or otherwise acting in furtherance of a public offering of the
issuer; acting as a financial adviser in a merger, acquisition or other
corporate reorganization; providing venture capital, equity lines of
credit, private investment, public equity transactions (PIPEs) or
similar investments or otherwise acting in furtherance of a private
offering of the issuer; or serving as placement agent for the issuer.''
---------------------------------------------------------------------------

    \38\ See ABA and SIA.
---------------------------------------------------------------------------

    One commenter requested that, if a definition of ``investment
banking services'' were adopted, it should be limited to U.S.
registered offerings.\39\ FINRA disagrees that the proposed rule should
permit abusive IPO allocation arrangements in exchange for compensation
for investment banking services in an overseas transaction (which may
involve an affiliate of the U.S. member). In such cases, the same or
similar potential conflicts of interest and problematic incentives
apply both for the member as well as for the executive officers and
directors and should not be permitted.
---------------------------------------------------------------------------

    \39\ See ABA.
---------------------------------------------------------------------------

    Commenters supported the addition of definitions for the terms
``initial public offering'' and ``public company.'' \40\ In response to
comments, FINRA is proposing to add a definition of ``IPO'' to mean the
``initial public offering of an issuer's equity securities, which
offering is registered under the Securities Act of 1933 and as a result
of which the issuer becomes a public company.'' The proposed definition
of ``public company'' means ``any company that is registered under
Section 12 of the Securities Exchange Act of 1934 or files periodic
reports pursuant to Section 15(d) thereof.'' These proposed definitions
are identical in scope to the corresponding definitions found in the
Voluntary Initiative.
---------------------------------------------------------------------------

    \40\ See generally ABA and SIA.
---------------------------------------------------------------------------

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Additional Comment

    We seek specific comment on whether there are any alternatives to
the proposed rule change that FINRA should consider, such as whether
proposed new Rule 5131(b)'s spinning provision should be modified to
include a mandatory ban prohibiting members from seeking or providing
investment banking services to a company for a period of 12 months
following any allocation of IPO shares to an account of an executive
officer or director of such company and whether such a ban would
facilitate compliance.

V. 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 e-mail to<EMAIL_ADDRESS>Please include
File Number SR-NASD-2003-140 on the subject line.

Paper Comments

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

    All submissions should refer to File Number SR-NASD-2003-140. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for 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 a.m. and 3 p.m. Copies of such filing also will be
available for inspection and copying at the principal office of FINRA.
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-NASD-2003-140
and should be submitted on or before April 8, 2010.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\41\
---------------------------------------------------------------------------

    \41\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5913 Filed 3-17-10; 8:45 am]
BILLING CODE 8011-01-P


PAPERWORK REDUCTION ACT SUBMISSION Please read the instructions before completing this form. For additional forms or assistance in completing this form, contact your agency's Paperwork Clearance Officer. Send two copies of this form, the collection instrument to be reviewed, the Supporting Statement and any additional documentation to: Office of Information and Regulatory Affairs, Office of Management and Budget, Docket Library, Room 10102, 725 17th Street NW Washington, DC 20503.

1. Agency/ Subagency originating request USEPA/ Office of Enforcement and Compliance Assurance 2. OMB control number b. G None a. 2060  0283 __ __ __ __

3. Type of information collection ( check one) a. G New collection b. G Revision of a currently approved collection c. X Extension of a currently approved collection d. G Reinstatement, without change, of a previously approved collection for which approval has expired e. G Reinstatement, with change, of a previously approved collection for which approval has expired f. G Existing collection in use without an OMB control number 4. Type of review requested ( check one) a. X Regular b. G Emergency  Approval requested by: / / c. G Delegated 5. Small entities Will this information collection have a significant economic impact on a substantial number of small entities? G Yes X No For b f, note item A2 of Supporting Statement Instructions 6. Requested expiration date a. X Three years from approval date b. G Other Specify: / /___

