[Federal Register Volume 85, Number 123 (Thursday, June 25, 2020)]
[Rules and Regulations]
[Pages 38081-38086]
[FR Doc No: 2020-11931]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2018-0146; FRL-10009-22-Region 9]

Approval of Air Quality Implementation Plans; California; Ventura
County; 8-Hour Ozone Nonattainment Area Requirements

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is taking final
action to conditionally approve portions of two state implementation
plan (SIP) submissions from the State of California to meet Clean Air
Act (CAA or ``the Act'') requirements for the 2008 8-hour ozone
national ambient air quality standards (NAAQS or ``standards'') in the
Ventura County, California (``Ventura County'') ozone nonattainment
area. The two SIP submissions include the ``Final 2016 Ventura County
Air Quality Management Plan,'' and the Ventura County portion of the
``2018 Updates to

the California State Implementation Plan.'' In this action, the EPA
refers to these submittals collectively as the ``2016 Ventura County
Ozone SIP.'' The 2016 Ventura County Ozone SIP addresses the
nonattainment area requirements for the 2008 ozone NAAQS, including the
requirements for an emissions inventory, attainment demonstration,
reasonable further progress, reasonably available control measures,
contingency measures, among others; and establishes motor vehicle
emissions budgets. In a separate final rule, the EPA took final action
to approve the 2016 Ventura County Ozone SIP as meeting all the
applicable ozone nonattainment area requirements except for the
contingency measures requirement. In this action, the EPA is taking
final action to conditionally approve the contingency measures element
of the 2016 Ventura County Ozone SIP.

DATES: This rule will be effective on July 27, 2020.

ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-R09-OAR-2018-0146. All documents in the docket are
listed on the https://www.regulations.gov website. Although listed in
the index, some information is not publicly available, e.g.,
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Certain other material, such as
copyrighted material, is not placed on the internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available through https://www.regulations.gov, or please
contact the person identified in the FOR FURTHER INFORMATION CONTACT
section for additional availability information.

FOR FURTHER INFORMATION CONTACT: John Kelly, Air Planning Office (AIR-
2), EPA Region IX, 75 Hawthorne Street, San Francisco, CA 94105, (415)
947-4151, or by email at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Proposed Action
II. Public Comments and EPA Responses
III. Final Action
IV. Statutory and Executive Order Reviews

I. Summary of the Proposed Action

    On December 20, 2019, the EPA proposed to approve, under CAA
section 110(k)(3), or to conditionally approve, under CAA section
110(k)(4), all or portions of submittals from the California Air
Resources Board (CARB) of revisions to the California SIP for the
Ventura County ozone nonattainment area for the 2008 ozone NAAQS.\1\
The relevant SIP revisions include Ventura County Air Pollution Control
District's (VCAPCD's or ``District's'') Final 2016 Ventura County Air
Quality Management Plan (``2016 Ventura County AQMP''), and the Ventura
County portion of CARB's 2018 Updates to the California State
Implementation Plan (``2018 SIP Update''). Collectively, we refer to
these revisions as the 2016 Ventura County Ozone SIP, and we refer to
our December 20, 2019 proposed rule as the ``proposed rule.''
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    \1\ 84 FR 70109. Ventura County lies within California's South
Central Coast Air Basin, which includes the counties of Santa
Barbara and San Luis Obispo in addition to Ventura County. The
Ventura County ozone nonattainment area for the 2008 ozone NAAQS
includes the entire county except for the Channel Islands of Anacapa
and San Nicolas Islands. See 40 CFR 81.305.
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    Our proposed conditional approval of the contingency measures
element of the 2016 Ventura County AQMP relied on specific commitments:
(1) From the District to modify an existing rule or rules that would
provide for additional emissions reductions in the event that Ventura
County fails to meet a reasonable further progress (RFP) milestone or
fails to attain the 2008 ozone NAAQS by the applicable attainment date,
and (2) from CARB to submit the revised District rule(s) to the EPA as
a SIP revision within 12 months of our final action.\2\ For more
information on the SIP revision submittals and related commitments,
please see our proposed rule.
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    \2\ Letter dated August 16, 2019, from Michael Villegas, Air
Pollution Control Officer, VCAPCD, to Richard Corey, Executive
Officer, CARB; and letter dated August 30, 2019, from Richard W.
Corey, Executive Officer, CARB to Mike Stoker, Regional
Administrator, Region IX.
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    In our proposed rule, we provided background information on the
ozone standards,\3\ area designations, related SIP revision
requirements under the CAA, and the EPA's implementing regulations for
the 2008 ozone NAAQS, referred to as the 2008 Ozone SIP Requirements
Rule (``2008 Ozone SRR''). To summarize, the Ventura County ozone
nonattainment area is classified as Serious for the 2008 ozone NAAQS,
and the 2016 Ventura County Ozone SIP was developed to address all the
SIP requirements that apply to a Serious nonattainment area for the
2008 ozone NAAQS other than the SIP requirements for new source review
and reasonably available control technology previously addressed in
separate submittals and EPA actions.
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    \3\ Ground-level ozone pollution is formed from the reaction of
volatile organic compounds (VOC) and oxides of nitrogen
(NOX) in the presence of sunlight. The 2008 ozone NAAQS
is 0.075 parts per million (eight-hour average). CARB refers to
reactive organic gases (ROG) in some of its ozone-related
submittals. The CAA and the EPA's regulations refer to VOC, rather
than ROG, but both terms cover essentially the same set of gases. In
this final rule, we use the Federal term (VOC) to refer to this set
of gases.
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    For our proposed rule, we reviewed the various SIP elements
contained in the 2016 Ventura County Ozone SIP, evaluated them for
compliance with statutory and regulatory requirements, and proposed to
conclude that they meet all applicable requirements with the exception
of the contingency measures element. On February 27, 2020, the EPA took
final action to approve all the elements of the 2016 Ventura County
Ozone SIP except for the contingency measures element.\4\ In our
February 27, 2020 final rule, we indicated that we would be taking
final action on the contingency measures element in a separate final
rule. This action is our final action on the contingency measures
element.
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    \4\ 85 FR 11814.
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    With respect to the contingency measures element of the 2016
Ventura County Ozone SIP, in our proposed rule, we evaluated the
element for compliance with the CAA sections 172(c)(9) and 182(c)(9).
We explained that the key is that the statute requires that contingency
measures provide for additional emissions reductions that are not
relied on for RFP or attainment and that the purpose of contingency
measures is to provide continued emissions reductions while the plan is
being revised to meet the missed milestone or attainment date. We
further explained that neither the CAA nor the EPA's implementing
regulations for the 2008 Ozone NAAQS require that contingency measures
achieve a specific amount of emissions reductions, but that the EPA
will evaluate that on a case-by-case basis depending on the facts and
circumstances.
    In our proposed rule, in light of the Bahr decision,\5\ we
determined that the contingency measures element of the 2016 Ventura
County Ozone SIP could not be fully approved without supplementation by
the District and CARB. However, we also determined that the element
could be conditionally approved as meeting the requirements of CAA
sections 172(c)(9) and 182(c)(9) for the 2008 ozone NAAQS, based upon
commitments from the District and CARB to adopt and submit a revised
rule or rules with provisions designed to

take effect if the area fails to meet an RFP milestone or fails to
attain by the applicable attainment date.\6\
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    \5\ Bahr v. EPA, 836 F.3d 1218 (9th Cir. 2016) (``Bahr'')
(rejecting early-implementation of contingency measures and
concluding that a contingency measure under CAA section 172(c)(9)
must take effect at the time the area fails to make RFP or attain by
the applicable attainment date, not before).
    \6\ See 84 FR 70109, 70123-70125 from the proposed rule.
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    Please see our proposed rule for more information concerning the
background for this action and for a more detailed discussion of the
rationale for conditional approval of the contingency measures element
of the 2016 Ventura County Ozone SIP.

