[Federal Register Volume 88, Number 191 (Wednesday, October 4, 2023)]
[Notices]
[Pages 68855-68857]
[FR Doc No: 2023-21956]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98628; File No. SR-FINRA-2023-010]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Instituting Proceedings To Determine Whether To
Approve or Disapprove a Proposed Rule Change To Provide Relief Relating
to Specified Option Transactions Under FINRA Rule 4210 (Margin
Requirements)

September 28, 2023.

I. Introduction

    On June 30, 2023, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission''), pursuant to Section 19(b)(1) of the Securities and
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend FINRA Rule 4210 (Margin
Requirements) to provide margin relief for specified index option
transactions, known as ``protected options,'' and to make other minor
conforming revisions with regard to the margin relief. The proposed
rule change was published for comment in the Federal Register on July
19, 2023.\3\ The Commission received two comment letters on the
proposal.\4\ On August 31, 2023, FINRA extended the time period in
which the Commission must approve the proposed rule change, disapprove
the proposed rule change, or institute proceedings to determine whether
to approve or disapprove the proposed rule change to October 17,
2023.\5\ The Commission is publishing this order pursuant to Section
19(b)(2)(B) of the Exchange Act \6\ to solicit comments on the proposed
rule change and to institute proceedings to determine whether to
approve or disapprove the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Exchange Act Release No. 97898 (Jul. 13, 2023), 88 FR
46204 (``Notice'').
    \4\ Comments received on the proposed rule change are available
at https://www.sec.gov/comments/sr-finra-2023-010/srfinra2023010.htm.
    \5\ See Letter from Adam Arkel, Associate General Counsel,
FINRA, to Sheila Swartz, Division of Trading and Markets, Commission
(Aug. 31, 2023).
    \6\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change

    In its filing with the Commission, FINRA stated that Cboe Exchange,
Inc. (``Cboe'' or the ``Exchange'') filed with the Commission a
proposed rule change to amend Cboe Rule 10.3 regarding margin
requirements related to cash-settled index options written against
exchange-traded funds (``ETF(s)'') that track the same index underlying
the option,\7\ which the Commission approved on March 2, 2023.\8\
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    \7\ See Exchange Act Release No. 96395 (Nov. 28, 2022), 87 FR
74199 (Dec. 2, 2022) (Notice of Filing of a Proposed Rule Change to
Amend Rule 10.3 Regarding Margin Requirements; File No. SR-CBOE-
2022-058) (``Cboe Proposal''). See also Notice at 46205, n.3.
    \8\ See Exchange Act Release No. 97019 (Mar. 2, 2023), 88 FR
14416 (Mar. 8, 2023) (Order Approving a Proposed Rule Change to
Amend Rule 10.3 Regarding Margin Requirements; File No. SR-CBOE-
2022-058) (``Cboe Approval Order'').
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    FINRA stated that the Cboe rule change established a new exception
to those margin requirements with respect to a ``protected option''
strategy, as set forth in new paragraph (c)(5)(C)(iv)(e) of Cboe Rule
10.3.\9\ Subject to specified conditions, the exception is applicable
to short option positions or warrants on indexes that are offset by
positions in an underlying stock basket, non-leveraged index mutual
fund, or non-leveraged ETF that is based on the same index option.\10\
In approving Cboe's rule change, FINRA observed that the Commission
stated it believes the rule change will facilitate the use of protected
options and reduce associated costs and burdens.\11\ FINRA stated that,
in the interest of regulatory harmony and ensuring that the potential
benefits of protected option treatment are available to FINRA members
and their customers, FINRA proposed to conform its margin rule to the
provisions Cboe adopted and to make other minor conforming
revisions.\12\
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    \9\ See Notice at 46205.
    \10\ Cboe distinguishes the ``protected option'' strategy from a
``covered call,'' which is a strategy of writing an option against a
position in an underlying security and is addressed by separate
margin requirements under Cboe rules. See Cboe Proposal at 74201.
See also Notice at 46205, n.8.
    \11\ See Cboe Approval Order at 14418.
    \12\ See Notice at 46205.
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    Specifically, FINRA proposes to add new paragraph (f)(2)(H)(v)f.
(``Protected Options'') to FINRA Rule 4210.\13\ The new paragraph would
provide that when an index call (put) option or warrant is carried
``short'' (the ``protected option or warrant position'') and there is
carried in the same account a ``long'' (short) position in an
underlying stock basket, non-leveraged index mutual fund, or non-
leveraged ETF (each referred to as the ``protection'') that is based on
the same index underlying the index option or warrant, the protected
option or warrant position is not subject to the requirements set forth
in paragraphs (f)(2)(E)(i) and (f)(2)(E)(iii) of Rule 4210 \14\ if the
following conditions, which conform to the Cboe rule, are met: \15\
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    \13\ See Exhibit 5 to the proposed rule change, available at
https://www.sec.gov/files/rules/sro/finra/2023/34-97898-ex5.pdf.
    \14\ FINRA stated that the exception from the margin
requirements under Cboe's new rule is virtually identical to the
margin requirements set forth in Cboe Rule 10.3(c)(5)(A), which sets
forth margin requirements for listed options. According to FINRA,
paragraph (f)(2)(E)(i) under FINRA Rule 4210 correspondingly
addresses listed options and is virtually identical to the Cboe
provisions. Paragraph (f)(2)(E)(iii) of FINRA Rule 4210 addresses
margin requirements for over-the-counter (``OTC'') products. As
such, FINRA proposed to include both listed and OTC products within
the scope of the exception. FINRA stated that both types of products
would be subject to the conditions specified under the rule which,
according to FINRA, are virtually identical to Cboe's provisions.
FINRA stated that it believes this harmonized approach to both
listed and OTC options is appropriate for purposes of the rule
change to broaden availability of the benefits of the protected
option strategy to, for example, non-Cboe FINRA members, and would
thereby prevent a potential gap between listed and OTC options. See
also Notice at 46205, n.12.
    \15\ See id. at 46205.
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    1. when the protected option or warrant position is created, the
absolute value of the protection is not less than 100 percent of the
aggregate current underlying index value associated with the protected
option or warrant position determined at either:
    A. the time the order that created the protected option or warrant
position was entered or executed; or
    B. the close of business on the trading day the protected option or
warrant position was created;
    2. the absolute value of the protection is at no time less than 95
percent of the aggregate current underlying index value associated with
the protected option or warrant position; and
    3. margin is maintained in an amount equal to the greater of:
    A. the amount, if any, by which the aggregate current underlying
index value is above (below) the aggregate exercise price of the
protected call (put) option or warrant position; or
    B. the amount, if any, by which the absolute value of the
protection is below 100 percent of the aggregate current underlying
index value associated with the protected option or warrant.\16\
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    \16\ See id.
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    FINRA also proposes to expand the protected options treatment to
OTC options, so they are subject to the same conditions as listed
options. FINRA stated that it believes that harmonizing the FINRA
margin requirements for OTC options with the amended Cboe rule would
reduce potential regulatory arbitrage that would favor listing options
on Cboe. FINRA stated that while it does not have sufficient
information on how many investors or

