[Federal Register Volume 77, Number 35 (Wednesday, February 22, 2012)]
[Proposed Rules]
[Pages 10424-10430]
[FR Doc No: 2012-4171]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R05-OAR-2009-0695; FRL-9635-3]

Approval and Promulgation of Implementation Plans; Wisconsin;
Volatile Organic Compound Emission Control Measures for Milwaukee and
Sheboygan Ozone Nonattainment Areas

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: On September 1, 2009, November 16, 2011, and January 26, 2012,
the Wisconsin Department of Natural Resources (WDNR) submitted several
volatile organic compound (VOC) rules for approval into its State
Implementation Plan (SIP). The purpose of these rules is to satisfy the
Clean Air Act's (the Act) requirement that states revise their SIPs to
include reasonably available control technology (RACT) for sources of
VOC emissions in moderate ozone nonattainment areas. Wisconsin's VOC
rules provide RACT requirements for the Milwaukee-Racine and Sheboygan
8-hour ozone nonattainment areas. These rules are approvable because
they are consistent with the Control Technique Guideline (CTG)
documents issued by EPA in 2006 and 2007 and satisfy the RACT
requirements of the Act.

DATES: Comments must be received on or before March 23, 2012.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R05-
OAR-2009-0695, by one of the following methods:
     www.regulations.gov: Follow the on-line instructions for
submitting comments.
     Email<EMAIL_ADDRESS>     Fax:<PHONE_NUMBER>.
     Mail: Douglas Aburano, Chief, Attainment Planning and
Maintenance Section (AR-18J), U.S. Environmental Protection Agency, 77
West Jackson Boulevard, Chicago, Illinois 60604.
     Hand Delivery: Douglas Aburano, Chief, Attainment Planning
and Maintenance Section (AR-18J), U.S. Environmental Protection Agency,
77 West Jackson Boulevard, 18th floor, Chicago, Illinois 60604. Such
deliveries are only accepted during the Regional Office's normal hours
of operation, and special arrangements should be made for deliveries of
boxed information. The Regional Office official hours of business are
Monday through Friday, 8:30 a.m. to 4:30 p.m., excluding Federal
holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R05-OAR-
2009-0695. EPA's policy is that all comments received 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 information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through www.regulations.gov or email. The
www.regulations.gov Web site is an ``anonymous access'' system, which
means EPA will not know your identity or contact information unless you
provide it in the body of your comment. If you send an email comment
directly to EPA without going through www.regulations.gov your email
address will be automatically captured and included as part of the
comment that is placed in the public docket and made available on the
Internet. If you submit an electronic comment, EPA recommends that you
include your name and other contact information in the body of your
comment and with any disk or CD-ROM you submit. 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. For additional
instructions on submitting comments, go to Section I of the
SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the
www.regulations.gov

index. Although listed in the index, some information is not publicly
available, e.g., CBI or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, will be publicly available only in hard copy. Publicly
available docket materials are available either electronically in
www.regulations.gov or in hard copy at the Environmental Protection
Agency, Region 5, Air and Radiation Division, 77 West Jackson
Boulevard, Chicago, Illinois 60604. This facility is open from 8:30 AM
to 4:30 PM, Monday through Friday, excluding federal holidays. We
recommend that you telephone Steven Rosenthal at<PHONE_NUMBER> before
visiting the Region 5 office.

FOR FURTHER INFORMATION CONTACT: Steven Rosenthal, Environmental
Engineer, Attainment Planning & Maintenance Section, Air Programs
Branch (AR-18J), U.S. Environmental Protection Agency, Region 5, 77
West Jackson Boulevard, Chicago, Illinois 60604,<PHONE_NUMBER>,
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,''
``us,'' or ``our'' is used, we mean EPA. This SUPPLEMENTARY INFORMATION
section is arranged as follows:

I. What should I consider as I prepare my comments for EPA?
II. What action is EPA taking today?
III. What is the purpose of this action?
IV. What is EPA's analysis of Wisconsin's submitted VOC rules?
V. Statutory and Executive Order Reviews

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

    When submitting comments, remember to:
    1. Identify the rulemaking by docket number and other identifying
information (subject heading, Federal Register date, and page number).
    2. Follow directions--The EPA may ask you to respond to specific
questions or organize comments by referencing a Code of Federal
Regulations (CFR) part or section number.
    3. Explain why you agree or disagree; suggest alternatives and
substitute language for your requested changes.
    4. Describe any assumptions and provide any technical information
and/or data that you used.
    5. If you estimate potential costs or burdens, explain how you
arrived at your estimate in sufficient detail to allow for it to be
reproduced.
    6. Provide specific examples to illustrate your concerns, and
suggest alternatives.
    7. Explain your views as clearly as possible, avoiding the use of
profanity or personal threats.
    8. Make sure to submit your comments by the comment period deadline
identified.

II. What action is EPA taking today?

    EPA is proposing to approve into the Wisconsin SIP several new and
revised VOC rules which set out RACT requirements for categories of VOC
sources in two ozone nonattainment areas. These rules correspond to and
are consistent with the source categories and control recommendations
in the CTGs issued by EPA in 2006 and 2007, as well as EPA RACT
guidance for earlier CTGs and source categories not covered by a CTG.
Wisconsin adopted new or revised rules for industrial cleaning
solvents, flat wood paneling coatings, flexible packaging printing
materials, lithographic printing materials, letterpress printing
materials, paper, film and foil coatings, metal furniture coatings,
large appliance coatings, industrial wastewater collection and
treatment operations, and reactor processes and distillation operations
in the synthetic organic chemical manufacturing industry (SOCMI).

III. What is the purpose of this action?

    The primary purpose of these rules is to satisfy the requirement in
section 182(b) of the Act that VOC RACT rules be adopted in
nonattainment areas for the source categories covered by the CTG
documents issued by EPA in 2006 and 2007. These rule revisions also
include previously required SOCMI air oxidation, distillation and
reactor regulations as well as an industrial wastewater rule that is
required because industrial wastewater is a major non-CTG category for
which RACT rules are required. The Milwaukee-Racine and Sheboygan 8-
hour ozone nonattainment areas are classified as moderate nonattainment
for the 8-hour ozone national ambient air quality standard. See 40 CFR
81.31 and 81.314. According to EPA policy, Wisconsin does not need to
adopt rules for the source categories covered by the CTGs issued on
September 30, 2008, because it submitted a complete 8-hour ozone
redesignation request (on September 11, 2009) before September 30,
2009, the date upon which rules consistent with these CTGs were
required (according to section 182(b)) to be adopted and submitted as
SIP revisions.
    Section 182(b)(2) of the Act requires that, for areas classified as
moderate or above for ozone nonattainment, states must revise their
SIPs to adopt RACT requirements for VOC sources that are covered by
CTGs. RACT is defined as the lowest emissions limitation that a
particular source is capable of meeting by the application of control
technology that is reasonably available considering technological and
economic feasibility (44 FR 53762; September 17, 1979). CTGs are
documents issued by EPA to provide states with the EPA's recommendation
on how to control the emissions of VOC from a specific type of product
or source category in an ozone nonattainment area. A CTG provides
information on determining RACT for a source category, including
recommendations on control options and enforcement provisions for the
category.