II. Public Comments and EPA Responses

    The public comment period on the proposed rule opened on December
20, 2019, the date of its publication in the Federal Register, and
closed on January 21, 2020. During this period, the EPA received five
anonymous comments and one comment letter submitted by Air Law for All
on behalf of the Center for Biological Diversity, the Center for
Environmental Health, and Citizens for Responsible Oil and Gas
(collectively referred to herein as ``CBD'').
    In our February 27, 2020 final action on the 2016 Ventura County
Ozone SIP other than the contingency measures element, we explained
that the EPA was not responding to the five anonymous commenters
because their comments are either not adverse or not pertinent to the
proposed action. We also indicated that the comment letter from CBD
relates solely to our proposed conditional approval of the contingency
measures element, and that we would be addressing CBD's comments in a
separate final rule on the contingency measures element. We address
CBD's comments in the following paragraphs of this final rule.
    Comment #1: CBD recounts the background leading to the Bahr
decision and provides a discussion of policy implications of that
decision. CBD also provides its negative critique of the LEAN decision
\7\ and asserts that EPA must interpret the contingency measures
requirement consistent with the Bahr decision on a nationwide basis and
not just within the Ninth Circuit's jurisdiction.
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    \7\ LEAN v. EPA, 382 F.3d 575 (5th Cir. 2004) (``LEAN'')
(upholding contingency measures that were previously required and
implemented where they were in excess of the attainment
demonstration and RFP SIP).
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    Response #1: In our proposed rule, we explain that we have reviewed
the contingency measures element of the 2016 Ventura County Ozone SIP
in light of the Bahr decision. In other words, for the purposes of our
review and action on the 2016 Ventura County Ozone SIP, we accept the
Bahr decision as governing our review of the contingency measures
element. The issue of extending the Bahr decision with respect to the
contingency measures requirement outside of the jurisdiction of the
Ninth Circuit is beyond the scope of this rulemaking.
    Comment #2: Because the District did not quantify the potential
additional emissions reductions from any of the three prospective
contingency measures, CBD asserts that the reductions must be assumed
to be de minimis.
    Response #2: In our proposed rule, we acknowledged that the
potential contingency measures that were identified by the District
would not achieve one year's worth of RFP, given the types of measures
under consideration and the magnitude of emissions reductions
constituting one year's worth of RFP in this nonattainment area. We
disagree that it is necessary to have an estimate of the emissions
reductions for purposes of proposing a conditional approval. However,
in response to this comment, the District and CARB developed
preliminary estimates of the reductions that would likely be achieved
by the contingency measures under consideration, if triggered by a
failure to achieve an RFP milestone or failure to attain the 2008 ozone
NAAQS by the applicable attainment date.\8\ In developing the
preliminary estimates, the District narrowed the list of prospective
contingency measures to a single one, i.e., amendments to Rule 74.2
(``Architectural Coatings'').\9\ We have reviewed the preliminary
estimates for the amendments to Rule 74.2, and find that they are based
on reasonable assumptions and factors. Based on the preliminary
estimates, emissions reductions from amendments to Rule 74.2 would
likely be in the range of 0.02 to 0.06 tons per day (tpd) of volatile
organic compounds (VOC), which amount to approximately 2 to 5 percent
of one year's worth of RFP.\10\ As we anticipated in our proposed rule,
the reductions would not amount to one year's worth of RFP.
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    \8\ See email dated February 26, 2020 and attachment from Sylvia
Vanderspek, CARB, to Ali Ghasemi, VCAPCD, et al.
    \9\ See email dated May 8, 2020, from Ali Ghasemi, VCAPCD, to
Anita Lee, EPA Region IX.
    \10\ As noted in the proposed rule at 70125, one year's worth of
RFP is 1.1 tpd of VOC or 0.8 tpd of NOX.
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    CBD asserts that, if the EPA or the District develop preliminary
emissions estimates for the prospective contingency measures, then the
EPA must necessarily re-propose action on the contingency measures
element. We disagree and find that the development of the estimates and
presentation herein is a logical outgrowth of the proposed rule and
CBD's comments. The quantification of emissions reductions does not
affect our rationale for our proposed conditional approval of the
contingency measures element because we assumed that the reductions,
whatever they would ultimately be, would not be equivalent to one
year's worth of RFP.
    Comment #3: CBD asserts that consideration of surplus emissions
reductions from already-implemented measures in evaluating the adequacy
of contingency measures is functionally no different than simply
approving the already-implemented measures as contingency measures,
which is inconsistent with the Bahr decision. CBD also asserts that the
EPA's approach in this action would allow states to meet the
contingency measures requirement through submittal of token de minimis
contingency measures so long as already-implemented measures provide
for surplus emissions reductions equivalent to one year's worth of RFP.
CBD views the EPA's consideration of surplus reductions from already-
implemented measures as relying on a factor Congress has not intended
the Agency to consider in evaluating the adequacy of contingency
measures under CAA section 172(c)(9).
    Response #3: First, the EPA does not interpret CAA section
172(c)(9) or 182(c)(9) as allowing states to meet the requirements
through submittal merely of token or de minimis contingency measures.
States must include contingency measures in nonattainment plans that
will be triggered in the event of a failure to meet RFP or failure to
attain. However, the number of such contingency measures, or the amount
of emissions reductions that such measures need to achieve, may vary.
As explained in the proposal, the EPA considers it appropriate to take
into account the full facts and circumstances at issue in a given
nonattainment area when evaluating the adequacy of contingency
measures, and this may include approving contingency measures that
achieve less than the one year's worth of RFP in that area. The EPA
emphasizes that it does not interpret the CAA to require states to
adopt only token or de minimis contingency measures; it interprets the
CAA to require contingency measures appropriate for the area.
    Second, we disagree that, if the EPA takes into account the total
facts and circumstances in a given nonattainment area when assessing
the adequacy of contingency measures, and in particular the amount of
emissions reductions that such measures will achieve, that this

