[Federal Register Volume 78, Number 127 (Tuesday, July 2, 2013)]
[Notices]
[Pages 39784-39789]
[FR Doc No: 2013-15842]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30581; 813-180-09]

Invesco Advisers, Inc., et al.; Notice of Application

June 26, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an order under sections 6(b) and 6(e)
of the Investment Company Act of 1940 (``Act'') granting an exemption
from all provisions of the Act, except sections 9, 17, 30 and 36
through 53, and the rules and regulations under the Act (the ``Rules
and Regulations''). With respect to sections 17(a), (d), (e), (f), (g),
and (j) of the Act, sections 30(a), (b), (e), and (h) of the Act and
the Rules and Regulations, and rule 38a-1 under the Act, applicants
request a limited exemption as set forth in the application.

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

Summary of Application: Applicants request an order to exempt certain
limited partnerships and other entities formed for the benefit of
eligible employees of Invesco Ltd. and its affiliates from certain
provisions of the Act. Each such entity will be an ``employees'
securities company'' within the meaning of section 2(a)(13) of the Act.

Applicants: Invesco Advisers, Inc. (``Invesco''), Chancellor Employees'
Direct Fund I, L.P., Chancellor Employees' Partnership Fund I, L.P.
(the ``Initial Partnerships''), INVESCO ESC Real Estate Fund I, L.P.,
INVESCO ESC Real Estate Fund II, L.P., WLR IV Parallel ESC, L.P.,
INVESCO Employees' Partnership Fund II, L.P., INVESCO Employees' Direct
Fund V, L.P., INVESCO Employees' Partnership Fund III, L.P., INVESCO
Employees' Partnership Fund IV, L.P., IPC Employees Partnership Fund
III, L.L.C., IPC Employees' Direct Fund V, L.L.C., INVESCO ESC
Partnership Fund II, L.L.C. (the ``Additional Funds,'' together with
the Initial Partnerships, the ``Existing Funds''), and Invesco Ltd.

Filing Dates: The application was filed on December 11, 1997, and
amended on March 17, 1998, July 16, 1998, January 6, 1999, June 1,
1999, January 7, 2004, July 22, 2011, August 8, 2012, June 24, 2013,
and June 25, 2013.

Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on July 22, 2013, and should be accompanied by proof of service on
applicants, in the form of an affidavit or, for lawyers, a certificate
of service. Hearing requests should state the nature of the writer's
interest, the reason for the request, and the issues contested. Persons
who wish to be notified of a hearing may request notification by
writing to the Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants,
1555 Peachtree Street NE., Atlanta, GA 30309.

FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817, or Daniele Marchesani, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Exemptive Applications Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling<PHONE_NUMBER>.

Applicants' Representations: *

    1. Invesco Ltd. is a global money management company organized
under the laws of Bermuda. Invesco, a Delaware corporation, provides
investment management and distribution services to pension plans,
foundations, financial institutions and other global clients and is a
wholly-owned subsidiary of Invesco Ltd. Invesco is registered as an
investment adviser under the Investment Advisers Act of 1940
(``Advisers Act''). Invesco Ltd. and its affiliates, as defined in rule
12b-2 under the Securities Exchange Act of 1934 (the ``1934 Act''), are
referred to collectively as the ``Invesco Group'' and individually as
an ``Invesco Group entity.''
    2. The Invesco Group has formed the Existing Funds and may from
time to time organize additional entities (together with the Existing
Funds, the

``Funds''). Each Fund will be a limited partnership, business trust,
limited liability company or any other entity, formed or organized
under the laws of the State of Delaware or another jurisdiction,
including outside the United States.
    3. The Funds have been or will be established primarily for the
benefit of certain current or former employees and current persons on
retainer, including but not limited to, Consultants \1\ of the Invesco
Group, as part of a program designed to create capital building
opportunities that are competitive with those at other financial
service firms and to facilitate its recruitment and retention of high
caliber professionals. Each Fund will be an ``employees' securities
company'' within the meaning of section 2(a)(13) of the Act. Each of
the Funds will operate as a diversified or non-diversified closed-end
management investment company within the meaning of the Act. All
members or limited partners of a Fund, other than the Manager (defined
below) are ``Participants'' and any partner of a partnership or member
of a limited liability company a ``Unitholder.'' The Invesco Group will
control the Funds within the meaning of section 2(a)(9) of the Act.
---------------------------------------------------------------------------

    \1\ A ``Consultant'' is a person who Invesco Group has engaged
on retainer to provide services and professional expertise on an
ongoing basis as a regular consultant or as a business or legal
adviser and who shares a community of interest with Invesco Group
and its employers.
---------------------------------------------------------------------------

    4. Each Fund will have a manager that is an Invesco Group entity
(``Manager'').\2\ The Manager will manage, operate and control each of
the Funds. The Manager will be authorized to delegate to another
Invesco Group entity or to a committee of Invesco Group employees
(including, without limitation, the managers of the Funds) such
management responsibility. The Manager of the Initial Partnerships is
registered as an investment adviser under the Advisers Act and any
other Manager will register as an investment adviser if required under
applicable law. Applicants represent and concede that the Manager in
managing a Fund is an ``investment adviser'' within the meaning of
sections 9 and 36 of the Act and is subject to those sections.
---------------------------------------------------------------------------

    \2\ Invesco Private Capital Investments, Inc. is the Manager of
Chancellor Employees' Direct Fund I, L.P., Chancellor Employees'
Partnership Fund I, L.P., INVESCO Employees' Direct Fund V, L.P.,
INVESCO Employees' Partnership Fund III, L.P. and INVESCO Employees'
Partnership Fund IV, L.P.; IRI Fund I, L.P. is the Manager of
INVESCO ESC Real Estate Fund I, L.P.; IRI Fund II, L.P. is the
Manager of INVESCO ESC Real Estate Fund II, L.P.; Invesco WLR IV
Associates LLC is the Manager of WLR Parallel ESC IV, L.P.; Invesco
ESC Partnership Fund II, L.L.C. is the Manager of INVESCO Employees'
Partnership Fund II, L.P.; Invesco Private Capital, Inc. is the
Manager of IPC Employees' Partnership Fund III, L.L.C., INVESCO ESC
Partnership Fund II, L.L.C. and IPC Employees' Direct Fund V, L.L.C.
---------------------------------------------------------------------------

    5. The Manager, the Invesco Group or any employees of the Manager
or the Invesco Group may be entitled to receive compensation or a
performance-based fee (a ``carried interest'') \3\ based on the gains
and losses of the investment program or of the Fund's investment
portfolio or, if applicable, of the Client Funds (as defined below) in
which the Fund may hold an interest.
---------------------------------------------------------------------------

    \3\ A carried interest is an allocation to the Manager based on
the net gains of an investment program and is in addition to the
amount that is allocable to the Manager in proportion to its capital
contributions. A Manager that is registered under the Advisers Act
may charge a carried interest only if permitted by rule 205-3 under
the Advisers Act. Any carried interest paid to a Manager that is not
registered under the Advisers Act will be structured to comply with
section 205(b)(3) of the Advisers Act (with the Fund treated as
though it were a business development company solely for purposes of
that section).
---------------------------------------------------------------------------