IV. What is EPA's analysis of Wisconsin's submitted VOC rules?

    EPA has reviewed Wisconsin's new and revised VOC rules for the
source categories covered by the 2006 and 2007 CTGs, as well as
corrections to rules that were required to be submitted to EPA on
September 15, 2006, and proposes to find that these rules are
consistent with the control measures, definitions, recordkeeping and
test methods in these CTGs and applicable EPA RACT guidance at
www.epa.gov/ttn/naaqs/ozone/ozonetech/#ref. Therefore EPA is proposing
to approve these rules as meeting the RACT requirements in the Act. A
brief discussion of these rules follows.

NR 400.02 (54m)--Definitions

    A reference to digital printing has been added to Wisconsin's
printing regulations. This definition of ``digital printing'' is
approvable because it is a necessary update to the definition and
accurately describes digital printing.

NR 419.045--Industrial Wastewater Operations

    This new rule applies to sources that have potential VOC emissions
greater than or equal to 100 tons per year from industrial wastewater
operations and any other non-CTG source category without a final CTG,
such as batch operations. The VOC emissions from industrial wastewater
collection and treatment processes evaporate from the waste stream when
exposed to the ambient air. Consequently, the VOC RACT requirements
consist of implementing technologies and work practice standards that
combine to substantially suppress the exposure of the VOC-laden waste
stream to the ambient air. More specifically, the requirements include:
    (1) Oil-water separators must be provided with either a floating
cover

equipped with seals or a fixed cover, equipped with a closed vent
system vented to a pollution control device;
    (2) Each surface impoundment must: (1) Be equipped with a cover or
closed vent system which routs the VOCs to a control device or (2) be
equipped with a floating flexible membrane cover;
    (3) All process drains must be equipped with (1) a water seal or a
tightly fitting cap or plug or (2) a cover, and if the cover is vented,
the vapors must be routed to a process or through a closed vent system
to a control device; and
    (4) All junction boxes must be equipped with a tightly fitting
solid cover or vented to a process or to a control device.
    Also, several definitions have been added to NR 419.02 to clarify
the requirements in NR 419.045. These definitions are approvable
because they are necessary for implementation of the wastewater rule
and they accurately describe the terms that are being defined.
    This rule is based on and is consistent with EPA's 1992 draft CTG
``Control of VOC Emissions from Industrial Wastewater'' and EPA's 1994
``Industrial Wastewater Act.''
    NR 420.02 (31)--The definition of ``Reid vapor pressure'' was
amended to refer to the appropriate ASTM method.

NR 421--Control of Organic Emissions From Chemical, Coatings, and
Rubber Products Manufacturing

    As discussed previously, Wisconsin is required to develop
industrial cleaning solvent regulations consistent with EPA's 2006
Industrial Cleaning Solvent CTG. Some of these cleaning solvent
requirements are contained within source category specific rules and
some are contained within a general cleaning solvent regulation (NR
423.037).
    Wisconsin has adopted similar cleaning solvent requirements for
synthetic resin manufacturing (NR 421.05) and coatings manufacturing
(NR 421.06). These requirements are based on the (California) Bay Area
Air Quality Management District's rules, which are referenced in EPA's
CTG. These requirements apply to cleaning mixing vats, high dispersion
mills, grinding mills, tote tanks and roller mills and consist of four
options: (1) The solvent or solvent solution used must either contain
less than 1.67 pounds VOC per gallon or have a VOC composite partial
vapor pressure of less than or equal to 8 millimeters (mm) of mercury
(Hg) and the solvent or solvent solution must be collected and stored
in closed containers, or (2) several work practices must be
implemented, including storing all VOC-containing cleaning materials in
closed containers, or (3) the emissions from equipment cleaning must be
collected and vented to an emission control system with an overall
control efficiency of 80 percent or more on a mass basis, or (4) no
more than 60 gallons of virgin solvent per month may be used. In
addition, the owner or operator of a facility engaged in wipe cleaning
may not use open containers for the storage of solvent or solvent
solution used for cleaning or for the storage or disposal of any
material impregnated with solvent or solvent solution used for
cleaning. Records of the volume of virgin solvent used per month, VOC
content in pounds of VOC per gallon or VOC composite pressure are
required, if applicable to the option chosen for achieving compliance.
    In addition, accurate definitions of ``tote tank'' and ``wipe
cleaning'' have been added to properly implement these rules.
    These cleaning solvent requirements are therefore approvable
because they are consistent with EPA guidance and require adequate
recordkeeping.
    Wisconsin has also adopted SOCMI air oxidation, distillation and
reactor regulations in NR 421.07. NR 421.07(1)(a)(intro) specifies that
these SOCMI requirements apply to any facility that is located in the
Milwaukee-Racine and Sheboygan areas that operates a SOCMI air
oxidation unit, distillation operation, or reactor process, as those
activities are defined in NR 440.675(2)(c), 440.686(2)(e) and
440.705(2)(o), respectively, to produce any chemical as a product,
coproduct, byproduct or intermediate that is listed in the CTGs for
these categories.
    Affected facilities must comply with subsections (a), (b), or (c),
from NR 440.675(3), NR 440.686(3), and NR 440.705(3) for each vent
stream.
     (a) Reduce emissions of total organic compounds (TOC) (minus
methane and ethane) by 98 weight-percent or to a TOC (minus methane and
ethane) concentration of 20 parts per million by volume (ppmv) on a dry
basis corrected to 3% oxygen, whichever is less stringent. If a boiler
or process heater is used to comply with this paragraph, then the vent
stream shall be introduced into the flame zone of the boiler or process
heater; or
     (b) Combust the emissions in a flare that complies with the flare
requirements in EPA's new source performance standards; or
     (c) Maintain a total resource effectiveness (TRE) index value
greater than 1.0 without use of VOC emission control devices. TRE is a
measure of the supplemental total resource requirement (or cost-
effectiveness) per unit reduction of TOC associated with an individual
vent stream, based on vent stream flow rate, emission rate of TOC, net
heating value and corrosion properties, whether or not the vent stream
is halogenated.
    Wisconsin's SOCMI applicability criteria and control requirements
are consistent with EPA's CTGs and are therefore approvable.

NR 422--Control of Organic Compound Emissions From Surface Coating,
Printing and Asphalt Surfacing Operations

    NR 422.02--Definitions--Wisconsin has added several definitions
that are needed to properly implement its coating and printing rules.
These definitions are necessary and accurate and are therefore
approvable.

NR 422.05--Can Coating

    Wisconsin has amended its can coating rules to incorporate the
industrial solvent cleaning requirements from the industrial solvent
cleaning CTG. These requirements apply to any can coating facility with
VOC emissions from all industrial cleaning operations which equal or
exceed three tons per year on a 12 consecutive month rolling basis.
    With the exception of cleaning of heptane-containing end sealant
application equipment lines (at 5.8 pounds VOC/gallon) and cleaning of
metal can identification ink application equipment (at 7.4 pounds VOC/
gallon), cleaning solvent must not exceed a VOC content limit of 0.42
pounds VOC/gallon, as specified in the CTG. Based upon information
submitted by the Can Manufacturers Institute, EPA agrees that the
higher limits represent RACT. In lieu of complying with these VOC
content limits, an alternative limit of 8 mm Hg (and 10 mm Hg for
heptane-containing end sealant application equipment lines) is
consistent with the CTG.
    The CTG also references the solvent cleaning requirements in the
South Coast Air Quality Management District's (SCAQMD)--in the Los
Angeles area--solvent cleaning rules. These rules are therefore
considered to satisfy RACT. Wisconsin has included several cleaning
device and method requirements as well as storage, disposal and
transport requirements from the SCAQMD's Rule 1171. Wisconsin's rule
also has adequate recordkeeping requirements. The additions to
Wisconsin's can coating rule are therefore approvable.