members would choose to make use of the protected options treatment for
either listed or OTC options, it believes the number is small and would
be limited to institutional investors.\17\
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    \17\ See id. at 46206. See also supra note 14.
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    FINRA stated that in proposing the margin exception for protected
options, Cboe emphasized that the exception is not intended to and does
not apply to leveraged instruments.\18\
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    \18\ See Cboe Proposal at 74201; see also Cboe Approval Order at
14417 and Notice at 46205.
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    In addition, FINRA proposes minor revisions to paragraphs
(f)(2)(H)(v)a. through d. of FINRA Rule 4210 to conform with the usage
of the term ``in the same account'' as used in proposed paragraph
(f)(2)(H)(v)f.\19\ Specifically:
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    \19\ See Notice at 46205.
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     in paragraph (f)(2)(H)(v)a., the phrase ``in an account in
which there is also carried . . .'' would be changed to read ``in the
same account as . . .''
     in paragraphs (f)(2)(H)(v)b. through d., the phrase ``is
also carried with . . .'' would be changed to read ``there is carried
in the same account . . .'' \20\
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    \20\ See id.
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    FINRA stated that it believes these changes are appropriate because
they clarify the rule text and conform with the new proposed protected
option provisions.\21\
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    \21\ See id.
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    Lastly, FINRA stated that if the Commission approves the proposed
rule change, FINRA will announce the effective date of the proposed
rule change in a Regulatory Notice.\22\ The effective date will be no
later than 30 days following publication of the Regulatory Notice
announcing Commission approval of the proposed rule change.\23\
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    \22\ See id.
    \23\ See id. at 46205-46206. FINRA stated that the proposed rule
change would not impact funding portal members and would not impact
members that have elected to be treated as capital acquisition
brokers (``CABs''). According to FINRA, these members are not
subject to Rule 4210. See id. at 46205, n.14.
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III. Proceedings to Determine Whether To Approve or Disapprove SR-
FINRA-2023-010 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act to determine whether the proposed rule
change should be approved or disapproved.\24\ Institution of
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to the proposed rule change.
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    \24\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Exchange Act,\25\ the
Commission is providing notice of the grounds for disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis and input concerning whether the proposed rule
change is consistent with the Exchange Act and the rules thereunder.
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    \25\ Id.
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    In particular, the Commission seeks comment on the following
questions and asks commenters to submit data where appropriate to
support their views:
     What are commenters' views on FINRA's proposal to expand
the protected options treatment to OTC options so they are subject to
the same conditions as listed options? Would the expansion of the
protected options treatment to OTC options help to reduce potential
regulatory arbitrage that may favor listing options on certain
exchanges?
     What are commenters' views on the types of market
participants that would utilize the protected options treatment for
either listed or OTC options? For example, would use of the protected
options treatment for either listed or OTC options be generally limited
to institutional investors? Please explain why or why not.

