[Federal Register Volume 76, Number 127 (Friday, July 1, 2011)]
[Notices]
[Pages 38944-38959]
[FR Doc No: 2011-16727]

Vol. 76

Friday,

No. 127

July 1, 2011

Part VIII

Department of Transportation

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Notice of Order Soliciting Community Proposals; Notice

Federal Register / Vol. 76, No. 127 / Friday, July 1, 2011 /
Notices

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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[Docket No. DOT-OST 2011-0119]

Notice of Order Soliciting Community Proposals

AGENCY: Department of Transportation, Office of the Secretary.

ACTION: Notice of Order Soliciting Community Proposals (Order 2011-7-
1).

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SUMMARY: The Department of Transportation is soliciting proposals from
communities or consortia of communities interested in receiving a grant
under the Small Community Air Service Development Program. The full
text of the Department's order is attached to this document. There are
two mandatory requirements for filing of applications, both of which
must be completed for a community's application to be deemed timely and
considered by the Department. The first requirement is the submission
of the community's proposal, as described below; the second requirement
is the filing of SF424 through http://www.grants.gov.

DATES: Grant Proposals as well as the SF424 should be submitted no
later than August 2, 2011.

ADDRESSES: Interested parties can submit applications and the SF424
electronically through http://www.grants.gov.

FOR FURTHER INFORMATION CONTACT: Aloha Ley, Office of Aviation
Analysis, 1200 New Jersey Ave, SE., W86-310, Washington, DC 20590,
(202) 366-2347.

SUPPLEMENTARY INFORMATION:

Overview

    By this order, the Department invites proposals from communities
and/or consortia of communities interested in obtaining a Federal grant
under the Small Community Air Service Development Program (Small
Community Program and/or SCASDP) to address air service and airfare
problems in their communities. Proposals, including all required
information, must be submitted to http://www.grants.gov no later than 5
p.m., Eastern Daylight Time (EDT), on Tuesday, August 2, 2011.
Communities are reminded to register with Grants.gov early in the
application period since the mandatory Grants.gov registration process
can take up to three weeks to complete. Tutorials and other guidance
for completing the required registration and application procedures are
available at the ``Applicant Resources'' page of Grants.gov.\1\ If a
community is a registered user of Grants.gov, it is the community's
responsibility to verify that the Grants.gov account is valid and that
the AOR (Authorized Organization Representative) is current and
approved.
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    \1\ See http://www07.grants.gov/applicants/app_help_reso.jsp.
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Required Steps

     Determine eligibility (see Page 4);
     Register with http://www.grants.gov;
     Submit an Application for Federal Domestic Assistance
(SF424);
     Submit a cover sheet including all required information
(see Appendix B);
     Submit a completed ``Summary Information'' schedule (see
Appendix C);
     Submit a detailed proposal which meets all required
criteria (see Appendix D);
     Attach any letters of support to the proposal, which
should be addressed to Aloha Ley, Associate Director, Small Community
Program; and,
     Provide separate submission of confidential material, if
requested. (see Appendix E)
    An application will not be deemed complete and will be ineligible
for a grant award until and unless all required materials, including
SF424, have been submitted through http://www.grants.gov by the 5 p.m.
EDT August 2, 2011, deadline.
    This order is organized into the following sections:

I. Background
II. Eligibility Information
III. Types of Projects
IV. Application Review Information
V. Award Administration Information
VI. Appendix A--49 U.S.C. Sec.  41743
VII. Appendix B--Cover Sheet Contents
VIII. Appendix C--Summary Information
IX. Appendix D--Application Checklist
X. Appendix E--Confidential Commercial Information

I. Background

    The Small Community Program was established under the Wendell H.
Ford Aviation Investment and Reform Act for the 21st Century (AIR-21),
Pubic Law 106-181, and reauthorized under the Vision 100-Century of
Aviation Reauthorization Act, Public Law 108-176 (Vision 100). The
program is designed to provide financial assistance to small
communities to help them enhance their air service. The Department
provides this assistance in the form of financial grants that are
disbursed on a reimbursable basis.\2\
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    \2\ For detailed background on the Small Community Program, see
our Web site at: http://ostpxweb.dot.gov/aviation/X-50%20Role_files/smallcommunity.htm.
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    Authorized grant projects may include activities that extend over a
multi-year period under a single grant award; however, because there is
a priority established by statute for communities and consortia that
show that they can use the assistance ``in a timely fashion,''
applicants are advised to consider that criterion in developing their
proposals.

Current funding and limitations

    The Small Community Program is authorized to receive appropriations
under 49 U.S.C. 41743(e)(2), as amended. Appropriations are provided
for the program pursuant to Section 1104 of the FY 2011 Full-Year
Continuing Appropriations Act (Pub. L. 112-10 (extending the FY 2010
Consolidated Appropriations Act (Pub. L. 111-117)). The Department has
up to $15 million available for FY 2011 grant awards to carry out the
Small Community Program.
    The program is limited to a maximum of 40 grant awards, with a
maximum of four grants per State, in each year the program is funded.
There are no limits on the amounts of individual awards, and the
amounts awarded will vary depending upon the features and merits of the
proposals selected. In past years, the Department's individual grant
sizes have ranged from $20,000 to nearly $1.6 million.

II. Eligibility Information

Registration With Grants.Gov

    Communities not previously registered are encouraged to register
with http://www.grants.gov early during the application period because
the registration and SF424 application process required by http://www.grants.gov can take up to three weeks to complete. A community may
file its proposal anytime after the initial registration process has
been completed on http://www.grants.gov as long as the entire
application is filed by August 2, 2011.
    Communities are encouraged to contact the Grants.gov help desk for
any technical assistance in filing their applications. The Grants.gov
``Applicant Resources'' page (http://www07.grants.gov/applicants/app_help_reso.jsp) provides instructions and guidance on completing the
registration and application processes. Further, grant proposals must
be submitted as an attachment to the SF424.

Eligibility Requirements

    When selecting applicants to participate in the Small Community

Program, the Department is statutorily required to apply the following
eligibility criteria: \3\
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    \3\ 49 U.S.C. 41743(c).
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    1. As of calendar year 1997, the airport serving the community was
not larger than a small hub airport, and it has insufficient air
carrier service or unreasonably high air fares,
    2. The airport serving the community presents characteristics, such
as geographic diversity or unique circumstances that demonstrate the
need for, and feasibility of, grant assistance from the Small Community
Program;
    3. An applicant may not receive an additional grant to support the
same project from a previous grant;
    4. An applicant may not receive an additional grant, prior to the
completion of its previous grant;
    5. No more than 4 communities or consortia of communities, or a
combination thereof, from the same State may be selected to participate
in the program in any fiscal year; and
    6. No more than 40 communities or consortia of communities, or a
combination thereof, may be selected to participate in the program in
each year for which the funds are appropriated.
    In assessing whether a previous grantee's current proposal
represents a new project, we compare the goals and objectives of the
earlier grant, including the key components of the means by which those
goals and objectives were to be achieved, to the current proposal. For
example, if a community received an earlier grant to support a revenue
guarantee for service to a particular destination or direction, a new
application for another revenue guarantee for the same service would be
disqualified under Section 41743(c), even if the revenue guarantee were
structured differently or the type of carrier were different. However,
we do not read Section 41743(c) to disqualify a new application for
service to a new destination or direction using a revenue guarantee, or
for general marketing of the airport and the various services it
offers. We recognize that not all revenue guarantees, marketing
agreements, equipment purchases, etc. are of the same nature, and that
if a subsequent proposal incorporates different goals or significantly
different components, it may be sufficiently different to constitute a
new project under Section 41743(c).
    The Department is authorized to award grants to communities that
seek to provide assistance to:
     An air carrier to subsidize service to and from an
underserved airport for a period not to exceed 3 years;
     An underserved airport to obtain service to and from the
underserved airport; and/or
     An underserved airport to implement such other measures as
the Secretary, in consultation with such airport, considers appropriate
to improve air service both in terms of the cost of such service to
consumers and the availability of such service, including improving air
service through marketing and promotion of air service and enhanced
utilization of airport facilities.\4\
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    \4\ 49 U.S.C. 41743(d).
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Priority Considerations

