[Federal Register: November 2, 2007 (Volume 72, Number 212)]
[Notices]
[Page 62277-62287]
[DOCID:fr02no07-87]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56719; File No. SR-Amex-2007-98]

Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing of Proposed Rule Change, as Modified by Amendment Nos.
1 and 2, Relating to the Listing and Trading of Units of the United
States 12 Month Oil Fund, LP and the United States 12 Month Natural Gas
Fund, LP

October 29, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that on August 23, 2007, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been substantially prepared by the
Exchange. On September 14, 2007, the Exchange submitted Amendment No. 1
to the proposed rule change. On October 25, 2007, the Exchange
submitted Amendment No. 2 to the proposed rule change. The Commission
is publishing this notice to solicit comments on the proposed rule
change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to list and trade units (each a ``Unit'' and,
collectively, the ``Units'') of each of the United States 12 Month Oil
Fund, LP (``12 Month Oil Fund'') and the United States 12 Month Natural
Gas Fund, LP (``12 Month Natural Gas Fund'') (each a ``Partnership''
and, collectively, the ``Partnerships'').

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 Amex included statements
concerning the purpose of, and basis for, the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Amex 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 list and trade Units issued by the 12
Month Oil Fund (under the symbol: ``USL'') and the 12 Month Natural Gas
Fund (under symbol: ``USN'') pursuant to Amex Rules 1500-AEMI and 1501
through 1505.\3\ The Exchange submits that the Units will conform to
the initial and continued listing criteria under Rule 1502,\4\
specialist prohibitions under Rule 1503 and the obligations of
specialists under Rule 1504.
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    \3\ Amex Rule 1500-AEMI provides for the listing of Partnership
Units, which are defined as securities, that are: (a) Issued by a
partnership that invests in any combination of futures contracts,
options on futures contracts, forward contracts, commodities, and/or
securities; and (b) that are issued and redeemed daily in specified
aggregate amounts at net asset value. See Exchange Act Release No.
53582 (March 31, 2006), 71 FR 17510 (April 6, 2006) (SR-Amex-2005-
127) (approving Amex Rules 1500-AEMI and 1501 through 1505 in
conjunction with the listing and trading of Units of the United
States Oil Fund, LP).
    \4\ See section entitled ``Listing and Trading Rules,'' infra.
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    Ownership of a Partnership Unit represents a fractional undivided
unit of a beneficial interest in the net assets of

that Partnership.\5\ Each of the net assets of the 12 Month Oil Fund
and the 12 Month Natural Gas Fund will consist primarily of investments
in futures contracts for crude oil, heating oil, gasoline, natural gas,
and other petroleum-based fuels that are traded on the New York
Mercantile Exchange (``NYMEX''), Intercontinental Exchange (``ICE
Futures'') or other U.S. and foreign exchanges (collectively, ``Futures
Contracts''). In the case of the 12 Month Oil Fund, the predominant
investments are expected to be based on, or related to, crude oil.
Similarly, for the 12 Month Natural Gas Fund, the predominant
investments are expected to be based on, or related to, natural gas.
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    \5\ Each Partnership is a commodity pool that will issue Units
that may be purchased and sold on the Exchange.
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    The 12 Month Oil Fund may also invest in other crude oil-related
investments such as cash-settled options on Futures Contracts, forward
contracts for crude oil, and over-the-counter (``OTC'') transactions
based on the price of crude oil, heating oil, gasoline, natural gas,
other petroleum-based fuels, Futures Contracts, and indices based on
the foregoing (collectively, ``Other Crude Oil-Related Investments'').
Futures Contracts and Other Crude Oil-Related Investments collectively
are referred to as ``Crude Oil Interests.''
    Similarly, the 12 Month Natural Gas Fund may also invest in other
natural gas-related investments such as cash-settled options on Futures
Contracts, forward contracts for natural gas, and OTC transactions
based on the price of natural gas, crude oil and other petroleum-based
fuels, Futures Contracts and indices based on the foregoing
(collectively, ``Other Natural Gas-Related Investments''). Futures
Contracts and Other Natural Gas-Related Investments collectively are
referred to as ``Natural Gas Interests.''
    Each of the 12 Month Oil Fund and the 12 Month Natural Gas Fund
will invest in Crude Oil Interests and Natural Gas Interests,
respectively, to the fullest extent possible without being leveraged or
unable to satisfy its current or potential margin or collateral
obligations. In pursuing this objective, the primary focus of each
Partnership's investment manager, Victoria Bay Asset Management, LLC
(``Victoria Bay'' or ``General Partner''), will be the investment in
Futures Contracts and the management of its investments in short-term
obligations of the United States of two years or less (``Treasuries'')
and cash and cash equivalents (collectively, ``Cash'') for margining
purposes and as collateral.
12 Month Oil Fund Investment Objective and Policies
    The investment objective of the 12 Month Oil Fund is for the
changes in percentage terms of the Units' net asset value (``NAV'') to
reflect the changes in percentage terms of the price of light, sweet
crude oil delivered to Cushing, Oklahoma, as measured by the changes in
the average of the prices of twelve crude oil futures contracts traded
on NYMEX (the ``Oil Benchmark Futures Contracts''),\6\ less the 12
Month Oil Fund's expenses. The Oil Benchmark Futures Contracts consist
of the near month contract to expire and the contracts for the
following eleven months, for a total of twelve consecutive months'
contracts, except when the near month contract is within two weeks of
expiration, in which case it will be measured by the futures contracts
that are the next month contract to expire and the contracts for the
eleven consecutive months following that contract.\7\ When calculating
the daily movement of the average price of the twelve futures
contracts, each contract month will be equally weighted.
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    \6\ The average price is determined by summing up the 12
individual monthly prices and dividing them by 12, and then
comparing that result to the prior day's average price determined in
the same fashion.
    \7\ The composition of the Oil Benchmark Futures Contracts will
be changed or ``rolled'' over a one day period by selling the near
month contract and buying the contract, which at that time is the
thirteen month contract.
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    The General Partner will employ a ``neutral'' investment strategy
intended to track the changes in the price of crude oil regardless of
whether the price of crude oil goes up or goes down. The ``neutral''
investment strategy is designed to permit investors to purchase and
sell the 12 Month Oil Fund's Units for the purpose of investing
indirectly in crude oil in a cost-effective manner and/or to permit
participants in the crude oil markets or other industries to hedge the
risk of losses in their crude oil investments.
    The General Partner will attempt to place the 12 Month Oil Fund's
trades in Futures Contracts and Other Crude Oil-Related Investments and
otherwise manage the 12 Month Oil Fund's investments so that ``A'' will
be within plus/minus 10 percent of ``B'', where:
     A is the average daily change in 12 Month Oil Fund's NAV
for any period of 30 successive valuation days, i.e., any day as of
which 12 Month Oil Fund calculates its NAV, and
     B is the average daily change in the average of the prices
of the Oil Benchmark Futures Contracts over the same period.
    The Exchange states that an investment in the Units will allow both
retail and institutional investors to easily gain exposure to the crude
oil market in a cost-effective manner. In addition, the Units are also
expected to provide additional means for diversifying an investor's
investments or hedging exposure to changes in crude oil prices.
    The General Partner believes that market arbitrage opportunities
will cause changes in the 12 Month Oil Fund's unit price on the
Exchange to closely track changes in the 12 Month Oil Fund's NAV.\8\
The General Partner also believes that percentage changes in the 12
Month Oil Fund's NAV will closely track percentage changes in the Oil
Benchmark Futures Contracts, less the 12 Month Oil Fund's expenses. The
12 Month Oil Fund will not be operated in a manner such that the per-
Unit-NAV will equal, in dollar terms, the dollar price of spot crude
oil or any particular futures contract or contracts based on crude oil.
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    \8\ See section entitled ``Arbitrage,'' infra.
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12 Month Natural Gas Fund Investment Objective and Policies
    The investment objective of the 12 Month Natural Gas Fund is for
the changes in percentage terms of the Units' NAV to reflect the
changes in percentage terms of the price of natural gas delivered at
the Henry Hub, Louisiana, as measured by the changes in the average of
the prices of 12 futures contracts on natural gas traded on NYMEX (the
``Natural Gas Benchmark Futures Contracts''),\9\ less the 12 Month
Natural Gas Fund's expenses. The Natural Gas Benchmark Futures
Contracts consist of the near month contract to expire and the
contracts for the following eleven months, for a total of twelve
consecutive months' contracts, except when the near month contract is
within two weeks of expiration, in which case it will be measured by
the futures contracts that are the next month contract to expire and
the contracts for the eleven consecutive months following that
contract.\10\ When calculating the daily movement of the average price
of the twelve futures contracts, each contract month will be equally
weighted.
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    \9\ The average price is determined by summing up the 12
individual monthly prices and dividing them by 12, and then
comparing that result to the prior day's average price determined in
the same fashion.
    \10\ The composition of the Natural Gas Benchmark Futures
Contract will be changed or ``rolled'' over a one day period by
selling the near month contract and buying the contract which at
that time is the thirteen month contract on the same day.
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    The General Partner will employ a ``neutral'' investment strategy
intended