7. Title: NESHAP for Ethylene Oxide Emissions from Sterilization Facilities ( 40 CFR part 63, subpart O) ( Renewal)

8. Agency form number( s) ( If applicable): EPA ICR 1666.06 9. Keywords: Ethylene oxide, sterilization facilities 10. Abstract: Respondents are owners or operators of ethylene oxide sterilization facilities. Respondents must submit one time reports at the start of construction, reconstruction, or modification, anticipated or actual startup dates, and physical or operation changes to existing facilities. In addition, certain owners or operators of existing ethylene oxide sterilization facilities will submit reports of actual annual ethylene oxide use. Owners or operators of new ethylene oxide sterilization facilities will submit one time reports of estimated annual ethylene oxide use. Owners or operators of ethylene oxide sterilization facilities will also maintain records of ethylene oxide emissions.

11. Affected public ( Mark primary with " P" and all others that apply with " X") a. Individuals or households d. Farms b. P Business or other for profit e. Federal Government c. Not for profit institutions f. State, Local or Tribal Government 12. Obligation to respond ( Mark primary with " P" and all others that apply with " X") a. G Voluntary b. G Required to obtain or retain benefits c. P Mandatory 13. Annual reporting and recordkeeping hour burden a. Number of respondents 119 b. Total annual responses 236 1. Percentage of these responses collected electronically 10 % c. Total hours requested 8,662 d. Current OMB inventory 7,328 e. Difference 1,334 f. Explanation of difference 1. Program Change 2. Adjustment 1,334 14. Annual reporting and recordkeeping cost burden ( in thousands of dollars) a. Total annualized capital/ startup costs 65 b. Total annual costs ( O& M) 583 c. Total annualized cost requested 648 d. Current OMB inventory 228 e. Difference 420 f. Explanation of difference 1. Program change 2. Adjustment 420 15. Purpose of information collection ( Mark Primary With " P" and all others that apply with " X") a. Application for benefits e. Program planning or management b. Program evaluation f. Research c. General purpose statistics g. P Regulatory or compliance d. __ Audit 16. Frequency of recordkeeping or reporting ( check all that apply) a. X Recordkeeping b. Q Third party disclosure c. X Reporting 1. Q On occasion 2. Q Weekly 3. Q Monthly 4. Q Quarterly 5. X Semi annually 6. Q Annually 7. Q Biannually 8. X Other ( describe) initial 17. Statistical methods Does this information collection employ statistical methods?

Q Yes X No 18. Agency contact ( person who can best answer questions regarding the content of this submission) Name: Gregory Fried Phone: ( 202) 564 7016 OMB 83 I 10/ 95 19. Certification for Paperwork Reduction Act Submissions On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with' 5 CFR 1320.9.

NOTE: The text of 5 CFR 1320.9, and the related provisions of 5 CFR 1320.8( b)( 3), appear at the end of the instructions. The certification is to be made with reference to those regulatory provisions as set forth in the instructions.

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

( a) It is necessary for the proper performance of agency functions;

( b) It avoids unnecessary duplication;

( c) It reduces burden on small entities;

( d) It uses plain, coherent, and unambiguous terminology that is understandable to respondents;

( e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

( f) It indicates the retention periods for recordkeeping requirements;

( g) It informs respondents of the information called for under 5 CFR 1320.8( b)( 3):

( i) Why the information is being collected; ( ii) Use of information; ( iii) Burden estimate; ( iv) Nature of response ( voluntary, required for a benefit, or mandatory); ( v) Nature and extent of confidentiality; and ( vi) Need to display currently valid OMB control number;

( h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected ( see note in Item 19 of the instructions);

( i) It uses effective and efficient statistical survey methodology; and ( j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item below and explain the reason in Item 18 of the Supporting Statement.