NR 422.06--Coil Coating

    Wisconsin has amended its coil coating rules to incorporate the
industrial solvent cleaning requirements from the industrial solvent
cleaning CTG. These requirements apply to any coil coating facility
with VOC emissions from all industrial cleaning operations which equal
or exceed three tons per year on a 12 consecutive month rolling basis.
    As specified in the CTG, cleaning solvent must not exceed a VOC
content limit of 0.42 pounds VOC/gallon. In lieu of complying with this
VOC content limit, an alternative limit of 8 mm Hg is also consistent
with the CTG.
    The CTG also references the solvent cleaning requirements in the
SCAQMD solvent cleaning rules. Wisconsin has included several cleaning
device and method requirements as well as storage, disposal and
transport requirements from the SCAQMD's Rule 1171. Wisconsin's rule
also has adequate recordkeeping requirements. The additions to
Wisconsin's coil coating rule are therefore approvable.

NR 422.075--Paper Coating--Part 2

    This section has been added to be consistent with EPA's 2007 CTG
for Paper, Film, and Foil Coatings. Wisconsin's VOC content limits are
0.20 pounds VOC/pound of solids applied for pressure sensitive tape and
label surface coatings, and 0.40 pounds VOC/pound solids applied for
all other paper coatings, which are consistent with the CTG. When
compliance is achieved by the use of add-on control, the required
overall control efficiency of 90 percent is also consistent with the
CTG. Wisconsin's paper coating rule also contains work practices to
minimize VOC emissions from mixing operations, storage tanks, and other
containers, and handling operations for coatings, thinners, cleaning
materials and waste materials. The requirements in this section are
approvable because they are consistent with the subject CTG.

NR 422.08--Fabric and Vinyl Coating

    Wisconsin has amended its fabric and vinyl coating rules to
incorporate the industrial solvent cleaning requirements from the
industrial solvent cleaning CTG. These requirements apply to any fabric
and vinyl coating facility with VOC emissions from all industrial
cleaning operations which equal or exceed three tons per year on a 12
consecutive month rolling basis.
    As specified in the CTG, cleaning solvent must not exceed a VOC
content limit of 0.42 pounds VOC/gallon. In lieu of complying with this
VOC content limit, an alternative limit of 8 mm Hg is also consistent
with the CTG.
    The CTG also references the solvent cleaning requirements in the
SCAQMD solvent cleaning rules. Wisconsin has included several cleaning
device and method requirements as well as storage, disposal and
transport requirements from the SCAQMD's Rule 1171. Wisconsin's rule
also has adequate recordkeeping requirements. The additions to
Wisconsin's fabric and vinyl coating rule are therefore approvable.

NR 422.083--Plastic Parts Coating

    This section has been amended to include the cleaning material work
practices in EPA's 2008 CTG for Miscellaneous Metals and Plastic Parts
Coating. These work practices include storing all VOC-containing
cleaning materials and shop towels used for cleaning in closed
containers and minimizing emissions of VOC during cleaning of coating
application, storage, mixing, and conveying equipment by ensuring that
cleaning is performed without atomizing any VOC-containing cleaning
material and that the used material is captured and contained. These
work practices satisfy Wisconsin's requirement to have acceptable
cleaning solvent requirements for plastic parts coating operations and
are approvable.

NR 422.09--Automobile and Light-Duty Truck Manufacturing

    This section has been amended to include the cleaning material work
practices in EPA's 2008 CTG for Automobile and Light-Duty Truck
Assembly Coatings. A subject facility must develop and implement a work
practice plan to minimize VOC emissions from cleaning and purging of
equipment associated with all coating operations. This plan must
specify practices and procedures for vehicle body wiping, coating line
purging, flushing of coating systems, cleaning of spray booth grates,
walls and equipment as well as external spray booth areas. These work
practices satisfy Wisconsin's requirement to have acceptable cleaning
solvent requirements for automobile and light-duty truck assembly
coatings operations and are approvable.

NR 422.095--Automobile Refinishing Operations

    Wisconsin has amended its automobile refinishing operations rules
to incorporate the industrial solvent cleaning requirements from the
industrial solvent cleaning CTG. These requirements apply to any
automobile refinishing facility with VOC emissions from all industrial
cleaning operations which equal or exceed three tons per year on a 12
consecutive month rolling basis.
    As specified in the CTG, cleaning solvent must not exceed a VOC
content limit of 0.42 pounds VOC/gallon. In lieu of complying with this
VOC content limit, an alternative limit of 8 mm Hg is also consistent
with the CTG.
    The CTG also references the solvent cleaning requirements in the
SCAQMD solvent cleaning rules. Wisconsin has included several cleaning
device and method requirements as well as storage, disposal and
transport requirements from the SCAQMD's Rule 1171. Wisconsin's rule
also has adequate recordkeeping requirements. The additions to
Wisconsin's automobile refinishing rule are therefore approvable.

NR 422.105 Furniture Metal Coatings--Part 2

    This section has been added to be consistent with EPA's 2007 CTG
for Metal Furniture Coatings. Wisconsin's VOC content limits, e.g. 2.3
pounds VOC/gallon for general, one component coatings, are consistent
with the CTG. When compliance is achieved by the use of add-on control,
the required overall control efficiency of 90 percent is also
consistent with the CTG. Wisconsin's metal furniture coating rule also
contains work practices to minimize VOC emissions from mixing
operations, storage tanks, and other containers, and handling
operations for coatings, thinners, cleaning materials and waste
materials. The requirements in this section are approvable because they
are consistent with the subject CTG.

NR 422.115 Surface Coating of Large Appliance--Part 2

    This section has been added to be consistent with EPA's 2007 CTG
for Large Appliance Coatings. Wisconsin's VOC content limits, e.g. 2.3
pounds VOC/gallon for general, one component coatings, are consistent
with the CTG. When compliance is achieved by the use of add-on control,
the required overall control efficiency of 90 percent is also
consistent with the CTG. Wisconsin's large appliance coating rule also
contains work practices to minimize VOC emissions from mixing
operations, storage tanks, and other containers, and handling
operations for coatings, thinners, cleaning materials and waste
materials. The requirements in this section are approvable because they
are consistent with the subject CTG.