to track the changes in the price of crude oil regardless of whether
the price of crude oil goes up or goes down. The ``neutral'' investment
strategy is designed to permit investors to purchase and sell the 12
Month Natural Gas Fund's Units for the purpose of investing indirectly
in crude oil in a cost-effective manner and/or to permit participants
in the crude oil markets or other industries to hedge the risk of
losses in their crude oil investments.
    The General Partner will attempt to place the 12 Month Natural Gas
Fund's trades in Futures Contracts and Other Natural Gas-Related
Investments and otherwise manage the 12 Month Natural Gas Fund's
investments so that ``A'' will be within plus/minus 10 percent of
``B'', where:
     A is the average daily change in 12 Month Natural Gas
Fund's NAV for any period of 30 successive valuation days, i.e., any
day as of which 12 Month Natural Gas Fund calculates its NAV, and
     B is the average daily change in the average of the prices
of the Natural Gas Benchmark Futures Contracts over the same period.
    The Exchange states that an investment in the Units will allow both
retail and institutional investors to easily gain exposure to the
natural gas market in a cost-effective manner. The Units are also
expected to provide additional means for diversifying an investor's
investments or hedging exposure to changes in natural gas prices.
    The General Partner believes that market arbitrage opportunities
will cause changes in the 12 Month Natural Gas Fund's unit price on the
Exchange to closely track changes in the 12 Month Natural Gas Fund's
NAV.\11\ The General Partner also believes that percentage changes in
the 12 Month Natural Gas Fund's NAV will closely track percentage
changes in the Natural Gas Benchmark Futures Contracts, less the 12
Month Natural Gas Fund's expenses. The 12 Month Natural Gas Fund will
not be operated in a manner such that the per-Unit-NAV will equal, in
dollar terms, the dollar price of spot natural gas or any particular
futures contract or contracts based on natural gas.
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    \11\ See section entitled ``Arbitrage,'' infra.
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Description of the Petroleum-Based Fuels Market
    With respect to each of the following petroleum-based commodities,
the Exchange states as follows:
    Crude Oil. Crude oil is the world's most actively traded commodity.
The futures contracts for light, sweet crude oil that are traded on the
NYMEX are the world's most liquid forum for crude oil trading, as well
as the most liquid futures contracts on a physical commodity. Due to
the liquidity and price transparency of crude oil futures contracts,
they are used as a principal international pricing benchmark. The
futures contracts for light, sweet crude oil trade on the NYMEX \12\ in
units of 1,000 U.S. barrels (42,000 gallons) and, if not closed out
before maturity, will result in delivery of crude oil to Cushing,
Oklahoma, which is also accessible to the world market by two major
interstate petroleum pipeline systems.
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    \12\ The Exchange states that NYMEX is the world's largest
physical commodity futures exchange and the dominant market for the
trading of energy and precious metals.
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    The price of crude oil is established by the supply and demand
conditions in the global market overall and, more particularly, in the
main refining centers of Singapore, Northwest Europe, and the U.S. Gulf
Coast. Demand for petroleum products by consumers, as well as
agricultural, manufacturing and transportation industries, determines
demand for crude oil by refiners. Since the precursors of product
demand are linked to economic activity, crude oil demand will tend to
reflect economic conditions. However, other factors such as weather
also influence product and crude oil demand. The price of crude oil has
historically exhibited periods of significant volatility.
    Gasoline. Gasoline is the largest single volume refined product
sold in the U.S. and accounts for almost half of national oil
consumption. The Gasoline Futures Contract, listed and traded on the
NYMEX, trades in units of 42,000 gallons (1,000 barrels) and is based
on delivery at petroleum products terminals in the New York harbor, the
major East Coast trading center for imports and domestic shipments from
refineries in the New York harbor area or from the Gulf Coast refining
centers. The price of gasoline is volatile.
    Heating Oil. Heating oil, also known as No. 2 fuel oil, accounts
for 25% of the yield of a barrel of crude oil, the second largest
``cut'' from oil after gasoline. The heating oil futures contract,
listed and traded on the NYMEX, trades in units of 42,000 gallons
(1,000 barrels) and is based on delivery in New York harbor, the
principal cash market center.
    Natural Gas. Natural gas accounts for almost a quarter of U.S.
energy consumption. The price of natural gas is established by the
supply and demand conditions in the North American market and, more
particularly, in the main refining center of the U.S. Gulf Coast. The
natural gas market essentially constitutes an auction, where the
highest bidder wins the supply. When markets are ``strong'' (i.e., when
demand is high and/or supply is low), the bidder must be willing to pay
a higher premium to capture the supply. When markets are ``weak''
(i.e., when demand is low and/or supply is high), a bidder may choose
not to outbid competitors, waiting instead for later, possibly lower
priced, supplies. Demand for natural gas by consumers, and the
agricultural, manufacturing and transportation industries, determines
overall demand for natural gas. Since the precursors of product demand
are linked to economic activity, natural gas demand will tend to
reflect economic conditions. However, other factors such as weather
significantly influence natural gas demand. The natural gas futures
contracts traded on the NYMEX trade in units of 10,000 million British
thermal units (``mmBtu'') and are based on delivery at the Henry Hub in
Louisiana.
    Because of the volatility of natural gas prices, a vigorous basis
market has developed in the pricing relationships between the Henry Hub
and other important natural gas market centers in the continental
United States and Canada.
Structure and Regulation of 12 Month Oil Fund and 12 Month Natural Gas
Fund
    Each of the 12 Month Oil Fund and the 12 Month Natural Gas Fund is
a Delaware limited partnership formed in June 2007. The 12 Month Oil
Fund is a commodity pool that will invest in Crude Oil Interests, while
the 12 Month Natural Gas Fund is a commodity pool that will invest in
Natural Gas Interests. Both are managed by Victoria Bay, a single
member Delaware limited liability company, which is wholly owned by
Wainwright Holdings, Inc. The General Partner of the Partnerships is
registered as a commodity pool operator (``CPO'') with the Commodity
Futures Trading Commission (the ``CFTC'') and is a member of the
National Futures Association.
    Information regarding the Partnerships and the General Partner, as
well as detailed descriptions of the manner in which the Units will be
offered and sold, and the investment strategy of the 12 Month Oil Fund
and the 12 Month Natural Gas Fund, are included in their respective
registration statements regarding the offering of the

Units filed with the Commission under the Securities Act of 1933.\13\
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    \13\ See 12 Month Oil Fund's Form S-1, filed with the Commission
on July 5, 2007 and amended on August 31, 2007 (File No. 333-
144348), and 12 Month Natural Gas Fund's Form S-1, filed with the
Commission on July 6, 2007 (File No. 333-144409).
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    Clearing Broker. UBS Securities, LLC, a CFTC-registered futures
commission merchant (``FCM''), will execute and clear each
Partnership's futures contract transactions and hold the margin related
to its Futures Contracts investments (the ``Clearing Broker''). The
clearing arrangements between the Clearing Broker and each Partnership
are terminable by the Clearing Broker, upon notice. In such an
instance, the General Partner may be required to renegotiate with the
current Clearing Broker, or make arrangements with other FCMs, if the
Partnership(s) intend(s) to continue trading in Futures Contracts or
Other Crude Oil-or Natural Gas-Related Investments, as appropriate, at
the present level of capacity.
    Administrator and Custodian. Under separate agreements with each
Partnership, Brown Brothers Harriman & Co. will serve as administrator,
registrar, transfer agent and custodian (the ``Administrator'' or
``Custodian''). The Administrator will perform services necessary for
the operation and administration of each Partnership, including certain
administrative and accounting services as well as the preparation of
certain Commission and CFTC reports on behalf of each Partnership.
These services include, but are not limited to, investment accounting,
financial reporting, broker and trader reconciliation, calculation of
the NAV and valuation of Treasuries and cash equivalents used to
purchase or redeem Units and other Partnership assets or liabilities.
As Custodian, it will (i) receive payments from purchasers of Baskets,
(ii) make payments to Sellers for Redemption Baskets, as described
below, (iii) hold cash, cash equivalents and Treasuries, as well as
collateral posted by each Partnership's derivatives counterparties, and
(iv) make transfers of margin and collateral with respect to each
Partnership's investments to and from its FCMs or counterparties.
    Marketing Agent. ALPS Distributors, Inc., a registered broker-
dealer, will be the marketing agent for the Partnerships (``Marketing
Agent''). The Marketing Agent will continuously offer, and redeem,
Creation and Redemption Baskets, respectively, and will receive and
process creation and redemption orders from Authorized Purchasers (as
defined below) and coordinate the processing of orders for the creation
or redemption of Units with the General Partner and the Depository
Trust Company (``DTC'').
Investment Strategy of 12 Month Oil Fund
    Investments. The General Partner of the 12 Month Oil Fund believes
that it will be able to use a combination of Futures Contracts and
Other Crude Oil-Related Investments to manage the portfolio to achieve
its investment objective. The General Partner further anticipates that
the exact mix of Futures Contracts and Other Crude Oil-Related
Investments held by the portfolio will vary over time depending on,
among over things, the amount of invested assets in the portfolio,
price movements of crude oil, the rules and regulations of the various
futures and commodities exchanges and trading platforms that deal in
Crude Oil Interests, and innovations in the Crude Oil Interests'
marketplace including both the creation of new Crude Oil Interest
investment vehicles, and the creation of new trading venues that trade
in Crude Oil Interests.
    Futures Contracts. The principal Crude Oil Interests to be invested
in by the 12 Month Oil Fund are Futures Contracts. The General Partner
initially expects the 12 Month Oil Fund to purchase the Oil Benchmark
Futures Contracts. The 12 Month Oil Fund may also invest in Futures
Contracts in heating oil, crude oil, gasoline, natural gas, and other
petroleum-based fuels that are traded on the NYMEX, ICE Futures or
other U.S. and foreign exchanges.
    The price movements in the Oil Benchmark Futures Contracts have
historically closely tracked the investment objective of the 12 Month
Oil Fund over both the short-term, medium-term and the long-term. For
that reason, the 12 Month Oil Fund anticipates making significant
investments in the Oil Benchmark Futures Contracts. The General Partner
submits that other Futures Contracts have also tended to track the
investment objective of the 12 Month Oil Fund, though not as closely as
the Oil Benchmark Futures Contracts.
    Other Crude Oil-Related Investments. The 12 Month Oil Fund may also
purchase Other Crude Oil-Related Investments such as cash-settled
options on Futures Contracts and forward contracts for crude oil, and
participate in OTC transactions that are based on the price of crude
oil, heating oil, gasoline, natural gas, and other petroleum-based
fuels, Futures Contracts and indices based on the foregoing. Option
contracts offer investors and hedgers another vehicle for managing
exposure to the crude oil market. The 12 Month Oil Fund may purchase
options on crude oil Futures Contracts on the principal commodities and
futures exchanges in pursuing its investment objective.
    In addition to listed options, the Exchange states that there also
exists an active OTC market in derivatives linked to crude oil. These
OTC derivative transactions are privately-negotiated agreements between
two parties. Unlike Futures Contracts or related options, each party to
an OTC contract bears the credit risk that the counterparty may not be
able to perform its obligations.
    The Exchange states that some OTC contracts contain fairly generic
terms and conditions and are available from a wide range of
participants, while other OTC contracts have highly customized terms
and conditions and are not as widely available. Many OTC contracts are
cash-settled forwards for the future delivery of crude oil or
petroleum-based fuels that have terms similar to the Futures Contracts.
Others take the form of ``swaps'' in which the two parties exchange
cash flows based on pre-determined formulas tied to the price of crude
oil as determined by the spot, forward or futures markets. The 12 Month
Oil Fund may enter into OTC derivative contracts whose value may be
tied to changes in the difference between the crude oil spot price, the
price of Futures Contracts traded on NYMEX, and the prices of non-NYMEX
Futures Contracts that may be invested in by the 12 Month Oil Fund.
Investment Strategy of 12 Month Natural Gas Fund
    Investments. The General Partner of the 12 Month Natural Gas Fund
believes that it will be able to use a combination of Futures Contracts
and Other Natural Gas-Related Investments to manage the portfolio to
achieve its investment objective. The General Partner further
anticipates that the exact mix of Futures Contracts and Other Natural
Gas-Related Investments held by the portfolio will vary over time
depending on, among over things, the amount of invested assets in the
portfolio, price movements of natural gas, the rules and regulations of
the various futures and commodities exchanges and trading platforms
that deal in Natural Gas Interests, and innovations in the Natural Gas
Interests' marketplace including both the creation of new Natural Gas
Interest investment vehicles and the creation of new trading venues
that trade in Natural Gas Interests.
    Futures Contracts. The principal Natural Gas Interests to be
invested in by the 12 Month Natural Gas Fund are