Signature of Program Official Michael S. Alushin, Director Compliance Assessment and Media Programs Division Office of Compliance Office of Enforcement and Compliance Assurance Date Signature of Senior Official or designee Oscar Morales, Director Collection Strategies Division Office of Environmental Information Date OMB 83 I 10/ 95


DRAFT Schedule for Belews Creek Sampling

Monday, October 20, 2008 (Set-up day)

5:50 am	Arrive at ERG and put any last things in the vans.

6:00 am	Leave ERG.

1:00 pm	Arrive at Belews Creek, check in, and go through safety
training.

3:30 pm	Unload supplies in staging area.

4:30 pm	Review SP-1 (FGD influent), SP-2 (FGD bio influent), and SP-3
(FGD bio effluent) sampling points and test out the sample collection
equipment (tap collection: test flow and pressure head).

5:15 pm	Prepare all supplies for sample collection the next morning.

6:00 pm	Leave Belews Creek.

Tuesday, October 21, 2008 (1st Sampling Day)

Prior to arrival at site, obtain bagged ice for cooling of samples

6:00 am	Arrive at Belews Creek and check in at guard house.

6:30 am	Begin set up at the FGD bio influent (SP-2).

7:00 am	Collect SP-2 (FGD bio influent) samples for the day 1 sample
collection.  Total metals and classical samples will be collected from
the tap.  Dissolved metals samples will be collected in 10-L containers
and pumped off.

9:00 am	Collect SP-2 day 1 dissolved samples.

10:45 am	Lunch

11:30 am	Collect SP-1 (FGD influent) samples.  Total metals and
classical samples will be collected from the tap.  Dissolved metal
samples will be collected in 10-L containers and pumped off.  (Need to
confirm with plant personnel that wastewater is being transferred from
the purge tank to the equalization tank.)

1:30 pm	Collect SP-1 dissolved samples.

3:15 pm	Sampling team packs coolers for FedEx shipment.

5:45 pm	Finish packing coolers and preparing supplies for the next day.

6:00 pm	Leave Belews Creek.  Drive to FedEx with all samples for
shipment.  FedEx in Winston Salem has last express drop off at 8:00 pm
and is about 40 minutes away.

Throughout the day, work with plant personnel on the engineering data
sheets.

Wednesday, October 22, 2008 (2nd Sampling Day)

Prior to arrival at site, obtain bagged ice for cooling of samples.

6:00 am	Arrive at Belews Creek and check-in at guard house.

6:30 am	Begin set up at the FGD bio influent (SP-2) for the day 2 sample
collection.

7:00 am	Collect SP-2 (FGD bio influent) day 2 samples.  Total metals and
classical samples will be collected from the tap.  Dissolved metal
samples will be collected in 10-L containers and pumped off.

9:00 am	Collect SP-2 day 2 dissolved samples.

10:45 am	Lunch.

11:15 am	Collect SP-3 (FGD bio effluent) day 1 samples.  Total metals
and classical samples will be collected from the tap.  Dissolved metal
samples will be collected in 10-L containers and pumped off.

1:15 pm	Collect SP-3 day 1 dissolved samples.

3:00 pm	Sampling team packs coolers for FedEx shipment.

5:45 pm	Finish packing coolers and preparing supplies for the next day.

6:00 pm	Leave Belews Creek.  Drive to FedEx with all samples for
shipment.  FedEx in Winston Salem has last express drop off at 8:00 pm
and is about 40 minutes away.

Throughout the day, work with plant personnel on the engineering data
sheets.

Thursday, October 23, 2008 (3rd Sampling Day and Clean up)

Prior to arrival at site, obtain bagged ice for cooling of samples.

7:00 am	Arrive at Belews Creek and check-in at guard house.

7:30 am	Part of sampling team begins cleaning up supplies used supplies
and organizing the staging area as much as possible.

	Another part of sampling team works with plant personnel to complete
the engineering data sheets as much as possible.

10:30 am	Lunch/snack prior to sample collection.

11:00 am	Collect SP-3 (FGD bio effluent) day 2 samples.  Total metals
and classical samples will be collected from the tap.  Dissolved metal
samples will be collected in 10-L containers and pumped off.