IV. Request for Written Comments

    The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposed rule change. In particular, the Commission invites
the written views of interested persons concerning whether the proposed
rule change is consistent with the Exchange Act and the rules
thereunder.
    Although there do not appear to be any issues relevant to approval
or disapproval that would be facilitated by an oral presentation of
views, data, and arguments, the Commission will consider, pursuant to
Rule 19b-4 under the Exchange Act,\26\ any request for an opportunity
to make an oral presentation.\27\
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    \26\ 17 CFR 240.19b-4.
    \27\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975),
grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
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    Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by October 25, 2023. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
November 8, 2023.
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
file number SR-FINRA-2023-010 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-FINRA-2023-010. 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 website (https://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 website 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
a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of FINRA. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection.
    All submissions should refer to file number SR-FINRA-2023-010, and
should be submitted on or before October 25, 2023. Rebuttal comments

should be submitted by November 8, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21956 Filed 10-3-23; 8:45 am]
BILLING CODE 8011-01-P


The exposure estimates used in these analyses assume chronic exposures to ambient (outdoor) levels of pollutants. Because most people spend the majority of their time indoors, actual exposures may not be as high, depending on the characteristics of the pollutants modeled. For many of the HAP, indoor levels are roughly equivalent to ambient levels, but for very reactive pollutants or larger particles, indoor levels are typically lower. This factor has the potential to result in an overestimate of 25 to 30 percent of exposures (USEPA, 2001).

A sensitivity analysis, discussed in "Risk and Technology Review (RTR) Risk Assessment Methodologies" (USEPA 2009a), found that the selection of the meteorology data set location could have an impact on the risk estimates. The analysis found that cancer MIR derived using different meteorological stations varied by as much as 63 percent below to 51 percent above the value derived using the nearest meteorological station. Cancer incidence estimated using different meteorological stations varied by as much as 68 percent below to 120 percent above the value estimated using the nearest meteorological station. Similarly, air concentrations estimated using different meteorological stations varied by as much as 49 percent below to 21 percent above the value estimated using the nearest meteorological station. Since this analysis was performed EPA has increased the number of meteorological stations used in our risk assessments; thus, we expect variability to be reduced.

For the acute screening assessment, the results are intentionally biased high, and thus health-protective, by assuming the co-occurrence of independent factors, such as hourly emission rates, meteorology and human activity patterns. Furthermore, in cases where multiple acute dose-response values for a pollutant are considered scientifically acceptable, we choose the most conservative of these dose-response values, erring on the side of overestimating potential health risks from acute exposures. In cases where these results indicate the potential for exceeding acute HQs, we refine our assessment by developing a better understanding of the geography of the facility relative to potential exposure locations.

4.2.2	Multipathway exposure modeling
In modeling the fate and transport of pollutants through the environment and the non-inhalation exposure (i.e., ingestion) to these pollutants, TRIM.FaTE uses simplified representations of many complex real-world processes. This simplified representation introduces uncertainty. Uncertainties arise from model assumptions and structure, as reflected in the algorithms that describe the environmental movement of pollutants, and in the input values for numerous environmental parameters.

Uncertainty in the algorithms is inherent to any model attempting to represent complex processes in the real world. How persistent, bioaccumulative chemicals such as mercury, cadmium, arsenic, PAHs, and dioxins behave in the environment is highly complex, and many natural processes are represented in a simplified manner by TRIM.FaTE, including, for example:

 gaseous and particulate deposition from air;
 biogeochemical cycling in the aquatic environment, particularly mercury transformations through methylation and demethylation at the sediment-surface interface;
 mixing processes in air, water, and sediment;
 suspended and benthic sediment dynamics in lakes; and
 biotic processes such as growth, reproduction, and predation.