    Priority factors considered. The law directs the Department to give
priority consideration to those communities or consortia where: \5\
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    \5\ 49 U.S.C. 41743(c)(5).
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     Air fares are higher than the national average air fares
for all communities;
     The community or consortium will provide a portion of the
cost of the activity from local sources other than airport revenue
sources;
     The community or consortium has established or will
establish a public-private partnership to facilitate air carrier
service to the public;
     The assistance will provide material benefits to a broad
segment of the traveling public, including business, educational
institutions, and other enterprises, whose access to the national air
transportation system is limited; and
     The assistance will be used in a timely manner.
    Additional factors considered. Applications will be evaluated
against the priority considerations listed above. Our experience has
been that more applications are received than can be funded under the
Small Community Program. Consequently, consistent with the criteria
stated above, the selection process will take into consideration such
additional factors as:
     The geographic location of each applicant, including the
community's proximity to larger centers of air service and low-fare
service alternatives;
     The proposed Federal grant amount requested compared with
the local share offered;
     Whether the applicant community has previously received a
grant award under this program and, if so, whether its application
includes an explanation of how the community's proposed project differs
from its previously funded project;
     The community's demonstrated commitment to and
participation in the proposed grant project;
     The extent to which the applicant's proposed solution(s)
to solving the problem(s) is new or innovative;
     The population and business activity as well as the
relative size of each applicant community;
     The community's existing level of air service and whether
that service has been increasing or decreasing;
     Whether the community's proposal, if successfully
implemented, could serve as a working model for other communities;
     The grant amount requested compared with total funds
available for all communities;
     Whether the community has a viable plan to use the funds
in a timely manner;
     The uniqueness of an applicant's claimed problems and
whether the proposed project clearly addresses the applicant's claimed
problems; and
     Whether the community's proximity to an existing or prior
grant recipient could adversely affect either its proposal or the
project undertaken by the other recipient.
    Full community participation is a key goal of this program as
demonstrated by the statute's focus on local contributions and active
participation in the project. Therefore, applications that demonstrate
broad community support will be more attractive. For example,
communities providing proportionately higher levels of cash
contributions from other than airport revenues will have more
attractive proposals. Communities that provide multiple levels of
contributions (state, local, airport, cash and in-kind contributions)
also will have more attractive proposals. Similarly, communities that
demonstrate participation in the development and execution of the
proposed air service project will enhance the attractiveness of their
proposals. In this regard, the Department welcomes letters of intent
from airlines on behalf of community proposals that are specifically
intended to enlist new or expanded air carrier presence. Such letters
will be accorded greater weight when authorized by airline planning
departments.
    Proposals that offer innovative solutions to the transportation
issues facing the community will be more attractive. Small communities
have faced many problems retaining and improving their air services and
in coping with air fares that are higher than typical for larger
communities. Therefore, proposals that offer new, creative approaches
to addressing these problems, to the extent that they are

reasonable, will have their attractiveness enhanced. Proposals that
provide a well-defined plan, a reasonable timetable for use of the
grant funds, and a plan for continuation and/or monitoring of the
project after the grant expires also will have greater attractiveness.

Additional Criteria and Grant Limitations

    Communities without existing air service. Communities that do not
currently have commercial air service are also eligible, but air
service providers must have met or be able to meet in a reasonable
period all Departmental requirements for air service certification,
including safety and economic authorities.
    Essential Air Service communities. Small communities that meet the
basic criteria and currently receive subsidized air service under the
Essential Air Service (EAS) program are eligible to apply for funds
under the Small Community Program. However, grant awards to EAS-
subsidized communities are limited to marketing or promotion projects
that support existing or newly subsidized EAS. Grant funds will not be
authorized for EAS-subsidized communities to support any new competing
air service. Furthermore, no funds will be authorized to support
additional flights by EAS carriers or changes to those carriers'
existing schedules. These restrictions are necessary to avoid conflicts
with the EAS program.
    Consortium applications. The statute permits individual communities
and consortia of communities to apply for grant awards under this
program. In some instances in the past, several communities in a State
have filed a single application as a ``consortium,'' but in effect the
application was a collection of individual community requests involving
different projects. This is not a consortium. An application from a
consortium of communities must be one that seeks to facilitate the
efforts of the communities working together toward a joint grant
project. In other words, the application must set forth one grant
project, with one joint objective, and establish one entity to ensure
that the joint objective is accomplished according to the terms of a
grant agreement. For example, several communities surrounding an
airport may apply together to improve air services at that airport,
with a joint objective of securing new or additional service to that
airport. Or, surrounding airports may apply together in support of a
regional plan to lower fares or reverse a decline in traffic.
    Prior grant recipients. Communities or members of a consortia that
were awarded grants in previous years and want to apply for a grant
this year should be aware that they are precluded from seeking new
funds for projects for which they have already received an award under
the Small Community Program.
    In its application, a community that is a previous grant recipient
should compare and contrast its proposed project with its previously
funded one(s) to demonstrate why its latest proposal represents a new
project. Communities should also note that in prior years of the
program, interest in participation exceeded the funds available in any
one year. For this reason, the fact that a community has already
received one or more grants will be a consideration when comparing its
new proposal with those of other applicant communities.
    Concurrent applications. A community or member of a consortium may
participate in the program a subsequent time only after its
participation in a prior grant has terminated. 49 U.S.C. 41743(c)(4).
Simply stated, a community can have only one Small Community Program
grant at any time. If a grant applicant is applying for a subsequent
grant and its current grant has not yet expired, it must notify the
Department of its intent to terminate the current grant prior to
entering into the new grant. In addition, for grant applicants that are
members of a consortia grant, permission must be granted from both the
grant sponsor and the Department to withdraw from the current grant
prior to being eligible to receive a subsequent grant.
    Multiple Applications. The Department requests that communities
file only one application for a grant. In the past, some communities
have filed both individual applications and applications as part of a
consortium. In many cases these applications have involved the same
project at the same or different funding levels. We will not consider
the stand-alone application if a community is also submitting a largely
identical request as part of a consortium. To the extent that a
community files separately and as part of a consortium for
complementary projects--for example, one for a revenue guarantee and
one for marketing--we will consider such proposals. However,
communities should be aware that they can receive only one grant,
either the stand-alone grant or as a member of a consortium, because no
community can have concurrent grants.
    Market analysis and a complementary marketing commitment. A
thorough understanding of the target market is essential for the
ultimate success of new or expanded air service. Likewise, the chances
that such a service will become self-sustaining are enhanced when its
implementation is supported by a well-designed marketing campaign. For
these reasons, communities requesting funds for a revenue guarantee/
subsidy/financial incentive are encouraged to include in their
proposals an in-depth analysis evidencing close familiarity with their
target markets. Such communities also are encouraged to designate in
their proposals a portion of the project funds (Federal, local or in-
kind) for the development and implementation of a marketing plan in
support of the service sought.
    Subsidies for a carrier to compete against an incumbent. The
Department is reluctant to subsidize one carrier but not others in a
competitive market. For this reason, communities that propose to use
the grant funds for service in a city-pair market that is already
served by a carrier must explain in detail why the existing service is
insufficient or unsatisfactory, or provide other compelling information
to support such proposals. This information is necessary for the
Department to consider the competitive implications of giving financial
or other tangible incentives for one carrier that the other carrier is
not receiving.
    Cost Sharing and Local Contributions Are Important Factors. The
statute does not require communities to contribute toward a grant
project, but those communities that contribute from local sources other
than airport revenues are accorded priority consideration. One core
objective of the Small Community Program is to promote community
involvement in addressing air service/air fare issues through public/
private partnerships. As a financial stakeholder in the process, the
community gains greater control over the type, quality, and success of
the air service initiatives that will best meet its needs, and
demonstrates a greater commitment towards achieving the stated goals.
The Department has historically received many more applications than
can be accommodated and nearly all of those applications have proposed
a community financial contribution to the project. Thus, proposals that
propose a community financial contribution will be given priority
consideration.
    Applicant communities should be aware that, if awarded a grant, the
Department will not reimburse the community for pre-award expenses such
as the cost of preparing the grant application or for any expenses
incurred prior to the community executing a