1:00 pm	Collect SP-3 day 2 dissolved samples.

2:45 pm	Sampling team packs coolers for FedEx shipment.  Sampling team
also packs all used equipment and other supplies for shipment to
suppliers and return to ERG.

5:45 pm	Finish packing coolers, packing equipment, cleaning staging
area, and loading supplies.

6:00 pm	Leave Belews Creek.  Drive to FedEx with all samples for
shipment.  FedEx in Winston Salem has last express drop off at 8:00 pm
and is about 40 minutes away.

Throughout the day, work with plant personnel on the engineering data
sheets.

Friday, October 24, 2008 (Clean up day, if necessary)

7:00 am	Arrive at Belews Creek and check-in at guard house.

7:30 am	Finish packing any remaining supplies and cleaning up the
staging area, if necessary.

10:00 pm	Leave Belews Creek.


MEMORANDUM TO: 304( m) Record ( EPA Docket Number OW 2003 0074)

FROM: Bob Southworth, ERG Senior Environmental Engineer DATE: October 7, 2003 SUBJECT: Review of the TWPE Loads for Selected Inorganic Chemicals Manufacturing Facilities Calculated Using Data from the 2000 TRI Database This memorandum presents the results of a review of the Toxic Weighted Pound Equivalent ( TWPE) loads for selected inorganic chemicals manufacturing facilities calculated using data from the 2000 Toxic Release Inventory ( TRI) database. It provides background information on the inorganic chemicals manufacturing facilities that released 90 percent of the TWPE load to surface water, discusses the pollutants with the highest TWPE loads, and identifies the inorganic chemicals manufacturing facilities that released the pollutants with the highest TWPE loads. The TRIReleases2000 database contains pollutant loads for direct discharging and indirect discharging facilities. Only the TWPE loads from direct discharging facilities are discussed in this memorandum because the scaled up TWPE load for indirect discharge is only 230,898 pounds.

Background Fourteen of the inorganic chemicals manufacturing facilities in the 2000 TRI database released 90 of the TWPE load to surface water for the inorganic chemicals manufacturing industry. Four of the facilities have a Standard Industrial Classification ( SIC) Code of 2812, three have a SIC Code of 2816, and seven have a SIC Code of 2819. The TWPE of non conventional and priority pollutants released by the 14 facilities in 2000 was 834,620. Attachment A contains the TWPE load for inorganic chemicals manufacturing facilities calculated using data from the 2000 TRI database, the percentage of the total TWPE load for each facility, and the cumulative percentage of the total TWPE for each facility.

Pollutants With High TWPE Loads The TWPE loads for seven pollutants comprise 90 percent of the total TWPE load for direct discharging inorganic chemicals manufacturing facilities in the 2000 TRI database. The seven pollutants and the TWPE load for each pollutant are presented in Table 1. 2 TABLE 1 TWPE LOAD FOR THE POLLUTANTS THAT COMPRISE 90 PERCENT OF THE TWPE LOAD FOR THE INORGANIC CHEMICALS MANUFACTURING INDUSTRY Pollutant TWPE ( pounds)

Dioxin/ Dioxin Like Compounds1 536,932 Hexachlorobenzene1 145,559 Sodium Nitrite2 85,124 Chlorine2 36,552 Manganese Compounds2 12,467 Vanadium Compounds2 9,404 Silver Compounds1 8,582 Total 834,620 1 Priority pollutant 2 Non conventional pollutant Three of the pollutants with the highest TWPE loads are priority pollutants and four are non conventional pollutants. Two of the pollutants ( i. e., dioxin and hexachlorobenzene) account for approximately 75 percent of the TWPE load for the above seven pollutants.

Facilities With Highest TWPE Loads The following inorganic chemicals manufacturing facilities released the TWPE load in the 2000 TRI database for the above seven pollutants. The number in parenthesis is the TRI identification number.