Even though some processes, such as diffusion, are known to follow second-order dynamics, the TRIM.FaTE model represents all fate and transport processes in terms of first-order differential equations. TRIM.FaTE also does not explicitly deal with lateral or vertical dispersion in the air compartments. Some algorithms, such as those addressing methylation and sediment transport, for example, do not consider all of the factors known to affect the process. Biotic processes including chemical absorption, chemical elimination, growth, reproduction, predation, and death have been represented relatively simplistically in the model. Although the model's algorithms have been validated and are based on professional judgment, some level of uncertainty results from such simplifications.

The input values for parameters are also associated with uncertainty. Algorithms that describe the environmental movement of pollutants depend on numerous environmental parameters for which the values might be naturally variable and for which available data are often limited. Examples of parameters for which input values are variable and uncertain include aquatic food web structure (e.g., diet of each fish species), biokinetic parameters that influence bioaccumulation (e.g., assimilation efficiencies and elimination rates), topographic characteristics (e.g., lake depth, runoff rates, and erosion rates), meteorological parameters (e.g., evaporation and precipitation rates), chemical transformation rates (e.g., methylation and demethylation rates, in the case of mercury), and human exposure parameters (especially fish consumption rates).

For TRIM.FaTE modeling, we use central tendency values and combinations of values that would lead to estimates of reasonable maximum exposures to bound risk estimates. We have conducted analyses of the sensitivity of risk estimates to parameter input values. For those parameters to which the model is particularly sensitive, we have continued to collect additional data to better quantify the variability and distribution of input values.
A more comprehensive explanation of the uncertainties related to fate, transport, and exposure modeling using TRIM.FaTE is provided in Appendix 6 (Technical Support Document for TRIM-Based Multipathway Tiered Screening Methodology for RTR) of this report for the tiered assessments and Appendix 11 (Site-Specific Human Health Multipathway Residual Risk Assessment Report) of this report for a site-specific assessment if one was conducted.

4.2.3	Environmental risk screening assessment
For each source category, we generally rely on site-specific levels of environmental HAP emissions to perform an environmental screening assessment. The environmental screening assessment is based on the outputs from models that estimate environmental HAP concentrations. The same models, specifically the TRIM.FaTE multipathway model and the AERMOD air dispersion model, are used to estimate environmental HAP concentrations for both the human multipathway screening analysis and for the environmental screening analysis. Therefore, both screening assessments have similar modeling uncertainties. Two important types of uncertainty associated with the use of these models in RTR environmental screening assessments (and inherent to any assessment that relies on environmental modeling) are model uncertainty and input uncertainty.

Model uncertainty concerns whether the selected models are appropriate for the assessment being conducted and whether they adequately represent the movement and accumulation of environmental HAP emissions in the environment. For example, does the model adequately describe the movement of the pollutant through the soil?  This type of uncertainty is difficult to quantify. However, based on feedback received from previous EPA SAB reviews and other reviews, we are confident that the models used in the screen are appropriate and state-of-the-art for the environmental risk assessments conducted in support of our RTR analyses.

Input uncertainty is concerned with how accurately the models have been configured and parameterized for the assessment at hand. For Tier 1 of the environmental screen for PB-HAP, we configured the models to avoid underestimating exposure and risk to reduce the likelihood that the results indicate the risks are lower than they actually are. This was accomplished by selecting upper-end values from nationally-representative datasets for the more influential parameters in the environmental model, including selection and spatial configuration of the area of interest, the location and size of any bodies of water, meteorology, surface water and soil characteristics, and structure of the aquatic food web. In Tier 1, we used the maximum facility-specific emissions for the PB-HAP (other than lead compounds, which were evaluated by comparison to the Secondary Lead NAAQS) that were included in the environmental screening assessment and each of the media when comparing to ecological benchmarks. This is consistent with the conservative design of the Tier 1 screen. In Tier 2 of the environmental screening assessment for PB-HAP, we refine the model inputs to account for meteorological patterns in the vicinity of the facility versus using upper-end national values, and we identify the locations of water bodies near the facility location. By refining the screening approach in Tier 2 to account for local geographical and meteorological data, we decrease the likelihood that concentrations in environmental media are overestimated, thereby increasing the usefulness of the screen. To better represent widespread impacts, the modeled soil concentrations are averaged in Tier 2 to obtain one average soil concentration value for each facility and for each PB-HAP. For PB-HAP concentrations in water, sediment, and fish tissue, the highest value for each facility for each pollutant is used.