NR 422.125 Wood Furniture Coating

    Wisconsin's wood furniture coating rule has been amended to include
cleaning material work practices that are consistent with EPA's 1996
CTG for the Control of VOC Emissions from Wood Furniture Manufacturing
Operations. The 25 tons per year potential applicability cutoff has
been revised to include the emissions from any related cleaning
activities. These cleaning material work practices include storing VOC
containing materials in closed containers, collecting all VOC-
containing cleaning material used to clean spray guns and spray gun
lines in a container and keeping the container covered except when
adding or removing material, controlling emissions of VOC containing
material from washoff operations and using strippable spray booth
materials containing no more than 0.8 pounds of VOC per pound of
solids. These work practices are consistent with the wood furniture CTG
and are approvable.

NR 422.127 Use of Adhesives

    Wisconsin's adhesives rule has been amended to include cleaning
material work practices that are consistent with EPA's 2008 CTG for
Miscellaneous Industrial Adhesives. These work practices include
storing all VOC-containing cleaning materials in closed containers and
minimizing emissions of VOC during cleaning of coating application,
storage, mixing, and conveying equipment by ensuring that cleaning is
performed without atomizing any VOC containing cleaning material and
that the used material is captured and contained. An applicability
cutoff of three tons on a 12 consecutive month rolling basis has also
been added. These work practices are consistent with the miscellaneous
industrial adhesives CTG and are approvable.

NR 422.131 Flat Wood Panel Coating--Part 2

    This section has been added to be consistent with EPA's 2006 CTG
for Flat Wood Paneling Coatings. Wisconsin's VOC content limit is 2.1
pounds VOC/gallon, which is consistent with the CTG. When compliance is
achieved by the use of add-on control, the required overall control
efficiency of 90 percent is also consistent with the CTG. Wisconsin's
flat wood paneling rule also contains work practices to minimize VOC
emissions from mixing operations, storage tanks, and other containers,
and handling operations for coatings, thinners, cleaning materials and
waste materials. The requirements in this section are approvable
because they are consistent with the subject CTG.

NR 422.14 Graphic Arts

    Wisconsin has amended its graphic arts rule to incorporate the
industrial solvent cleaning requirements from the industrial solvent
cleaning CTG. These requirements apply to any (non-flexible packaging)
graphic arts facility with VOC emissions from all industrial cleaning
operations which equal or exceed three tons per year on a 12
consecutive month rolling basis.
    As specified in the CTG, cleaning solvent must not exceed a VOC
content limit of 0.42 pounds VOC/gallon--except for a 0.83 pounds VOC/
gallon limit for cleaning of publication rotogravure ink application
equipment and a 5.4 pounds VOC/gallon limit for cleaning of ultraviolet
ink application equipment. The latter two limits are based on the
SCAQMD's Rule 1171, discussed above. In lieu of complying with these
VOC content limits, an alternative limit of 8 mm Hg is also consistent
with the CTG. Wisconsin has included several cleaning device and method
requirements as well as storage, disposal and transport requirements
from the SCAQMD's Rule 1171. Wisconsin's rule also has adequate
recordkeeping requirements. The additions to Wisconsin's graphic arts
rule are therefore approvable.

NR 422.141--Flexible Package Printing

    These regulations have been revised based on and are consistent
with EPA's 2006 CTG for Flexible Packaging Printing Materials. Subject
printing lines may comply by meeting limits of 0.8 pounds VOC per pound
of solids applied or 0.16 pounds VOC per pound of ink and coatings
applied. Alternatively, compliance can be achieved by the use of add-on
control achieving an overall reduction in VOM emissions ranging from 65
percent to 80 percent, depending upon when the printing line and
control device were constructed. Work practices to reduce emissions
from the use of VOM containing cleaning materials are also required.
These work practices require that solvents used in cleaning operations
be stored in covered containers and that VOC-containing cleaning
material be conveyed in closed containers or pipes. The requirements in
this section are approvable because they are consistent with the
subject CTG.

NR 422.143 Lithographic Printing--Part 2

    These regulations are based on and are consistent with EPA's 2006
CTG for Lithographic Printing. The control requirements for cleaning
materials and fountain solutions apply if the combined emissions of VOC
exceed three tons on a 12 consecutive month rolling basis. The add-on
control requirements for heatset web offset printing operations apply
if the potential emissions of VOC from a lithographic press dryer equal
or exceed 25 tons per year. The fountain solution is subject to a
percent VOC limit, based upon the temperature and whether or not the
fountain solution contains alcohol. The cleaning materials (blanket or
roller wash) must not exceed 30 percent by weight (nor equal or exceed
70 percent by weight for ultraviolet ink application equipment) VOC or
the VOC composite partial pressure must be less than or equal to 10 mm
Hg. An add-on control device on a subject heatset dryer must achieve a
90 percent or 95 percent reduction of VOC emissions, depending on the
installation date of the add-on control device, or alternatively can
comply by not exceeding an outlet concentration of 20 ppmv, as carbon.
Recordkeeping requirements are also specified to establish compliance
with the applicable limits. The requirements in this section are
approvable because they are consistent with the subject CTG.

NR 422.144 Letterpress Printing

    These regulations are based on and are consistent with EPA's 2006
CTG for Letterpress Printing. The control requirements for cleaning
materials apply if the combined emissions of VOC exceed three tons on a
12 consecutive month rolling basis. The add-on control requirements for
heatset web letterpress printing operations apply if the potential
emissions of VOC from a lithographic press dryer equal or exceed 25
tons per year. The cleaning materials (blanket or roller wash) must not
equal or exceed 70 percent by weight VOC or the VOC composite partial
pressure must be less than 10 mm Hg. An add-on control device on a
subject heatset dryer must achieve a 90 percent or 95 percent reduction
of VOM emissions, depending on the installation date of the add-on
control device. Recordkeeping requirements are also specified to
establish compliance with the applicable limits. The requirements in
this section are approvable because they are consistent with the
subject CTG.

NR 422.145 Screen Printing

    Wisconsin has amended its screen printing rules to incorporate the
industrial solvent cleaning requirements in the CTG for Industrial
Cleaning Solvents. These requirements apply to any screen printing
facility with VOC

emissions from all industrial cleaning operations which equal or exceed
three tons per year on a 12 consecutive month rolling basis.
    As specified in the CTG, cleaning solvent must not exceed a VOC
content limit of 0.42 pounds VOC/gallon. However, the CTG also
references the solvent cleaning requirements in the SCAQMD solvent
cleaning rules. As a result of SCAQMD limits that were in place at the
time that EPA's CTG was issued, Wisconsin has adopted 4.2 pounds VOC/
gallon limits for repair or maintenance cleaning and cleaning of ink
application equipment. In lieu of complying with these VOC content
limits, an alternative limit of 8 mm Hg is also consistent with the
CTG.
    Wisconsin has included several cleaning device and method
requirements as well as storage and disposal requirements from the
SCAQMD's Rule 1171. Wisconsin's rule also has adequate recordkeeping
requirements. The additions to Wisconsin's screen printing rule are
therefore approvable.

NR 422.15 Miscellaneous Metal Parts and Products

    This section has been amended to include the cleaning material work
practices in EPA's 2008 CTG for Miscellaneous Metals and Plastic Parts
Coating. These work practices include storing all VOC-containing
cleaning materials and shop towels used for cleaning in closed
containers and minimizing emissions of VOC during cleaning of coating
application, storage, mixing, and conveying equipment by ensuring that
cleaning is performed without atomizing any VOC-containing cleaning
material and that the used material is captured and contained. These
work practices satisfy Wisconsin's requirement to have acceptable
cleaning solvent requirements for miscellaneous metal parts and
products coating operations and are approvable.