° Oxy Vinyl L. P. Deer Park, TX SIC 2812 ( 77536CCDNT1000T)

° DuPont New Johnsonville, TN SIC 2816 ( 37134DPNTJ1DUPO)

° PPG Industries, Inc. New Martinsville, WV SIC 2812 ( 26155PPGNDSTATE) 3 ° Millennium Inorganic Baltimore, MD SIC 2816 Chemicals, Inc ( 21226SCMCH3901G)

° GFS Chemicals Columbus, OH SIC 2819 ( 43223GFRDR867MC)

° Occidental Chemical Corp. St. James, LA SIC 2812 ( 70723CCDNTHIGHW)

° DuPont Edgemoor, DE SIC 2816 ( 19809DPNTD104HA)

° Repauno Prods L. L. C. Gibbstown, NJ SIC 2819 ( 08027RPNPR200NR)

° Nyacol Nano Techs, Inc. Ashland, MA SIC 2819 ( 01721NYCLPMEGUN)

° Engelhard Corp. Erie, PA SIC 2819 ( 16503CLSCT1707G)

° Occidental Chemical Corp St. Charles, LA. SIC 2812 ( 70057CCDNTLAHWY)

° AMAX Metals Recovery Braithwaite, LA SIC 2819 ( 70040MXMTLLAHWY)

° Engelhard Corp. Seneca, SC SIC 2819 ( 29678NGLHR554MO)

° Sud Chemie, Inc. Louisville, KY SIC 2819 ( 40210NTDCT1227S)

The inorganic chemicals manufacturing facilities that released the highest percentage of the TWPE load for the above seven pollutants are listed in Table 2. 4 TABLE 2 INORGANIC CHEMICALS MANUFACTURING FACILITIES THAT RELEASED THE HIGHEST PERCENTAGE OF THE TOP SEVEN POLLUTANTS Pollutant Facility Percentage of TWPE Released by Facility Dioxin/ Dioxin Like Compounds Oxy Vinyl L. P PPG Industries, Inc. Millennium Inorganic Chem. Occidental Chem.  St. James DuPont New Johnsonville Occidental Chem. St. Charles 55 16 15 6 5 3 Hexachlorobenzene DuPont New Johnsonville DuPont Edgemoor 80 20 Sodium Nitrite Repauno Prods. L. L. C. Nyacol Nano Techs, Inc. Engelhard Corp  Erie Engelhard Corp  Seneca 32 30 27 11 Chlorine GFS Chemical, Inc. 100 Manganese Compounds Millennium Inorganic Chem. 100 Vanadium Compounds AMAX Metals Recovery 100 Silver Compounds Sud Chemie, Inc. 100 For four of the above pollutants ( i. e, chlorine, manganese compounds, vanadium compounds, and silver compounds), one facility released 100 percent of the TWPE load for the pollutants. For dioxin/ dioxin like compounds, three facilities released 86 percent of the TWPE load for those compounds. For hexachlorobenzene, one facility released 80 percent of the total TWPE for that pollutant. In the case of sodium nitrite, three facilities released 89 percent of the TWPE load for that pollutant.

The effluent limitations guidelines ( ELG) for the inorganic chemicals manufacturing industry contain limits for one of the above pollutants ( i. e., silver). If EPA decides not to establish limits for the other pollutants in an ELG, limits for those pollutants and a revised limit for silver could be established on a case by case basis in a National Pollutant Discharge Elimination System permit based on Best Professional Judgement. This is a feasible approach because a small number of inorganic chemicals manufacturing facilities released most of the TWPE load for each of the pollutants. 5 Attachment 6 ATTACHMENT A TWPE LOADS FOR INORGANIC CHEMICALS MANUFACTURING FACILITIES CALCULATED USING DATA FROM THE 2000 TRI DATABASE


[Federal Register Volume 85, Number 240 (Monday, December 14, 2020)]
[Rules and Regulations]
[Pages 80646-80648]
[FR Doc No: 2020-26549]

=======================================================================
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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

49 CFR Part 26

RIN No. 2105-AE92

Disadvantaged Business Enterprise Program; Inflationary
Adjustment

AGENCY: Office of the Secretary (OST), Department of Transportation
(DOT).