For the environmental screening assessment for acid gases, we employ a single-tiered approach. We use the modeled air concentrations and compare those with ecological benchmarks.

For both Tiers 1 and 2 of the environmental screening assessment, our approach to addressing model input uncertainty is generally cautious. We choose model inputs from the upper end of the range of possible values for the influential parameters used in the models, and we assume that the exposed individual exhibits ingestion behavior that would lead to a high total exposure. This approach reduces the likelihood of not identifying potential risks for adverse environmental impacts.

 Uncertainties in the dose-response relationships
 In the sections that follow, separate discussions are provided on uncertainty associated with cancer potency factors and for noncancer reference values. Cancer potency values are derived for chronic (lifetime) exposures. Noncancer dose-response values are generally derived for chronic exposures (up to a lifetime) but may also be derived for acute (less than 24 hours), short-term (from 24 hours up to 30 days), and subchronic (30 days up to 10 percent of lifetime) exposure durations, all of which are derived based on an assumption of continuous exposure throughout the duration specified. For the purposes of assessing all potential health risks associated with the emissions included in an assessment, we rely on both chronic (cancer and noncancer) and acute (noncancer) dose-response values, which are described in more detail below.

Although every effort is made to identify peer-reviewed dose-response values for all HAP emitted by the source category included in an assessment, some HAP have no peer-reviewed values. Since exposures to these pollutants cannot be included in a quantitative risk estimate, an understatement of risk for these pollutants at environmental exposure levels is possible. To help alleviate this potential underestimate, where we conclude similarity with a HAP for which a dose-response assessment value is available, we use that value as a surrogate for the assessment of the HAP for which no value is available. To the extent use of surrogates indicates appreciable risk, we may identify a need to increase priority for a new IRIS assessment of that substance. We additionally note that, generally speaking, HAP of greatest concern due to environmental exposures and hazards are those for which dose-response assessments have been performed, reducing the likelihood of understating risk. Further, HAP not included in the quantitative assessment as assessed qualitatively and considered in the risk characterization that informs the risk management decisions, including with regard to consideration of HAP reductions achieved by various control options.

Additionally, chronic dose-response values for certain compounds included in the assessment may be under EPA IRIS review. In those cases, revised assessments may determine in the future that these pollutants are more or less potent than currently thought.

For a group of compounds that are unspeciated (e.g., glycol ethers), we conservatively use the most protective reference value of an individual compound in that group to estimate risk. Similarly, for an individual compound in a group (e.g., ethylene glycol diethyl ether) that does not have a specified reference value, we apply the most protective reference value from the other compounds in the group to estimate risk.

Cancer assessment
The discussion of dose-response uncertainties in the estimation of cancer risk below focuses on the uncertainties associated with the specific approach currently used by the EPA to develop cancer potency factors. In general, these same uncertainties attend the development of cancer potency factors by CalEPA, the source of peer-reviewed cancer potency factors used where EPA-developed values are not yet available. To place this discussion in context, we provide a quote from the EPA's Guidelines for Carcinogen Risk Assessment (herein referred to as Cancer Guidelines). (USEPA, 2005d) "The primary goal of EPA actions is protection of human health; accordingly, as an Agency policy, risk assessment procedures, including default options that are used in the absence of scientific data to the contrary, should be health protective." The approach adopted in this document is consistent with this approach as described in the Cancer Guidelines.

For cancer endpoints EPA usually derives an oral slope factor for ingestion and a unit risk value for inhalation exposures. These values allow estimation of a lifetime probability of developing cancer given long-term exposures to the pollutant. Depending on the pollutant being evaluated, EPA relies on both animal bioassay and epidemiological studies to characterize cancer risk. As a science policy approach, consistent with the Cancer Guidelines, EPA uses animal cancer bioassays as indicators of potential human health risk when other human cancer risk data are unavailable.

Extrapolation of study data to estimate potential risks to human populations is based upon EPA's assessment of the scientific database for a pollutant using EPA's guidance documents and other peer-reviewed methodologies. The EPA Cancer Guidelines describes the Agency's recommendations for methodologies for cancer risk assessment. EPA believes that cancer risk estimates developed following the procedures described in the Cancer Guidelines and outlined below generally provide an upper bound estimate of risk. That is, EPA's upper bound estimates represent a plausible upper limit to the true value of a quantity (although this is usually not a true statistical confidence limit). In some circumstances, the true risk could be as low as zero; however, in other circumstances the risk could also be greater. When developing an upper bound estimate of risk and to provide risk values that do not underestimate risk, EPA generally relies on conservative default approaches.   EPA also uses the upper bound (rather than lower bound or central tendency) estimates in its assessments, although it is noted that this approach can have limitations for some uses (e.g. priority setting, expected benefits analysis).