NR 422.15 Fire Truck and Emergency Response Vehicle Manufacturing

    This section (a subset of miscellaneous metals) has been amended to
include the cleaning material work practices in EPA's 2008 CTG for
Miscellaneous Metals and Plastic Parts Coating. These work practices
include storing all VOC-containing cleaning materials and shop towels
used for cleaning in closed containers and minimizing emissions of VOC
during cleaning of coating application, storage, mixing, and conveying
equipment by ensuring that cleaning is performed without atomizing any
VOC-containing cleaning material and that the used material is captured
and contained. These work practices satisfy Wisconsin's requirement to
have acceptable cleaning solvent requirements for miscellaneous metal
parts and products coating operations and are approvable.

NR 423--Control of Organic Compound Emissions From Solvent Cleaning
Operations

NR 423.02--Definitions

    Wisconsin has added definitions of ``Flexible magnetic data storage
disc'' and ``Rigid magnetic data storage disc'' because these terms are
used in its industrial cleaning operations rule. These terms are
accurately defined and are therefore approvable.

NR 423.037 Industrial Cleaning Operations--Part 2

    Wisconsin has added an industrial solvent cleaning rule to
incorporate the industrial solvent cleaning requirements, from the
industrial solvent cleaning CTG, for those source categories whose
rules do not contain such solvent cleaning requirements. These
requirements apply to any such facility having actual VOC emissions
from industrial cleaning operations which equal or exceed three tons
per year on a 12 consecutive month rolling basis.
    As specified in the CTG, cleaning solvents must not exceed a VOC
content limit of 0.42 pounds VOC/gallon as well as several specialty
cleaning limits based on limits in SCAQMD's Rule 1171 that were in
place at the time that EPA's CTG was issued. In lieu of complying with
these VOC content limits, an alternative limit of 8 mm Hg is also
consistent with the CTG.
    Wisconsin has included several cleaning device and method
requirements as well as storage, disposal and transport requirements
from the SCAQMD's Rule 1171. Wisconsin's rule also has adequate
recordkeeping requirements. The additions to Wisconsin's graphic arts
rule are therefore approvable.

NR 439 Reporting, Recordkeeping, Testing, Inspection and Determination
of Compliance Requirements

NR 439.04 Recordkeeping

    Wisconsin amended its recordkeeping requirements for exempt sources
(in NR 439.04(4)) to include the VOC emissions from cleaning
operations, when necessary, in addition to the VOC emissions from
coating or printing lines. Wisconsin also added a requirement that the
maximum theoretical emissions be determined from the dryer of each
heatset web lithographic or letterpress printing press. A requirement
for detailed records of solvent use in solvent cleaning activities was
also added.
    Wisconsin added monitoring and recordkeeping requirements (in NR
439.04(6)) for when add-on control equipment is used to comply with
solvent cleaning requirements.
    The recordkeeping requirements in NR 439.04, as amended, along with
the recordkeeping requirements in the coating and printing rules in NR
422 adequately establish the applicability and compliance requirements
of the rules and are therefore approvable.

NR 484--Incorporation by Reference

    Wisconsin has also updated its Incorporation by Reference Chapter,
including CFR appendices, National Technical Information Service, other
government organizations, the American Society for Testing and
Materials and other private organizations.

V. Statutory and Executive Order Reviews

    Under the Act, the Administrator is required to approve a SIP
submission that complies with the provisions of the Act and applicable
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in
reviewing SIP submissions, EPA's role is to approve state choices,
provided that they meet the criteria of the Act. Accordingly, this
action merely approves state law as meeting Federal requirements and
does not impose additional requirements beyond those imposed by state
law. For that reason, this action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Order
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or

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

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Intergovernmental
relations, Ozone, Reporting and recordkeeping requirements, Volatile
organic compounds.

    Dated: February 9, 2012.
 Susan Hedman,
Regional Administrator, Region 5.
[FR Doc. 2012-4171 Filed 2-21-12; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register: July 25, 2008 (Volume 73, Number 144)]
[Rules and Regulations]
[Page 43353-43354]
[DOCID:fr25jy08-8]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2008-0452; Airspace Docket No. 08-AAL-11]

Revision of Class E Airspace; Kivalina, AK

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: This action revises Class E airspace at Kivalina, AK, to
provide

adequate controlled airspace to contain aircraft executing Standard
Instrument Approach Procedures (SIAPs) and Obstacle Departure
Procedures (ODPs). Two SIAPs are being amended for the Kivalina
Airport. Additionally, one textual ODP is being developed. This action
revises existing Class E airspace upward from 700 feet (ft.) and 1,200
ft. above the surface at Kivalina Airport, Kivalina, AK.

DATES: Effective Date: 0901 UTC, September 25, 2008. The Director of
the Federal Register approves this incorporation by reference action
under title 1, Code of Federal Regulations, part 51, subject to the
annual revision of FAA Order 7400.9 and publication of conforming
amendments.

FOR FURTHER INFORMATION CONTACT: Gary Rolf, AAL-538G, Federal Aviation
Administration, 222 West 7th Avenue, Box 14, Anchorage, AK 99513-7587;
telephone number<PHONE_NUMBER>; fax:<PHONE_NUMBER>; e-mail:
<EMAIL_ADDRESS>Internet address: http://www.alaska.faa.gov/at.

SUPPLEMENTARY INFORMATION:

History

    On Thursday May 29, 2008, the FAA proposed to amend part 71 of the
Federal Aviation Regulations (14 CFR part 71) to revise Class E
airspace upward from 700 ft. above the surface and from 1,200 ft. above
the surface at Kivalina, AK (73 FR 30827). The action was proposed in
order to create Class E airspace sufficient in size to contain aircraft
while executing instrument procedures for the Kivalina Airport. Class E
controlled airspace extending upward from 700 ft. and 1,200 ft. above
the surface in the Kivalina Airport area is revised by this action.
    Interested parties were invited to participate in this rulemaking
proceeding by submitting written comments on the proposal to the FAA.
No comments were received. The rule is adopted as proposed.
    The area will be depicted on aeronautical charts for pilot
reference. The coordinates for this airspace docket are based on North
American Datum 83. The Class E airspace areas designated as 700/1,200
ft. transition areas are published in paragraph 6005 of FAA Order
7400.9R, Airspace Designations and Reporting Points, signed August 15,
2007, and effective September 15, 2007, which is incorporated by
reference in 14 CFR 71.1. The Class E airspace designations listed in
this document will be published subsequently in the Order.