    6. Interests in a Fund (``Units'') will be offered without
registration in reliance on section 4(2) of the Securities Act of 1933
(the ``Securities Act''), or Regulation D under the Securities Act, and
will be sold only to Eligible Employees, Qualified Participants (each
as defined below) or Invesco Group entities. Prior to offering Units to
an Eligible Employee or Eligible Family Member (as defined below), the
Manager must reasonably believe that such individual will be a
sophisticated investor capable of understanding and evaluating the
risks of participating in the Fund without the benefit of regulatory
safeguards and can afford a complete loss of such investment.
Participation in a Fund will be voluntary. No sales load or similar fee
of any kind will be charged in connection with the sale of Units.
    7. An ``Eligible Employee'' is an individual who is a current or
former officer, director, employee or current person on retainer,
including, but not limited to, Consultants of the Invesco Group and (a)
meets the standard of an ``accredited investor'' under rule 501(a)(5)
or rule 501(a)(6) of Regulation D, or (b) qualifies as an ``Other
Investor.'' To qualify as an Other Investor, an individual must meet
the conditions of Rule 506(b)(2) of Regulation D and be a
``knowledgeable employee,'' as defined in Rule 3c-5 under the Act, of
such Fund (with the Fund treated as though it were a ``covered
company'' for purposes of such rule). A maximum of 35 individuals may
become Participants in a Fund as an Other Investor.
    8. In the discretion of the Manager of a Fund and at the request of
an Eligible Employee, Units may be assigned by such Eligible Employee,
or sold directly by the Fund, to a Qualified Participant of an Eligible
Employee. In order to qualify as a ``Qualified Participant,'' an
individual or entity must be an Eligible Family Member or Qualified
Entity, respectively, of an Eligible Employee. An ``Eligible Family
Member'' is a spouse, parent, child, spouse of child, brother, sister
or grandchild, including step or adoptive relationships, of an Eligible
Employee. If an Eligible Family Member is purchasing a Unit from a
Unitholder or directly from the Fund, such Eligible Family Member must
be an accredited investor. Eligible Employees may transfer their Units
without consideration to Eligible Family Members who may not be
accredited investors. A ``Qualified Entity'' is (a) a trust of which
the trustee, grantor and/or beneficiary is an Eligible Employee; (b) a
partnership, corporation or other entity controlled by an Eligible
Employee; \4\ or (c) a trust or other entity established solely for the
benefit of Eligible Family Members of an Eligible Employee. A Qualified
Entity must be either an accredited investor or an entity for which an
Eligible Employee or an Eligible Family Member is a settlor and
principal investment decision-maker.
---------------------------------------------------------------------------

    \4\ The inclusion of partnerships, corporations or other
entities that are controlled by Eligible Employees in the definition
of ``Qualified Entity'' is to enable such Eligible Employees to make
investments in the Funds through personal investment vehicles for
the purpose of implementing their personal and family investment and
estate planning objectives. Eligible Employees will exercise
investment discretion or control over these investment vehicles,
thereby creating a close nexus between the Invesco Group and these
investment vehicles.
---------------------------------------------------------------------------

    9. The terms of a Fund will be fully disclosed to each Eligible
Employee and, if applicable, to a Qualified Participant of such
Eligible Employee, at the time they are invited to participate in the
Fund. Each Eligible Employee and Qualified Participant will be
furnished with a private placement memorandum and limited partnership
agreement or limited liability company operating agreement (``Fund
Agreement''). Any private placement memorandum of a particular Fund
will set forth the specific investment objectives and strategies for
such Fund. Each Fund will send its Unitholders audited financial
statements within 120 days after the end of the fiscal year or as soon
as practicable thereafter.\5\ In addition, as soon as practicable after
the end of each tax year of a Fund, a report will be sent to each
Participant setting forth the information with respect to the

Investor's share of income, gains, losses, credits, and other items for
federal and state income tax purposes, resulting from the operation of
the Fund during that year.
---------------------------------------------------------------------------

    \5\ ``Audit'' will have the meaning defined in rule 1-02(d) of
Regulation S-X.
---------------------------------------------------------------------------

    10. Units in each Fund will be non-transferable except with the
prior written consent of the Manager, and in any event, no person or
entity will be admitted into the Fund as a Unitholder unless such
person is an Eligible Employee, a Qualified Participant, or an Invesco
Group entity.
    11. Units in the Initial Partnerships will not be subject to
repurchase, cancellation or redemption, but one or more Funds may offer
Units with certain repurchase rights. Upon termination of an Eligible
Employee's employment, such Eligible Employee or his or her Qualified
Participant will retain his or her limited partnership interest or
limited liability company interest, as applicable, for the Existing
Funds unless the Manager exercises its option to purchase his or her
limited partnership interest or limited liability company interest, as
applicable, and will be permitted to make additional capital
contributions in fulfillment of such Eligible Employee's or Qualified
Participant's capital commitment made prior to the termination of
employment, but such Eligible Employee or Qualified Participant will
not be permitted to make new capital commitments or investments or
participate in other Funds.
    12. Subject to the terms of the applicable Fund Agreement, a Fund
will be permitted to enter into transactions involving (a) an Invesco
Group entity, (b) a portfolio company, (c) any Unitholder or person or
entity affiliated with a Unitholder, (d) an investment fund or separate
account that is organized for the benefit of investors or clients who
are not affiliated with Invesco Group and over which an Invesco Group
entity exercises investment discretion (a ``Third-Party Fund''), or any
partnership in which a Third-Party Fund is a limited partner, or (e)
any partner or other investor in a Third-Party Fund that is not
affiliated with the Invesco Group (a ``Third-Party Investor''). These
transactions may include a Fund's purchase or sale of an investment or
an interest from or to any Invesco Group entity (including certain
entities formed to make investments and managed by Invesco Group
employees, as described in the application (a ``Client Fund'')) or
Third-Party Fund, acting as principal. Prior to entering these
transactions, the Manager must determine that the terms are fair to the
Unitholders and the Fund, in addition to satisfying any requirements in
the organizational document of the Third-Party Fund.
    13. A Fund will not acquire any security issued by a registered
investment company if, immediately after such acquisition, the Fund
will own more than 3% of the outstanding voting stock of the registered
investment company.