ACTION: Final rule.

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

SUMMARY: The United States Department of Transportation (DOT) is
amending the small business size limit under its Disadvantaged Business
Enterprise (DBE) program, also known as the gross receipts cap, to
ensure that small businesses may continue to participate in the
Department's DBE program after taking inflation into account. This
final rule provides an inflation adjustment to the size limit on small
businesses participating in the DBE program and implements a statutory
change to the size standard pursuant to the Federal Aviation
Administration (FAA) Authorization Act of 2018.

DATES: This rule is effective January 13, 2021.

FOR FURTHER INFORMATION CONTACT: Chris Cialeo, Office of the General
Counsel (C-10), U.S. Department of Transportation, 1200 New Jersey
Avenue SE, Washington, DC 20590,<PHONE_NUMBER>,
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

    The DBE program for DOT-assisted contracts is a statutory program
intended to ensure nondiscriminatory contracting opportunities for
small business concerns owned and controlled by socially and
economically disadvantaged individuals in the Department's highway,
mass transit, and airport financial assistance programs. The statutory
provision governing the DBE program in the highway and mass transit
financial assistance programs is section 1101(b) of the Fixing
America's Surface Transportation (FAST) Act (Pub. L. 114-94, Dec. 4,
2015), and the statutory provision governing the DBE program as it
relates to airport financial assistance programs is 49 U.S.C. 47113.
    Under the Department's existing rules, to qualify as an eligible
DBE firm, a firm's average annual gross receipts over the preceding
three fiscal years cannot exceed a DOT-specific gross receipts cap. On
April 2, 2007, in response to direction in the Safe, Accountable,
Flexible, Efficient Transportation Equity Act: A Legacy for Users
(SAFETEA-LU) (Pub. L. 109-59, August 10, 2005) to adjust this gross
receipts cap annually for inflation, the Department published a final
rule adjusting the gross receipts cap for its DBE program in 49 CFR
part 26 from $19,570,000 to $20,410,000 (72 FR 15614). On April 3,
2009, the Department published another final rule adjusting the gross
receipts cap for its DBE program from $20,410,000 to $22,410,000 (74 FR
15222). The Moving Ahead for Progress in the 21st Century (MAP-21) Act
(Pub. L. 112-141, July 6, 2012) maintained the $22,410,000 gross
receipts cap amount set by the April 2009 final rule. On October 2,
2014, the Department issued a final rule that increased the gross
receipts cap to $23,980,000 (79 FR 59565). In 2015, The FAST Act
maintained the $23,980,000 gross receipts cap set by the October 2014
rule. Section 1101(b)(2)(A)(ii) of the FAST Act reaffirms the Secretary
of Transportation's requirement to adjust this amount annually for
inflation. Accordingly, this final rule adjusts the gross receipts cap
for inflation by increasing the gross receipts cap applicable to firms
for purposes of Federal Highway Administration (FHWA)--and Federal
Transit Administration (FTA)--assisted work to $26,290,000.
    The Federal Aviation Administration (FAA) Reauthorization Act of
2018 (Pub. L. 115-254) removed the gross receipts cap for purposes of
eligibility for FAA-assisted work. Therefore, the revised rule reflects
that the gross receipts cap does not apply for purposes of determining
a firm's eligibility for FAA-assisted work.