contradicts Congressional intent. The specific explicit factors
Congress intended the Agency to use in evaluating contingency measures
are set forth in CAA sections 172(c)(9) and 182(c)(9) and include
specificity (``implementation of specific measures''), timing
(``measures to be undertaken'' and ``to take effect''), triggers (if
the area fails to attain the NAAQS by the applicable [NAAQS] or if the
area fails to meet any applicable milestone), federal enforceability
(``included in the [SIP]''), and readiness (measures must be designed
to take effect without further action by the state or the EPA). We will
review the contingency measure that is the subject of the conditional
approval with those factors in mind when we receive the submittal of
the revised District rule as a SIP revision from CARB.
    Neither CAA section 172(c)(9) nor 182(c)(9) contain language
implying that the factors discussed above are the only factors for the
Agency to consider. Neither section specifies the magnitude of
emissions reductions that contingency measures must achieve as an
explicit factor for the EPA to consider, although consideration of the
magnitude is appropriate in determining whether the contingency measure
or measures submitted by the state meet the requirements of CAA
sections 172(c)(9) and 182(c)(9). Consideration of the magnitude of
emissions reductions is appropriate because contingency measures serve
a remedial function where an area fails to achieve an RFP milestone or
fails to attain the NAAQS by the applicable attainment date, and RFP
and attainment are achieved through emissions reductions.\11\
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    \11\ See, e.g., CAA sections 107(d)(3)(E)(iii), 171(1),
182(c)(1).
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    Just as the CAA does not include the magnitude of emissions
reductions as a specific explicit consideration, the CAA also does not
prescribe how the EPA is to evaluate that question. As such, the EPA is
not relying on a factor that Congress did not intend the EPA to
consider when the Agency considers the emissions reductions from
already-implemented measures that are surplus to those needed for RFP
or attainment within a given nonattainment area when evaluating whether
the state's contingency measure submittal meets CAA sections 172(c)(9)
and 182(c)(9).
    Comment #4: CBD asserts that contingency measures should at a
minimum equal one year's worth of RFP and asserts that CAA section
182(g) provides statutory support for the interpretation that
contingency measures should provide for one year's worth of RFP.
    Response #4: Neither the CAA nor the EPA's implementing regulations
for the ozone NAAQS establish a specific amount of emissions reductions
that implementation of contingency measures must achieve. However,
consistent with our long-standing guidance, we agree that contingency
measures should generally provide for emissions reductions
approximately equivalent to one year's worth of progress, which, for
Serious ozone nonattainment areas such as Ventura County, amounts to
reductions of 3 percent of the RFP baseline emissions inventory for the
nonattainment area.
    CBD finds statutory support in CAA section 182(g) for the EPA's
recommendation that contingency measures should generally provide for
one year's worth of progress. We do not disagree that our
recommendation concerning emissions reductions from contingency
measures comports generally with the statutory scheme for attainment
planning. However, like sections 172(c)(9) and 182(c)(9), section
182(g) does not explicitly identify the magnitude of reductions that
contingency measures must achieve nor does not it address how to
evaluate the reductions from contingency measures in light of the facts
and circumstances of a given nonattainment area.
    In making the recommendation that contingency measures typically
achieve one year's worth of RFP, the EPA has considered the overarching
purpose of such measures in the context of attainment planning. The
purpose of emissions reductions from implementation of contingency
measures is to ensure that, in the event of a failure to meet an RFP
milestone or a failure to attain the NAAQS by the applicable attainment
date, the state will continue to make progress toward attainment though
additional emissions reductions at a rate similar to that specified
under the RFP requirements. The intent is that the state will achieve
the emissions reductions from the contingency measures while conducting
additional control measure development and implementation as necessary
to correct the RFP shortfall or as part of a new attainment
demonstration plan.\12\ The facts and circumstances of a given
nonattainment area may justify larger or smaller amounts of emissions
reductions for contingency measure purposes.
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    \12\ 57 FR 13498, at 13512 (April 16, 1992).
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    In reviewing a SIP revision for compliance with CAA sections
172(c)(9) and 182(c)(9), the EPA evaluates whether the contingency
measure or measures would provide emissions reductions that, when
considered with surplus emissions reductions from other measures,
ensure sufficient continued progress in the event of a failure to
achieve an RFP milestone or to attain the ozone NAAQS by the applicable
attainment date. We continue to evaluate the sufficiency of continued
progress that will result from contingency measures in light of our
guidance, but in appropriate circumstances do not believe that the
contingency measures themselves must provide for one year's worth of
RFP. Such appropriate circumstances include situations in which
sufficient progress would be maintained by the contingency measures and
surplus emissions reductions from other sources while the state
proceeds to develop and implement additional control measures as
necessary to correct the RFP shortfall or as part of a new attainment
demonstration plan. In other words, if there are additional emissions
reductions projected to occur after the RFP milestone years or the
attainment year that a state has not relied upon for purposes of RFP or
attainment or to meet other nonattainment plan requirements, and that
result from measures the state has not adopted as contingency measures,
then those reductions may support EPA approval of contingency measures
identified by the state even if the contingency measures would result
in less than one year's worth of RFP in appropriate circumstances.
    As to whether the contingency measure, once adopted, would provide
for sufficient continued progress in the event of a failure to achieve
an RFP milestone or a failure to attain the NAAQS, we reviewed the
documentation provided in the 2018 SIP Update of ``surplus''
reductions, as clarified by CARB in August 2019 from CARB's already-
adopted mobile source control program in the two RFP milestone years
and in the year following the attainment year. For the Ventura County
nonattainment area, CARB's estimates of ``surplus'' reductions in the
RFP milestone years (5.1 tpd of oxides of nitrogen (NOX) in
2020 and 7.1 tpd of NOX in 2017) are 6 to 9 times greater
than one year's worth of progress (0.8 tpd of NOX).\13\

With respect to the year after the attainment year, CARB estimates that
NOX emissions in Ventura County will be approximately 0.9
tpd lower in 2021 than in the 2020 attainment year due to mobile source
controls and vehicle turnover, and thus continued emissions reductions
are assured in the year after the attainment year even before
accounting for the emissions reductions from the to-be-adopted local
contingency measure.\14\ As such, we conclude that the to-be-adopted
District contingency measure need not in itself achieve one year's
worth of RFP.
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    \13\ Based on the emissions estimates and projections shown in
table 4 of the proposed rule. More specifically, the estimate of the
RFP milestone surplus as ranging from 5.1 tpd to 7.1 tpd of
NOX is based on the surplus in terms of percentages
(range of 19.6% (in 2000) to 27.4% (in 2017)) times the 2011
baseline NOX emissions level of 26.0 tpd. The proposed
rule cited a range of 6.5 tpd to 7.1 tpd for the RPF surplus, but
those estimates were based on the 2018 SIP Update and not the
updated RFP demonstration summarized in table 4 of the proposed
rule.
    \14\ See pages A-9 and A-10 of the 2018 SIP Update. As shown on
pages A-7 and A-8 of the 2018 SIP Update, VOC emissions are also
expected to decrease between 2020 and 2021 (by 0.3 tpd).
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    In conclusion, we anticipate that the emissions reductions from the
contingency measure ultimately adopted by the District will be
sufficient, although we expect that it will achieve less than 1.1 tpd
of VOC or 0.8 tpd of NOX reductions (i.e., one year's worth
of RFP), because other surplus emission reductions measures (not relied
upon directly to meet the statutory contingency measure requirement or
any other nonattainment plan requirement including RFP or attainment)
will ensure sufficient continued progress in the event of a failure to
achieve an RFP milestone or a failure to attain the NAAQS by the
applicable attainment date. Therefore, we expect the contingency
measure, once adopted and submitted, to be sufficient to remedy the
deficiency in the contingency measures element of the 2016 Ventura
County Ozone SIP, and the commitment to submit such a contingency
measure as an appropriate basis for a conditional approval.

III. Final Action

    For the reasons discussed above, under CAA section 110(k)(4), the
EPA is taking final action to conditionally approve as a revision to
the California SIP the contingency measures element of the 2016 Ventura
County Ozone SIP, submitted by CARB on April 11, 2017 and December 5,
2018, as meeting the requirements of CAA sections 172(c)(9) and
182(c)(9) for RFP and attainment contingency measures.\15\ Our
conditional approval is based on commitments by the District and CARB
to supplement the contingency measures element of the 2016 Ventura
County Ozone SIP through submission, as a SIP revision (within one year
of the effective date of our final conditional approval action), of a
revised District rule that would add new limits or other requirements
if an RFP milestone is not met or if Ventura County fails to attain the
2008 ozone NAAQS by the applicable attainment date.\16\
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    \15\ More specifically, we are conditionally approving chapter 7
(``Contingency Measures'') of the Final 2016 Ventura County Air
Quality Management Plan, as submitted on April 11, 2017, and chapter
III.C (``Contingency Measures'') of the 2018 Updates to the
California State Implementation Plan, as submitted on December 5,
2018.
    \16\ Letter dated August 16, 2019, from Michael Villegas, Air
Pollution Control Officer, VCAPCD, to Richard Corey, Executive
Officer, CARB; letter dated August 30, 2019, from Richard W. Corey,
Executive Officer, CARB, to Mike Stoker, Regional Administrator, EPA
Region IX.
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IV. Statutory and Executive Order Reviews

    Under the Clean Air 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, the EPA's role is to approve state
choices, provided that they meet the criteria of the Clean Air Act.
Accordingly, this action merely conditionally approves state plans 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 Orders
12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21,
2011);
     Is not an Executive Order 13771 (82 FR 9339, February 2,
2017) regulatory action because SIP approvals are exempted under
Executive Order 12866;
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the Clean Air Act; and
     Does not provide the EPA with the discretionary authority
to address disproportionate human health or environmental effects with
practical, appropriate, and legally permissible methods under Executive
Order 12898 (59 FR 7629, February 16, 1994).
    In addition, the SIP is not approved to apply on any Indian
reservation land or in any other area where the EPA or an Indian tribe
has demonstrated that a tribe has jurisdiction. In those areas of
Indian country, the rule does not have tribal implications and will not
impose substantial direct costs on tribal governments or preempt tribal
law as specified by Executive Order 13175 (65 FR 67249, November 9,
2000).
    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. The EPA will submit a report containing this action and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by August 24, 2020. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this action for the purposes of
judicial review nor does it extend the time within which a petition for
judicial review may be filed, and shall not postpone the effectiveness
of such rule or action. This action may not be challenged later in
proceedings to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by

reference, Intergovernmental relations, Nitrogen dioxide, Ozone,
Reporting and recordkeeping requirements, Volatile organic compounds.

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

    Dated: May 27, 2020.
John Busterud,
Regional Administrator, Region IX.

    Chapter I, title 40 of the Code of Federal Regulations is amended
as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart F--California

0
2. Section 52.220 is amended by adding paragraphs (c)(514)(ii)(A)(6)
and (c)(532)(ii)(A)(2) to read as follows:

Sec.  52.220  Identification of plan--in part.