grant agreement with the Department. In addition, ten percent of the
grant funds will be withheld until the Department receives the final
report on the grant project. See ``Award Administration Information,''
below.
    Types of contributions. Contributions should represent a new
financial commitment or new financial resources devoted to attracting
new or improved service, or addressing specific high-fare or other
service issues, such as improving patronage of existing service at the
airport. Contributions from already-existing programs or projects
(e.g., designating a portion of an airport's existing annual marketing
budget to the project) are considered less favorably than contributions
for new and innovative programs or projects. For those communities that
propose to contribute to the grant project, that contribution can be in
the following forms:
    Cash from non-airport revenues. A cash contribution can include
funds from the State, the County or the local government, and/or from
local businesses, or other private organizations in the community.
Contributions that are comprised of intangible non-cash items, such as
the ``value'' of donated advertising, are considered ``in-kind''
contributions (see further discussion below).
    Cash from airport revenues. This includes contributions from funds
generated by airport operations. Airport revenues may not be used for
revenue guarantees to airlines.\6\ Community proposals that include
local contributions based on airport revenues do not receive priority
consideration for selection.
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    \6\ 49 U.S.C. 47107, 47133.
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    In-kind contributions from the airport. This can include such items
as waivers of landing fees, terminal rents, fuel fees, and/or vehicle
parking fees.
    In-kind contributions from the community. This can include such
items as donated advertising from media outlets, catering services for
inaugural events, or in-kind trading, such as advertising in exchange
for free air travel. Travel banks and travel commitments/pledges are
considered to be in-kind contributions,\7\ as are reduced fares offered
by airlines.
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    \7\ A travel ``bank'' involves the actual deposit of funds from
participating parties (e.g., businesses, individuals) into a
designated bank account for the purpose of purchasing air travel on
the selected airline, with defined procedures for the subsequent use
or withdrawal of those funds under an agreement with the airline.
Often, however, what communities refer to as a travel ``bank'' in
reality involves travel ``pledges'' from businesses in the community
without any collection of funds or formal procedures for use of the
funds. As with other types of in-kind contributions, the Department
views travel banks and pledges included in grant proposals as an
indicator of local community support.
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    Cash vs. in-kind contributions. Communities that include local
contributions made in cash are given priority consideration for
selection.
    Financial commitments must be fulfilled. Applicant communities
should note that, as part of the grant agreement between the Department
and the community, the community has legally committed itself to
fulfilling its proposed financial contribution to the project and that
its failure to meet this commitment could lead the Department to
terminate the grant. Community participation in all aspects of the
proposal, including the financial aspects, is critical to the success
of the authorized project initiative. Furthermore, communities cannot
propose a certain level of cash contribution from non-airport sources,
and subsequent to being awarded a grant, seek to substitute or replace
that contribution with either ``in-kind'' contributions or
contributions from airport revenues, or both. Given the statute's
priority for contributions from non-airport sources and the competitive
nature of the selection process, a community's grant award could be
reduced or terminated altogether if it is unable to replace the
committed funds from non-airport revenue sources.
    Payment Reimbursement Receipts: The Small Community Program is a
reimbursable program; therefore, communities are required to make
expenditures in full for project implementation under the program prior
to seeking reimbursement from the Department. Reimbursement rates are
calculated as a percentage of the total Federal funds requested divided
by the Federal funds plus the local cash contribution (which is not
refundable). Payments/expenditures in forms other than cash (e.g. in-
kind) are not reimbursable. For example, if a community requests
$500,000 in Federal funding and provides $100,000 in local contribution
the reimbursement rate would be 83.33 percent: ((500,000)/(500,000 +
100,000)) = 83.33.

III. Types of Projects

    The statute is very general about the types of projects that can be
authorized so that communities are provided flexibility in addressing
their particular air service and airfare issues. Because circumstances
may differ among communities, applicants have some latitude in
identifying their own objectives and developing strategies for
accomplishing them.
    The major objective of the Small Community Program is to help
communities secure enhancements that will be responsive to their air
transportation/air fare needs on a long-term basis after the financial
support of the grant has ended. There are many ways that a community
might enhance its current air service or attract new service, such as:
     Promoting awareness among residents of locally available
service;
     Attracting a new carrier through revenue guarantees or
operating cost offsets;
     Attracting new forms of service, such as on-demand air
taxi service;
     Offering an incumbent carrier financial or other
incentives to lower its fares, increase its frequencies, add new
routes, or deploy more suitable aircraft, including upgrading its
equipment from turboprops to regional jets;
     Combining traffic support from surrounding communities
with regionalized service through one airport; or
     Providing local ground transportation service to improve
access to air service to the community and the surrounding area.\8\
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    \8\ These examples are illustrative only and are not meant as a
list of projects favored by the Department. Interested communities
can view actual proposals submitted in prior years. Go to http://www.regulations.gov and, under ``Search,'' enter one of the
following depending on the desired filing year: DOT-OST-2002-11590,
DOT-OST-2003-15065, DOT-OST-2004-17343, DOT-OST-2005-20127, DOT-OST-
2006-23671; DOT-OST-2007-27370, DOT-OST-2008-0100, DOT-OST-2009-
0149, and DOT-OST-2010-0124.
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    The SCASDP program has already supported numerous standard revenue
guarantee and marketing projects; there is an increased prospect for
favorable consideration if the proposal offers distinctive or creative
aspects or features that have potential for establishing new and better
practices. At the same time, proposals must not be general, vague, or
unsupported. The more highly defined and focused the proposal, the more
competitive it will be, particularly in light of the priority
consideration afforded by the statute to those applicants that can use
the funds in a timely manner. 49 U.S.C. 41743(c)(5)(E).

Additional Information

    There is no set format that must be used in submitting grant
proposals. At a minimum, however, a proposal must provide the following
information:
     A description of the community's existing air service,
including the carrier(s) providing service, service