Applicants' Legal Analysis

    1. Section 6(b) of the Act provides, in part, that the Commission
will exempt employees' securities companies from the provisions of the
Act to the extent that the exemption is consistent with the protection
of investors. Section 6(b) provides that the Commission will consider,
in determining the provisions of the Act from which the company should
be exempt, the company's form of organization and capital structure,
the persons owning and controlling its securities, the price of the
company's securities and the amount of any sales load, how the
company's funds are invested, and the relationship between the company
and the issuers of the securities in which it invests. Section 2(a)(13)
defines an employees' securities company, in relevant part, as any
investment company all of whose securities (other than short-term
paper) are beneficially owned (a) by current or former employees, or
persons on retainer, of one or more affiliated employers, (b) by
immediate family members of such persons, or (c) by such employer or
employers together with any of the persons in (a) or (b).
    2. Section 7 of the Act generally prohibits investment companies
that are not registered under section 8 of the Act from selling or
redeeming their securities. Section 6(e) of the Act provides that, in
connection with any order exempting an investment company from any
provision of section 7, certain provisions of the Act, as specified by
the Commission, will be applicable to the company and other persons
dealing with the company as though the company were registered under
the Act. Applicants request an order under sections 6(b) and 6(e) of
the Act exempting the Funds from all the provisions of the Act, except
sections 9, 17, 30, 36 through 53, and the Rules and Regulations. With
respect to sections 17(a), (d), (e), (f), (g), and (j) and 30(a), (b),
(e), and (h) of the Act and the Rules and Regulations thereunder, and
rule 38a-1 under the Act, the exemption is limited as set forth in the
application.
    3. Section 17(a) generally prohibits any affiliated person of a
registered investment company, or any affiliated person of an
affiliated person, acting as principal, from knowingly selling or
purchasing any security or other property to or from the company.
Applicants request an exemption from section 17(a) of the Act to permit
(a) an Invesco Group entity (including, without limitation, a Client
Fund) or a Third-Party Fund, acting as principal, to engage in any
transaction directly or indirectly with any Fund or any company
controlled by such Fund; (b) a Fund to invest in or engage in any
transaction with any Invesco Group entity (including, without
limitation, a Client Fund) or a Third-Party Fund, acting as principal,
(i) in which the Fund, any company controlled by the Fund or any
Invesco Group entity or a Third-Party Fund has invested or will invest,
or (ii) with which such Fund, any company controlled by such Fund or
any Invesco Group entity or Third-Party Fund is or will become
otherwise affiliated; and (c) a Third-Party Investor, acting as
principal, to engage in any transaction directly or indirectly with a
Fund or any company controlled by the Fund.
    4. Applicants state that the relief is requested to ensure that
each Fund will be able to invest in entities in which the Invesco
Group, or its employees, officers, directors, members, managers, or
partners may make or have already made an investment. Applicants
further state that the relief is also requested to permit each Fund the
flexibility to deal with its portfolio investments in the manner the
Manager deems most advantageous to all Participants in the Fund, or as
required by the Invesco Group or the Fund's other co-investors,
including, without limitation, restructuring its investments, having
its investments redeemed, tendering such Fund's securities or
negotiating options or implementing exit strategies with respect to its
investments.
    5. Applicants believe an exemption from section 17(a) is consistent
with the policy of each Fund and the protection of investors and
necessary to promote the basic purpose of such Fund. Applicants state
that the Participants in each Fund will have been fully informed of the
possible extent of such Fund's dealings with the Invesco Group, and as
successful professionals employed in the investment management or
financial services businesses, will be able to understand and evaluate
the attendant risks. Applicants assert that the community of interest
among the Participants in each Fund, on the one hand, and the Invesco
Group, on the other hand, is the best insurance against any risk of
abuse. Applicants, on behalf of the Funds, represent that any
transactions otherwise subject to section 17(a) of the

Act, for which exemptive relief has not been requested, would require
approval of the Commission.
    6. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
any affiliated person of a registered investment company, or any
affiliated person of such person, acting as principal, from
participating in any joint arrangement with the company unless
authorized by the Commission. Applicants request an order to permit
affiliated persons of each Fund, or affiliated persons of any of these
persons, to participate in, or effect any transaction in connection
with, any joint enterprise or other joint arrangement or profit-sharing
plan in which the Fund or a company controlled by the Fund is a
participant. The exemption requested would permit, among other things,
co-investments by each Fund, the Manager, the Client Funds, the Co-
Investors \6\ and individual employees, officers, or directors of the
Invesco Group making their own individual investment decisions apart
from the Invesco Group.
---------------------------------------------------------------------------

    \6\ ``Co-Investors'' means co-investing funds or separate
accounts, other than the Funds or the Client Funds, that are
organized or managed by an Invesco Group entity, are not affiliated
with the Invesco Group (such as by having Invesco Group employees,
officers or directors invested in them) and that will co-invest with
the Client Funds on a pari passu basis.
---------------------------------------------------------------------------

    7. Applicants assert that compliance with section 17(d) would cause
a Fund to forego investment opportunities simply because a Participant
in such Fund or other affiliated person of such Fund (or any affiliate
of such a person) also had, or contemplated making, a similar
investment. Applicants further assert that attractive investment
opportunities of the types considered by a Fund often require each
participant in the transaction to make funds available in an amount
that may be substantially greater than may be available to such Fund
alone. Applicants contend that, as a result, the only way in which a
Fund may be able to participate in such opportunities may be to co-
invest with other persons, including its affiliates. Applicants assert
that the flexibility to structure co-investments and joint investments
will not involve abuses of the type section 17(d) and rule 17d-1 were
designed to prevent.
    8. Applicants state that side-by-side investments held by a Third-
Party Fund, or by an Invesco Group entity in a transaction in which an
Invesco Group investment was made pursuant to a contractual obligation
to a Third-Party Fund, will not be subject to condition 3 below.
Applicants assert that in structuring a Third-Party Fund, it is common
for the unaffiliated investors of such fund to require that the Invesco
Group invest its own capital in Third-Party Fund investments, either
through the Third-Party Fund or on a side-by-side basis, and that the
Invesco Group investments be subject to substantially the same terms as
those applicable to the Third-Party Fund's investments. Applicants
state that it is important that the interests of the Third-Party Fund
take priority over the interests of the Funds, and that the activities
of the Third-Party Fund not be burdened or otherwise affected by
activities of the Funds. Applicants also state that the relationship of
a Fund to a Third-Party Fund is fundamentally different from a Fund's
relationship to the Invesco Group. Applicants contend that the focus
of, and the rationale for, the protections contained in the application
are to protect the Funds from any overreaching by the Invesco Group in
the employer/employee context, whereas the same concerns are not
present with respect to the Funds vis-[agrave]-vis the investors of a
Third-Party Fund.
    9. Section 17(e) of the Act and rule 17e-1 under the Act limit the
compensation an affiliated person may receive when acting as agent or
broker for a registered investment company. Applicants request an
exemption from section 17(e) to permit an Invesco Group entity
(including the Manager), acting as agent or broker, to receive
placement fees, advisory fees or other compensation from a Fund in
connection with the purchase or sale by the Fund of securities,
provided that the fees or other compensation can be deemed ``usual and
customary.'' Applicants state that for purposes of the application,
fees or other compensation will be deemed ``usual and customary'' only
if (a) the Fund is purchasing or selling securities with other
unaffiliated third parties (including Third-Party Funds) who are also
similarly purchasing or selling securities, (b) the fees or
compensation being charged to the Fund are also being charged to the
unaffiliated third parties (including Third-Party Funds), and (c) the
amount of securities being purchased or sold by the Fund does not
exceed 50% of the total amount of securities being purchased or sold by
the Fund and the unaffiliated third parties (including Third-Party
Funds). Applicants assert that, because the Invesco Group does not wish
to appear be favoring the Funds, compliance with section 17(e) would
prevent a Fund from participating in transactions where the Fund would
be charged lower fees than unaffiliated third parties. Applicants
assert that the fees or other compensation paid by a Fund to an Invesco
Group entity will be the same as those negotiated at arm's length with
unaffiliated third parties.
    10. Rule 17e-1(b) under the Act requires that a majority of
directors who are not ``interested persons'' (as defined in section
2(a)(19) of the Act) take actions and make approvals regarding
commissions, fees or other remuneration. Rule 17e-1(c) under the Act
requires each Fund to comply with the fund governance standards defined
in rule 0-1(a)(7) under the Act. Applicants request an exemption from
rule 17e-1 to the extent necessary to permit each Fund to comply with
the rule without having a majority of the board of directors of Invesco
(``Designated Board of Directors'') who are not interested persons take
actions and make determinations as set forth in paragraph (b) of the
rule, and without having to satisfy the standards as required by
paragraph (c) of the rule. Applicants state that because the Designated
Board of Directors will be interested persons of the Funds, without the
relief requested, a Fund could not comply with rule 17e-1(b) and (c).
Applicants state that each Fund will satisfy rule 17e-1(b) by having a
majority of the Designated Board of Directors take actions and make
approvals as set forth in rule 17e-1. Applicants state that each Fund
will otherwise comply with rule 17e-1.
    11. Section 17(f) of the Act designates the entities that may act
as investment company custodians, and rule 17f-1 under the Act imposes
certain requirements when the custodian is a member of a national
securities exchange. Applicants request an exemption from section 17(f)
of the Act and the rule 17f-1(c) requirement that a copy of the
executed custodian contract be transmitted to the Commission.
Applicants believe that, because of the community of interest of all
parties involved, and by maintaining such records themselves and making
them available for examination by the Commission and its staff,
compliance with this requirement would pose an unnecessary burden.
Applicants also request an exemption from the rule 17f-1(b)(4)
requirement that an independent accountant periodically verify the
assets held by the custodian. Applicants state that, because of the
community of interest of the parties involved, and the existing
requirement for an independent audit, compliance with this requirement
would be an unnecessary expense. Applicants will comply with all other
requirements of rule 17f-1.