* * * * *
    (c) * * *
    (514) * * *
    (ii) * * *
    (A) * * *
    (6) 2018 Updates to the California State Implementation Plan,
adopted on October 25, 2018, chapter III (``SIP Elements for Ventura
County''), section III.C (``Contingency Measures''); only.
* * * * *
    (532) * * *
    (ii) * * *
    (A) * * *
    (2) Final 2016 Ventura County Air Quality Management Plan, adopted
February 14, 2017, chapter 7 (``Contingency Measures''), only.
* * * * *

0
3. Section 52.248 is amended by adding paragraph (j) to read as
follows:

Sec.  52.248  Identification of plan--conditional approval.

* * * * *
    (j) The EPA is conditionally approving the California State
Implementation Plan (SIP) for Ventura County for the 2008 ozone NAAQS
with respect to the contingency measures requirements of CAA sections
172(c)(9) and 182(c)(9). The conditional approval is based on a
commitment from the Ventura County Air Pollution Control District
(District) in a letter dated August 16, 2019, to adopt a specific rule
revision, and a commitment from the California Air Resources Board
(CARB) dated August 30, 2019, to submit the amended District rule to
the EPA within 12 months of the effective date of the final conditional
approval. If the District or CARB fail to meet their commitments within
one year of the effective date of the final conditional approval, the
conditional approval is treated as a disapproval.

[FR Doc. 2020-11931 Filed 6-24-20; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register: May 8, 2008 (Volume 73, Number 90)]
[Rules and Regulations]
[Page 25997-25999]
[DOCID:fr08my08-10]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2007-0045; Directorate Identifier 2007-NM-169-AD;
Amendment 39-15501; AD 2008-09-20]
RIN 2120-AA64

Airworthiness Directives; Boeing Model 747-200F, 747-300, 747-
400, and 747-400D Series Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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SUMMARY: We are adopting a new airworthiness directive (AD) for certain
Boeing Model 747-200F, 747-300, 747-400, and 747-400D series airplanes.
This AD requires a detailed inspection to detect missing fasteners from
the shear clip at a certain stub frame to auxiliary sill joint, and
applicable related investigative and corrective actions. This AD
results from reports of missing fasteners from the shear clip of the
stub frame to auxiliary sill joint and cracking of the adjacent
exterior skin and internal doubler. We are issuing this AD to ensure
that fasteners are installed in the shear clip of the stub frame to
auxiliary sill joint. Missing fasteners could result in cracks in the
adjacent exterior skin and internal doubler, which can propagate and
result in loss of structural integrity and sudden in-flight
decompression of the airplane.

DATES: This AD is effective June 12, 2008.
    The Director of the Federal Register approved the incorporation by
reference of a certain publication listed in this AD as of June 12,
2008.

ADDRESSES: For service information identified in this AD, contact
Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington 98124-
2207.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://
www.regulations.gov; or in person at the Docket Management Facility
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays. The AD docket contains this AD, the regulatory evaluation,
any comments received, and other information. The address for the
Docket Office (telephone<PHONE_NUMBER>) is the Document Management
Facility, U.S. Department of Transportation, Docket Operations, M-30,
West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE.,
Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Ivan Li, Aerospace Engineer, Airframe
Branch, ANM-120S, FAA, Seattle Aircraft Certification Office, 1601 Lind

Avenue SW., Renton, Washington 98057-3356; telephone<PHONE_NUMBER>;
fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR
part 39 to include an airworthiness directive (AD) that would apply to
certain Boeing Model 747-200F, 747-300, 747-400, and 747-400D series
airplanes. That NPRM was published in the Federal Register on October
17, 2007 (72 FR 58768). That NPRM proposed to require a detailed
inspection to detect missing fasteners from the shear clip at a certain
stub frame to auxiliary sill joint, and applicable related
investigative and corrective actions.

New Service Bulletin Revision

    Since we issued the NPRM, we have reviewed Boeing Service Bulletin
747-53A2685, Revision 1, dated March 13, 2008. Revision 1 clarifies
certain figures and part and material content. No additional work is
necessary for airplanes on which the actions have been done in
accordance with Boeing Alert Service Bulletin 747-53A2685, dated May
31, 2007 (referred to as the appropriate source of service information
for accomplishing the actions specified in the NPRM). We have revised
paragraphs (c), (f), and (g) of this AD to refer to Boeing Service
Bulletin 747-53A2685, Revision 1, dated March 13, 2008. We have added a
new paragraph (h) of this AD to give credit for actions done before the
effective date of this AD according to Boeing Alert Service Bulletin
747-53A2685, dated May 31, 2007, and redesignated subsequent paragraphs
of the AD accordingly.

Comments

    We gave the public the opportunity to participate in developing
this AD. We considered the comments received from two commenters.
Boeing requested that Boeing Service Bulletin 747-53A2685, Revision 1,
dated March 13, 2008, be used instead of Boeing Alert Service Bulletin
747-53A2685, dated May 31, 2007. All Nippon Airways requested
clarification of technical information in the NPRM. These requests have
been addressed in Revision 1 of the service bulletin, which is cited in
the final rule.

Conclusion

    We reviewed the relevant data, considered the comments received,
and determined that air safety and the public interest require adopting
the AD with the changes described previously. We also determined that
these changes will not increase the economic burden on any operator or
increase the scope of the AD.

Costs of Compliance

    There are about 98 airplanes of the affected design in the
worldwide fleet. This AD affects about 8 airplanes of U.S. registry.
The required actions take about 1 work hour per airplane, at an average
labor rate of $80 per work hour. Based on these figures, the estimated
cost of the AD for U.S. operators is $640, or $80 per airplane.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. ``Subtitle VII: Aviation
Programs,'' describes in more detail the scope of the Agency's
authority.
    We are issuing this rulemaking under the authority described in
``Subtitle VII, Part A, Subpart III, Section 44701: General
requirements.'' Under that section, Congress charges the FAA with
promoting safe flight of civil aircraft in air commerce by prescribing
regulations for practices, methods, and procedures the Administrator
finds necessary for safety in air commerce. This regulation is within
the scope of that authority because it addresses an unsafe condition
that is likely to exist or develop on products identified in this
rulemaking action.

Regulatory Findings

    This AD will not have federalism implications under Executive Order
13132. This AD will not have a substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government.
    For the reasons discussed above, I certify that this AD:
    (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) Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.
    You can find our regulatory evaluation and the estimated costs of
compliance in the AD Docket.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.

Adoption of the Amendment

0
Accordingly, under the authority delegated to me by the Administrator,
the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

0
1. The authority citation for part 39 continues to read as follows:

    Authority: 49 U.S.C. 106(g), 40113, 44701.

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new AD:

2008-09-20 Boeing: Amendment 39-15501. Docket No. FAA-2007-0045;
Directorate Identifier 2007-NM-169-AD.

Effective Date

    (a) This airworthiness directive (AD) is effective June 12,
2008.

Affected ADs

    (b) None.

Applicability

    (c) This AD applies to Boeing Model 747-200F, 747-300, 747-400,
and 747-400D series airplanes, certificated in any category; as
identified in Boeing Service Bulletin 747-53A2685, Revision 1, dated
March 13, 2008.

Unsafe Condition

    (d) This AD results from two reports of cracks found in the
exterior skin and internal doubler adjacent to the shear clip at the
stub frame to auxiliary sill joint at stringer 30 (left and right
sides), body station (BS) 488. In addition, on one of the airplanes,
seven fasteners were missing from the shear clip on the left side of
the airplane. The cause of the missing fasteners has been attributed
to a manufacturing process error. We are issuing this AD to ensure
fasteners in the shear clip of the stub frame to auxiliary sill
joints (left and right sides) are installed. Missing fasteners could
result in cracks in the adjacent exterior skin and internal doubler,
which can propagate and result in loss of structural integrity and
sudden in-flight decompression of the airplane.

Compliance

    (e) You are responsible for having the actions required by this
AD performed within the compliance times specified, unless the
actions have already been done.