frequency, nonstop destinations offered, fares, and equipment types.
     A synopsis of the community's historical service,
including destinations, traffic levels, service providers, and any
extenuating factors that might have affected traffic in the past or
that can be expected to influence service needs in the near to
intermediate term.
     A description of the community's air service development
efforts over the past five years and the results of those efforts. The
community should describe past air service development efforts and
their results in its grant proposal. The description should include
marketing and promotional efforts of airport services as well as
efforts to recruit additional or improved air service and airfare
initiatives.
     A description of the community's air service needs or
deficiencies. A community should submit any information about (1) major
origin/destination markets that are not now served or are not served
adequately, and (2) fare levels that the community deems relevant to
consideration of its grant request, including market analyses or
studies demonstrating an understanding of local air service needs.
     A strategic plan for meeting those needs under the Small
Community Program, including the community's specific project goal(s)
and detailed plan for attaining such goal(s). Plans should:
    [cir] Clearly identify the target audience of each component of the
proposed transportation initiative, including all advertising and
promotional efforts.
    [cir] Set forth a realistic timetable for implementation of the
grant project including a timeline chart. Because the statute includes
timely use of the grant funds as a priority consideration, a community
must have a well-developed project plan and a detailed timetable for
implementing that plan. In establishing the timetable, however, the
community should be realistic about its ability to meet its project
deadlines.\9\
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    \9\ The projected timetable will be an integral part of the
grant agreements between the selected communities and the
Department. Therefore, there is no advantage to a community in
proposing an aggressive timetable that cannot be met, and there may
be disadvantages if the community finds that it cannot meet its
timetable or if its timeline is deemed unrealistic. Communities
should carefully consider all factors affecting implementation of
their projects and develop realistic timeframes for achieving those
objectives.
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    [cir] For proposals involving new or improved service, explain how
the service will become self-sufficient. Under the statute, a community
cannot seek grant funding in subsequent years in support of the same
project. Moreover, in developing a proposal, it is important that a
community seriously consider the scale of its proposed project and the
timetable for achieving the stated goals. To the extent that a proposed
project is dependent upon or relevant to the completion of other
Federally funded capital improvement projects, the community should
provide a description of, and the construction time-line for, those
projects, keeping in mind the statutory requirement to use Small
Community Program funding in a timely manner.
    [cir] Fully and clearly outline the goals and objectives of the
project; e.g., ``to broaden the awareness by residents in the Tri-
County area of the various services provided by passenger carriers at
the Tri-County airport,'' or ``to obtain new and affordable service to
a hub airport in a direction where there is no such service.'' When an
application is selected, these goals and objectives will be
incorporated into the grant agreement and define its basic project
scope. Once an agreement is signed, if circumstances change and an
amendment is sought to allow for different activities or a different
approach, the Department will look to whether the change being sought
is consistent with those fundamental project goals and objectives.
Proposed changes that would alter those fundamental goals and
objectives cannot be authorized, because doing so would undermine the
competitive nature of the selection process. Applicants are also
encouraged to include in their proposals alternative or back-up
strategies for achieving their desired goals and objectives. By
incorporating such information into the grant agreement, desired
changes may be permitted.
    [cir] Include metrics by which progress towards goals will be
measured, the source(s) of those data, and how the data will be
analyzed.
    [cir] If the applicant received a Small Community Program grant in
the past, explain how its proposed project differs from its earlier one
by comparing and contrasting project goals, objectives and methods of
achieving them.
     A description of any public-private partnership that will
participate in the project. Full community involvement is a key aspect
of the Small Community Program. The statute gives priority to those
communities that already have established, or will establish, a public-
private partnership to facilitate air service to the public. The
proposal should fully describe the public-private partnership that will
participate in the community's proposal and how the partnership will
actively participate in the implementation of the proposed project. In
addition, applicants should identify each member of the partnership,
the role that each will play, and the specific responsibilities of each
member in project implementation. If the application does not include
specific information on the partnership participation in the project,
the Department will not be able to evaluate how well a community has
met this consideration, and the applicant will not be deemed to have
met this priority consideration in the Department's evaluation of the
community's proposal.
     A detailed description of the funding necessary for
implementation of the community's project, including the Federal and
non-Federal contributions. Proposals should clearly identify the level
of Federal funding sought. They should also clearly identify the
community's cash contributions to the proposed project, ``in-kind''
contributions from the airport, and ``in-kind'' contributions from the
community. Cash contributions from airport revenues should be
identified separately from cash contributions from other community
sources. Similarly, cash contributions from the State and/or local
government should be separately identified and described.
     An explanation of how the community will ensure that its
own funding contribution is spent in the manner proposed.
     Descriptions of how the community will monitor the
progress of the grant project and identification of a list of critical
milestones to be met during the life of the grant, including the need
to modify or discontinue funding if the community cannot achieve such
milestones. This is an important component of the community's proposal
and serves to demonstrate the thoroughness of the community's planning
of the proposed grant project.
     A description of how the community plans to continue with
the project if it is not self-sustaining after the grant award expires.
A particular goal of the Small Community Program is to provide long-
term, self-sustaining improvements to air service for small
communities. A community cannot seek further grant funding in support
of the same project. 49 U.S.C. 41743(c)(4). It is possible that new or
improved service at a community will be well on its way to becoming a
self-sustaining service, but it may not have reached that goal before
the grant expires. Similarly, it is possible that extensive marketing
and promotional efforts may be in progress, but not have been completed
at the end of the grant period and will require

continued support.\10\ Therefore, in developing its proposal, the
community should carefully consider and describe in detail its plans
for providing any necessary continued financial support for the project
after the grant funding is no longer available. This aspect of the
application reflects the community's commitment to the grant project
and is an important component to the Department's consideration of the
community's proposal for selection for a grant award.
---------------------------------------------------------------------------

    \10\ Project implementation costs are reimbursable from grant
funds only for services or property delivered during the grant term.
---------------------------------------------------------------------------

     Designation of a legal sponsor responsible for
administering the program. The legal sponsor of the grant project must
be a government entity. If the applicant is a public-private
partnership, a public government member of the organization must be
identified as the community's sponsor to receive program
reimbursements. In this regard, communities can designate only a single
government entity as the legal sponsor, even if it is applying as a
consortium that consists of two or more local government entities.
Private organizations cannot be designated as the legal sponsor of a
grant under the Small Community Program.\11\
---------------------------------------------------------------------------

    \11\ The community has the responsibility to ensure that the
recipient of any funding has the legal authority under State and
local laws to carry out all aspects of the grant.
---------------------------------------------------------------------------

Air Service Development Zone Designation
    The statute authorizing the Small Community Program also provides
that the Department will designate one of the grant recipients as an
Air Service Development Zone. The purpose of the designation is to
provide communities interested in attracting business to the area
surrounding the airport and/or developing land-use options for the area
to work with the Department on means to achieve those goals. The
Department will assist the designated community in establishing
contacts with and obtaining advice and assistance from appropriate
government agencies, including the Department of Commerce as well as
other offices within the Department of Transportation, and in
identifying other pertinent resources that may aid the community in its
efforts to attract businesses and to formulate land-use options.
However, the community receiving the designation will be responsible
for developing, implementing, and managing activities related to the
air service development zone initiative. Only communities that are
interested in these objectives and have a plan to accomplish them
should compete for the available designation. There are no additional
funds associated with this designation, and applying for the
designation will provide no special benefit or preference to a
community in receiving a grant award under the Small Community Program.
    Grant applicants interested in selection for the Air Service
Development Zone designation must include in their applications a
separate section, titled, Support for Air Service Development Zone
Designation. That section should include:
    [cir] Detailed information regarding the property and facilities
available for development such as an existing airpark or land for such
an airpark;
    [cir] The other modes of transportation that would be available to
support additional economic development, such as rail, road, and/or
water access;
    [cir] Information concerning historic, existing, and any future
business activity in the area that would support further development;
    [cir] Demographic information concerning the community and its
environs relevant to the developmental efforts, including population,
employment, and per capita income data; and
    [cir] Any other information that the community believes is relevant
to its plans to enhance air service development.
    The community should provide as detailed a plan as possible,
including what goals it expects to achieve from the air service
development zone designation and the types of activities on which it
would like to work with the Department in achieving those goals. The
community should also indicate whether further local government
approvals are required in order to implement the proposed activities.