Futures Contracts. The General Partner of the 12 Month Natural Gas Fund
initially expects to purchase the Natural Gas Benchmark Futures
Contracts. The 12 Month Natural Gas Fund may also invest in Futures
Contracts in crude oil, natural gas, heating oil, gasoline and other
petroleum-based fuels that are traded on the NYMEX, ICE Futures or
other U.S. and foreign exchanges.
    The price movements in the Natural Gas Benchmark Futures Contracts
have historically closely tracked the investment objective of the 12
Month Natural Gas Fund over both the short-term, medium-term and the
long-term. For that reason, the General Partner of the 12 Month Natural
Gas Fund anticipates making significant investments in the Natural Gas
Benchmark Futures Contracts. The General Partner submits that other
Futures Contracts have also tended to track the investment objective of
the 12 Month Natural Gas Fund, though not as closely as the Natural Gas
Benchmark Futures Contracts.
    Other Natural Gas-Related Investments. The 12 Month Natural Gas
Fund may also purchase Other Natural Gas-Related Investments such as
cash-settled options on Futures Contracts and forward contracts for
natural gas, and participate in OTC transactions that are based on the
price of gasoline, heating oil, crude oil, natural gas, and other
petroleum-based fuels, as well as Futures Contracts and indices based
on the foregoing. Option contracts offer investors and hedgers another
vehicle for managing exposure to the natural gas market. The 12 Month
Natural Gas Fund may purchase options on natural gas Futures Contracts
on the principal commodities and futures exchanges in pursuing its
investment objective.
    In addition to listed options, the Exchange states that there also
exists an active OTC market in derivatives linked to natural gas. These
OTC derivative transactions are privately-negotiated agreements between
two parties. Unlike Futures Contracts or related options, each party to
an OTC contract bears the credit risk that the counterparty may not be
able to perform its obligations.
    The Exchange states that some OTC contracts contain fairly generic
terms and conditions and are available from a wide range of
participants, while other OTC contracts have highly customized terms
and conditions and are not as widely available. Many OTC contracts are
cash-settled forwards for the future delivery of gasoline or petroleum-
based fuels that have terms similar to the Futures Contracts. Others
take the form of ``swaps'' in which the two parties exchange cash flows
based on pre-determined formulas tied to the price of gasoline as
determined by the spot, forward or futures markets. The 12 Month
Natural Gas Fund may enter into OTC derivative contracts whose value
will be tied to changes in the difference between the natural gas spot
price, the price of Futures Contracts traded on NYMEX, and the prices
of non-NYMEX Futures Contracts that may be invested in by the 12 Month
Natural Gas Fund.
Impact of Accountability Levels and Position Limits.
    The Exchange states that the CFTC and U.S. designated contract
markets such as NYMEX have established accountability levels and
position limits on the maximum net long or net short Futures Contracts
in commodity interests that any person or group of persons under common
trading control and that these limits are applicable to each of the
Partnerships. Accountability levels and position limits are intended,
among other things, to prevent a corner or squeeze on a market or undue
influence on prices by any single trader or group of traders. The net
position is the difference between an individual or firm's open long
contracts and open short contracts in any one commodity.
    Most U.S. futures exchanges, such as NYMEX, also limit the daily
price fluctuation (i.e., daily price limits) for Futures Contracts. The
daily price limits establish the maximum amount that the price of a
futures contract or an option on a futures contract may vary either up
or down from the previous day's settlement price during a particular
trading session. Once the daily limit has been reached in a particular
futures contract or option on a futures contract, no trades may be made
at a price beyond the limit.
    The accountability levels for each of the Benchmark Futures
Contracts and other Futures Contracts traded on NYMEX are not a fixed
ceiling, but rather, a threshold above which NYMEX may exercise greater
scrutiny and control over an investor's positions. The current
accountability level for investments at any one time in crude oil
Futures Contracts (including investments in the Oil Benchmark Futures
Contracts) is 20,000 contracts. Similarly, the amount for natural gas
Futures Contracts (including investments in the Natural Gas Benchmark
Futures Contracts) is 12,000 contracts. If a Partnership exceeds its
respective accountability level for investments in either crude oil or
natural gas Futures Contracts, as appropriate, NYMEX will monitor the
Partnership's exposure and request additional information on its
activities including the total size of all positions, investment and
trading strategy, and the extent of its liquidity resources. If deemed
necessary, NYMEX could order the Partnership to reduce its position
back to the accountability level.
    If NYMEX orders a Partnership to reduce its position back to the
accountability level, or to an accountability level that NYMEX deems
appropriate for the Partnership, such accountability level may impact
the mix of investments in Crude Oil Interests or Natural Gas Interests
made by the 12 Month Oil Fund or the 12 Month Natural Gas Fund,
respectively. To illustrate, assume that the Oil Benchmark Futures
Contracts and the Unit price of the 12 Month Oil Fund are each $50, and
that NYMEX has determined that the 12 Month Oil Fund may not own more
than 20,000 contracts in crude oil Futures Contracts. In such case, the
12 Month Oil Fund could invest up to $1 billion of its daily net assets
in the Oil Benchmark Futures Contracts (i.e., $50 per unit multiplied
by 1,000 (an Oil Benchmark Futures Contract is a contract for 1,000
barrels) multiplied by 20,000 contracts) before reaching the
accountability level imposed by NYMEX. Once the daily net assets of the
portfolio exceed $1 billion in the Oil Benchmark Futures Contracts, the
portfolio may not be able to make any further investments in the Oil
Benchmark Futures Contracts, depending on whether NYMEX imposes limits.
If NYMEX does impose limits at the $1 billion level (or another level),
the 12 Month Oil Fund anticipates that it will invest the majority of
its assets above that level in a mix of other Futures Contracts or
Other Crude Oil-Related Investments. The above example applies equally
to the 12 Month Natural Gas Fund and the Natural Gas Benchmark Futures
Contracts.
    In addition to accountability levels, NYMEX imposes position limits
on contracts held in the last few days of trading in the near month
contract. The Exchange states that it is unlikely that a Partnership
will run up against such position limits because each Partnership's
investment strategy is to exit from the near month contract
approximately two weeks before expiration of the contract.
Investment Procedures
    The General Partner for each of the 12 Month Oil Fund and the 12
Month Natural Gas Fund anticipates that the use of Other Crude Oil-
Related Investments and Other Natural Gas-Related Investments,
respectively, together with investments in Futures