    12. Rule 17f-2 under the Act specifies requirements that must be
satisfied for a registered management investment company to act as
custodian of its own investments. Applicants request an exemption from
section 17(f) and rule 17f-2 to permit the following exceptions from
the requirements of rule 17f-2: (a) A Fund's investments may be kept in
the locked files of the Manager; (b) for purposes of paragraph (d) of
the rule, (i) employees of the Manager (or an Invesco Group entity)
will be deemed to be employees of the Funds, (ii) officers or managers
of the Manager of a Fund (or an Invesco Group entity) will be deemed to
be officers of the Fund and (iii) the Designated Board of Directors
will be deemed to be the board of directors of the Fund; and (c) in
place of the verification procedure under paragraph (f) of the rule,
verification will be effected quarterly by two employees of the Manager
(or an Invesco Group entity). Applicants expect that many of the Funds'
investments may be evidenced only by partnership agreements,
participation agreements or similar documents, rather than by
negotiable certificates that could be misappropriated. Applicants
believe that these instruments are most suitably kept in the files of
the Manager, where they can be referred to as necessary.
    13. Section 17(g) of the Act and rule 17g-1 under the Act generally
require the bonding of officers and employees of a registered
investment company who have access to its securities or funds. Rule
17g-1 requires that a majority of directors who are not interested
persons take certain actions and give certain approvals relating to
fidelity bonding. The rule also requires that the board of directors of
an investment company relying on the rule satisfy the fund governance
standards, as defined in rule 0-1(a)(7). Applicants request relief to
permit the Designated Board of Directors, who may be deemed interested
persons, to take actions and make determinations as set forth in the
rule. Applicants state that, because all directors of the Designated
Board of Directors will be affiliated persons, a Fund could not comply
with rule 17g-1 without the requested relief. Applicants state that
each Fund will comply with rule 17g-1 by having a majority of the
Designated Board of Directors take actions and make determinations as
set forth in rule 17g-1. Applicants also request an exemption from the
requirements of rule 17g-1(g) and (h) relating to the filing of copies
of fidelity bonds and related information with the Commission and the
provision of notices to the board of directors and an exemption from
the requirements of rule 17g-1(j)(3) relating to compliance with the
fund governance standards. Applicants state that the Funds will comply
with all other requirements of rule 17g-1.
    14. Section 17(j) of the Act and paragraph (b) of rule 17j-1 under
the Act make it unlawful for certain enumerated persons to engage in
fraudulent or deceptive practices in connection with the purchase or
sale of a security held or to be acquired by a registered investment
company. Rule 17j-1 also requires that every registered investment
company adopt a written code of ethics and that every access person of
a registered investment company report personal securities
transactions. Applicants request an exemption from the provisions of
rule 17j-1, except for the anti-fraud provisions of paragraph (b),
because they are burdensome and unnecessary as applied to the Funds.
    15. Applicants request an exemption from the requirements in
sections 30(a), 30(b), and 30(e) of the Act, and the rules under those
sections, that registered investment companies prepare and file with
the Commission and mail to their shareholders certain periodic reports
and financial statements. Applicants contend that the forms prescribed
by the Commission for periodic reports have little relevance to a Fund
and would entail administrative and legal costs that outweigh any
benefit to the Participants in such Fund. Applicants request relief to
the extent necessary to permit each Fund to report annually to its
Participants. Applicants also request relief from the requirements of
section 30(h) to the extent necessary to exempt the Manager of each
Fund, directors of the Manager, members of the Designated Board of
Directors and any officer or other person who may be deemed members of
an advisory board of a Fund, from filing Forms 3, 4, and 5 under
section 16(a) of the 1934 Act with respect to their ownership of Units
in such Fund. Applicants believe that, because there will be no trading
market and the transfers of Units will be severely restricted, these
filings are unnecessary for the protection of investors and burdensome
to those required to make them.
    16. Rule 38a-1 requires investment companies to adopt, implement
and periodically review written policies reasonably designed to prevent
violation of the federal securities laws and to appoint a chief
compliance officer. Applicants state that each Fund will comply with
rule 38a-1(a), (c) and (d), except that (a) since the Fund does not
have a board of directors, the Designated Board of Directors will
fulfill the responsibilities assigned to the Fund's board of directors
under the rule, (b) since the Designated Board of Directors does not
have any disinterested members, approval by a majority of the
disinterested board members required by rule 38a-1 will not be
obtained, and (c) since the Designated Board of Directors does not have
any disinterested members, the Funds will comply with the requirement
in rule 38a-1(a)(4)(iv) that the chief compliance officer meet with the
independent directors by having the chief compliance officer meet with
the Designated Board of Directors as constituted.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will
be subject to the following conditions:
    1. Each proposed transaction otherwise prohibited by section 17(a)
or section 17(d) and rule 17d-1 to which a Fund is a party (the
``Section 17 Transactions'') will be effected only if the Manager
determines that:
    (a) The terms of the transaction, including the consideration to be
paid or received, are fair and reasonable to the Unitholders of such
Fund and do not involve overreaching of such Fund or its Unitholders on
the part of any person concerned; and
    (b) the transaction is consistent with the interests of the
Unitholders of such Fund, such Fund's organizational documents and such
Fund's reports to its Participants.
    In addition, the Manager of each Fund will record and preserve a
description of Section 17 Transactions, the Manager's findings, the
information or materials upon which the Manager's findings are based
and the basis therefor. All such records will be maintained for the
life of each Fund and at least six years thereafter, and will be
subject to examination by the Commission and its staff. Each Fund will
preserve the accounts, books and other documents required to be
maintained in an easily accessible place for at least the first two
years.
    2. The Manager of each Fund will adopt, and periodically review and
update, procedures designed to ensure that reasonable inquiry is made,
prior to the consummation of any Section 17 Transaction, with respect
to the possible involvement in the transaction of any affiliated person
or promoter of or principal underwriter for such Fund, or any
affiliated person of such a person, promoter or principal underwriter.
    3. The Manager of each Fund will not invest the funds of such Fund
in any