IV. Award Administration Information

    The grant awards will be made as promptly as possible so that
selected communities can complete the grant agreement process and
proceed to implement their plans. Given the competitive nature of the
grant process, the Department will not meet with grant applicants with
respect to their grant proposals.
    The Department will announce its grant selections via a selection
order, which will be served on each grant recipient, all other
applicants, and all parties served with this solicitation order. The
selection order will also be on the Department's Small Community
Program Web page.
    Grant agreement. Communities awarded grants are required to execute
a grant agreement with the Department before they begin to expend funds
under the grant award. Grant funds will be provided on a reimbursable
basis only, with reimbursements made only for expenses incurred and
billed during the period that the grant agreement is in effect and at
the appropriate percentage rate.\12\ Applicants should not assume they
have received a grant, nor should they obligate or expend local funds
prior to receiving and fully executing a grant agreement with the
Department. Expenditures made prior to the execution of a grant
agreement, including costs associated with preparation of the grant
application, will not be reimbursed. Moreover, there are numerous
assurances that grant recipients must sign and honor when Federal funds
are awarded. All communities receiving a grant under the Small
Community Program will be required to accept the responsibilities of
these assurances and to execute such the assurances when they execute
their grant agreements. Copies of the applicable assurances are
available for review on the Department's Web page at http://ostpxweb.dot.gov/aviation/X-50%20Role_files/smallcommunity.htm (click
on ``SCASDP Grant Assurances'').
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    \12\ The percentage is determined by: (SCASDP Grant Amount) /
(SCASDP Grant Amount + Local Cash Contribution + State Cash
Contribution, if applicable).
---------------------------------------------------------------------------

    Grantee reports. The grant agreement between the Department and
each selected community will require the submission of quarterly
reports on the progress the community has made during the previous
quarter in implementing its grant project. In addition, the grant
agreement will require the submission, on a quarterly or other time-
specific basis, of other materials relevant to the grant project, such
as copies of advertising and promotional material and copies of
contracts with consultants and service providers. In addition, each
community will be required to submit a final report on its project to
the Department, and 10 percent of the grant funds will not be
reimbursed to the community until such final report is received.
    Additional information on award administration for selected
communities will be provided in the grant agreement.
    Grant amendments. A grantee may wish to amend its agreement with
the Department in the event of a change in circumstances after the date
the agreement is executed. Typically, amendments involve an extension
to the time period for completing the grant or a change in the types of
activities authorized for reimbursement under the goals and objectives
(``project scope'') of

the grant agreement. Grantees are cautioned, however, that the
Department cannot authorize amendments that are incompatible with the
scope of the agreement. For example, a grant awarded solely for the
purpose of developing an airport marketing plan cannot be amended to
permit subsidization of an air carrier's startup costs, or a grant
awarded solely for the purpose of attracting low-fare service cannot be
amended to permit it to attract service from a legacy carrier, since
the latter, in each example, was never contemplated by the original
agreement.
    Applicants are advised to obtain firm assurances from air carriers
proposing to offer new air service if a grant is awarded. Many grants
have been awarded for the purpose of subsidizing new or additional air
service for a small community, with the goal of that service becoming
self-sustaining by the end of the subsidy period. In virtually all
cases, the community seeking the grant funds received expressions of
interest from one or more air carriers. In some instances, these
expressions of interest failed to materialize and the community was
left without any immediate prospects, at which time it asked for a
grant extension to allow more time to pursue other carriers. Because
the Department is charged by law to consider timely use of funds when
selecting grant recipients, the Department will grant an extension only
when the community can provide strong evidence of a firm commitment on
the part of an air carrier to deliver the desired service.
    To ensure understanding, grantees contemplating amendments to their
agreements are urged to discuss their situations with the Small
Community Program staff before requesting a formal amendment.
    This order is issued under authority delegated in 49 CFR 1.56a(f).
    Accordingly,
    1. Community proposals for funding under the Small Community Air
Service Development Program should be submitted via http://www.grants.gov as an attachment to the SF424 no later than August 2,
2011; and
    2. This order will be published in the Federal Register and also
will be served on the Conference of Mayors, the National League of
Cities, the National Governors Association, the National Association of
State Aviation Officials (NASAO), County Executives of America, the
American Association of Airport Executives (AAAE), and the Airports
Council International-North America (ACI), and posted on http://www.grants.gov.

    Issued in Washington, DC, on June 28, 2011.
Susan L. Kurland,
Assistant Secretary for Aviation and International Affairs.

    An electronic version of this document is available on the World
Wide Web at http://www.regulations.gov.

Small Community Air Service Development Program

United States Code Annotated
Title 49. Transportation
Subtitle VII. Aviation Programs
Part A. Air Commerce and Safety
Subpart II. Economic Regulation
Chapter 417. Operations of Carriers
Subchapter II. Small Community Air Service

[rtarr7] Sec.  41743. Airports not receiving sufficient service

    (a) Small community air service development program.--The
Secretary of Transportation shall establish a program that meets the
requirements of this section for improving air carrier service to
airports not receiving sufficient air carrier service.
    (b) Application required.--In order to participate in the
program established under subsection (a), a community or consortium
of communities shall submit an application to the Secretary in such
form, at such time, and containing such information as the Secretary
may require, including--
    (1) An assessment of the need of the community or consortium for
access, or improved access, to the national air transportation
system; and
    (2) An analysis of the application of the criteria in subsection
(c) to that community or consortium.
    (c) Criteria for participation.--In selecting communities, or
consortia of communities, for participation in the program
established under subsection (a), the Secretary shall apply the
following criteria:
    (1) Size.--For calendar year 1997, the airport serving the
community or consortium was not larger than a small hub airport,
and--
    (A) Had insufficient air carrier service; or
    (B) Had unreasonably high air fares.
    (2) Characteristics.--The airport presents characteristics, such
as geographic diversity or unique circumstances, that will
demonstrate the need for, and feasibility of, the program
established under subsection (a).
    (3) State limit.--Not more than 4 communities or consortia of
communities, or a combination thereof, from the same State may be
selected to participate in the program in any fiscal year.
    (4) Overall limit.--No more than 40 communities or consortia of
communities, or a combination thereof, may be selected to
participate in the program in each year for which funds are
appropriated for the program.
    No community, consortia of communities, nor combination thereof
may participate in the program in support of the same project more
than once, but any community, consortia of communities, or
combination thereof may apply, subsequent to such participation, to
participate in the program in support of a different project.
    (5) Priorities.--The Secretary shall give priority to
communities or consortia of communities where--
    (A) Air fares are higher than the average air fares for all
communities;
    (B) The community or consortium will provide a portion of the
cost of the activity to be assisted under the program from local
sources other than airport revenues;
    (C) The community or consortium has established, or will
establish, a public-private partnership to facilitate air carrier
service to the public;
    (D) The assistance will provide material benefits to a broad
segment of the traveling public, including business, educational
institutions, and other enterprises, whose access to the national
air transportation system is limited; and
    (E) The assistance will be used in a timely fashion.
    (d) Types of assistance.--The Secretary may use amounts made
available under this section--
    (1) To provide assistance to an air carrier to subsidize service
to and from an underserved airport for a period not to exceed 3
years;
    (2) To provide assistance to an underserved airport to obtain
service to and from the underserved airport; and
    (3) To provide assistance to an underserved airport to implement
such other measures as the Secretary, in consultation with such
airport, considers appropriate to improve air service both in terms
of the cost of such service to consumers and the availability of
such service, including improving air service through marketing and
promotion of air service and enhanced utilization of airport
facilities.
    (e) Authority to make agreements.--
    (1) In general.--The Secretary may make agreements to provide
assistance under this section.
    (2) Authorization of appropriations.--There is authorized to be
appropriated to the Secretary $20,000,000 for fiscal year 2001,
$27,500,000 for each of fiscal years 2002 and 2003, and $35,000,000
for each of fiscal years 2004 through 2008 to carry out this
section. Such sums shall remain available until expended.
    (f) Additional action.--Under the program established under
subsection (a), the Secretary shall work with air carriers providing
service to participating communities and major air carriers (as
defined in section 41716(a)(2)) serving large hub airports to
facilitate joint-fare arrangements consistent with normal industry
practice.
    (g) Designation of responsible official.--The Secretary shall
designate an employee of the Department of Transportation--
    (1) To function as a facilitator between small communities and
air carriers;
    (2) To carry out this section;
    (3) To ensure that the Bureau of Transportation Statistics
collects data on passenger information to assess the service needs
of small communities;
    (4) To work with and coordinate efforts with other Federal,
State, and local agencies

to increase the viability of service to small communities and the
creation of aviation development zones; and
    (5) To provide policy recommendations to the Secretary and
Congress that will ensure that small communities have access to
quality, affordable air transportation services.
    (h) Air Service Development Zone.--The Secretary shall designate
an airport in the program as an Air Service Development Zone and
work with the community or consortium on means to attract business
to the area surrounding the airport, to develop land use options for
the area, and provide data, working with the Department of Commerce
and other agencies.