Contracts, will produce price and total return results that closely
track each Partnership's investment objective.
    Counterparty Procedures. To protect themselves from the credit risk
that arises in connection with such contracts, the 12 Month Oil Fund
and the 12 Month Natural Gas Fund will each enter into agreements, with
each counterparty, that provide for the netting of their respective
overall exposure to the counterparty, such as the agreements published
by the International Swaps and Derivatives Association, Inc. Each
Partnership will also require that the counterparty be highly rated
and/or provide collateral or other credit support to address the
Partnership's exposure to the counterparty. The General Partner will
assess or review, as appropriate, the creditworthiness of each
potential or existing counterparty to an OTC contract pursuant to
guidelines approved by the General Partner's Board of Directors. The
General Partner, on behalf of the Partnerships, will only enter into
OTC contracts with (a) members of the Federal Reserve System or foreign
banks with branches regulated by the Federal Reserve Board; (b) primary
dealers in U.S. government securities; (c) broker-dealers; (d)
commodities futures merchants; or (e) affiliates of the foregoing.
    Cash, Cash Equivalents and Treasuries. The 12 Month Oil Fund and
the 12 Month Natural Gas Fund will invest virtually all of their assets
not invested in Crude Oil Interests or Natural Gas Interests,
respectively, in cash, cash equivalents, and Treasuries. The cash, cash
equivalents and Treasuries will be available for use in meeting each
Partnership's current or potential margin and collateral requirements
with respect to investments in Crude Oil Interests or Natural Gas
Interests, as appropriate. Neither Partnership will use cash, cash
equivalents, and Treasuries as margin for new investments unless it has
a sufficient amount of cash, cash equivalents, and Treasuries to meet
the margin or collateral requirements that may arise due to changes in
the value of its currently held Crude Oil Interests or Natural Gas
Interests. Other than in connection with a redemption of Units, each
Partnership does not intend to distribute cash or property to its Unit
holders. Interest earned on cash, cash equivalents, and Treasuries held
by a Partnership will be retained by it to pay its expenses, to make
investments to satisfy its investment objectives, or to satisfy its
margin or collateral requirements.
The Markets for Partnership Units
    There will be two markets for investors to purchase and sell Units.
New issuances of the Units will be made only in baskets of 100,000
Units (a ``Basket''), or multiples thereof. Each Partnership will issue
and redeem Baskets of the Units on a continuous basis, by or through
participants who have each entered into an authorized purchaser
agreement (``Authorized Purchaser Agreement'' and each such
participant, an ``Authorized Purchaser'') \14\ with the General
Partner, at the NAV per Unit next determined after an order to purchase
the Units in a Basket is received in proper form. Baskets may be issued
and redeemed on any ``business day'' (defined as any day other than a
day on which the Amex, the NYMEX or the New York Stock Exchange
(``NYSE'') is closed for regular trading) through the Marketing Agent
in exchange for cash and/or Treasuries, which the Custodian receives
from Authorized Purchasers or transfers to Authorized Purchasers, in
each case, on behalf of a Partnership. Baskets are then separable upon
issuance into identical Units that will be listed and traded on the
Exchange.\15\
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    \14\ An ``Authorized Purchaser'' must be (i) a registered
broker-dealer or other market participant, such as a bank or other
financial institution, that is exempt from broker-dealer
registration and (ii) a DTC Participant.
    \15\ The Exchange expects that the number of outstanding Units
will increase and decrease as a result of creations and redemptions
of Baskets.
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    The Units will thereafter be traded on the Exchange similar to
other equity securities. Units will be registered in book-entry form
through DTC. Trading in the Units on the Exchange will be effected
until 4:15 p.m. Eastern time (``ET'') each business day. The minimum
trading increment for such Units will be $.01.
    Each Authorized Purchaser, and each distributor, offering and
selling newly issued Units as part of the distribution of such Units,
is required to comply with the prospectus delivery and disclosure
requirements of the Securities Act of 1933, as well as the requirements
of the Commodities Exchange Act (``CEA''), including the requirement
that prospective investors provide an acknowledgement of receipt of
such disclosure materials prior to the payment for any newly issued
Units.
    Calculation of Partnership NAV. The Administrator will calculate
NAV as follows: (1) Determine the current value of each Partnership's
assets and (2) subtract the liabilities of each Partnership. The NAV
will be calculated shortly after the close of trading on the Exchange
using the settlement value \16\ of Futures Contracts traded on the
NYMEX as of the close of open-outcry trading on the NYMEX at 2:30 p.m.
ET, and for the value of other Crude Oil Interests or Natural Gas
Interests, depending on the Partnership, and Treasuries and cash
equivalents, the value of such investments as of the earlier of 4 p.m.
ET or the close of trading on the NYSE. The NAV is calculated by
including any unrealized profit or loss on Futures Contracts and Other
Crude Oil-Related Investments and Other Natural Gas Related-
Investments, as the case may be, and any other credit or debit accruing
to a Partnership but unpaid or not received by such Partnership. The
NAV is then used to compute all fees (including the management and
administrative fees) that are calculated from the value of Partnership
assets. The Administrator will calculate the NAV per Unit by dividing
the NAV by the number of Units outstanding.
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    \16\ See Rules 6.52 and 6.52A of the NYMEX Rulebook.
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    When calculating NAV, the Administrator will value Futures
Contracts based on the closing settlement prices quoted on the relevant
commodities and futures exchange and obtained from various major market
data vendors such as Bloomberg or Reuters. The value of the Other Crude
Oil-Related Investments or Other Natural Gas-Related Investments, for
purposes of determining the NAV, will be based upon the determination
of the Administrator as to the fair market value. Certain types of
Other Crude Oil-Related Investments and Other Natural Gas-Related
Investments, such as listed options on Futures Contracts, have closing
prices that are available from the exchange upon which they are traded
or from various market data vendors. Other Crude Oil-Related
Investments and Other Natural Gas-Related Investments will be valued
based on the last sale price on the exchange or market where traded. If
a contract fails to trade, the value shall be the most recent bid
quotation from the third-party source. Some types of Other Crude Oil-
Related Investments and Other Natural Gas-Related Investments, such as
forward contracts, do not trade on established exchanges but typically
have prices that are widely available from third-party sources. The
Administrator may make use of such third-party sources in calculating a
fair market value of these Other Crude Oil-Related Investments and
Other Natural Gas-Related Investments.

    Certain types of Other Crude Oil-Related Investments and Other
Natural Gas-Related Investments, such as OTC derivative contracts such
as ``swaps'' also do not have established exchanges upon which they
trade and may not have readily available price quotes from third
parties. Swaps and other similar derivative or contractual-type
instruments will be first valued at a price provided by a single broker
or dealer, typically the counterparty. If no such price is available,
the contract will be valued at a price at which the counterparty to
such contract could repurchase the instrument or terminate the
contract. In determining the fair market value of such derivative
contracts, the Administrator may make use of quotes from other
providers of similar derivatives. If these are not available, the
Administrator may calculate a fair market value of the derivative
contract based on the terms of the contract and the movement of the
underlying price factors of the contract.
    Calculation of the Basket Amount. Baskets will be issued in
exchange for Treasuries and/or cash in an amount equal to the NAV per
Unit times 100,000 Units (the ``Basket Amount''). Baskets will be
delivered by the Marketing Agent to each Authorized Purchaser only
after execution of the Authorized Purchaser Agreement.
    Units in a Basket are issued and redeemed in accordance with the
Authorized Purchaser Agreement. Authorized Purchasers that wish to
purchase a Basket must transfer the Basket Amount, for each Basket
purchased, to the Custodian (the ``Deposit Amount''). Authorized
Purchasers that wish to redeem a Basket will receive an amount of
Treasuries and/or cash in exchange for each Basket surrendered in an
amount equal to the NAV per Basket (the ``Redemption Amount'').
    On each business day, the Administrator will make available,
immediately prior to the opening of trading on the Exchange, the Basket
Amount for the creation of a Basket based on the prior day's NAV. At or
about 4 p.m. ET on each business day, the Administrator will determine
the Basket Amount for orders placed by Authorized Purchasers received
before 12 p.m. ET that day. Because orders to purchase and/or redeem
Baskets must be placed by 12 p.m. ET, but the Basket Amount will not be
determined until shortly after 4 p.m. ET, on the date the purchase
order or redemption order, as applicable, is received, Authorized
Purchasers will not know the total payment required to create or redeem
a Basket, as applicable, at the time they submit such irrevocable
purchase and/or redemption order. This is similar to exchange-traded
funds and mutual funds. The 12 Month Oil Fund's and the 12 Month
Natural Gas Fund's registration statements disclose that NAV and the
Basket Amount could rise and fall substantially between the time an
irrevocable purchase order and/or redemption order is submitted and the
time the Basket Amount is determined.\17\
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    \17\ The General Partner states that the price of crude oil or
natural gas futures may fluctuate 5% or more between 12 noon, the
cutoff for creation and redemption orders, and 2:30 p.m., the close
of trading on NYMEX. As explained further below (see section
entitled ``Arbitrage,'' infra), the Exchange does not anticipate
such price movements to impact the arbitrage process.
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    Shortly after 4 p.m. ET on each business day, the Administrator,
Amex, and the General Partner will disseminate the Basket Amount (for
orders placed during the day) together with the NAV for the Units.\18\
The Basket Amount and the NAV are communicated by the Administrator to
all Authorized Purchasers via facsimile or electronic mail message.
Concurrently, the Amex will also disclose the NAV and Basket Amount on
its Web site at http://www.amex.com. The Basket Amount necessary for