investment in which an ``Affiliated Co-Investor'' (as defined below)
has acquired or proposes to acquire the same class of securities of the
same issuer, where the investment involves a joint enterprise or other
joint arrangement within the meaning of rule 17d-1 in which such Fund
and an Affiliated Co-Investor are participants, unless any such
Affiliated Co-Investor, prior to disposing of all or part of its
investment (a) gives such Manager sufficient, but not less than one
day's, notice of its intent to dispose of its investment; and (b)
refrains from disposing of its investment unless such Fund has the
opportunity to dispose of such Fund's investment prior to or
concurrently with, and on the same terms as, and pro rata with the
Affiliated Co-Investor. The term ``Affiliated Co-Investor'' with
respect to any Fund means any person who is: (a) An ``affiliated
person'' (as such term is defined in section 2(a)(3) of the Act) of the
Fund (other than a Third-Party Fund or Third-Party Investor); (b) the
Invesco Group; (c) an officer or director of the Invesco Group; or (d)
an entity (other than a Third-Party Fund) in which the Manager acts as
a general partner or has a similar capacity to control the sale or
disposition of the entity's securities. The restrictions contained in
this condition, however, shall not be deemed to limit or prevent the
disposition of an investment by an Affiliated Co-Investor: (a) To its
direct or indirect wholly-owned subsidiary, to any company (a
``Parent'') of which such Affiliated Co-Investor is a direct or
indirect wholly-owned subsidiary or to a direct or indirect wholly-
owned subsidiary of its Parent; (b) to immediate family members,
including step and adoptive relationships, of such Affiliated Co-
Investor or a trust or other investment vehicle established for any
Affiliated Co-Investor or any such family member; (c) when the
investment is comprised of securities that are listed on any national
securities exchange registered under section 6 of the 1934 Act, (d)
when the investment is comprised of securities that are national market
system securities pursuant to section 11A(a)(2) of the 1934 Act and
rule 11A(a)(2)-1 under the 1934 Act; or (e) when the investment is
comprised of government securities as defined in section 2(a)(16) of
the Act.
    4. Each Fund and its Manager will maintain and preserve, for the
life of such Fund and at least six years thereafter, such accounts,
books and other documents as constitute the record forming the basis
for the audited financial statements that are to be provided to the
Participants in such Fund, and each annual report of such Fund required
to be sent to such Participants, and agree that all such records will
be subject to examination by the Commission and its staff. Each Fund
will preserve the accounts, books and other documents required to be
maintained in an easily accessible place for at least the first two
years.
    5. The Manager of each Fund will send to each Participant who had
an interest in any capital account of such Fund, at any time during the
fiscal year then ended, Fund financial statements audited by such
Fund's independent accountants within 120 days after the end of the
fiscal year of each of the Funds or as soon as practicable thereafter.
At the end of each fiscal year, the Manager will make a valuation or
have a valuation made of all of the assets of the Fund as of such
fiscal year end in a manner consistent with customary practice with
respect to the valuation of assets of the kind held by the Fund. In
addition, as soon as practicable after the end of each fiscal year, the
Manager of such Fund will send a report to each person who was a
Participant in such Fund at any time during the fiscal year then ended,
setting forth such tax information as shall be necessary for the
preparation by the Participant of his, her or its federal and state
income tax returns and a report of the investment activities of the
Fund during such year.
    6. In any case where purchases or sales are made by a Fund from or
to an entity affiliated with the Fund by reason of a director, officer
or employee of Invesco Group (a) serving as an officer, director,
general partner or investment adviser of the entity, or (b) having a 5%
or more investment in the entity, such individual will not participate
in such Fund's determination of whether or not to effect such purchase
or sale.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-15842 Filed 7-1-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 44 (Wednesday, March 6, 2013)]
[Rules and Regulations]
[Pages 14457-14461]
[FR Doc No: 2013-05248]

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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 136

[EPA-HQ-OW-2010-0192; FRL-9787-7]

Guidelines Establishing Test Procedures for the Analysis of
Pollutants Under the Clean Water Act; Analysis and Sampling Procedures;
Notice

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of final decision.

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

SUMMARY: EPA discussed, but did not propose, a new method, ASTM D7575,
for oil and grease in the 2010 proposed Methods Update Rule (MUR). Oil
and grease is a method-defined parameter. That is, the nature and
amount of material determined by the method is defined in terms of the
method. EPA subsequently published a Notice of Data Availability (NODA)
on this method that provided new data and requested comment on whether
and how EPA should approve the method in Part 136 as an alternative oil
and grease method. This document provides EPA's final decision on its
reconsideration of this method.

DATES: March 6, 2013.