Cover Page

    The cover page for all applications should bear the title
``Proposal Under the Small Community Air Service Development
Program, Docket DOT-OST-2011-0119'' and should include:
    (1) The name of the community or consortium of communities
applying for the grant;
    (2) The legal sponsor and its Dun and Bradstreet (D&B) Data
Universal Numbering System (DUNS) number, including + 4; Employee
Identification Number (EIN) or Tax ID; and,
    (3) The 2-digit Congressional district code applicable to the
sponsoring organization and, if a consortium, to each participating
community.
BILLING CODE 4910-9X-P

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BILLING CODE 4910-9X-C

Confidential Commercial Information

    Applicants will be able to provide certain confidential business
information relevant to their proposals on a confidential basis.
Under the Department's Freedom of Information Act regulations (49
CFR 7.17), such information is limited to commercial or financial
information that, if disclosed, would either likely cause
substantial harm to the competitive position of a business or
enterprise or make it more difficult for the Federal Government to
obtain similar information in the future.
    Applicants seeking confidential treatment of a portion of their
applications must segregate the confidential material in a sealed
envelope marked ``Confidential Submission of X (the applicant) in
Docket DOT-OST-2011-0119,'' and include with that material a request
in the form of a motion seeking confidential treatment of the
material under 14 CFR 302.12 (Rule 12) of the Department's
regulations. The applicant should submit an original and two copies
of its motion and an original and two copies of the confidential
material in the sealed envelope.
    The confidential material should not be included with the
original of the applicant's proposal that is submitted via http://www.grants.gov. The applicant's original submission, however, should
indicate clearly where the confidential material would have been
inserted. If an applicant invokes Rule 12, the confidential portion
of its filing will be treated as confidential pending a final
determination. All confidential material must be received by August
2, 2011, and delivered to the Office of Aviation Analysis, 8th
Floor, Room W86-310, 1200 New Jersey Ave., SE., Washington, DC
20590.
    A template for the confidential motion can be found at http://ostpxweb.dot.gov/aviation/X-50%20Role_files/smallcommunity.htm.

[FR Doc. 2011-16727 Filed 6-30-11; 8:45 am]
BILLING CODE 4910-9X-C


[Federal Register Volume 81, Number 160 (Thursday, August 18, 2016)]
[Notices]
[Pages 55251-55254]
[FR Doc No: 2016-19687]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78565; File No. SR-BOX-2016-40]

Self-Regulatory Organizations; BOX Options Exchange LLC; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend Its Fee Schedule To Adopt a New Fee in Section V (Technology
Fees) of the BOX Fee Schedule

August 12, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 3, 2016, BOX Options Exchange LLC (the ``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 prepared by the Exchange. The Exchange filed the
proposed rule change pursuant to Section 19(b)(3)(A)(ii) of the Act,\3\
and Rule 19b-4(f)(2) thereunder,\4\ which renders the proposal
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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

    The Exchange is filing with the Securities and Exchange Commission
(``Commission'') a proposed rule change to amend the Fee Schedule to
adopt a new fee in Section V (Technology Fees) of the BOX Fee Schedule
on the BOX Market LLC (``BOX'') options facility. The text of the
proposed rule change is available from the principal office of the
Exchange, at the Commission's Public Reference Room and also on the
Exchange's Internet Web site at http://boxexchange.com.

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

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

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

1. Purpose
    The Exchange proposes to amend Section V (Technology Fees) in the
Fee Schedule. Specifically, the Exchange proposes to establish Section
V.B. (High Speed Vendor Feed (``HSVF'') in the BOX Fee Schedule and
adopt a fee of $750.00 per month for all market participants for
receiving the HSVF. This fee will be payable by any market participant
that receives the HSVF through a direct connection to BOX and will be
assessed once per market participant.
    In February 2013, the Exchange made its proprietary direct market
data product, the HSVF, available to all market participants at no
cost.\5\ The BOX HSVF is a proprietary product that provides: (i)
Trades and trade cancelation information; (ii) best-ranked price level
to buy and the best-ranked price level to sell; (iii) instrument
summaries (including information such as high, low, and last trade
price and traded volume); (iv) the five best limit prices for each
option instrument; (v) request for Quote messages; \6\ (vi) PIP Order,
Improvement Order and Block Trade Order (Facilitation and Solicitation)
information; \7\ (vii) orders exposed at NBBO; \8\ (viii) instrument
dictionary (e.g., strike price, expiration date, underlying symbol,
price threshold, and minimum trading increment for instruments traded
on BOX); (ix) options class and instrument status change notices (e.g.,
whether an instrument or class is in pre-opening, continuous trading,
closed, halted, or prohibited from trading); and (x) options class
opening time.
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    \5\ See Securities Exchange Act Release No. 68833 (February 5,
2013), 78 FR 9758 (February 11, 2013) (SR-BOX-2013-04).
    \6\ See Exchange Rules 100(a)(57), 7070(h) and 8050.
    \7\ As set forth in Exchange Rules 7150 and 7270, respectively.
    \8\ As set forth in Exchange Rules 7130(b)(3) and 8040(d)(6),
respectively.
---------------------------------------------------------------------------

    The Exchange notes that data connection fees are charged by other
options markets such as International Securities Exchange (``ISE''),
Bats BZX Exchange (``BATS''), Chicago Board Options Exchange
(``CBOE''), The NASDAQ Options Market (``NOM''), Miami International
Securities Exchange LLC (``MIAX''), NASDAQ BX, Inc. (``BX''), and
NASDAQ PHLX LLC (``Phlx'').\9\
---------------------------------------------------------------------------

    \9\ See the ISE Fee Schedule, available at: https://www.ise.com/assets/documents/OptionsExchange/legal/fee/ISE_fee_schedule.pdf, the
BATS Fee Schedule, available at: https://batstrading.com/support/fee_schedule/bzx/, the CBOE Fee Schedule, available at https://www.cboe.org/framed/pdfframed.aspx?content=/publish/mdxfees/mdxfeescheduleforcboedatafeeds.pdf§ion=SEC_MDX_CSM&title=CBOE
MDX Fees Schedule; the NOM Fee Schedule, available at http://www.nasdaqtrader.com/Micro.aspx?id=optionsPricing, the MIAX Fee
Schedule, available at: https://www.miaxoptions.com/content/fees and
the Phlx Fee Schedule, available at: http://www.nasdaqtrader.com/Micro.aspx?id=phlxpricing.
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2. Statutory Basis
    The Exchange believes that the proposal is consistent with the
requirements of Section 6(b) of the Act,\10\ in general, and Section
6(b)(4) and (5) of the Act,\11\ in particular, in that it provides for
the equitable allocation of reasonable dues, fees, and other charges
among BOX Participants and other persons using the Exchange's
facilities and is not designed to permit unfair discrimination among
them.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    In adopting Regulation NMS, the Commission granted self-regulatory
organizations and broker-dealers increased authority and flexibility to
offer new and unique market data to the public.
    The Commission concluded that Regulation NMS--by deregulating the
market in proprietary data--would itself further the Act's goals of
facilitating efficiency and competition:

    [E]fficiency is promoted when broker-dealers who do not need the
data beyond the prices, sizes, market center identifications of the
NBBO and consolidated last sale information are not required to
receive (and pay for) such data. The Commission also believes that
efficiency is promoted when broker-dealers may choose to receive
(and pay for) additional market data based on their own internal
analysis of the need for such data.\12\
---------------------------------------------------------------------------

    \12\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
---------------------------------------------------------------------------

    By removing ``unnecessary regulatory restrictions'' on the ability
of exchanges to sell their own data, Regulation NMS advanced the goals
of the Act and the principles reflected in its legislative history. If
the free market should determine whether proprietary data is sold to
broker-dealers at all, it follows that the price at which such data is
sold should be set by the market as well. The HSVF is precisely the
sort of market data product that the Commission envisioned when it
adopted Regulation NMS.
    The decision of the United States Court of Appeals for the District
of

Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010)
(``NetCoalition I''), upheld the Commission's reliance upon competitive
markets to set reasonable and equitably allocated fees for market data.
``In fact, the legislative history indicates that the Congress intended
that the market system `evolve through the interplay of competitive
forces as unnecessary regulatory restrictions are removed' and that the
SEC wield its regulatory power `in those situations where competition
may not be sufficient,' such as in the creation of a `consolidated
transactional reporting system.' NetCoalition I, at 535 (quoting H.R.
Rep. No. 94-229, at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 321,
323). The court agreed with the Commission's conclusion that ``Congress
intended that `competitive forces should dictate the services and
practices that constitute the U.S. national market system for trading
equity securities.' \13\
---------------------------------------------------------------------------

    \13\ NetCoalition I, at 535.
---------------------------------------------------------------------------

    The Court in NetCoalition I, while upholding the Commission's
conclusion that competitive forces may be relied upon to establish the
fairness of prices, nevertheless concluded that the record in that case
did not adequately support the Commission's conclusions as to the
competitive nature of the market for NYSE Arca's data product at issue
in that case. As explained below in BOX's Statement on Burden on
Competition, however, BOX believes that there is substantial evidence
of competition in the marketplace for data that was not in the record
in the NetCoalition I case, and that the Commission is entitled to rely
upon such evidence in concluding fees are the product of competition,
and therefore in accordance with the relevant statutory standards.\14\
Accordingly, any findings of the court with respect to that product may
not be relevant to the product at issue in this filing.
---------------------------------------------------------------------------

    \14\ It should also be noted that Section 916 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010 (``Dodd-Frank
Act'') has amended paragraph (A) of Section 19(b)(3) of the Act, 15
U.S.C. 78s(b)(3), to make it clear that all exchange fees, including
fees for market data, may be filed by exchanges.
---------------------------------------------------------------------------

    BOX believes that the allocation of the proposed fee is fair and
equitable in accordance with Section 6(b)(4) of the Act, and not
unreasonably discriminatory in accordance with Section 6(b)(5) of the
Act. As described above, the proposed fee is based on pricing
conventions and distinctions that exist in BOX's current fee schedule.
These distinctions are each based on principles of fairness and equity
that have helped for many years to maintain fair, equitable, and not
unreasonably discriminatory fees, and that apply with equal or greater
force to the current proposal.
    As described in greater detail below, if BOX has calculated
improperly and the market deems the proposed fees to be unfair,
inequitable, or unreasonably discriminatory, firms can discontinue the
use of their data because the proposed product is entirely optional to
all parties. Firms are not required to purchase data and BOX is not
required to make data available or to offer specific pricing
alternatives for potential purchases. BOX can discontinue offering a
pricing alternative (as it has in the past) and firms can discontinue
their use at any time and for any reason (as they often do), including
due to their assessment of the reasonableness of fees charged. BOX
continues to establish and revise pricing policies aimed at increasing
fairness and equitable allocation of fees among subscribers.
    The Exchange's proprietary HSVF is currently available to all
market participants at no cost; however, the Exchange now proposes to
adopt a new fee of $750.00 per month for all market participants who
receive the HSVF. The Exchange believes that adopting such a fee is
reasonable and appropriate as it is within the range that is charged by
other options exchanges.\15\
---------------------------------------------------------------------------

    \15\ See supra, note 9. CBOE's data distributor MDX charges a
$500 port fee per month; NOM charges a port fee between $500 and
$750 a month depending on the port. The Exchange notes the CBOE and
NOM charge these fees per port, while the Exchange proposes to
assess the fee once per market participant.
---------------------------------------------------------------------------

    In addition, the Exchange believes that its fees are equitable and
not unfairly discriminatory because all market participants are charged
the same fee for access to the HSVF. Further, the Exchange notes that
all market participants who wish to receive the feed may, as the feed
is available to anyone willing to pay the proposed $750 monthly fee.

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

    The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The proposed
change to the Fee Schedule will simply allow the Exchange to charge all
market participants equally for the costs incurred by connecting to the
BOX Network. The HSVF is similar to proprietary data products currently
offered by other exchanges, and these other exchanges charge comparable
monthly fees.\16\ While connection to the HSVF is required to receive
the broadcasts for and participate in the Exchange's auction
mechanisms,\17\ the Exchange does not believes the proposed monthly fee
will impede competition within these auctions. As discussed above, the
Exchange believes that fees for connectivity are constrained by the
robust competition for order flow among exchanges and non-exchange
markets. Further, excessive fees for connectivity would serve to impair
ability to compete for order flow rather than burdening competition. As
such, the Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
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    \16\ See supra note 9.
    \17\ BOX's auction mechanisms include the Price Improvement
Period (``PIP''), Complex Order Price Improvement Period
(``COPIP''), Facilitation Auction and Solicitation Auction.
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    Notwithstanding its determination that the Commission may rely upon
competition to establish fair and equitably allocated fees for market
data, the NetCoalition court found that the Commission had not, in that
case, compiled a record that adequately supported its conclusion that
the market for the data at issue in the case was competitive. BOX
believes that a record may readily be established to demonstrate the
competitive nature of the market in question.
    There is intense competition between trading platforms that provide
transaction execution and routing services and proprietary data
products. Transaction execution and proprietary data products are
complementary in that market data is both an input and a byproduct of
the execution service. In fact, market data and trade execution are a
paradigmatic example of joint products with joint costs. Data products
are valuable to many end subscribers only insofar as they provide
information that end Subscribers expect will assist them or their
customers in making trading decisions.
    The costs of producing market data include not only the costs of
the data distribution infrastructure, but also the costs of designing,
maintaining, and operating the exchange's transaction execution
platform and the cost of regulating the exchange to ensure its fair
operation and maintain investor confidence. The total return that a
trading platform earns reflects the revenues it receives from both
products and the joint costs it incurs. Moreover, an exchange's
Participant's view the