Inspection and Applicable Related Investigative and Corrective Actions

    (f) At the applicable compliance time and repeat intervals
listed in Tables 1 and 2 of paragraph 1.E., ``Compliance,'' of
Boeing Service Bulletin 747-53A2685, Revision 1, dated March 13,
2008; except where the service bulletin specifies a compliance time

after the date on the service bulletin, this AD requires compliance
within the specified compliance time after the effective date of
this AD: Do the inspection and applicable related investigative and
corrective actions by accomplishing all the applicable actions
specified in the Accomplishment Instructions of the service
bulletin, except as provided by paragraph (g) of this AD.

Repair of Cracks

    (g) If any crack is found during any inspection required by this
AD, and Boeing Service Bulletin 747-53A2685, Revision 1, dated March
13, 2008, specifies to contact Boeing for appropriate action: Before
further flight, repair the crack using a method approved in
accordance with the procedures specified in paragraph (i) of this
AD.

Credit for Actions Done Using the Previous Service Information

    (h) Actions accomplished before the effective date of this AD in
accordance with Boeing Alert Service Bulletin 747-53A2685, dated May
31, 2007, are considered acceptable for compliance with the
corresponding actions specified in paragraph (f) of this AD.

Alternative Methods of Compliance (AMOCs)

    (i)(1) The Manager, Seattle Aircraft Certification Office (ACO),
FAA, has the authority to approve AMOCs for this AD, if requested in
accordance with the procedures found in 14 CFR 39.19.
    (2) To request a different method of compliance or a different
compliance time for this AD, follow the procedures in 14 CFR 39.19.
Before using any approved AMOC on any airplane to which the AMOC
applies, notify your appropriate principal inspector (PI) in the FAA
Flight Standards District Office (FSDO), or lacking a PI, your local
FSDO.
    (3) An AMOC that provides an acceptable level of safety may be
used for any repair required by this AD, if it is approved by an
Authorized Representative for the Boeing Commercial Airplanes
Delegation Option Authorization Organization who has been authorized
by the Manager, Seattle ACO, to make those findings.

Material Incorporated by Reference

    (j) You must use Boeing Service Bulletin 747-53A2685, Revision
1, dated March 13, 2008, to do the actions required by this AD,
unless the AD specifies otherwise.
    (1) The Director of the Federal Register approved the
incorporation by reference of this service information under 5
U.S.C. 552(a) and 1 CFR part 51.
    (2) For service information identified in this AD, contact
Boeing Commercial Airplanes, P.O. Box 3707, Seattle, Washington
98124-2207.
    (3) You may review copies of the service information
incorporated by reference at the FAA, Transport Airplane
Directorate, 1601 Lind Avenue SW., Renton, Washington; or at the
National Archives and Records Administration (NARA). For information
on the availability of this material at NARA, call<PHONE_NUMBER>, or
go to: http://www.archives.gov/federal_register/code_of_federal_
regulations/ibr_locations.html.

    Issued in Renton, Washington, on April 23, 2008.
Ali Bahrami,
Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. E8-9894 Filed 5-7-08; 8:45 am]

BILLING CODE 4910-13-P


[Federal Register Volume 81, Number 136 (Friday, July 15, 2016)]
[Notices]
[Pages 46147-46151]
[FR Doc No: 2016-16724]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78285; File No. SR-NASDAQ-2016-087]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Relating to Automated Removal of Orders and Quotes

July 11, 2016.
    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 June 30, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend the rules of the NASDAQ Options
Market LLC (``NOM'') at Chapter VII, Section 6(f), entitled ``Automated
Removal of Orders and Quotes.''
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaq.cchwallstreet.com, at the principal office of
the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend a NOM Rule at Chapter VII, Section
6(f), entitled ``Automated Removal of Orders and Quotes'' to modify the
minimum Specified Percentage (as described below). A NOM Market Maker
\3\ sets the Specified Percentage to enhance its risk management for an
underlying security as market conditions warrant, based on its own risk
tolerance level and quoting behavior. The Exchange proposes to permit
the NOM Market Maker to set the Specified Percentage more broadly, no
less than 1% with this rule change. The Exchange also proposes to
replace the term ``disseminated size'' \4\ with a quantitative
description to add transparency with respect to the calculation of
Series Percentage.
---------------------------------------------------------------------------

    \3\ The term ``Nasdaq Options Market Maker'' or ``Options Market
Maker'' (herein ``NOM Market Maker'') means an Options Participant
registered with the Exchange for the purpose of making markets in
options contracts traded on the Exchange and that is vested with the
rights and responsibilities specified in Chapter VII of these Rules.
See NOM Rules at Chapter I, Section 1(a)(26).
    \4\ See Securities Exchange Act Release No 76316 (October 30,
2015), 80 FR 68595 at 68597 (November 5, 2015) (SR-NASDAQ-2015-122).
The Exchange defined disseminated size in this rule change in
footnote 13, as the original size quoted by the Participant.
---------------------------------------------------------------------------

Background
    Today, Chapter VII, Section 6(f) permits NOM Market Makers to
monitor risk arising from multiple executions across multiple options
series of a single underlying security. A NOM Market Maker may provide
a specified time period and a specified percentage by which the
Exchange's System will automatically remove a NOM Market Maker's quotes
and orders in all series of an underlying security submitted through
designated NOM protocols, as specified by the Exchange, during a
specified time period not to exceed 15 seconds (``Percentage-Based
Specified Time Period.'').\5\
---------------------------------------------------------------------------

    \5\ A specified time period commences for an option when a
transaction occurs in any series in such option.
---------------------------------------------------------------------------

    For each series in an option, the System determines: (i) The
percentage that the number of contracts executed in that series
represents relative to the NOM Market Maker's disseminated size of each
side in that series (``Series Percentage''); and (ii) the sum of the
Series Percentage in the option issue (``Issue Percentage''). The
Exchange proposes herein to replace the term ``disseminated size'' with
the more precise phrase ``number of contracts available at the time of
execution plus the number of contracts executed in unexpired prior
executions.''
    The System tracks and calculates the net impact of positions in the
same option issue during the Percentage-Based Specified Time Period.
Specifically, the System tracks transactions, i.e., the sum of buy-side
put percentages, the sum of sell-side put percentages, the sum of buy-
side call percentages, and the sum of sell-side call percentages. The
System then calculates the absolute value of the difference between the
buy-side puts and the sell-side puts plus the absolute value of the
difference between the buy-side calls and the sell-side calls. If the
Issue Percentage, rounded to the nearest integer, equals or exceeds a
percentage established by the NOM Market Maker, not less than 100%
(``Specified Percentage''), the System automatically removes a NOM
Market Maker's quotes and orders in all series of an underlying
security submitted through designated NOM protocols, as specified by
the Exchange, during the Percentage-Based Specified Time.
    The Percentage-Based Specified Time Period commences for an option
every time an execution occurs in any series in such option and
continues until the System removes quotes and orders as described in
Chapter VII, Section 6(f)(iv) or (v) or the Percentage-Based Specified
Time Period expires. The Percentage-Based Specified Time Period
operates on a rolling basis among all series in an option in that there
may be multiple Percentage-Based Specified Time Periods occurring
simultaneously and such Percentage-Based Specified Time periods may
overlap.
Proposal
    The Exchange proposes to lower the minimum Specified Percentage,
which is set by the NOM Market Maker, from 100% to 1%. The proposal
would

amend the rule text to state, if the Issue Percentage, rounded to the
nearest integer, equals or exceeds a percentage established by the NOM
Market Maker, not less than 1% (``Specified Percentage''), the System
automatically removes a NOM Market Maker's quotes and orders in all
series of an underlying security submitted through designated NOM
protocols, as specified by the Exchange, during the Percentage-Based
Specified Time. This proposal would allow a NOM Market Maker to
establish a Specified Percentage at any percentage level greater than
or equal to 1% for an option in which the NOM Market Maker is
appointed. Today, the Specified Percentage would be set by the NOM
Market Maker at greater than or equal to 100%. This amendment will
allow NOM Market Makers to better manage their risk and assist them to
avoid trading a number of contracts that exceeds the NOM Marker Maker's
risk tolerance level across multiple series of a single underlying when
such series are executed in rapid succession.
    NOM Market Makers will be able to more precisely customize their
risk settings within the System. NOM Market Makers will be able to
consider factors such as present and anticipated market conditions,
news in an option, and a sudden change in volatility of an option. NOM
Market Makers are required to utilize either the Percentage Based
Threshold or the Volume Based Threshold. NOM Market Makers that select
to utilize the Percentage-Based Threshold will be able to adopt more
precise controls with this proposal based on the NOM Market Maker's
risk tolerance level.
    NOM Market Makers must utilize either the Percentage-Based \6\ or
Volume-Based risk controls. NOM Market Makers may contact Market
Operations to set their percentage, which is 1% or greater with this
proposal, and specified time period.
---------------------------------------------------------------------------