FOR FURTHER INFORMATION CONTACT: Jan Matuszko, Office of Science and
Technology, Office of Water (4303-T), Environmental Protection Agency,
1200 Pennsylvania Avenue NW.; Washington, DC 20460; telephone number:
202-566-1035; fax number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

A. CWA Analytical Methods and Limited Use Alternate Test Procedures
(ATP) Program

    EPA establishes test procedures (also referred to as analytical
methods) codified in 40 CFR Part 136 under its authority in section
304(h) of the CWA to promulgate guidelines establishing test procedures
for the analysis of pollutants. EPA's regulations provide that, when
EPA has promulgated a test procedure for analysis of a specific
pollutant in 40 CFR Part 136, an NPDES permittee must use an approved
test procedure for the specific pollutant when measuring the pollutant
for an application submitted to EPA or to a State with an approved
NPDES program and for reports required to be submitted by dischargers
under the NPDES program. See 40 CFR Sec.  136.1(a). This approach
simplifies the permitting process for hundreds of thousands of NPDES
and indirect discharging permittees and permitting authorities. In the
absence of an approved test procedure for a specific pollutant (or when
an approved test procedure does not work in a specific matrix, e.g.,
because of a matrix interference), generally, a permit applicant may
use any suitable method but must provide the permitting authority a
description of the method for evaluation of its suitability. See 40 CFR
122.21(g)(7). However, 40 CFR Part 136 also recognizes that new
technologies and approaches are constantly being developed, including
methods for pollutants for which EPA already has an approved test
procedure. As such, Part 136.5 allows for use of an alternate method
for a specific pollutant or parameter in a regulated CWA matrix that is
different from the approved test procedure (i.e., limited use
approval). Requests for such uses, along with supporting data, are made
to the applicable Regional Alternate Test Procedure (ATP) Coordinator
for consideration and approval.

B. Oil and Grease

    Unlike many parameters, oil and grease is not a unique chemical
entity, but is a mixture of chemical species that varies from source to
source. Common substances that may contribute to oil and grease include
petroleum based compounds such as fuels, motor oil, lubricating oil,
soaps, waxes, and hydraulic oil and vegetable based compounds such as
cooking oil and other fats. Oil and grease is defined by the method
used to measure it (i.e., it is a method-defined analyte). The CWA
defines oil and grease as a conventional parameter and hundreds of
thousands of NPDES permits and indirect discharging permits contain oil
and grease numerical limits. Currently, Part 136 lists two analytical
methodologies for the measurement of oil and grease in such discharge
permits. Permittees have been using EPA Method 1664A to measure
compliance with such discharge limits. Method 1664A is a liquid/liquid
extraction (LLE), gravimetric procedure that employs normal hexane (n-
hexane) as the extraction solvent that is applicable for measuring oil
and grease in concentrations from 5 mg/L to 1,000 mg/L. This method
also allows the use of solid-phase extraction (SPE) provided that the
results obtained by SPE are equivalent to the results obtained by LLE.

C. Method-Defined Analytes

    The measurement results obtained for a method-defined analyte are
both

specific to that method and solely dependent on the method used. As a
consequence, the results obtained for a parameter defined by one
particular method are not necessarily directly comparable to results
obtained by another method (i.e., the data derived from method-defined
protocols cannot be reliably verified outside the method itself). EPA
has defined a method-defined analyte in 40 CFR 136.6(a)(5) as ``* * *
an analyte defined solely by the method used to determine the analyte.
Such an analyte may be a physical parameter, a parameter that is not a
specific chemical, or a parameter that may be comprised of a number of
substances. Examples of such analytes include temperature, oil and
grease, total suspended solids, total phenolics, turbidity, chemical
oxygen demand, and biochemical oxygen demand.''

D. EPA's Past Consideration of Alternative Oil and Grease Methods for
Adoption in 40 CFR Part 136

    Because oil and grease is a method-defined parameter, EPA has not
considered promulgating multiple methods to measure oil and grease that
are based on different extractants. Moreover, EPA has not considered
multiple oil and grease methods that are based on different
determinative techniques. The only exception to this was EPA's
promulgation of EPA Method 1664A in 1999 to replace EPA Method 413.1
(64 FR 26315), a similar procedure that used Freon[supreg] (1,1,2-
trichloro-1,2,2-trifluoroethane (CFC-113; Freon-113)) as the extraction
solvent. EPA made this exception because Freon[supreg] was banned by an
international treaty (the Montreal Protocol on Substances That Deplete
the Ozone Layer), and until the ban went into effect, EPA allowed
either of these oil and grease methods for CWA compliance. In both
methods, the determinative technique is gravimetry and the only change
was the extraction solvent (n-hexane instead of Freon[supreg]).
    When EPA promulgated EPA Method 1664A to replace EPA Method 413.1,
EPA evaluated a variety of possible replacement extracting solvents in
addition to n-hexane. EPA selected n-hexane and promulgated Method
1664A after conducting multi-year, extensive side-by-side studies on a
variety of samples representing a wide range of matrices/discharges
(see ``Preliminary Report of EPA Efforts to Replace Freon for the
Determination of Oil and Grease,'' EPA-821-R-93-011, September 1993,
and ``Report of EPA Efforts to Replace Freon for the Determination of
Oil and Grease and Total Petroleum Hydrocarbons: Phase II,'' EPA-820-R-
95-003, April 1995). In considering which solvent produced results most
comparable to results obtained with Freon[supreg], EPA conducted a Root
Mean Squared Deviation (RMSD) evaluation of the data collected in the
side-by-side studies. None of the alternative solvents produced results
statistically comparable to results produced by Freon[supreg]. However,
EPA concluded at the time that n-hexane was appropriate as an
alternative solvent, based on overall extraction results (96% versus
100% for Freon) and analytical practical considerations (e.g., boiling
point).
    To accommodate concerns about possible differences in results, EPA
allowed permitting authorities to establish a conversion factor by
having the discharger perform a side-by-side comparison of Method 1664A
and the Freon[supreg] extraction method and then adjusting the
discharge limits, if necessary, to account for differences in the
permit. EPA further recommended a specific process to follow for the
side-by-side comparison in the guidance document for Method 1664A (see
``Analytical Method Guidance for EPA Method 1664A Implementation and
Use (40 CFR part 136),'' EPA/821-R-00-003, February 2000).

E. Proposed 2010 Methods Update Rule (MUR)

    On September 23, 2010, EPA proposed to add new and revised EPA
methods to its Part 136 test procedures (75 FR 58024). Among other
methods, in the September 2010 proposal, EPA described three oil and
grease methods published by ASTM International or the Standard Methods
Committee that require a different extractant and/or a different
measurement (i.e., determinative) technique than the existing Part 136
oil and grease methods. These methods were ASTM D7575, ASTM D7066 and
Standard Methods 5520. Section 12(d) of the National Technology
Transfer and Advancement Act (NTTAA) of 1995 (Pub. L. 104-113; 15
U.S.C. 272 note) directs EPA to use voluntary consensus standards in
its regulatory activities unless to do so would be inconsistent with
applicable law or is otherwise impractical. As such, when requested by
ASTM and Standard Methods to include their methods in 40 CFR Part 136,
EPA may propose to approve a method or explain why it should or should
not do so. The proposal explained the issues surrounding method-defined
parameters, and explained that, consistent with past practices, EPA was
not proposing to include any of the three oil and grease methods in
Part 136, including ASTM D7575.