Such health risk assessments have associated uncertainties, some which may be considered quantitatively, and others which generally are expressed qualitatively. Uncertainties may vary substantially among cancer risk assessments associated with exposures to different pollutants, since the assessments employ different databases with different strengths and limitations and the procedures employed may differ in how well they represent actual biological processes for the assessed substance. Some of the major sources of uncertainty and variability in deriving cancer risk values are described more fully below.

(1) The qualitative similarities or differences between tumor responses observed in experimental animal bioassays and those which would occur in humans are a source of uncertainty in cancer risk assessment. In general, EPA does not assume that tumor sites observed in an experimental animal bioassay are necessarily predictive of the sites at which tumors would occur in humans. However, unless scientific support is available to show otherwise, EPA assumes that tumors in animals are relevant in humans, regardless of target organ concordance. For a specific pollutant, qualitative differences in species responses can lead to either under-estimation or over-estimation of human cancer risks.

(2) Uncertainties regarding the most appropriate dose metric for an assessment can also lead to differences in risk predictions. For example, the measure of dose is commonly expressed in units of mg/kg/d ingested or the inhaled concentration of the pollutant. However, data may support development of a pharmacokinetic model for the absorption, distribution, metabolism and excretion of an agent, which may result in improved dose metrics (e.g., average blood concentration of the pollutant or the quantity of agent metabolized in the body). Quantitative uncertainties result when the appropriate choice of a dose metric is uncertain or when dose metric estimates are themselves uncertain (e.g., as can occur when alternative pharmacokinetic models are available for a compound). Uncertainty in dose estimates may lead to either over or underestimation of risk.

(3) For the quantitative extrapolation of cancer risk estimates from experimental animals to humans, EPA uses scaling methodologies (relating expected response to differences in physical size of the species), which introduce another source of uncertainty. These methodologies are based on both biological data on differences in rates of process according to species size and empirical comparisons of toxicity between experimental animals and humans. For a particular pollutant, the quantitative difference in cancer potency between experimental animals and humans may be either greater than or less than that estimated by baseline scientific scaling predictions due to uncertainties associated with limitations in the test data and the correctness of scaled estimates.

(4) EPA cancer risk estimates, whether based on epidemiological or experimental animal data, are generally developed using a benchmark dose (BMD) analysis to estimate a dose at which there is a specified excess risk of cancer, which is used as the point of departure (or POD) for the remainder of the calculation. Statistical uncertainty in developing a POD using a benchmark dose (BMD) approach is generally addressed though use of the 95 percent lower confidence limit on the dose at which the specified excess risk occurs (the BMDL), decreasing the likelihood of understating risk. EPA has generally utilized the multistage model for estimation of the BMDL using cancer bioassay data (see further discussion below).

(5) Extrapolation from high to low doses is an important source of uncertainty in cancer risk assessment. EPA uses different approaches to low dose risk assessment (i.e., developing estimates of risk for exposures to environmental doses of an agent from observations in experimental or epidemiological studies at higher dose) depending on the available data and understanding of a pollutant's mode of action (i.e., the manner in which a pollutant causes cancer). EPA's Cancer Guidelines express a preference for the use of reliable, compound-specific, biologically-based risk models when feasible; however, such models are rarely available. The mode of action for a pollutant (i.e., the manner in which a pollutant causes cancer) is a key consideration in determining how risks should be estimated for low-dose exposure. A reference value is calculated when the available mode of action data show the response to be nonlinear (e.g., as in a threshold response). A linear low-dose (straight line from POD) approach is used when available mode of action data support a linear (e.g., nonthreshold) response or as the most common default approach when a compound's mode of action is unknown. Linear extrapolation can be supported by both pollutant-specific data and broader scientific considerations. For example, EPA's Cancer Guidelines generally consider a linear dose-response to be appropriate for pollutants that interact with DNA and induce mutations. Pollutants whose effects are additive to background biological processes in cancer development can also be predicted to have low-dose linear responses, although the slope of this relationship may not be the same as the slope estimated by the straight line approach.