the creation of a Basket will change from day to day. On each day that
the Amex is open for regular trading, the Administrator will adjust the
Deposit Amount as appropriate to reflect the prior day's Partnership
NAV and accrued expenses. The Administrator will then determine the
Deposit Amount for a given business day.
    Calculation and Payment of the Deposit Amount. The Deposit Amount
of Treasuries and/or cash will be in the same proportion to the total
net assets of each Partnership as the number of Units to be created is
in proportion to the total number of Units outstanding as of the date
the purchase order is accepted. The General Partner will determine the
requirements for the Treasuries that may be included in the Deposit
Amount and will disseminate these requirements at the start of each
business day. The amount of cash that is required is the difference
between the aggregate market value of the Treasuries required to be
included in the Deposit Amount as of 4 p.m. ET on the date of purchase
and the total required deposit.
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    \18\ The Exchange will obtain a representation from each
Partnership that its NAV and other relevant pricing information will
be disclosed to all market participants at the same time.
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    All purchase orders must be received by the Marketing Agent by 12
p.m. ET for consideration on that business day. Delivery of the Deposit
Amount, i.e., Treasuries and/or cash, to the Administrator must occur
by the third business day following the purchase order date (T+3).\19\
Thus, the General Partner will disseminate shortly after 4 p.m. ET on
the date the purchase order was properly submitted, the amount of
Treasuries and/or cash to be deposited with the Custodian for each
Basket.
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    \19\ Authorized Purchasers are required to pay a transaction fee
of $1,000 for each order to create one or more Baskets.
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    Calculation and Payment of the Redemption Amount. The Units will
not be individually redeemable but will only be redeemable in Baskets.
To redeem, an Authorized Purchaser will be required to accumulate
enough Units to constitute a Basket (i.e., 100,000 Units). An
Authorized Purchaser redeeming a Basket will receive the Redemption
Amount. Upon the surrender of the Units and payment of applicable
redemption transaction fee,\20\ taxes or charges, the Custodian will
deliver to the redeeming Authorized Purchaser the Redemption Amount.
The Redemption Amount of Treasuries and/or cash will be in the same
proportion to the total net assets of each Partnership as the number of
Units to be redeemed is in proportion to the total number of Units
outstanding as of the date the redemption order is accepted. The
General Partner will determine the Treasuries to be included in the
Redemption Amount. The amount of cash that is required is the
difference between the aggregate market value of the Treasuries
required to be included in the Redemption Amount as of 4 p.m. ET on the
date of redemption and the total Redemption Amount. All redemption
orders must be received by the Marketing Agent by 12 p.m. ET on the
business day redemption is requested and are irrevocable. Delivery of
the Basket to be redeemed to the Custodian and payment of the
Redemption Amount will occur by the third business day following the
redemption order date (T+3).
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    \20\ Authorized Purchasers are required to pay a transaction fee
of $1,000 for each order to redeem one or more Baskets.
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Arbitrage
    The Exchange believes that the Units will not trade at a material
discount or premium to a Unit's NAV based on potential arbitrage
opportunities. Due to the fact that the Units can be created and
redeemed only in Baskets at NAV, the Exchange submits that arbitrage
opportunities should provide a mechanism to mitigate the effect of any

premiums or discounts that may exist from time to time.\21\
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    \21\ The Exchange states that arbitrage opportunities may arise
whenever the market price of a Partnership is higher (or lower) than
its expected fair market value, which is based on the price of the
underlying commodity futures. Authorized Purchasers may effectively
lock-in an arbitrage spread by selling (or buying) the Units while,
at the same time buying (or selling), the related commodity futures.
This arbitrage activity may occur not only at the time of an
irrevocable creation or redemption order, but throughout the day.
Accordingly, the Exchange believes that arbitrage activity should
not be affected by price movements in the underlying commodity
assets between the cutoff for creation and redemption orders and the
close of futures trading, following which the Basket Amount is
determined.
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Dissemination and Availability of Information
    Futures Contracts. The daily settlement prices for NYMEX-traded
Futures Contracts are publicly available on NYMEX's Web site at http://www.nymex.com.
 The Exchange will also include on its Web site at http:/

/http://www.amex.com a hyperlink to NYMEX's Web site for the purpose of

disclosing futures contract pricing. In addition, various market data
vendors and news publications publish futures prices and related data.
The Exchange represents that quote and last sale information for the
Futures Contracts are widely disseminated through a variety of market
data vendors worldwide, including Bloomberg and Reuters. In addition,
the Exchange further represents that real-time futures data is
available by subscription from Reuters and Bloomberg. NYMEX also
provides delayed futures information on current and past trading
sessions and market news free of charge on its Web site. The specific
contract specifications for the Futures Contracts are also available on
NYMEX's Web site and the ICE Futures Web site at http://www.icefutures.com
.

    Partnership Units. The Exchange's Web site at http://www.amex.com,

which is publicly accessible at no charge, will contain the following
information: (1) The prior business day's NAV and the reported closing
price; (2) the mid-point of the bid-ask price\22\ in relation to the
NAV as of the time the NAV is calculated (the ``Bid-Ask Price''); (3)
calculation of the premium or discount of such price against such NAV;
(4) data in chart form displaying the frequency distribution of
discounts and premiums of the Bid-Ask Price against the NAV, within
appropriate ranges for each of the four previous calendar quarters; (5)
the prospectus and the most recent periodic reports filed with the
Commission or required by the CFTC; and (6) other applicable
quantitative information.
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    \22\ The Bid-Ask Price of Units is determined using the highest
bid and lowest offer as of the time of calculation of the NAV.
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    Portfolio Disclosure. The 12 Month Oil Fund's and the 12 Month
Natural Gas Fund's total portfolio composition will be disclosed each
business day that the Amex is open for trading on their respective Web
sites at http://www.unitedstates12monthoilfund.com and http://www.unitedstates12monthnaturalgasfund.com
, respectively. The 12 Month
espectively. The 12 Month
and will include, as applicable, the name and value of each Crude Oil
Interest, the specific types of Crude Oil Interests and characteristics
of such Crude Oil Interests, Treasuries, and amount of cash and cash
equivalents held in the portfolio of the 12 Month Oil Fund. The 12
Month Natural Gas Fund's Web site disclosure of portfolio holdings will
be made daily and will include, as applicable, the name and value of
each Natural Gas Interest, the specific types of Natural Gas Interests
and characteristics of such Natural Gas Interests, Treasuries, and
amount of cash and cash equivalents held in the portfolio of the 12
Month Natural Gas Fund. The public Web site disclosure of the portfolio
composition of each of the 12 Month Oil Fund and the 12 Month Natural
Gas Fund will coincide with the disclosure by the Administrator on each
business day of the NAV for the Units and the Basket Amount (for orders
placed during the day) for each Partnership. Therefore, the same
portfolio information will be provided at the same time on the public
Web site for each Partnership as well as in the facsimile or electronic
mail message to Authorized Purchasers containing the NAV and Basket
Amount (``Daily Dissemination''). The format of the public Web site
disclosure and the Daily Dissemination will differ because the public
Web site will list all portfolio holdings while the Daily Dissemination
will provide the portfolio holdings in a format appropriate for
Authorized Purchasers, i.e., the exact components of a Creation Unit.
    As described above, each Partnership's NAV will be calculated and
disseminated daily. The Amex also intends to disseminate for each
Partnership on a daily basis by means of the Consolidated Tape
Association (``CTA'')/Consolidated Quote High Speed Lines information
with respect to the Indicative Partnership Value (as discussed below),
recent NAV, Units outstanding, the Basket Amount and the Deposit
Amount. The Exchange will also make available on its Web site daily
trading volume, closing prices and the NAV. The closing price and
settlement prices of the Futures Contracts held by each Partnership are
also readily available from the NYMEX, automated quotation systems,
published or other public sources, or on-line information services such
as Bloomberg or Reuters. In addition, the Exchange will provide a
hyperlink on its Web site at http://www.amex.com Month  to each Partnership's

Web site.
    Indicative Partnership Value. In order to provide updated
information relating to each Partnership for use by investors,
professionals and persons wishing to create or redeem the Units, the
Exchange will disseminate through the facilities of the CTA an amount
representing, on a per-Unit-basis, the current indicative value of the
Basket Amount (the ``Indicative Partnership Value'').\23\ Consistent
with Amex Rule 1502, the Indicative Partnership Value for each
Partnership will be disseminated on a per-Unit-basis at least every 15
seconds during regular Amex trading hours of 9:30 a.m. to 4:15 p.m. ET.
The Indicative Partnership Value will be calculated based on the
Treasuries and cash required for creations and redemptions (i.e., NAV
per Unit x 100,000) adjusted to reflect the price changes of the
relevant Benchmark Futures Contracts.
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    \23\ The Exchange proposes to amend Amex Rule 1500-AEMI(b) to
define ``Indicative Partnership Value'' as an estimate, updated at
least every 15 seconds, of the value of a Partnership Unit of each
series.
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    The Indicative Partnership Value is based on open outcry trading of
the relevant Benchmark Futures Contracts on NYMEX. Open-outcry trading
on the NYMEX closes daily at 2:30 p.m. ET while NYMEX's energy futures
contracts are traded on the Chicago Mercantile Exchange's CME Globex
[reg] electronic trading platform on a twenty-four hour basis.\24\
After the close of open outcry on NYMEX at 2:30 p.m., the Indicative
Partnership Value will reflect changes to the relevant Benchmark
Futures Contracts as provided for through CME Globex [reg]. The value
of the relevant Benchmark Futures Contracts will be available on a 15-
second delayed basis during the time that a Unit trades on the
Exchange.
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    \24\ CME Globex[supreg] (``Globex'') is an open-access
marketplace that operates virtually 24 hours each trading day.
Electronic trading on Globex is conducted from 6 p.m. ET Sunday
through 5:15 p.m. ET Friday each week. There is a 45-minute break
each day between 5:15 p.m. ET and 6 p.m. ET.
---------------------------------------------------------------------------