F. December 2011 Notice of Data Availability (NODA)

    In response to the September 2010 proposal, EPA received comments
recommending that it reconsider alternative methods for oil and grease.
Some of the comments focused exclusively on the oil and grease method
ASTM D7575. Unlike EPA Method 1664A which uses n-hexane as the
extractant and gravimetry for the measurement of the extracted
materials, ASTM D7575 uses an extracting membrane followed by infrared
measurement of the sample materials that can be retained on the
membrane. In particular, commenters cited that ASTM D7575 is solvent
free and provides reliable and comparable results to EPA Method 1664A.
These commenters submitted additional information on the health hazards
associated with hexane as well as additional single laboratory
comparability data between Method 1664A and ASTM D7575 and on
additional matrices tested after the initial comparability study and
associated statistical analysis.
    Because EPA is interested in promoting the use of solvent-free
methods and this new information, EPA re-evaluated the ASTM D7575
method for the measurement of oil and grease and published a Notice of
Data Availability on December 14, 2011 (76 FR 77742). The notice
provided the additional data and EPA's analysis of that data. Further,
it explained that, after evaluating the new information, EPA was re-
considering its decision not to include ASTM D7575 in 40 CFR Part 136
as an alternative to EPA Method 1664A for measuring oil and grease. The
notice explained that EPA had three primary reasons for this re-
consideration. First, EPA's analysis demonstrates ASTM D7575 is an
acceptable stand alone method for the measurement of oil and grease in
wastewater for its applicable reporting range (5-200 mg/L). Second, it
produces results that, while not statistically comparable across all
matrices tested,\1\ are generally very close to those obtained using
EPA Method 1664A for the matrices tested. Third, EPA supports pollution
prevention, and is particularly persuaded by the substantial advantages
associated with the green aspects of this membrane technology (e.g., it
uses a solventless extraction, there is no

solvent waste, and no exposure of the analyst to solvent).
---------------------------------------------------------------------------

    \1\ Similar to the approach it used when it replaced Freon with
hexane, EPA performed a RMSD evaluation of the ASTM D-7575 results
and EPA Method 1664A results for the available matrices evaluated.
See 76 FR 77745.
---------------------------------------------------------------------------

    However, the notice also discussed implementation considerations
associated with promulgating an alternative method based on a different
determinative step for a method-defined parameter. EPA recognized the
potential impact that this new method could have on the hundreds of
thousands of oil and grease determinations in regulatory Clean Water
Act programs, and, as such, was keenly interested in obtaining
additional input from stakeholders. Therefore, the notice explained
that, while EPA determined that the results of the EPA 1664A and ASTM
D7575 are comparable over the applicable range where the two methods
overlap (5-200 mg/L) for the set of the 13 wastewater matrices
evaluated, it continued to have compliance concerns with promulgating
the ASTM method for nationwide use as an alternative to EPA Method
1664A. More specifically, because oil and grease measures a wide
variety and type of individual compounds and because oil and grease is
extensively incorporated in permits covering a wide variety of
wastewater matrices, the result of promulgating the ASTM D7575 method
as an alternative to EPA Method 1664A is that a permittee could be in
or out of compliance simply due to a change in the test method used to
evaluate samples.
    Finally, through the notice, EPA requested comment on its
conclusion that ASTM D7575 is an acceptable choice for the
determination of oil and grease, and whether it should reconsider its
policy towards method-defined parameters for this particular method. In
particular, the notice requested comment on whether or not EPA should
reconsider promulgating this specific additional method for oil and
grease based on different extractants and determinative techniques than
EPA Method 1664A. Further, in the event that EPA were to promulgate
this specific alternative method, the notice requested comment on some
approaches that could ensure comparability for individual permittees
(e.g., EPA requested comment on the need for a permit adjustment based
on side-by-side comparison of Methods 1664A and ASTM D7575).

G. Summary of NODA Comments

    EPA received comments from 106 stakeholders. Approximately, a third
expressed support for nationwide approval of the ASTM D7575 method as
an alternative oil and grease method. In general, these comments were
similar to those received on EPA's proposal: ASTM D7575 is ``green''
(e.g., less hazardous waste, no exposure to toxic chemicals), it is
easier, faster, less expensive and potentially portable in comparison
to EPA 1664A, and it produces results substantially in agreement with
Method 1664A. About two-thirds of the comments recommended EPA not
approve it for use as an alternative oil and grease method. Some
comments were specific to the sampling requirements and sample
preparation procedures of the method, raising technical concerns such
as the representativeness of the 10 mL aliquot and concerns over the
drying procedures. Some comments were more overarching such as comments
that ASTM D7575 had not been tested in a sufficient number of matrices.
Others were specific to the consideration of the ASTM D7575 method as
an alternative to EPA method 1664A, such as the applicable range of the
ASTM D7575 method (5 to 200 mg/L) was limited in comparison to EPA
Method 1664A. Some noted that the ASTM method did not produce
statistically comparable results to EPA Method 1664A and EPA should
retain its policy not to approve alternative methods for method-defined
parameters that are not based on the same determinative step. Finally,
many shared the concerns raised in the notice about implementing ASTM
D7575 on a nationwide basis as an alternative oil and grease method and
the possibility that a discharger could be in or out of compliance
simply by changing the method.

III. Final Determination on ASTM D7575 as an Alternative to Existing
Part 136 Oil and Grease Methods

    As explained in the NODA, EPA's consideration of ASTM D7575
represents a unique situation. Because oil and grease is a method-
defined parameter, EPA has not considered promulgating multiple methods
to measure oil and grease that are based on different extractants.
Moreover, EPA has not considered multiple oil and grease methods that
are based on different determinative techniques. The only exception to
this was EPA's promulgation of EPA Method 1664A to replace Method
413.1, a similar procedure that used (the internationally banned
extraction solvent) Freon[supreg]. Thus, EPA's consideration of ASTM
D7575 as an alternative oil and grease method represents a new path for
EPA. As is always the case, EPA proceeded carefully, with a particular
focus on the underlying data. This consideration is specific to ASTM
D7575 and should not be interpreted broadly to other oil and grease
methods that use different extractants and/or determinative techniques,
or more generally to other method-defined analytes. If EPA receives
similar requests for other methods, it will evaluate each one
individually.

A. ASTM D7575 Is a Good Stand Alone Method for the Measurement of Oil
and Grease in Aqueous Matrices

    After careful consideration of all the comments received on the
NODA, EPA continues to conclude that ASTM D7575 is a good stand alone
method for the measurement of oil and grease as defined by the method.
The method was single- and multi-lab tested following ASTM Standard
Practice D2777 (Standard Practice for the Determination of Precision
and Bias of Applicable Test methods of Committee D19 on Water) and
produced recoveries and precision as good as or better than EPA Method
1664A for those matrices tested and in the range of ASTM D7575
applicability (5-200 mg/L). Further, EPA is not persuaded by the
technical comments it received on the method itself. For example, the
representativeness of a well homogenized sample used was adequately
demonstrated by the replicate studies in the validation tests. See
docket number EPA-HQ-OW-2010-0192 for responses to these and all other
NODA comments.