EPA most frequently utilizes a linear low-dose extrapolation approach as a baseline science-policy choice (a "default") when available data do not allow a compound-specific determination. This approach is designed to not underestimate risk in the face of uncertainty and variability. EPA believes that linear dose-response models, when appropriately applied as part of EPA's cancer risk assessment process, provide an upper bound estimate of risk and generally provide a health protective approach. Note that another source of uncertainty is the characterization of low-dose nonlinear, non-threshold relationships. The National Academy of Sciences (NAS, 1994) has encouraged the exploration of sigmoidal type functions (e.g., log-probit models) in representing dose-response relationships due to the variability in response within human populations. Another National Research Council report (NRC, 2006) suggests that models based on distributions of individual thresholds are likely to lead to sigmoidal-shaped dose-response functions for a population. This report notes sources of variability in the human population:  "One might expect these individual tolerances to vary extensively in humans depending on genetics, coincident exposures, nutritional status, and various other susceptibility factors..." Thus, if a distribution of thresholds approach is considered for a carcinogen risk assessment, application would depend on ability of modeling to reflect the degree of variability in response in human populations (as opposed to responses in bioassays with genetically more uniform rodents). Note also that low dose linearity in risk can arise for reasons separate from population variability: due to the nature of a mode of action and additivity of a chemical's effect on top of background chemical exposures and biological processes.

As noted above, EPA's current approach to cancer risk assessment typically utilizes a straight line approach from the BMDL. This is equivalent to using an upper confidence limit on the slope of the straight line extrapolation. The impact of the choice of the BMDL on bottom line risk estimates can be quantified by comparing risk estimates using the BMDL value to central estimate BMD values, although these differences are generally not a large contributor to uncertainty in risk assessment (Subramaniam et. al., 2006). It is important to note that earlier EPA assessments, including the majority of those for which risk values exist today, were generally developed using the multistage model to extrapolate down to environmental dose levels and did not involve the use of a POD. Subramaniam et. al. (2006) also provide comparisons indicating that slopes based on straight line extrapolation from a POD do not show large differences from those based on the upper confidence limit of the multistage model.

(6) Cancer risk estimates do not generally make specific adjustments to reflect the variability in response within the human population  --  resulting in another source of uncertainty in assessments. In the diverse human population, some individuals are likely to be more sensitive to the action of a carcinogen than the typical individual, although compound-specific data to evaluate this variability are generally not available. There may also be important life stage differences in the quantitative potency of carcinogens and, with the exception of the recommendations in EPA's Supplemental Cancer Guidance for carcinogens with a mutagenic mode of action, risk assessments do not generally quantitatively address life stage differences. However, one approach used commonly in EPA assessments that may help address variability in response is to extrapolate human response from results observed in the most sensitive species and sex tested, resulting typically in the highest URE which can be supported by reliable data, thus supporting estimates that are designed not to underestimate risk in the face of uncertainty and variability.

Chronic noncancer assessment
Chronic noncancer reference values represent chronic exposure levels that are intended to be health-protective. That is, EPA and other organizations, such as the Agency for Toxic substances and disease Registry (ATSDR), which develop noncancer dose-response values use an approach that is intended not to underestimate risk in the face of uncertainty and variability. When there are gaps in the available information, uncertainty factors (UFs) are applied to derive reference values that are intended to be protective against appreciable risk of deleterious effects. Uncertainty factors are commonly default values (e.g., factors of 10 or 3) used in the absence of compound-specific data; where data are available, uncertainty factors may also be developed using compound-specific information. When data are limited, more assumptions are needed and more default factors are used. Thus, there may be a greater tendency to overestimate risk -- in the sense that further study might support development of reference values that are higher (i.e., less potent) because fewer default assumptions are needed. However, for some pollutants it is possible that risks may be underestimated.

For noncancer endpoints related to chronic exposures, EPA derives a reference dose (RfD) for exposures via ingestion, and a reference concentration (RfC) for inhalation exposures. As stated in the IRIS Glossary, these values provide an estimate (with uncertainty spanning perhaps an order of magnitude) of daily oral exposure (RfD) or of a continuous inhalation exposure (RfC) to the human population (including sensitive subgroups) that is likely to be without an appreciable risk of deleterious effects during a lifetime. To derive values that are intended to be "without appreciable risk," EPA's methodology relies upon an uncertainty factor (UF) approach (USEPA, 1993b; USEPA, 1994b) which includes consideration of both uncertainty and variability.

EPA begins by evaluating all of the available peer-reviewed literature to determine noncancer endpoints of concern, evaluating the quality, strengths and limitations of the available studies. EPA typically chooses the relevant endpoint that occurs at the lowest dose, often using statistical modeling of the available data, and then determines the appropriate POD for derivation of the reference value. A POD is determined by (in order of preference): (1) a statistical estimation using the BMD approach; (2) use of the dose or concentration at which the toxic response was not significantly elevated (no observed adverse effect level --  NOAEL); or (3) use of the lowest observed adverse effect level (LOAEL).