    While NYMEX is open for trading, the Indicative Partnership Value
can be expected to closely approximate the value per Unit of the Basket
Deposit. However, during Amex trading hours

when the Futures Contracts have ceased trading in NYMEX's open outcry,
spreads and resulting premiums or discounts may widen and, therefore,
increase the difference between the price of the Units and the NAV of
the Units. The Exchange submits that the Indicative Partnership Value
disseminated during Amex trading hours, on a per-Unit-basis, should not
be viewed as a real-time update of the NAV, which is calculated only
once daily. The Exchange believes that dissemination of the Indicative
Partnership Value based on the Basket Deposit provides additional
information that is not otherwise available to the public and is useful
to professionals and investors in connection with the Units trading on
the Exchange or the creation or redemption of the Units.
Partnership Termination Events
    Each Partnership shall continue in effect from the date of its
formation in perpetuity, unless sooner terminated upon the occurrence
of any one or more of the following events: (1) The death, adjudication
of incompetence, bankruptcy, dissolution, withdrawal, or removal of a
General Partner who is the sole remaining General Partner, unless a
majority in interest of limited partners within ninety (90) days after
such event elects to continue the Partnership and appoints a successor
general partner; or (2) the affirmative vote of a majority in interest
of the limited partners to terminate the partnership, subject to
certain conditions.
    Upon termination of the Partnership, holders of the Units will
surrender their Units and the assets of the Partnership shall be
distributed to the Unit holders pro rata in accordance with the value
of the Units, in cash or in kind, as determined by the General Partner.
Purchases and Redemptions in Baskets
    In the Information Circular, members and member organizations will
be informed that procedures for purchases and redemptions of Units in
Baskets are described in the Prospectus and that Units are not
individually redeemable but are redeemable only in Baskets or multiples
thereof.
Listing and Trading Rules
    Each Partnership will be subject to the criteria in Amex Rule 1502
for initial and continued listing of the Units. The Exchange will
require a minimum of 100,000 Units to be outstanding at the start of
trading. The Exchange expects that the initial price of a Unit will be
$50.00.\25\ The Exchange believes that the anticipated minimum number
of Units outstanding at the start of trading is sufficient to provide
adequate market liquidity and to further each Partnership's objective
to seek to provide a simple and cost effective means of accessing the
commodity futures markets. The Exchange represents that it prohibits
the initial and/or continued listing of any security that is not in
compliance with Rule 10A-3 under the Act.\26\
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    \25\ Each Partnership expects that the initial Authorized
Purchaser will purchase the initial Basket of 100,000 Units at the
initial offering price per Unit of $50.00. On the date of the public
offering and thereafter, each Partnership will continuously issue
Baskets consisting of 100,000 Units to Authorized Purchasers at NAV.
    \26\ See 17 CFR 240.10A-3.
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    The Amex original listing fee applicable to the listing of Units
for each Partnership is $5,000. In addition, the annual listing fee
applicable under Section 141 of the Amex Company Guide will be based
upon the year-end aggregate number of Units in all series of each
Partnership outstanding at the end of each calendar year.
    Amex Rule 154-AEMI, ``Orders in AEMI,'' paragraph (c)(ii), provides
that stop and stop limit orders to buy or sell a security the price of
which is derivatively priced based upon another security or index of
securities, may be elected by a quotation, as set forth in
subparagraphs (c)(ii) (1)-(4) of Rule 154-AEMI. The Units will be
deemed eligible for this treatment.
    The Exchange states that Amex Rule 126A-AEMI, which will apply to
trading of the Units, complies with Rule 611 of Regulation NMS, which
requires among other things, that the Exchange adopt and enforce
written policies and procedures that are reasonably designed to prevent
trade-throughs of protected quotations.\27\
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    \27\ See Exchange Act Release No. 54552 (September 29, 2006), 71
FR 59546 (October 10, 2006) (SR-Amex-2005-104) (implementing a new
hybrid market structure for equities and exchange-traded funds known
as the ``Auction & Electronic Market Integration'').
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    Consistent with the treatment of trust issued receipts (``TIRs''),
Specialist transactions of the Units made in connection with the
creation and redemption of Units will not be subject to the
prohibitions of Amex Rule 190, ``Specialist's Transactions with Public
Customers.'' \28\ The Units will generally be subject to the Exchange's
stabilization rule, Rule 170-AEMI, ``Registration and Functions of
Specialists,'' except that specialists may buy on ``plus ticks'' and
sell on ``minus ticks,'' in order to bring the Units into parity with
the underlying commodity or commodities and/or futures contract price.
The Exchange notes that Commentary .01 to its Rule 1503, ``Specialist
Prohibitions,'' sets forth this limited exception to Rule 170-AEMI.
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    \28\ The Commission notes that Commentary .05 to Amex Rule 190
provides an exemption from the prohibitions stated in that rule for
securities issued by a trust listed pursuant to Amex Rules 1200-AEMI
and 1201-1202, 1200A-AEMI and 1201A-1205A, or 1200B and 1201B-1205B.
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    The trading of the Units will be subject to certain conflict of
interest provisions set forth in Amex Rules 1503 and 1504. Rule 1503
provides that the prohibitions in Rule 175(c) apply to a specialist in
the Units so that the specialist or affiliated person may not act or
function as a market-maker in an underlying asset, related futures
contract or option or any other related derivative. An exception to the
general prohibition in Rule 1503 provides that an approved person of an
equity specialist that has established and obtained Exchange approval
for procedures restricting flow of material, non-public market
information between itself and the specialist member organization, and
any member, officer or employee associated therewith, may act in a
market making capacity, other than as a specialist in the Units on
another market center, in the underlying asset or commodity, related
futures or options on futures, or any other related derivatives. Rule
1504 provides that specialists handling Units provide the Exchange with
all necessary information relating to their trading in underlying
physical assets or commodities, related futures or options on futures,
or any other related derivatives. In addition, members and member
organizations will be subject to Commentary .03 to Amex Rule 1500-AEMI
prohibiting such member or member organizations from acting as a market
maker from off-floor through the use of multiple limit orders.
Trading Halts
    If an Indicative Partnership Value is not being disseminated by one
or more major market data vendors, the Exchange may halt trading during
the day in which the interruption to the dissemination of such
Indicative Partnership Value occurs. If the interruption to the
dissemination of an Indicative Partnership Value persists past the
trading day in which it occurred, the Exchange will halt trading no
later than the beginning of the trading day following the interruption.
    Prior to the commencement of trading, the Exchange will issue an
Information Circular to members informing them of, among other things,
Exchange policies regarding trading

halts in the Units. First, the Information Circular will advise that
trading will be halted in the event the market volatility trading halt
parameters set forth in Amex Rule 117 have been reached. Second, the
Information Circular will advise that, in addition to the parameters
set forth in Rule 117, the Exchange will halt trading in the Units if
trading in the underlying Benchmark Futures Contracts is halted or
suspended. Third, with respect to a halt in trading that is not
specified above, the Exchange may also consider other relevant factors
and the existence of unusual conditions or circumstances that may be
detrimental to the maintenance of a fair and orderly market.
Additionally, the Exchange represents that it will cease trading in the
Units if any of the condition in Amex Rule 1502(b)(ii) or (iii) exist
(i.e., if there is a halt or disruption in the dissemination of the
Indicative Partnership Value and/or underlying Oil Benchmark Futures
Contracts and/or Natural Gas Benchmark Futures Contracts).
Suitability
    The Information Circular will inform members and member
organizations of the characteristics of the Units and of applicable
Exchange rules, as well as of the requirements of Amex Rule 411 (Duty
to Know and Approve Customers).
    The Exchange notes that pursuant to Amex Rule 411, members and
member organizations are required, in connection with recommending
transactions in the Units, to have a reasonable basis to believe that a
customer is suitable for the particular investment given reasonable
inquiry concerning the customer's investment objectives, financial
situation, needs, and any other information known by such member.
Information Circular
    The Amex will distribute an Information Circular to its members in
connection with the trading of each Partnership's Units. The
Information Circular will discuss the special characteristics, and
risks, of trading in the Units. Specifically, the Information Circular,
among other things, will discuss what the Units are, how a Basket is
created and redeemed, the requirement that members and member firms
deliver a prospectus to investors purchasing the Units prior to, or
concurrently with, the confirmation of a transaction, applicable Amex
rules, dissemination of information regarding the per-Unit-Indicative
Partnership Value, trading information, and applicable suitability
rules. The Information Circular will also explain that each Partnership
is subject to various fees and expenses described in the relevant
Registration Statements. The Information Circular will also reference
the fact that there is no regulated source of last sale information
regarding physical commodities, and describe the regulatory framework
relating to the trading of crude oil, natural gas, heating oil,
gasoline, or other petroleum-based fuels and crude oil- and natural
gas-based futures contracts and related options.
    The Information Circular will also notify members and member
organizations about the procedures for purchases and redemptions of
Units in Baskets, and that Units are not individually redeemable but
are redeemable only in Baskets or multiples thereof. The Information
Circular will advise members of their suitability obligations with
respect to recommended transactions to customers in the Units. The
Information Circular will also discuss any relief, if granted, by the
Commission or the staff from any rules under the Act.
    The Information Circular will disclose that the NAV for Units will
be calculated shortly after 4 p.m. ET each trading day.
Surveillance
    The Exchange submits that its surveillance procedures are adequate
to deter and detect violations of Exchange rules relating to the
trading of the Units. The surveillance procedures for the Units will be
similar to those used for units of the United States Oil Fund, LP and
the United States Natural Gas Fund, LP \29\ as well as other commodity-
based trusts, TIR and exchange-traded funds. In addition, the
surveillance procedures will incorporate and rely upon existing Amex
surveillance procedures governing options and equities. The Exchange
currently has in place a comprehensive surveillance sharing agreement
with each of NYMEX and ICE Futures for the purpose of providing
information in connection with trading in, or related to, futures
contracts traded on NYMEX and ICE Futures, respectively. To the extent
that a Partnership invests in Crude Oil Interests or Natural Gas
Interests traded on other exchanges, the Amex will enter into
comprehensive surveillance sharing agreements with those particular
exchanges.\30\
---------------------------------------------------------------------------