B. ASTM D7575 as an Alternative Oil and Grease Method in 40 CFR Part
136

    After careful consideration of all the comments received on the
NODA, EPA concludes that the case has not yet been made that ASTM D7575
should be approved for nationwide use as an alternative oil and grease
method. EPA has multiple reasons supporting this conclusion. First,
ASTM D7575 is not applicable to the same range and matrices as the
existing Part 136 oil and grease methods. ASTM D7575 is applicable for
measuring oil and grease from 5 mg/L to 200 mg/L while EPA Method 1664A
is applicable for measuring oil and grease from 5 mg/L to 1,000 mg/L.
Additionally, as explained in Note 2 in the method, ASTM D7575 is not
appropriate for certain samples where the solid matter is not
sufficiently IR transmitting, such as those that contain high levels of
metal particulates. Further, EPA Method 1664A also quantifies non-polar
oil and grease (SGT-HEM) while ASTM D-7575 does not.
    Second and more importantly, EPA continues to share the concerns
raised by many commenters. Given that the two methods measure a method-
defined parameter, by definition, they cannot measure the same thing.
Consequently, because of the wide variety and type of

individual compounds that may be measured as oil and grease and because
oil and grease is extensively incorporated in permits covering a wide
variety of wastewater matrices, a permittee could be in or out of
compliance simply due to a change in the test method used to evaluate
samples. EPA continues to conclude such concerns are well founded for
the following reasons. First, oil and grease is a method-defined
parameter. That is, the results are dependent on the particular method
used. As ASTM D7575 uses a different determinative step than the
existing approved methods, one would not expect the results to be the
same for all applications. Second, the results of ASTM D7575 have been
evaluated on a relatively limited number of matrices (13) in comparison
to the extensive number and types of possible applications. In
contrast, when EPA promulgated Method 1664A to replace the previous
Freon-based method, it evaluated the two methods on a much more
extensive and wide variety of matrices (approximately 35). Third, the
data evaluated to date demonstrate that while ASTM D7575 produces
results that are generally very close to the approved method for the
set of matrices evaluated, they are not statistically comparable
results. As such, the concerns that the two methods may produce
different results are well founded.
    However, EPA also recognizes that a blanket conclusion that one can
never promulgate new methods for method-defined parameters based on a
different determinative technique leaves little room for technology
improvements. Furthermore, EPA is keenly interested in supporting the
development and use of ``green'' methods such as ASTM D7575 that do not
require solvents. As such, EPA considered various approaches for
allowing its use as an alternative to approved methods while minimizing
the well founded concern that the two methods may affect compliance. In
other words, in those applications where the two methods produce
results that are comparable enough not to affect compliance, EPA wants
to encourage the use of non-solvent based methods such as ASTM D7575.
On the other hand, EPA wants to prevent the use of ASTM D7575 in those
applications where the two methods differ in their results and have the
potential to affect a facility's compliance status. Here, there simply
is not enough data to make a nationwide determination. Until such time
that EPA has enough data to make such a determination, EPA has
concluded such determinations should be made on a case by case basis
rather than a nationwide basis. As a result, EPA has decided not to
approve ASTM D7575 as an alternative oil and grease method in Part 136.
    EPA also considered a novel approach in which it would approve ASTM
D7575 as an alternative oil and grease method in Part 136 with a
requirement to demonstrate comparability (side-by-side data) to the
permitting authority. To determine comparability for a specific
application, a permittee could use the specific side by side comparison
procedures recommended in the guidance document that was developed when
Method 1664A was promulgated (see''Analytical Method Guidance for EPA
Method 1664A Implementation and Use (40 CFR part 136),'' EPA/821-R-00-
003, February 2000). Under this approach, a permittee would only be
able to use ASTM D7575 if the recommended procedures demonstrated
comparability. This approach would provide for a non-solvent based
alternative to measuring oil and grease and eliminate the compliance
concerns noted above. This approach would be novel because EPA has
never approved a method for nationwide use with such a requirement. As
explained in Section II.A, the purpose of promulgating Part 136 methods
for nationwide use is to simplify the permitting process and reduce
burden to the permittees and the permitting authority (often the
state). As a result, EPA consulted with various permitting authorities
on this consideration. Feedback from permitting authorities indicated
that reviewing side by side comparison data would be a huge burden on
the states and that many POTWs lack both the expertise and staff to
conduct a side by side comparison. As a result, EPA rejected this
approach.

C. ASTM D7575 as an Alternative Oil and Grease Method in Permit
Specific Applications

    In EPA's effort to promote the use of newer and more efficient
methods, EPA looked at a third option--the use of EPA's Alternate Test
Procedures process spelled out in the regulations at 40 CFR 136.5. EPA
considered this approach for encouraging and allowing the use of ASTM
D7575 while eliminating the associated compliance concerns using
existing regulatory authority. As explained in Section F, EPA
recognizes that new technologies and approaches are constantly being
developed and, as such, Part 136 currently allows for permittees to
gain approval of the use of an alternate method for a specific
application at a facility or type of discharge that is different from
the approved test procedure. Therefore, the authority already exists
under Sec.  136.5 for a permittee to request the use of ASTM D7575 as
an alternative oil and grease method for a specific use (i.e. limited
use ATP). The burden to review such requests rests on the EPA Regional
ATP Coordinators rather than the permitting authority which is often a
state or a local control authority. As such, EPA encourages permittees
to carefully consider whether or not ASTM D7575 is an acceptable
alternative to the existing methods for their specific matrix and, if
supported by data, to make such requests to their Regional ATP
Coordinator. To the extent that such requests are widespread, EPA
headquarters will provide technical support to the Regional ATP
Coordinators.
    Part 136 already stipulates that an applicant must provide
comparability data for the performance of the proposed method compared
to the reference method to eliminate compliance concerns. EPA
anticipates that requests for the use of ASTM D7575 as an alternative
oil and grease method could be widespread, thus EPA wants to ensure
that such requests are handled consistently. To that end, EPA
recommends that applicants demonstrate comparability by conducting a
side-by-side comparison using the specific procedures (e.g. sampling
frequency, number of samples, QA/QC, and statistical analyses)
recommended in the guidance document that was developed when Method
1664A was promulgated [Analytical Method Guidance for EPA Method 1664A
Implementation and Use (40 CFR part 136), EPA/821-R-00-003, February
2000]. Comparability could be shown if this side by side comparison
demonstrates there is not a significant difference between the
promulgated method and ASTM D7575. Finally, EPA notes that such
requests may provide sufficient additional data that may allow EPA at a
later date to later make a nationwide determination on the approval of
ASTM D7575 as an alternative oil and grease method.

IV. New Docket Materials

1. Response to Comment document
2. Response from ASTM re: technical questions
3. Memo describing outreach to states and control authorities on burden
4. May 14, 1999 Federal Register (64 FR 26315)
5. ``Analytical Method Guidance for EPA Method 1664A Implementation and
Use (40 CFR

part 136),'' EPA/821-R-00-003, February 2000

    Dated: February 27, 2013.
Nancy K. Stoner,
Acting Assistant Administrator.
[FR Doc. 2013-05248 Filed 3-5-13; 8:45 am]
BILLING CODE 6560-50-P