costs of transaction executions and of data as a unified cost of doing
business with the exchange. A broker-dealer (``BD'') will direct orders
to a particular exchange only if the expected revenues from executing
trades on the exchange exceed net transaction execution costs and the
cost of data that the BD chooses to buy to support its trading
decisions (or those of its customers). The choice of data products is,
in turn, a product of the value of the products in making profitable
trading decisions. If the cost of the product exceeds its expected
value, the BD will choose not to buy it. Moreover, as a BD chooses to
direct fewer orders to a particular exchange, the value of the product
to that BD decreases, for two reasons. First, the product will contain
less information, because executions of the BD's orders will not be
reflected in it. Second, and perhaps more important, the product will
be less valuable to that BD because it does not provide information
about the venue to which it is directing its orders. Data from the
competing venue to which the BD is directing orders will become
correspondingly more valuable.
    Thus, an increase in the fees charged for either transactions or
data has the potential to impair revenues from both products. ``No one
disputes that competition for order flow is `fierce'.'' NetCoalition at
24. However, the existence of fierce competition for order flow implies
a high degree of price sensitivity on the part of BDs with order flow,
since they may readily reduce costs by directing orders toward the
lowest-cost trading venues. A BD that shifted its order flow from one
platform to another in response to order execution price differentials
would both reduce the value of that platform's market data and reduce
its own need to consume data from the disfavored platform. Similarly,
if a platform increases its market data fees, the change will affect
the overall cost of doing business with the platform, and affected BDs
will assess whether they can lower their trading costs by directing
orders elsewhere and thereby lessening the need for the more expensive
data.
    Analyzing the cost of market data distribution in isolation from
the cost of all of the inputs supporting the creation of market data
will inevitably underestimate the cost of the data. Thus, because it is
impossible to create data without a fast, technologically robust, and
well-regulated execution system, system costs and regulatory costs
affect the price of market data. It would be equally misleading,
however, to attribute all of the exchange's costs to the market data
portion of an exchange's joint product. Rather, all of the exchange's
costs are incurred for the unified purposes of attracting order flow,
executing and/or routing orders, and generating and selling data about
market activity. The total return that an exchange earns reflects the
revenues it receives from the joint products and the total costs of the
joint products.
    Competition among trading platforms can be expected to constrain
the aggregate return each platform earns from the sale of its joint
products, but different platforms may choose from a range of possible,
and equally reasonable, pricing strategies as the means of recovering
total costs. Some exchanges pays rebates to attract orders, charges
relatively low prices for market information and charges relatively
high prices for accessing posted liquidity. Other platforms may choose
a strategy of paying lower liquidity rebates to attract orders, setting
relatively low prices for accessing posted liquidity, and setting
relatively high prices for market information. Still others may provide
most data free of charge and rely exclusively on transaction fees to
recover their costs. Finally, some platforms may incentivize use by
providing opportunities for equity ownership, which may allow them to
charge lower direct fees for executions and data.
    In this environment, there is no economic basis for regulating
maximum prices for one of the joint products in an industry in which
suppliers face competitive constraints with regard to the joint
offering. Such regulation is unnecessary because an ``excessive'' price
for one of the joint products will ultimately have to be reflected in
lower prices for other products sold by the firm, or otherwise the firm
will experience a loss in the volume of its sales that will be adverse
to its overall profitability. In other words, an increase in the price
of data will ultimately have to be accompanied by a decrease in the
cost of executions, or the volume of both data and executions will
fall.
    The level of competition and contestability in the market is
evident in the numerous alternative venues that compete for order flow,
including eleven SRO markets, as well as internalizing BDs and various
forms of alternative trading systems (``ATSs''), including dark pools
and electronic communication networks (``ECNs''). Each SRO market
competes to produce transaction reports via trade executions, and two
FINRA-regulated TRFs compete to attract internalized transaction
reports. It is common for BDs to further and exploit this competition
by sending their order flow and transaction reports to multiple
markets, rather than providing them all to a single market. Competitive
markets for order flow, executions, and transaction reports provide
pricing discipline for the inputs of proprietary data products.
    The large number of SROs, TRFs, BDs, and ATSs that currently
produce proprietary data or are currently capable of producing it
provides further pricing discipline for proprietary data products. Each
SRO, TRF, ATS, and BD is currently permitted to produce proprietary
data products, and many currently do or have announced plans to do so,
including BOX, NYSE, NYSE MKT, NYSE Arca, and BATS/Direct Edge.
    Any ATS or BD can combine with any other ATS, BD, or multiple ATSs
or BDs to produce joint proprietary data products. Additionally, order
routers and market data vendors can facilitate single or multiple BDs'
production of proprietary data products. The potential sources of
proprietary products are virtually limitless. Notably, the potential
sources of data include the BDs that submit trade reports to TRFs and
that have the ability to consolidate and distribute their data without
the involvement of FINRA or an exchange-operated TRF.
    The fact that proprietary data from ATSs, BDs, and vendors can by-
pass SROs is significant in two respects. First, non-SROs can compete
directly with SROs for the production and sale of proprietary data
products, as BATS and NYSE Arca did before registering as exchanges by
publishing proprietary book data on the internet. Second, because a
single order or transaction report can appear in a core data product, a
SRO proprietary product, and/or a non-SRO proprietary product, the data
available in proprietary products is exponentially greater than the
actual number of orders and transaction reports that exist in the
marketplace.
    In addition to the competition and price discipline described
above, the market for proprietary data products is also highly
contestable because market entry is rapid, inexpensive, and profitable.
The history of electronic trading is replete with examples of entrants
that swiftly grew into some of the largest electronic trading platforms
and proprietary data producers: Archipelago, Bloomberg Tradebook,
Island, RediBook, Attain, TracECN, BATS Trading and BATS/Direct Edge. A
proliferation of dark pools and other ATSs operate profitably with
fragmentary shares of consolidated market volume.
    Regulation NMS, by deregulating the market for proprietary data,
has

increased the contestability of that market. While BDs have previously
published their proprietary data individually, Regulation NMS
encourages market data vendors and BDs to produce proprietary products
cooperatively in a manner never before possible. Multiple market data
vendors already have the capability to aggregate data and disseminate
it on a profitable scale, including Bloomberg and Thomson Reuters. In
Europe, Cinnober aggregates and disseminates data from over 40 brokers
and multilateral trading facilities.\18\
---------------------------------------------------------------------------

    \18\ See http://www.cinnober.com/boat-trade-reporting.
---------------------------------------------------------------------------

    In this environment, a super-competitive increase in the fees
charged for either transactions or data has the potential to impair
revenues from both products. ``No one disputes that competition for
order flow is `fierce'.'' NetCoalition I at 539. The existence of
fierce competition for order flow implies a high degree of price
sensitivity on the part of BDs with order flow, since they may readily
reduce costs by directing orders toward the lowest-cost trading venues.
A BD that shifted its order flow from one platform to another in
response to order execution price differentials would both reduce the
value of that platform's market data and reduce its own need to consume
data from the disfavored platform. If a platform increases its market
data fees, the change will affect the overall cost of doing business
with the platform, and affected BDs will assess whether they can lower
their trading costs by directing orders elsewhere and thereby lessening
the need for the more expensive data.

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

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Exchange Act \19\ and Rule 19b-4(f)(2)
thereunder,\20\ because it establishes or changes a due, or fee.
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \20\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-BOX-2016-40 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-BOX-2016-40. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing 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-BOX-2016-40, and should be
submitted on or before September 8, 2016.
---------------------------------------------------------------------------

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

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-19687 Filed 8-17-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 209 (Tuesday, October 29, 2013)]
[Notices]
[Page 64494]
[FR Doc No: 2013-25527]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 13579-002; Project No. 14491-000]

FFP Qualified Hydro 14, LLC, Western Minnesota Municipal Power
Agency; Notice Announcing Filing Priority for Preliminary Permit
Applications

    On October 21, 2013, the Commission held a drawing to determine
priority between competing preliminary permit applications with
identical filing times. In the event that the Commission concludes that
neither of the applicants' plans is better adapted than the other to
develop, conserve, and utilize in the public interest the water
resources of the region at issue, the priority established by this
drawing will serve as the tiebreaker. Based on the drawing, the order
of priority is as follows:

1. FFP Qualified Hydro 14, LLC--Project No. 13579-002
2. Western Minnesota Municipal Power Agency--Project No. 14491-000

    Dated: October 23, 2013.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2013-25527 Filed 10-28-13; 8:45 am]
BILLING CODE 6717-01-P