    \6\ NOM Market Makers selecting the Percentage-Based risk
control in Chapter VII, Section 6(f)(i) are required to provide a
specified time period, up to 15 seconds, and a specified percentage
with a number of 1% or greater, as proposed herein, to the NOM
Market Operations staff to select this risk control. If a NOM Market
Maker does not desire to utilize the Percentage-Based risk control
the NOM Market Maker must utilize the Volume-Based risk control
which is similarly set-up by contacting Market Operations and
providing certain settings.
---------------------------------------------------------------------------

    By way of example, if a NOM Market Maker has set the percentage
setting to 50% and a Specified Time Period of 15 seconds and the Order
Book reflects:
    MM1 has a displayed quote of 1.10 (100) x 1.20 (100) for IBM May
20, 2016 70 puts and MM1 is the only displayed size on NOM and an order
is submitted to buy 75 IBM May 20, 2016 70 Puts for 1.20.
    Chapter VII, Section 6(f) would cause the following:
    (1) Provide MM1 with an execution--Sold 75 @ 1.20; and
    (2) Trigger the Percentage-Based Threshold and remove MM1's quotes
in IBM.
    Another example is with multiple executions. Presume the following:
    MM1 has set the percentage to 80% by 5 seconds and MM1 has a
displayed quote of 2.00 (100) x 2.25 (100) for IBM May 20, 2016 70 puts
and he is the only displayed size on the NOM. Also, presume an order
comes in to buy 50 IBM May 20, 2016 70 puts for 2.25.
    Chapter VII, Section 6(f) would cause the following:
    (1) Provide MM1 with an execution--Sold 50 @ 2.25;
    (2) Update MMI [sic] quote to 2.00 (100) x 2.25 (50);
    (3) Within 1 second an order comes in to buy 45 IBM May 20, 2016 70
puts for 2.25;
    (4) Provide MM1 with an execution--Sold 45 @ 2.25; and
    (5) Trigger the Percentage-Based Threshold and remove MM1's quotes
in IBM.
    The Exchange also proposes to replace the term ``disseminated
size'' with a quantitative description to add transparency with respect
to the calculation of Series Percentage. The language proposed amends
the original definition of disseminated size. With respect to the
disseminated size, the Exchange previously defined disseminated size as
``. . . the original size quoted by the Participant.'' \7\
---------------------------------------------------------------------------

    \7\ See note 4 above.
---------------------------------------------------------------------------

    The Exchange proposes to amend the definition as follows: ``For
each series in an option, the System will determine: (i) The percentage
that the number of contracts executed in that series represents
relative to the number of contracts available at the time of execution
plus the number of contracts executed in unexpired prior executions of
each side in that series (``Series Percentage''); and (ii) the sum of
the Series Percentage in the option issue (``Issue Percentage'').'' The
Exchange counts Specialized Quote Feed (``SQF'') \8\ quotes and OUCH To
Trade Options (``OTTO'') \9\ orders only in determining the number of
contracts traded and removed by the System. OTTO orders are single
sided and may be submitted at multiple price levels for each series,
whereas SQF permits a two-sided quote for each NOM Market Maker. The
calculation considers the different price levels.
---------------------------------------------------------------------------

    \8\ SQF permits the receipt of quotes. SQF Auction Responses and
market sweeps are also not included.
    \9\ OTTO provides a method for subscribers to send orders and
receive status updates on those orders. OTTO accepts limit orders
from System subscribers, and if there is a matching order, the
orders will execute. Non-matching orders are added to the limit
order book. All NOM Participants have the ability to utilize OTTO.
OTTO immediate or cancel orders will not be included.
---------------------------------------------------------------------------

    By way of example, with the proposed definition, if a NOM Market
Maker with a Percentage-Based Specified Time Period of 10 seconds and a
Specified Percentage of 100% submits a quote over SQF of 1.00(100) x
1.10(100) and a buy order executes 75, the remaining size would be
1.00(100) x 1.10(25). Thereafter a new Percentage-Based Specified Time
Period begins and current Series Percentage executed is 75 and three
seconds pass and the NOM Market Maker re-quotes 1.00(100) x 1.10 (100),
an incoming buy order of 43 would cause the Issue Percentage to meet
the Percentage-Based Threshold. This is due to a counted size of 175
(the executed 75 plus the newly quoted 100) and rounding (0.75 + 43/175
= 0.9957 rounds up to 100%). If the former definition applied, the size
would have been 100 and an execution of only 25 contracts on the same
side would have caused the Issue Percentage to meet the Percentage-
Based Threshold, which is not the case. In other words, the current SQF
quote and all OTTO orders on that side for that series (for that NOM
Market Maker) in addition to all the executions that have occurred on
that side for that series (for that NOM Market Maker) within the
Percentage-Based Specified Time Period would comprise the size.
    This new definition accurately represents the manner in which the
Issue Percentage is calculated. Also, the more precise language within
the rule text will provide NOM Market Makers with a more accurate
description of the operation of this risk mechanism. The Exchange has
always calculated the NOM Market Maker's size in this fashion. The
definition, as described in the prior rule change, was not accurate and
the Exchange seeks to amend the definition with this proposal and
memorialize the definition within the rule.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \10\ in general, and furthers the objectives of Section
6(b)(5) of the Act \11\ in particular, in that it is designed 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, by offering NOM Market Makers the
ability to better manage their own risk with this risk feature.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    NOM Market Makers are obligated to submit continuous two-sided
quotations in a certain number of series in their appointed option
classes for a certain percentage of each trading session.\12\ This
obligation renders them vulnerable to risk from unusual market
condition, volatility in specific options, and other market events that
may cause them to receive multiple, extremely rapid automatic
executions before they can adjust their quotations and overall risk
exposure in the market. Without adequate risk management tools in place
on the Exchange, the incentive for NOM Market Makers to quote
aggressively, respecting both price and size could be diminished. Such
a result may undermine the quality of the markets, which are enhanced
by the depth and liquidity such NOM Market Makers provide in the
marketplace.
---------------------------------------------------------------------------

    \12\ Pursuant to NOM Rules at Chapter VII, Section 5, entitled
``Obligations of Market Makers'', in registering as a market maker,
an Options Participant commits himself to various obligations.
Transactions of a NOM Market Maker must constitute a course of
dealings reasonably calculated to contribute to the maintenance of a
fair and orderly market, and Market Makers should not make bids or
offers or enter into transactions that are inconsistent with such
course of dealings. Further, all Market Makers are designated as
specialists on NOM for all purposes under the Act or rules
thereunder. See Chapter VII, Section 5.
---------------------------------------------------------------------------

    By allowing the Specified Percentage provided by the NOM Market
Maker to be reduced from 100% to 1%, the Exchange provides its NOM
Market Makers the desired flexibility to take into account such factors
as present and anticipated market conditions, news in an option or
sudden change in volatility of an option without any limitation
regarding the Specified Percentage. This should encourage NOM Market
Makers to provide additional depth and liquidity to the Exchange's
markets, thereby removing impediments to and perfecting the mechanisms
of a free and open market and a national market system and, in general,
protecting investors and the public interest.
    The proposal is consistent with the Act because the reduction of
the Specified Percentage to not less than 1% provides more alternatives
to NOM Market Makers in setting their percentage without impacting
their firm quote obligations. The System operates consistently with the
firm quote obligations of a broker-dealer pursuant to Rule 602 of
Regulation NMS. Specifically, with respect to NOM Market Makers, their
obligation to provide continuous two-sided quotes on a daily basis is
not diminished by the removal of such quotes and orders by the
Percentage-Based Threshold. NOM Market Makers are required to provide
continuous two-sided quotes on a daily basis.\13\ NOM Market Makers
that utilize the Percentage-Based Threshold will not be relieved of the
obligation to provide continuous two-sided quotes on a daily basis, nor
will the change prohibit the Exchange from taking disciplinary action
against a NOM Market Maker for failing to meet the continuous quoting
obligation each trading day. All quotes entered into the System are
considered firm. Quotes will only be removed from the System once the
Percentage-Based Threshold has been met if the quote was not otherwise
executed by an incoming order.
---------------------------------------------------------------------------