The Rule

    This amendment to 14 CFR part 71 revises Class E airspace at the
Kivalina Airport, Alaska. This Class E airspace is revised to
accommodate aircraft executing new and amended instrument procedures,
and will be depicted on aeronautical charts for pilot reference. The
intended effect of this rule is to provide adequate controlled airspace
for Instrument Flight Rules (IFR) operations at the Kivalina Airport,
Kivalina, Alaska.
    The FAA has determined that this regulation only involves an
established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore--(1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. Since this is a routine matter that
will only affect air traffic procedures and air navigation, it is
certified that this rule will not have a significant economic impact on
a substantial number of small entities under the criteria of the
Regulatory Flexibility Act.
    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the United States Code. Subtitle 1, Section 106
describes the authority of the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more detail the scope of the agency's
authority.
    This rulemaking is promulgated under the authority described in
Subtitle VII, Part A, Subpart 1, Section 40103, Sovereignty and use of
airspace. Under that section, the FAA is charged with prescribing
regulations to ensure the safe and efficient use of the navigable
airspace. This regulation is within the scope of that authority because
it creates Class E airspace sufficient in size to contain aircraft
executing instrument procedures for the Kivalina Airport and represents
the FAA's continuing effort to safely and efficiently use the navigable
airspace.

List of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

Adoption of the Amendment

0
In consideration of the foregoing, the Federal Aviation Administration
amends 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, CLASS B, CLASS C, CLASS D, AND
CLASS E AIRSPACE AREAS; AIRWAYS; ROUTES; AND REPORTING POINTS

0
1. The authority citation for 14 CFR part 71 continues to read as
follows:

    Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  71.1  [Amended]

0
2. The incorporation by reference in 14 CFR 71.1 of Federal Aviation
Administration Order 7400.9R, Airspace Designations and Reporting
Points, signed August 15, 2007, and effective September 15, 2007, is
amended as follows:

Paragraph 6005 Class E Airspace extending upward from 700 feet or
more above the surface of the earth.

* * * * *

AAL AK E5 Kivalina, AK [Revised]

Kivalina, Kivalina Airport, AK
    (Lat. 67[deg]44'10'' N., long. 164[deg]33'49'' W.)

    That airspace extending upward from 700 feet above the surface
within a 6.5-mile radius of the Kivalina Airport, AK, and 3.9 miles
either side of the 317[deg] bearing from the Kivalina Airport, AK,
extending from the 6.5-mile radius to 11.1 miles northwest of the
Kivalina Airport, AK; and that airspace extending upward from 1,200
feet above the surface within a 73-mile radius of the Kivalina
Airport, AK.
* * * * *

    Issued in Anchorage, AK, on July 17, 2008.
Anthony M. Wylie,
Manager, Alaska Flight Services Information Area Group.
 [FR Doc. E8-16977 Filed 7-24-08; 8:45 am]

BILLING CODE 4910-13-P


[Federal Register Volume 80, Number 90 (Monday, May 11, 2015)]
[Notices]
[Pages 26966-26970]
[FR Doc No: 2015-11275]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74876; File No. SR-BOX-2015-06]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing of Amendment No. 1 and Order Granting Accelerated Approval of
a Proposed Rule Change To Establish a Pilot Program, as Modified by
Amendment No. 1, To List and Trade Options Settling to the
RealVolTM SPY Index

May 5, 2015.

I. Introduction

    On January 21, 2015, the BOX Options Exchange LLC (the
``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 list and trade P.M.-settled options settling to
the RealVolTM SPY Index (``Index''). The proposed rule
change was published for comment in the Federal Register on February 5,

2015.\3\ On March 18, 2015, pursuant to Section 19(b)(2) of the Act,\4\
the Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ On April 9, 2015, the Exchange filed Amendment No. 1 to the
proposed rule change.\6\ The Commission received one comment letter on
the proposed rule change.\7\ This Order grants approval of the proposed
rule change, as modified by Amendment No. 1, on an accelerated basis
for a twelve-month pilot period.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 74178 (January 30,
2015), 80 FR 6558 (February 5, 2015) (``Notice'').
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 74526 (March 18,
2015), 80 FR 15653 (March 24, 2015). The Commission designated a
longer period within which to take action on the proposed rule
change and designated May 6, 2015, as the date by which it should
approve, disapprove, or institute proceedings to determine whether
to disapprove the proposed rule change.
    \6\ See Amendment No. 1; see also infra notes 14-18 and
accompanying text.
    \7\ See letter from John O'Connell, Financial Integration, to
Commission, dated February 8, 2015 (``O'Connell Letter'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The Exchange proposes to list and trade, on a pilot basis, P.M.-
settled, cash-settled, European-style options settling to the Index
(proposed symbol VOLS \8\), for a pilot period of twelve months
(``Pilot Program''). The Index measures the daily realized volatility
\9\ of the SPDR S&P 500 Exchange-Traded Fund (``SPY''),\10\ based on a
21-trading day rolling realized volatility of the daily closing price
of SPY.
---------------------------------------------------------------------------

    \8\ Options settling to the Index are hereafter referred to as
VOLS.
    \9\ The Exchange states that realized volatility is the ``actual
volatility,'' ``statistical volatility,'' or ``asset volatility''
that the underlying asset has displayed over a specific period. See
Notice, supra note 3, at 6559.
    \10\ According to the Exchange, SPY has historically been the
largest and most actively-traded exchange-traded fund in the United
States as measured by its assets under management and the value of
shares traded. See id.
---------------------------------------------------------------------------

    The Index is calculated using a methodology developed by The VolX
Group Corporation (``VolX''),\11\ and will be calculated and maintained
by a third party calculation agent acting on behalf of VolX. The Index
will be updated on each trading day after the close of trading of
SPY.\12\ Although the Index is based only on daily closing values of
SPY, a real-time version of the Index that is based on the current SPY
price will be calculated during the trading day and disseminated at
least every 15 seconds during the trading day to market data vendors.
This real-time version will provide an estimate of the Index at the
close.\13\ The Exchange states that values of the Index also will be
disseminated to market information vendors such as Bloomberg and
Thomson Reuters. In the event the Index ceases to be maintained or
calculated, the Exchange will not list any additional series for
trading and will limit all transactions in such options to closing
transactions only for the purpose of maintaining a fair and orderly
market and protecting investors.
---------------------------------------------------------------------------

    \11\ See id. (describing in more detail the calculation
methodology for the Index).
    \12\ According to the Exchange, if the current published value
of SPY is not available, because of a market disruption event where
the market cannot open and there is no closing price for SPY, for
example, the Index will continue to be calculated and disseminated.
The calculation of the Index will compensate for the missing day's
returns by lowering the value of ``n'' in the formula by the number
of days that there is no closing price for SPY. See id.
    \13\ The Exchange represents that after the market close, the
real-time formula and the formula used calculate to the Index will
have exactly the same value. See id. at 6559-6560 (describing in
more detail the calculation of the real-time version of the Index).
---------------------------------------------------------------------------