II. Business Size Standards for the DBE Program

    To make an inflation adjustment to the gross receipts figures, DOT
uses the Department of Commerce's price index for State and local
consumption expenditures (gross output of general government). The
Bureau of Economic Analysis at the Department of Commerce prepares
constant dollar estimates of State and local government purchases of
goods and services by deflating current dollar estimates by suitable
price indexes. These indexes include purchases of durable and non-
durable goods, and other services. Using these price deflators enables
the Department to adjust dollar figures for inflation from past years.
    The current inflation rate on purchases by State and local
governments is calculated by dividing the price deflator for the fourth
quarter of 2019 (116.030) by 2015's fourth quarter price deflator
(105.829). See Bureau of Economic Analysis Table 3.10.4, Price Indexes
for Government Consumption Expenditures and General Government Gross
Output (January 30, 2020). The result of the calculation is 1.09639,
which represents an inflation rate of 10.9639% from the fourth quarter
of 2015. Multiplying the FAST Act's $23,980,000 standard for
disadvantaged business enterprises in DOT financial assistance programs
by 1.09639 equals $26,291,465, which will be rounded off to the nearest
$10,000 is $26,290,000. Therefore, if a firm's gross receipts averaged
over the firm's previous three fiscal years exceeds $26,290,000, it
exceeds the small business size limit for participation in FHWA and
FTA-assisted work under the Department's DBE program. The Department
will adjust this amount for inflation on an annual basis. In subsequent
years, the revised amount will be published on the Departmental Office
of Civil Rights' website.

Regulatory Analyses and Notices

    Under the Administrative Procedure Act (5 U.S.C. 553(b)(B)), an
agency may waive notice and comment procedures if it finds good cause
that such procedures are impracticable, unnecessary, or contrary to the
public interest. The Department finds that notice and comment for this
rule is unnecessary because it only relates to ministerial updates of
business size standards and gross receipts caps to account for
inflation, which does not change the standards or caps in real dollar
terms. Accordingly, the Department finds good cause under 5 U.S.C.
553(b)(B) to waive notice and opportunity for public comment.

A. Executive Order 13771 (Reducing Regulation and Controlling
Regulatory Costs), Executive Order 12866 (Regulatory Planning and
Review), Executive Order 13563 (Improving Regulation and Regulatory
Review), and 49 CFR Part 5 (DOT Administrative Rulemaking, Guidance,
and Enforcement Procedures)

    This rule is not a significant regulatory action under Executive
Order 12866, Regulatory Planning and Review, as supplemented by
Executive Order 13563, Improving Regulation and Regulatory Review. It
is also not significant within the meaning of DOT regulatory policies
and procedures. This rule is issued in accordance with the Department's
rulemaking procedures found in 49 CFR part 5 and DOT Order 2100.6.
    The Department does not anticipate that this rulemaking will have
an economic impact on regulated entities. The rule is a ministerial
adjustment for inflation of a statutory small business size standard.
It will not impose burdens on any regulated parties.
    This rule is not an Executive Order 13771 regulatory action because
this rule is not significant under Executive Order 12866.

B. Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354,
5 U.S.C. 601-612), DOT has evaluated the effects of this action on
small entities and have determined that the action will not have a
significant economic impact on a substantial number of small entities.
The rule is a ministerial update to the size limits to define small
businesses for the Department's Financial Assistance Program for
Disadvantaged Business Enterprises. The only effect of the rule on
small entities is to allow some small businesses to continue to
participate in the DBE programs by adjusting for inflation, and to
align the regulation with a change to the part 26 size standard for
FAA-assisted work pursuant to the FAA Reauthorization Act of 2018.
Therefore, the Department certifies that this rule would not have a
significant economic impact on a substantial number of small entities.

C. Executive Order 13132 (Federalism)

    This action has been analyzed in accordance with the principles and
criteria contained in Executive Order 13132 (Federalism), and the
Department has determined that this action will not have sufficient
federalism implications to warrant the preparation of a federalism
assessment. The Department has also determined that this action will
not preempt any State law or State regulation or affect the States'
ability to discharge traditional State governmental functions.

D. Executive Order 13175 (Tribal Consultation)

    This rule has been analyzed in accordance with the principles and
criteria contained in Executive Order 13175 (Consultation and
Coordination with Indian Tribal Governments). Because this rule will
not significantly or uniquely affect the Indian tribal communities, and
will not impose substantial direct compliance costs, the funding and
consultation requirements of the Executive Order do not apply.