    \29\ See Exchange Act Release Nos. 53582 (March 31, 2006), 71 FR
17510 (April 6, 2006) (SR-Amex-2005-127) (approving Amex Rules 1500-
AEMI and 1501 through 1505 in conjunction with the listing and
trading of Units of the United States Oil Fund, LP) and 55632 (April
13, 2007), 72 FR 19987 (April 20, 2007) (SR-Amex-2006-112)
(approving the listing and trading of Units of the United States
Natural Gas Fund, LP).
    \30\ The Exchange represents that each of the Partnerships will
only invest in futures contracts on markets where the Exchange has
entered into the appropriate comprehensive surveillance sharing
agreements.
---------------------------------------------------------------------------

2. Statutory Basis
    The Amex believes that the proposed rule change is consistent with
the requirements of Section 6(b) of the Act \31\ in general, and
furthers the objectives of Section 6(b)(5),\32\ of the Act in
particular, in that it is 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 facilitating transactions in securities, and to
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general to protect
investors and the public interest; and is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers, or to
regulate by virtue of any authority conferred by the Act matters not
related to the purpose of the Act or the administration of the
Exchange.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78f(b).
    \32\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 that is not necessary or appropriate
in furtherance of the purposes of the Act.

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

    The Exchange has neither solicited nor received written comments on
the proposed rule change.

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

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

    (B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
    The Amex has requested accelerated approval of this proposed rule
change prior to the 30th day after the date of publication of the
notice of the filing thereof. The Commission has determined that a 15-
day comment period is appropriate in this case.

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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-Amex-2007-98 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Amex-2007-98. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all

written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of 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-Amex-2007-98 and should be
submitted on or before November 19, 2007.
---------------------------------------------------------------------------

    \33\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\33\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-21619 Filed 11-1-07; 8:45 am]

BILLING CODE 8011-01-P


From:
Jones, DonnaLee<EMAIL_ADDRESS>Sent:
Friday, November 20, 2015 9:44 AM
To:
David Ailor<EMAIL_ADDRESS><EMAIL_ADDRESS>Cc:
Raymond, Gabrielle<EMAIL_ADDRESS>Subject:
RE: draft meeting minutes for your review - attachments to minutes

David - Forgot to include attachments. One of the many reasons why it is good to have RTI back on the team. Thanks Gabrielle.

Regards,
Donna Lee Jones, Ph.D.
Senior Technical Advisor, Metals Sector
U. S. Environmental Protection Agency
Office of Air Quality Planning and Standards Sector Policies and Programs Division / Metals & Inorganic Chemicals Group (D243-02) Research Triangle Park, NC  27711  Tele:<PHONE_NUMBER>  Fax<PHONE_NUMBER> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
"Reasonableness never fails to be appreciated."  - anon.

<< meeting-11-16-15-coke-AT-EPA_Attachment1.pdf >>
<< meeting-11-16-15-coke-phone_Attachment2.docx >>
<< meeting-11-16-15-coke-agenda_Attachment3.PDF >>
<< meeting-11-16-15-coke-handout_Attachment4.PDF >>

________________________________________
From: Jones, DonnaLee
Sent: Friday, November 20, 2015 9:28 AM
To: David Ailor<EMAIL_ADDRESS>Cc: GABRIELLE RAYMOND
Subject: draft meeting minutes for your review

Hi David - Here are the draft minutes of our meeting. Please have industry review and get any comments back to me by next Wednesday, Nov. 25. Please use redline in Word.

Here are the other action items and tentative dates:

::       By-product industry will send CBI information to the EPA CBI office on their extended coking status and conditions (form provided by EPA, 11/17/15; requested response by 11/25/15);
::       Industry will provide summary economic slides for Dr. Jones to use with EPA management (requested response by 12/01/15);
::       Industry will submit itemized costs of testing, with contact name(s) and number(s) of testing contractor(s) (requested response by 12/11/15);
::       Industry will submit any previous test reports that would help EPA determine how many test runs and/or sample volume to require (e.g., U.S. Steel has quench tower data) requested responses by 12/11/15];
::       Industry will add their suggested additions and deletions as redline/strikeout to the draft ICR Enclosures 1 and 2 [EPA provided latest versions in Word 11/17/15; requested response by 12/18/15];

::       EPA provided the technical memorandum on EPA method reference detection limits (EPA provided via Stef Johnson, 11/16/15); and
::       EPA provided meeting attendee List (sent by email, 11/16/15)

Regards,
Donna Lee Jones, Ph.D.
Senior Technical Advisor, Metals Sector
U. S. Environmental Protection Agency
Office of Air Quality Planning and Standards Sector Policies and Programs Division / Metals & Inorganic Chemicals Group (D243-02) Research Triangle Park, NC  27711  Tele:<PHONE_NUMBER>  Fax<PHONE_NUMBER> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
"Reasonableness never fails to be appreciated."  - anon.

<< coke-EPA-meeting-11-16-15-draft-notes-dlj-11-20-15.docx >>


[Federal Register Volume 88, Number 171 (Wednesday, September 6, 2023)]
[Notices]
[Pages 61006-61007]
[FR Doc No: 2023-19142]

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

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2021-0038; Notice 2]

Porsche Cars North America, Inc., Grant of Petition for Decision
of Inconsequential Noncompliance

AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).

ACTION: Grant of petition.

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

SUMMARY: Porsche Cars North America, Inc., (``Porsche''), has
determined that certain model year (MY) 2017-2021 Porsche Panamera, MY
2019-2021 Porsche Cayenne, and MY 2020-2021 Porsche Taycan motor
vehicles do not fully comply with Federal Motor Vehicle Safety Standard
(FMVSS) No. 135, Light Vehicle Brake Systems. Porsche filed an original
noncompliance report dated March 10, 2021. Subsequently, Porsche
petitioned NHTSA on April 1, 2021, for a decision that the subject
noncompliance is inconsequential as it relates to motor vehicle safety.
This notice announces the grant of Porsche's petition.

FOR FURTHER INFORMATION CONTACT: Vince Williams, General Engineer,
NHTSA, Office of Vehicle Safety Compliance,<PHONE_NUMBER>,
[email protected].

SUPPLEMENTARY INFORMATION:

I. Overview

    Porsche has determined that certain MY 2017-2021 Porsche Panamera,
MY 2019-2021 Porsche Cayenne, and MY 2020-2021 Porsche Taycan motor
vehicles do not fully comply with the requirements of paragraphs
S5.5.5(a) and S5.5.5(d)(5) of FMVSS No. 135, Light Vehicle Brake
Systems (49 CFR 571.135). Porsche filed a noncompliance report dated
March 10, 2021, pursuant to 49 CFR part 573, Defect and Noncompliance
Responsibility and Reports. Porsche subsequently petitioned NHTSA on
April 1, 2021, for an exemption from the notification and remedy
requirements of 49 U.S.C. Chapter 301 on the basis that this
noncompliance is inconsequential as it relates to motor vehicle safety,
pursuant to 49 U.S.C. 30118(d) and 30120(h) and 49 CFR part 556,
Exemption for Inconsequential Defect or Noncompliance.
    Notice of receipt of Porsche's petition was published with a 30-day
public comment period, on August 16, 2021, in the Federal Register (86
FR 45817). No comments were received. To view the petition and all
supporting documents log onto the Federal Docket Management System
(FDMS) website at https://www.regulations.gov/. Then follow the online
search instructions to locate docket number ``NHTSA-2021-0038.''