    The Exchange proposes that its standard trading hours for index
options (9:30 a.m. to 4:15 p.m., Eastern time) will apply to VOLS.
Standard VOLS will expire on the third Friday of each month. Trading in
expiring VOLS will normally cease at 4:15 p.m. (Eastern time) on the
business day of expiration, or, in the case of an option contract
expiring on a day that is not a business day, on the last business day
before its expiration. The exercise and settlement value will be
calculated based on the Index value at the close of the last business
day of trading, which is ultimately based on the closing price of SPY
on the last business day of trading, for its final input value. The
exercise-settlement amount is equal to the difference between the
settlement value and the exercise price of the option, multiplied by
$100. Exercise will result in the delivery of cash on the business day
following expiration.
    The Exchange proposes to adopt minimum trading increments for VOLS
to be $0.05 for series trading below $3, and $0.10 for series trading
at or above $3. The Exchange also proposes to set the minimum strike
price interval at $0.50 strike price (or greater) intervals for VOLS
where the strike price is less than $75; $1 strike price (or greater)
intervals where the strike price is $200 or less; and $5 strike price
(or greater) intervals where the strike price is greater than $200.
    Amendment No. 1 corrects an inaccurate statement in the Notice
regarding the exercise price range limitations for new series of index
options.\14\ Under the Exchange's rules, when new series of index
options with a new expiration date are opened for trading, or when
additional series of index options in an existing expiration date are
opened for trading, as the current value of the underlying index moves
substantially from the exercise prices of series already opened, the
exercise prices of such new or additional series shall be reasonably
related to the current value of the underlying index at the time such
series are first opened for trading.\15\ The term ``reasonably related
to the current index value of the underlying index'' means that the
exercise price is within 30% of the current index value, as defined in
BOX Rule 6090(c)(4).\16\ In the Notice, the Exchange stated that it
proposed to eliminate, for VOLS, the range limitation in BOX Rule
6090(c)(3) requiring the exercise prices of new or additional series of
index options to be reasonably related to the current value of the
underlying index at the time such series are first opened for trading.
The Notice erroneously stated that the Exchange's proposal to permit
exercise prices without a range limitation would be identical to those
adopted by the Chicago Board Options Exchange, Incorporated (``CBOE'')
for options on the CBOE Volatility Index (``VIX'').\17\ Amendment No. 1
provides that the exercise price ranges for VOLS will be subject to the
exercise price range limitations under BOX Rule 6090(c)(3).\18\
---------------------------------------------------------------------------

    \14\ See Amendment No. 1.
    \15\ See BOX Rule 6090(c)(3).
    \16\ See Notice, supra note 3, at 6560.
    \17\ See id.
    \18\ Amendment No. 1 also modifies Exhibit 5 by striking from
the proposed text of BOX Rule 6090(c)(7) an erroneous reference to
BOX Rules 6090(c)(3) and (c)(4). See Amendment No. 1.
---------------------------------------------------------------------------

    The Exchange states that its rules provide that index option
contracts may expire at three-month intervals or in consecutive
months.\19\ The Exchange proposes to list VOLS in six consecutive
expiration months.\20\ In addition, long-term option series having up
to 180 months to expiration \21\ and Short Term Option Series \22\ in
VOLS may also be

listed and traded.\23\ VOLS will be quoted and traded in U.S.
dollars.\24\
---------------------------------------------------------------------------

    \19\ See Notice, supra, note 3, at 6560; BOX Rule 6090(a)(3).
    \20\ For example, the Exchange states that six monthly
expirations from January through June may be listed. This is
consistent with BOX Rule 6090(a)(3), which permits the Exchange to
list up to six expiration months at any one time. See Notice, supra
note 3, at 6560.
    \21\ See BOX Rule 6090(b)(1).
    \22\ See IM-6090-2 to BOX Rule 6090. The Exchange states that it
may open Short Term Option Series for trading on any Thursday or
Friday that is a business day and that expire on each of the next
five Fridays that are business days and are not Fridays in which
monthly options series or quarterly options series expire. See
Notice, supra note 3, at 6561; see also IM-6090-2(a) to BOX Rule
6090. The Exchange states that the interval between strike prices on
Short Term Options Series may be $0.50 or greater where the strike
price is less than $75, and $1 or greater where the strike price is
between $75 and $150. During the month prior to expiration of an
index option class that is selected for the Short Term Option Series
Program, the strike price intervals for the related non-Short Term
Option shall be the same as the strike price intervals for the Short
Term Option. See Notice, supra note 3, at 6561; see also IM-6090-
2(b)(5) to BOX Rule 6090.
    \23\ See Notice, supra note 3, at 6559.
    \24\ See BOX Rule 6090(a)(1).
---------------------------------------------------------------------------

    The Exchange believes that the Index is a broad-based index, as
that term is defined in BOX Rule 6010(j).\25\ The Exchange proposes
that there shall be no position or exercise limits for VOLS, and also
proposes to apply margin requirements for the purchase and sale of VOLS
that are identical to the margin requirements adopted by CBOE for
options on the VIX.\26\
---------------------------------------------------------------------------

    \25\ BOX Rule 6010(j) defines the term ``broad-based index'' as
an index designed to be representative of a stock market as a whole
or a range of companies in unrelated industries.
    \26\ The Exchange has proposed to amend BOX Rule 10120 (Margin
Requirements) to make clear that the margin requirements for VOLS
will be identical to those adopted by CBOE for options on the VIX.
See CBOE Rule 12.3.
---------------------------------------------------------------------------

    In addition, the Exchange proposes that the trading of options on
the Index will be subject to the same rules that currently govern the
trading of Exchange index options, including sales practice rules and
trading rules.\27\ Trading of VOLS will also be subject to the trading
halt procedures applicable to other index options traded on the
Exchange.\28\ Further, Section 4000 of the Exchange's rules, which is
designed to protect public customer trading, will apply to trading in
VOLS.
---------------------------------------------------------------------------

    \27\ See Notice, supra note 3, at 6561.
    \28\ Id. at 6560; see also BOX Rule 6080(c).
---------------------------------------------------------------------------

    The Exchange believes that because the Index will settle using
published quotes for SPY and there are currently no position limits for
SPY options, it is appropriate not to impose position or exercise
limits for VOLS. The Exchange notes that because the size of the market
underlying SPY options is so large, it should dispel concerns regarding
market manipulation. The Exchange believes that the same reasoning
applies to VOLS since the value of VOLS is derived from the realized
volatility of SPY. The Exchange also notes that VIX options are not
subject to any position or exercise limits.\29\ The Exchange represents
that it has an adequate surveillance program in place for the VOLS
product and intends to apply to it the same program procedures that it
applies to the Exchange's other options products.\30\ The Exchange
states that its surveillance procedures will allow the Exchange to
adequately surveil for any potential manipulation in the trading of
VOLS. The Exchange states that, in its normal course of surveillance,
it will monitor for any potential manipulation of the Index settlement
value according to the Exchange's current procedures. In addition, the
Exchange notes that it is a member of the Intermarket Surveillance
Group, through which it can coordinate surveillance and investigative
information sharing in the stock and options markets with all of the
U.S. registered stock and options markets. The Exchange also represents
that it has the necessary system capacity to support additional
quotations and messages that will result from the listing and trading
of VOLS.\31\
---------------------------------------------------------------------------

    \29\ See Notice, supra note 3, at 6560-6561.
    \30\ See id. at 6561.
    \31\ Id.
---------------------------------------------------------------------------

    The Exchange proposes that proposed rule change to list and trade
VOLS be approved on a pilot basis for a period of twelve months. As
part of the Pilot Program, the Exchange committed to submit a pilot
program report to the Commission two months prior to the expiration
date of the pilot program (the ``annual report'').\32\ The annual
report would include an analysis of volume, open interest, and trading
patterns. The analysis would examine trading in VOLS as well as trading
in SPY. In addition, for series that exceed certain minimum open
interest parameters, the annual report would provide an analysis of
index price volatility and SPY trading activity. In addition to the
annual report, the Exchange committed to provide the Commission with
periodic interim reports while the pilot is in effect that would
contain some, but not all, of the information contained in the annual
report (``interim reports''). In its filing, BOX notes that it would
provide the annual and interim reports to the Commission on a
confidential basis.\33\
---------------------------------------------------------------------------