E. Unfunded Mandates Reform Act of 1995

    This rule does not impose unfunded mandates as defined by the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4; 109 Stat. 48).
This rule will not result in the expenditure by State, local, and
tribal governments, in the aggregate, or by the private sector, of
$148.1 million or more in any one year (2 U.S.C. 1532). The definition
of ``Federal mandate'' in the Unfunded Mandates Reform Act excludes
financial assistance of the type in which State, local, or tribal
governments have authority to adjust their participation in the program
in accordance with changes made in the program by the Federal
Government. Since this rule pertains to a nondiscrimination requirement
and affects only Federal financial assistance programs, the Unfunded
Mandates Reform Act does not apply.

F. Executive Order 12372 (Intergovernmental Review)

    The regulations implementing Executive Order 12372 regarding
intergovernmental consultation on Federal programs and activities do
not apply to this program.

G. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501),
Federal agencies must obtain approval from the Office of Management and
Budget (OMB) for each collection of information they conduct, sponsor,
or require through regulations. The Department has determined that this
rule does not contain collection of information requirements for the
purposes of the PRA.

H. National Environmental Policy Act

    The agency has analyzed the environmental impacts of this action
pursuant to the National Environmental Policy Act of 1969 (NEPA) (42
U.S.C. 4321, et seq.) and has determined that it is categorically
excluded pursuant to DOT Order 5610.1C, ``Procedures for Considering
Environmental Impacts'' (44 FR 56420, October 1, 1979). Categorical
exclusions are actions identified in an agency's NEPA implementing
procedures that do not normally have a significant impact on the
environment and therefore do not require either an environmental
assessment or environmental impact statement. The purpose of this
rulemaking is to make an inflation adjustment of the size limit on
small businesses participating in the DBE program. The agency does not
anticipate any environmental impacts, and there are no extraordinary
circumstances pertaining to this rulemaking.

List of Subjects in 49 CFR Part 26

    Administrative practice and procedure, Civil rights, Disadvantaged
business, Government contracts, Grant programs-transportation, Highways
and roads, Mass transportation, Minority business, Reporting and
recordkeeping requirements, Small business.

    For the reasons stated in the preamble, the Department of
Transportation amends 49 CFR part 26 as follows:

PART 26--PARTICIPATION BY DISADVANTAGED BUSINESS ENTERPRISES IN
DEPARTMENT OF TRANSPORTATION FINANCIAL ASSISTANCE PROGRAMS

0
1. The authority citation for part 26 is revised to read as follows:

    Authority: 23 U.S.C. 324; 42 U.S.C. 2000d, et seq.; Sec.
1101(b), Pub. L. 114-94, 129 Stat. 1312, 1324; 49 U.S.C. 47113,
47123; Sec. 150, Pub. L. 115-254, 132 Stat. 3215.

0
2. In Sec.  26.65, revise paragraph (b) to read as follows:

Sec.  26.65  What rules govern business size determinations?

* * * * *
    (b) Even if it meets the requirements of paragraph (a) of this
section, a firm is not an eligible DBE for the purposes of Federal
Highway Administration and Federal Transit Administration-assisted work
in any Federal fiscal year if the firm (including its affiliates) has
had average annual gross receipts, as defined by SBA regulations (see
13 CFR 121.104), over the firm's previous three fiscal years, in excess
of $26.29 million. The Department will adjust this amount for inflation
on an annual basis. The adjusted amount will be published on the
Department's website in subsequent years.
* * * * *

    Issued this 25th day of November, 2020, at Washington, DC, under
authority delegated in 49 CFR 1.27(a).
Steven G. Bradbury,
General Counsel.
[FR Doc. 2020-26549 Filed 12-11-20; 8:45 am]
BILLING CODE 4910-9X-P