    \13\ Id.
---------------------------------------------------------------------------

    This risk feature will continue to remove impediments to and
perfect the mechanism of a free and open market and a national market
system and protect investors and the public interest by allowing NOM
Market Makers to remove their quotes and orders in the event that
market conditions warrant, based on their own risk tolerance level. NOM
Market Makers provide liquidity to the market place and have
obligations unlike other market participants.\14\ This risk feature is
important because it will enable NOM Market Makers to manage their
exposure at the Exchange. Further, permitting NOM Market Makers to
enter a broader setting would continue to allow NOM Market Makers to
have flexibility in setting their risk exposure to prevent unintended
triggers of the Percentage-Based Threshold. This proposal continues to
allow NOM Market Makers to select a Percentage-Based Specified Time
Period. Each NOM Market Maker has different levels of sensitivity and
its own system safeguards as well. The proposed setting would permit
each NOM Market Maker to select a setting that is appropriate to
capture the needs of that NOM Market Maker.
---------------------------------------------------------------------------

    \14\ Id.
---------------------------------------------------------------------------

    Further, it is important to note that any interest that is
executable against a NOM Market Maker's quotes and orders that are
received \15\ by the Exchange prior to the trigger of the Percentage-
Based Threshold, which is processed by the System, automatically
executes at a price up to the NOM Market Maker's size. The system-
generated Purge Notification Message is accepted by the System in the
order of receipt in the queue and is processed in that order so that
interest that is already accepted into the System is processed prior to
the message. Incoming orders received prior to the Purge Notification
Message would not be cancelled, rather they be [sic] executed at a
price up to the NOM Market Maker's size.
---------------------------------------------------------------------------

    \15\ The time of receipt for an order or quote is the time such
message is processed by the Exchange book.
---------------------------------------------------------------------------

    The Exchange notes that Miami International Securities Exchange,
LLC (``MIAX'') implemented a rule that changed its Allowable Engagement
Percentage from a minimum of 100% to any percentage established by the
Market Maker.\16\ The NOM rule is similar to MIAX's in that a member is
required to have a setting, although MIAX has a default setting in
place in the instance that no percentage is provided. NOM Market Makers
that select the Percentage-Based risk tool must provide the Exchange
with a Percentage-Based Specified Time Period greater than or equal to
1%. [sic] Amending the definition of disseminated size will provide
market participants with greater information on the manner in which the
Exchange computes the Issue Percentage. The Exchange believes that the
manner in which the Exchange calculates the number of contracts, which
are counted for the Issue Percentage, is consistent with the Act. The
counting method permits the Exchange to update the reference number to
include the executed contracts. While this method differs from the
method previously described, the Exchange believes that there is no
industry standard for counting and its method permits market
participants to achieve the desire [sic] risk protection. With the
proposed definition, each execution uses the Percentage-Based Specified
Time Period that existed at the time of the execution. NOM Market
Makers can change the Percentage-Based Specified Time Period at any
time. If a NOM Market Maker is using a Percentage-Based Specified Time
Period of 15 seconds when an execution happens, then changes the
Percentage-Based Specified Time Period to half a second, that first
execution will not expire until 15 seconds have passed. The selected
Percentage-Based Specified Time Period will persist for 15 seconds and
the number of executed contracts will be included in the denominator of
subsequent executions for a full 15 seconds.
---------------------------------------------------------------------------

    \16\ See Securities Exchange Act Release No. 77817 (May 12,
2016), 81 FR 31286 (May 18, 2016) (SR-MIAX-2016-10).

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

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The Percentage-Based Threshold
is intended to protect NOM Market Makers from exposure to excessive
risk. The Exchange believes this proposal will foster competition by
providing NOM Market Makers with the ability to enhance and customize
their percentage in order to compete for executions and order flow.
Specifically, the proposal does not impose a burden on intra-market or
inter-market competition; rather, it provides NOM Market Makers with
the opportunity to avail themselves of similar risk tools, which are
currently available on other exchanges.\17\ NOM Market Makers quote
across many series in an option creating the possibility of ``rapid
fire'' executions that can create large, unintended principal positions
that expose NOM Market Makers. The Percentage-Based Threshold permits
NOM Market Makers to monitor risk arising from multiple executions
across multiple options series of a single underlying security.
---------------------------------------------------------------------------

    \17\ See Section 8 of the 19b4.
---------------------------------------------------------------------------

    The Exchange is proposing this rule change to continue to permit
NOM Market Makers to reduce their risk in the event the NOM Market
Maker is suffering from a system issue or due to the occurrence of
unusual or unexpected market activity. Reducing such risk will enable
NOM Market Makers to enter quotations without any fear of inadvertent
exposure to excessive risk, which in turn will benefit investors
through increased liquidity for the execution of their orders. Reducing
risk by utilizing the proposed risk protections enables NOM Market
Makers, specifically, to enter quotations with larger size, which in
turn will benefit investors through increased liquidity for the
execution of their orders. Such increased liquidity benefits investors
because they receive better prices and because it lowers volatility in
the options market.
    The Exchange believes that amending the definition of disseminated
size does not create an undue burden on competition because the
Exchange will uniformly calculate the Percentage-Based Threshold in a
uniform manner for all NOM Market Makers. The Exchange is memorializing
the definition within the Rule.

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

    No written comments were either solicited or received.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b-
4(f)(6) thereunder.\19\ The Exchange has requested that the Commission
waive the thirty-day operative delay so that the proposal may become
operative immediately. The Commission believes that waiving the thirty-
day operative delay is consistent with the protection of investors and
the public interest. The Exchange proposes to change a setting in an
existing risk protection feature to enhance market makers' ability to
protect against excessive risk arising from multiple executions across
multiple options series of a single underlying security. The Commission
notes that another options exchange currently has a similar setting for
a like risk protection feature for market makers. Moreover, the
Commission notes that the proposal to replace the term ``disseminated
size'' with an accurate and more precise description would add
transparency with respect to the operation of the risk protection
feature. Therefore, the Commission hereby waives the thirty-day
operative delay and designates the proposal operative upon filing.\20\
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(A).
    \19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and the text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange has satisfied this requirement.
    \20\ For purposes of waiving the 30-day operative delay, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2016-087 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2016-087. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2016-087 and should
be submitted on or before August 5, 2016.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-16724 Filed 7-14-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 194 (Thursday, October 6, 2011)]
[Notices]
[Pages 62122-62123]
[FR Doc No: 2011-25825]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65453; File No. SR-NYSE-2011-45]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving a Proposed Rule Change Amending NYSE Rule 17(c)(2)(B) To Make
Permanent the Pilot Program That Permits the Exchange To Accept Inbound
Orders Routed by Archipelago Securities LLC in Its Capacity as a
Facility of Affiliated Exchanges and To Clarify the Text of NYSE Rule
17(c)(2)(A)(ii) to More Accurately Reflect the Regulatory Services
Agreement Between the Exchange and the Financial Industry Regulatory
Authority

September 30, 2011.