    \32\ Id. at 6561-6562.
    \33\ Id. at 6562.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful consideration of the proposal, the Commission finds
that the proposed rule change is consistent with the requirements of
the Act and the rules and regulations thereunder applicable to a
national securities exchange,\34\ and, in particular, the requirements
of Section 6 of the Act.\35\ Specifically, the Commission finds that
the proposed rule change is consistent with Section 6(b)(5) of the
Act,\36\ which requires, among other things, that the rules of a
national securities exchange be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, 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. In particular, the
Commission believes that the proposed VOLS options product provides
investors with an additional trading and hedging mechanism. Further, as
noted above, the Commission received one comment letter in support of
the proposal and endorsed the usefulness of the VOLS products for these
purposes. The comment letter stated, ``[t]hese options will be
extremely helpful for hedging index option exposure, equity portfolios,
and as a risk-management tool for hedge fund managers.'' \37\ In
addition, the Commission believes that the proposal will allow BOX to
conduct a limited and carefully monitored pilot for the listing and
trading of VOLS, as proposed.
---------------------------------------------------------------------------

    \34\ 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).
    \35\ 15 U.S.C. 78f.
    \36\ 15 U.S.C. 78f(b)(5).
    \37\ See O'Connell Letter, supra note 7, at 1.
---------------------------------------------------------------------------

    The Commission believes that the Exchange's proposal to impose no
position or exercise limits on VOLS is appropriate and consistent with
the Act. The Commission also believes that the proposed strike price
intervals are consistent with the Act. $0.50 or greater strikes for
VOLS where the strike price is less than $75, $1 or greater strike
price intervals for VOLS where the strike price is $200 or less, and $5
or greater strike price intervals for VOLS when the strike price is
greater than $200 should provide investors with added flexibility in
the trading of VOLS options and will further the public interest by
allowing investors to establish positions that are better tailored to
meet their investment objectives. Moreover, the Commission notes that,
under the Exchange's rules, the strike prices of new or additional
series of VOLs shall be reasonably related to--i.e., within 30% of--the
current value of the underlying index at the time such series are first
opened for trading.\38\ The Commission also notes that the Exchange has
represented that it has the necessary system capacity to

handle the additional quotations and messages associated with the
listing and trading of VOLS.\39\
---------------------------------------------------------------------------

    \38\ See BOX Rule 6090(c)(3) and (c)(4).
    \39\ See Notice, supra note 3, at 6561.
---------------------------------------------------------------------------

    The Commission also believes that it is consistent with the Act to
apply margin requirements to the proposed VOLS product that are
identical to the margin requirements adopted by the CBOE for options on
the VIX. The Exchange has represented that BOX options participants and
their associated persons are bound by the initial and maintenance
margin requirements of either the CBOE or the New York Stock Exchange,
pursuant to BOX Rule 10120.\40\ As the CBOE VIX measures the expected
volatility of the S&P 500 Index, the Commission believes it is
acceptable to apply the same margin requirements applying to VIX
options to VOLS, which are options on an index measuring the realized
volatility of SPY. The Commission further believes that the Exchange's
proposed minimum trading increment, series openings, and other aspects
of the proposed rule change are appropriate and consistent with the
Act.
---------------------------------------------------------------------------

    \40\ Id. at 6560.
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    In the Commission's order approving the listing and trading of
P.M.-settled options on the S&P 500 Index on CBOE,\41\ the Commission
noted that the potential impact on the market at expiration for the
underlying component stocks for a P.M.-settled, cash-settled index
option remained unclear, given past experience with the impact of P.M.
settlement of cash-settled index derivatives on the underlying cash
markets and the enhanced closing procedures that are now in use at the
primary equity markets.\42\ To assist the Commission in assessing any
potential impact of a P.M.-settled VOLS product on the options markets
as well as the underlying cash equities markets, BOX will be required
to submit data to the Commission as a condition of Commission approval
of the VOLS product on a pilot basis. The Commission believes that
BOX's proposed twelve-month pilot, together with the data and analysis
that BOX should provide to the Commission, should allow BOX and the
Commission to monitor for and assess any potential for adverse market
effects. Specifically, the data and analysis should assist the
Commission in evaluating the effect of allowing P.M. settlement for
VOLS on SPY.
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    \41\ See Securities Exchange Act Release No. 68888 (February 8,
2013), 78 FR 10668 (February 14, 2013).
    \42\ Id. at 10669.
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    BOX's proposed twelve-month pilot will enable the Commission to
collect current data to assess and monitor for any potential for impact
on the markets. In particular, the data collected from BOX's Pilot
Program will help inform the Commission's consideration of whether the
pilot should be modified, discontinued, extended, or permanently
approved. The Pilot Program information should help the Commission
assess the impact on the markets and determine whether other changes
are necessary. Furthermore, the Exchange's ongoing analysis of the
pilot should help it monitor any potential risks from large P.M.-
settled positions and take appropriate action on a timely basis if
warranted.
    As a national securities exchange, the Exchange is required, under
Section 6(b)(1) of the Act,\43\ to enforce compliance by its members
and persons associated with its members with the provisions of the Act,
Commission rules and regulations thereunder, and its own rules. In this
regard, the Commission notes that trading of VOLS will be subject to
the same rules that currently govern the trading of other index options
on the Exchange.\44\ In addition, as noted above, the Exchange has
asserted that the Index settlement value is not susceptible to
manipulation.\45\ Moreover, the Exchange has represented that it has an
adequate surveillance program in place for options traded on the Index,
and will monitor for any potential manipulation of the Index settlement
value according to its current surveillance procedures.\46\ In
approving the proposed listing and trading of the Index options, the
Commission has also relied on BOX's representation that it has the
necessary system capacity to support the new options series that will
result from this proposal.\47\
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    \43\ 15 U.S.C. 78f(b)(1).
    \44\ See supra note 27 and accompanying text.
    \45\ See Notice, supra note 3, at 6561.
    \46\ Id.
    \47\ Id.
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    Accordingly, for the reasons stated above, the Commission finds
good cause, pursuant to Section 19(b)(2) \48\ of the Act, for approving
the Exchange's proposal, as modified by Amendment No. 1, prior to the
30th day after the date of publication of the notice in the Federal
Register.
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    \48\ 15 U.S.C. 78s(b)(2).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-BOX-2015-06 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BOX-2015-06. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing will also be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-BOX-2015-06 and should be
submitted on or before June 1, 2015.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\49\ that the proposed rule change (SR-BOX-2015-06), as modified by
Amendment No. 1, be, and hereby is, approved on an accelerated basis
for a twelve-month pilot period set to expire on May 6, 2016.
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    \49\ 15 U.S.C. 78s(b)(2).

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    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\50\
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    \50\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-11275 Filed 5-8-15; 8:45 am]
 BILLING CODE 8011-01-P