II. Vehicles Involved

    Approximately 80,666 of the following MY 2017-2021 Porsche motor
vehicles manufactured between October 23, 2016, and February 9, 2021,
are potentially involved:

 MY 2017-2021 Panamera 4
 MY 2017-2021 Panamera
 MY 2017-2021 Panamera 4 S
 MY 2017-2020 Panamera Turbo
 MY 2017-2020 Panamera 4 S Executive
 MY 2017-2020 Panamera Turbo Executive
 MY 2018-2021 Panamera 4 Hybrid
 MY 2018-2020 Panamera Turbo S Hybrid
 MY 2018-2021 Panamera 4 Executive
 MY 2018-2020 Panamera 4 Hybrid Executive
 MY 2018-2020 Panamera Turbo S Hybrid Executive
 MY 2018-2020 Panamera 4 Sport Turismo
 MY 2018-2020 Panamera 4 S Sport Turismo
 MY 2018-2020 Panamera 4 Hybrid Sport Turismo
 MY 2018-2020 Panamera Turbo Sport Turismo
 MY 2018-2020 Panamera Turbo S Hybrid Sport Turismo
 MY 2019-2021 Panamera GTS
 MY 2020 Panamera GTS Sport Turismo
 MY 2019-2021 Cayenne
 MY 2019-2021 Cayenne S
 MY 2019-2021 Cayenne Hybrid
 MY 2019-2021 Cayenne Turbo
 MY 2020 Panamera 10 Year Special Model
 MY 2020 Panamera 4 10 Year Special Model
 MY 2020-2021 Taycan 4S
 MY 2020 Taycan Top S
 MY 2020 Taycan Top
 MY 2020 Panamera 4 Hybrid 10 Year Special Model
 MY 2020 Cayenne Turbo S Hybrid
 MY 2020-2021 Cayenne Coupe
 MY 2020-2021 Cayenne S Coupe
 MY 2020-2021 Cayenne Hybrid Coupe
 MY 2020-2021 Cayenne Turbo Coupe
 MY 2020 Cayenne Turbo S Hybrid Coupe
 MY 2021 Taycan
 MY 2021 Taycan Turbo S
 MY 2021 Taycan Turbo
 MY 2021 Panamera Turbo S
 MY 2021 Panamera 4S Hybrid
 MY 2021 Cayenne GTS
 MY 2021 Cayenne GTS Coupe

III. Noncompliance

    Porsche explains that the noncompliance is that the subject
vehicles are equipped with brake wear indicators that do not meet the
minimum lettering height requirements, as specified in paragraph
S5.5.5(d)(5) of FMVSS No. 135. Specifically, the lettering height for
the brake wear indicators ranges in height from 1.7 mm to 2.2 mm, when
the required minimum height is 3.2 mm.

IV. Rule Requirements

    Paragraphs S5.5.5(a) and S5.5.5(d)(5) of FMVSS No. 135 include the
requirements relevant to this petition. Each visual indicator shall
display a word or words in accordance with the requirements of FMVSS
No. 101 (49 CFR 571.101) and FMVSS No. 135, which shall be legible to
the driver under all daytime and nighttime conditions when activated.
Unless otherwise specified, the words shall have letters not less than
3.2 mm (\1/8\ inch) high and the letters and background shall be of
contrasting colors, one of which is red. Words or symbols in addition
to those required by FMVSS No. 101 and FMVSS No. 135 may be provided
for purposes of clarity. If a separate indicator is provided to
indicate brake lining wear-out as specified in S5.5.1(d), the words
``Brake Wear'' shall be used.

V. Summary of Porsche's Petition

    The following views and arguments presented in this section, ``V.
Summary of Porsche's Petition,'' are the views and arguments provided
by Porsche and do not reflect the views of the Agency.

Porsche describes the subject noncompliance and contends that the
noncompliance is inconsequential as it relates to motor vehicle safety.
    Porsche believes that the subject noncompliance is inconsequential
to vehicle safety. Porsche explains that, in addition to the required
brake wear indicator, the affected vehicles have a multi-functional
display that provides brake wear information and is readily visible to
the driver. Porsche states that the brake wear message can be confirmed
and then suppressed at the next ignition cycle, however, the operator
would need to read and understand the message in order to do so.
Porsche states that the brake wear indicator text is red, which is
compliant and a contrasting color to the background of the text.
Porsche believes that along with the color, the position of the text
makes the brake wear indicator symbol conspicuous to the driver. The
symbol is located adjacent to the fuel, temperature, and other vehicle
data displays. Furthermore, Porsche states that the brake wear
detection is functional and not affected by the noncompliant size of
the text. Porsche adds that each letter of the text is capitalized,
making it more easily seen and read by the driver due to the uniform
height.
    Porsche states that owners of the subject vehicles would understand
the symbol despite the noncompliant text size because the owner's
manual provided with the vehicle contains information about the brake
wear warning symbol. Porsche notes that the subject noncompliance has
been corrected in production vehicles.
    Porsche contends that NHTSA has granted the prior petitions for
similar noncompliances.\1\ Furthermore, Porsche says that NHTSA has
stated in previous determinations that it generally finds labeling
noncompliances like the subject noncompliance to be ``more appropriate
for a determination of inconsequentiality.'' \2\
---------------------------------------------------------------------------

    \1\ See 81 FR 92964 (Dec. 20, 2016); see also 67 FR 72026 (Dec.
3, 2002).
    \2\ See, Porsche Cars North America, Inc., Grant of Petition for
Decision of Inconsequential Noncompliance, 85 FR 62365, 62366 (Oct.
2, 2020).
---------------------------------------------------------------------------

    Porsche concludes that the subject noncompliance is inconsequential
as it relates to motor vehicle safety and that its petition to be
exempted from providing notification of the noncompliance, as required
by 49 U.S.C. 30118, and a remedy for the noncompliance, as required by
49 U.S.C. 30120, should be granted.

VII. NHTSA's Analysis

    In determining inconsequentiality of a noncompliance, NHTSA focuses
on the safety risk to individuals who experience the type of event
against which a recall would otherwise protect.\3\ In general, NHTSA
does not consider the absence of complaints or injuries when
determining if a noncompliance is inconsequential to safety. The
absence of complaints does not mean vehicle occupants have not
experienced a safety issue, nor does it mean that there will not be
safety issues in the future.\4\
---------------------------------------------------------------------------

    \3\ See Gen. Motors, LLC; Grant of Petition for Decision of
Inconsequential Noncompliance, 78 FR 35355 (June 12, 2013) (finding
noncompliance had no effect on occupant safety because it had no
effect on the proper operation of the occupant classification system
and the correct deployment of an air bag); Osram Sylvania Prods.
Inc.; Grant of Petition for Decision of Inconsequential
Noncompliance, 78 FR 46000 (July 30, 2013) (finding occupant using
noncompliant light source would not be exposed to significantly
greater risk than occupant using similar compliant light source).
    \4\ See Morgan 3 Wheeler Limited; Denial of Petition for
Decision of Inconsequential Noncompliance, 81 FR 21663, 21666 (Apr.
12, 2016); see also United States v. Gen. Motors Corp., 565 F.2d
754, 759 (D.C. Cir. 1977) (finding defect poses an unreasonable risk
when it ``results in hazards as potentially dangerous as sudden
engine fire, and where there is no dispute that at least some such
hazards, in this case fires, can definitely be expected to occur in
the future'').
---------------------------------------------------------------------------

    The Agency concurs with Porsche that this noncompliance will not
have an adverse effect on vehicle safety. Despite the letter height of
the brake wear indicators being smaller than the 3.2 mm requirement,
the affected vehicles include a multi-functional display which provides
supplementary brake wear information that is located within the
driver's direct field of vision, immediately adjacent to the fuel,
temperature, other critical vehicle data displays. Although the
additional brake warnings can be suppressed by the vehicle operator,
the information is presented at every new ignition cycle and informs
the driver of the need to change the brake pads while also recommending
if continued driving is possible/advised. For as long as the brake
warnings exist, the driver will be required to make a deliberate action
after every new key cycle in order to suppress the additional brake
warning messages. Finally, the additional brake warning symbols are
accurately depicted and displayed in the correct colors, consistent
with Table 1 of FMVSS No. 101, minimizing any confusion about the
meaning of the indicators. Due to the aforementioned factors, the
Agency concurs with Porsche that the subject noncompliance will have an
adverse effect on vehicle safety and therefore recommends that this
petition be granted.

VII. NHTSA's Decision

    In consideration of the foregoing, NHTSA finds that Porsche has met
its burden of persuasion that the subject FMVSS No. 135 noncompliance
in the affected vehicles is inconsequential to motor vehicle safety.
Accordingly, Porsche's petition is hereby granted, and Porsche is
consequently exempted from the obligation of providing notification of,
and a free remedy for, that noncompliance under 49 U.S.C. 30118 and
30120.
    NHTSA notes that the statutory provisions (49 U.S.C. 30118(d) and
30120(h)) that permit manufacturers to file petitions for a
determination of inconsequentiality allow NHTSA to exempt manufacturers
only from the duties found in sections 30118 and 30120, respectively,
to notify owners, purchasers, and dealers of a defect or noncompliance
and to remedy the defect or noncompliance. Therefore, this decision
only applies to the subject vehicles that Porsche no longer controlled
at the time it determined that the noncompliance existed. However, the
granting of this petition does not relieve vehicle distributors and
dealers of the prohibitions on the sale, offer for sale, or
introduction or delivery for introduction into interstate commerce of
the noncompliant vehicles under their control after Porsche notified
them that the subject noncompliance existed.

(Authority: 49 U.S.C. 30118, 30120: delegations of authority at 49
CFR 1.95 and 501.8)

Otto G. Matheke, III,
Director, Office of Vehicle Safety Compliance.
[FR Doc. 2023-19142 Filed 9-5-23; 8:45 am]
BILLING CODE 4910-59-P