I. Introduction

    On August 18, 2011, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to make permanent the existing pilot program that
permits the Exchange to accept inbound orders routed by Archipelago
Securities LLC (``Arca Securities'') in its capacity as a facility of
an affiliated exchange (with the attendant obligations and conditions),
and to clarify the text of NYSE Rule 17(c)(2)(A)(ii) to more accurately
reflect the regulatory services agreement (``RSA'') between the
Exchange and the Financial Industry Regulatory Authority (``FINRA'').
The proposed rule change was published for comment in the Federal
Register on August 26, 2011.\3\ The Commission received no comment
letters regarding the proposed rule change. This order approves the
proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 65183 (August 22,
2011), 76 FR 53513 (``Notice'').
---------------------------------------------------------------------------

II. Background

    Arca Securities is a broker-dealer that is an NYSE member,\4\ and,
among other things, is permitted to provide to members of NYSE Amex and
NYSE Arca optional routing services to other market centers.\5\ On June
16, 2011, the Exchange filed an immediately effective proposed rule
change to, among other things, permit the Exchange to receive inbound
routes of equity orders that Arca Securities routes in its capacity as
a facility of NYSE Amex and NYSE Arca on a pilot basis ending September
30, 2011.\6\ The Exchange now seeks permanent approval of this inbound
routing pilot.\7\
---------------------------------------------------------------------------

    \4\ Arca Securities is owned indirectly by NYSE Euronext (``NYSE
Euronext''), which also indirectly owns three registered securities
exchanges--NYSE Amex LLC (``NYSE Amex''), the Exchange, and NYSE
Arca, Inc. (``NYSE Arca''). Thus, Arca Securities is an affiliate of
each of these exchanges.
    \5\ Arca Securities operates as a facility of NYSE Amex and NYSE
Arca that provides outbound routing from NYSE Amex and NYSE Arca to
other market centers, subject to certain conditions. See Securities
Exchange Act Release Nos. 58705 (October 1, 2008), 73 FR 58995
(October 8, 2008) (SR-Amex-2008-63); and 52497 (September 22, 2005),
70 FR 56949, 56952-56953 (September 29, 2005) (SR-PCX-2005-90).
    \6\ See Securities Exchange Act Release No. 64729 (June 23,
2011), 76 FR 38232 (June 29, 2011) (SR-NYSE-2011-24) (``Routing
Pilot Release''). See also Notice, 76 FR at 53513, n.5 and
accompanying text.
    \7\ See Notice.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\8\
Specifically, the Commission finds that the proposed rule change is
consistent with Section 6(b)(1) of the Act,\9\ which requires, among
other things, that a national securities exchange be so organized and
have the capacity to carry out the purposes of the Act, and to comply
and enforce compliance by its members and persons associated with its
members, with the provisions of the Act, the rules and regulation
thereunder, and the rules of the Exchange. Further, the Commission
finds that the proposed rule change is consistent with Section

6(b)(5) of the Act,\10\ 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 foster cooperation and coordination
with persons engaged in regulating, clearing, settling, and processing
information with respect to, and facilitating transactions in
securities; to remove impediments to and perfect the mechanism of a
free and open market and a national market system; and, in general, to
protect investors and the public interest. Section 6(b)(5) also
requires that the rules of an exchange not be designed to permit unfair
discrimination among customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \8\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition and
capital formation. 15 U.S.C. 78c(f).
    \9\ 15 U.S.C. 78f(b)(1).
    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Recognizing that the Commission has expressed concern regarding the
potential for conflicts of interest in instances where a member firm is
affiliated with an exchange to which it is routing orders, the Exchange
previously implemented limitations and conditions to Arca Securities's
affiliation with the Exchange to permit the Exchange to accept orders
routed inbound to NYSE Arca by Arca Securities from its affiliates,
NYSE Amex and NYSE Arca, on a pilot basis.\11\ The Exchange now seeks
to make this pilot permanent, and to more accurately reflect in its
rule text its RSA with FINRA. Specifically, the Exchange states it is
in compliance with the following obligations and conditions:\12\
---------------------------------------------------------------------------

    \11\ See Routing Pilot Release. See also supra note 6 and
accompanying text.
    \12\ See Notice, 76 FR at 53514.
---------------------------------------------------------------------------

     First, the Exchange will maintain an agreement pursuant to
Rule 17d-2 under the Exchange Act with FINRA to relieve the Exchange of
regulatory responsibilities for Arca Securities with respect to rules
that are common rules between the Exchange and FINRA, and maintain an
RSA with FINRA to perform regulatory responsibilities for Arca
Securities for unique Exchange rules.
     Second, the RSA will require the Exchange to provide FINRA
with information, in an easily accessible manner, regarding all
exception reports, alerts, complaints, trading errors, cancellations,
investigations, and enforcement matters (collectively ``Exceptions'')
in which Arca Securities is identified as a participant that has
potentially violated Exchange or Commission Rules and of which the
Exchange becomes aware, and shall require that FINRA provide a report,
at least quarterly, to the Exchange quantifying all Exceptions in which
Arca Securities is identified as a participant that has potentially
violated Exchange or Commission Rules; \13\
---------------------------------------------------------------------------

    \13\ See Notice, 76 FR at 53514, n.8 and accompanying text. The
Exchange proposed to modify this provision, as set forth in NYSE
Rule 17(c)(2)(A)(ii) to more accurately reflect its RSA with FINRA
and specify that the quarterly report of Exceptions shall be
provided to the Exchange's Chief Regulatory Officer (``CRO''). The
Exchange states that upon approval of this change, it will continue
to comply with the obligations and conditions as set forth in NYSE
Rule 17(c)(2). See Notice, 76 FR at 53514.
---------------------------------------------------------------------------

     Third, the Exchange, on behalf of its parent, NYSE
Euronext, will establish and maintain procedures and internal controls
reasonably designed to prevent Arca Securities from receiving any
benefit, taking any action or engaging in any activity based on non-
public information regarding planned changes to Exchange systems,
obtained as a result of its affiliation with the Exchange, until such
information is available generally to similarly situated member
organizations of the Exchange in connection with the provision of
inbound order routing to the Exchange; and
     Fourth, the Exchange may furnish to Arca Securities the
same information on the same terms that the Exchange makes available in
the normal course of business to any other member organization.\14\

    \14\ See NYSE Rule 17(c)(2). See also Notice, 76 FR at 53514.
---------------------------------------------------------------------------

The Exchange believes that by meeting the above-listed conditions it
has set up mechanisms that protect the independence of the Exchange's
regulatory responsibility with respect to Arca Securities, and has
demonstrated that Arca Securities cannot use any information it may
have because of its affiliation with the Exchange to its advantage.\15\
---------------------------------------------------------------------------

    \15\ See Notice, 76 FR at 53514.
---------------------------------------------------------------------------

    In the past, the Commission has expressed concern that the
affiliation of an exchange with one of its members raises potential
conflicts of interest, and the potential for unfair competitive
advantage.\16\ Although the Commission continues to be concerned about
potential unfair competition and conflicts of interest between an
exchange's self-regulatory obligations and its commercial interest when
the exchange is affiliated with one of its members, for the reasons
discussed below, the Commission believes that it is consistent with the
Act to permit Arca Securities to provide inbound routing to the
Exchange on a permanent basis instead of a pilot basis, subject to the
other conditions described above.
---------------------------------------------------------------------------

    \16\ See, e.g., Securities Exchange Act Release Nos. 54170 (July
18, 2006), 71 FR 42149 (July 25, 2006) (SR-NASDAQ-2006-006) (order
approving Nasdaq's proposal to adopt Nasdaq Rule 2140, restricting
affiliations between Nasdaq and its members); 53382 (February 27,
2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-77) (order
approving the combination of the New York Stock Exchange, Inc. and
Archipelago Holdings, Inc.); 58673 (September 29, 2008), 73 FR 57707
(October 8, 2008) (SR-Amex-2008-62) (order approving the combination
of NYSE Euronext and the American Stock Exchange LLC); 59135
(December 22, 2008), 73 FR 79954 (December 30, 2008) (SR-ISE-2009-
85) (order approving the purchase by ISE Holdings of an ownership
interest in DirectEdge Holdings LLC); and 59281 (January 22, 2009),
74 FR 5014 (January 28, 2009) (SR-NYSE-2008-120) (order approving a
joint venture between NYSE and BIDS Holdings L.P.).
---------------------------------------------------------------------------

    The Exchange has proposed four ongoing conditions applicable to
Arca Securities's routing activities, which are enumerated above. The
Commission believes that these conditions mitigate its concerns about
potential conflicts of interest and unfair competitive advantage. In
particular, the Commission believes that FINRA's oversight of Arca
Securities,\17\ combined with FINRA's monitoring of Arca Securities's
compliance with the Exchange's rules and quarterly reporting to NYSE's
CRO, will help to protect the independence of the Exchange's regulatory
responsibilities with respect to Arca Securities.
---------------------------------------------------------------------------

    \17\ This oversight will be accomplished through the Regulatory
Contract between the Exchange and FINRA and a 17d-2 Agreement.
---------------------------------------------------------------------------

V. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the
Act,\18\ that the proposed rule change (SR-NYSE-2011-45) be, and hereby
is, approved.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-25825 Filed 10-5-11; 8:45 am]
BILLING CODE 8011-01-P