A series of downward adjustments using default UFs is then applied to the POD to estimate the reference value (USEPA, 2002b). While collectively termed "UFs", these factors account for a number of different quantitative considerations when utilizing observed animal (usually rodent) or human toxicity data in a risk assessment. The UFs are intended to account for: (1) variation in susceptibility among the members of the human population (i.e., inter-individual variability); (2) uncertainty in extrapolating from experimental animal data to humans (i.e., interspecies differences); (3) uncertainty in extrapolating from data obtained in a study with less-than-lifetime exposure (i.e., extrapolating from subchronic to chronic exposure); (4) uncertainty in extrapolating from a LOAEL in the absence of a NOAEL; and (5) uncertainty when the database is incomplete or there are problems with applicability of available studies. When scientifically sound, peer-reviewed assessment-specific data are not available, default adjustment values are selected for the individual UFs. For each type of uncertainty (when relevant to the assessment), EPA typically applies an UF value of 10 or 3 with the cumulative UF value leading to a downward adjustment of 10-3000 fold from the selected POD. An UF of 3 is used when the data do not support the use of a 10-fold factor. If an extrapolation step or adjustment is not relevant to an assessment (e.g., if applying human toxicity data and an interspecies extrapolation is not required) the associated UF is not used. The major adjustment steps are described more fully below.

	1) Heterogeneity among humans is a key source of variability as well as uncertainty. Uncertainty related to human variation is considered in extrapolating doses from a subset or smaller-sized population, often of one sex or of a narrow range of life stages (typical of occupational epidemiologic studies), to a larger, more diverse population. In the absence of pollutant-specific data on human variation, a 10-fold UF is used to account for uncertainty associated with human variation. Human variation may be larger or smaller; however, data to examine the potential magnitude of human variability are often unavailable. In some situations, a smaller UF of 3 may be applied to reflect a known lack of significant variability among humans.

	2) Extrapolation from results of studies in experimental animals to humans is a necessary step for the majority of chemical risk assessments. When interpreting animal data, the concentration at the POD (e.g. NOAEL, BMDL) in an animal model (e.g. rodents) is extrapolated to estimate the human response. While there is long-standing scientific support for the use of animal studies as indicators of potential toxicity to humans, there are uncertainties in such extrapolations. In the absence of data to the contrary, the typical approach is to use the most relevant endpoint from the most sensitive species and the most sensitive sex in assessing risks to the average human. Typically, compound specific data to evaluate relative sensitivity in humans versus rodents are lacking, thus leading to uncertainty in this extrapolation. Size-related differences (allometric relationships) indicate that typically humans are more sensitive than rodents when compared on a mg/kg/day basis. The default choice of 10 for the interspecies UF is consistent with these differences. For a specific chemical, differences in species responses may be greater or less than this value.

      Pharmacokinetic models are useful to examine species differences in pharmacokinetic processing and associated uncertainties; however, such dosimetric adjustments are not always possible. Information may not be available to quantitatively assess toxicokinetic or toxicodynamic differences between animals and humans, and in many cases a 10-fold UF (with separate factors of 3 for toxicokinetic and toxicodynamic components) is used to account for expected species differences and associated uncertainty in extrapolating from laboratory animals to humans in the derivation of a reference value. If information on one or the other of these components is available and accounted for in the cross-species extrapolation, a UF of 3 may be used for the remaining component.

	3) In the case of reference values for chronic exposures where only data from shorter durations are available (e.g., 90-day subchronic studies in rodents) or when such data are judged more appropriate for development of an RfC, an additional UF of 3 or 10-fold is typically applied unless the available scientific information supports use of a different value.

      4) Toxicity data are typically limited as to the dose or exposure levels that have been tested in individual studies; in an animal study, for example, treatment groups may differ in exposure by up to an order of magnitude. The preferred approach to arrive at a POD is to use BMD analysis; however, this approach requires adequate quantitative results for a meaningful analysis, which is not always possible. Use of a NOAEL is the next preferred approach after BMD analysis in determining a POD for deriving a health effect reference value. However, many studies lack a dose or exposure level at which an adverse effect is not observed (i.e., a NOAEL is not identified). When using data limited to a LOAEL, a UF of 10 or 3-fold is often applied.

      5) The database UF is intended to account for the potential for deriving an underprotective RfD/RfC due to a data gap preventing complete characterization of the chemical's toxicity. In the absence of studies for a known or suspected endpoint of concern, a UF of 10 or 3-fold is typically applied.

Acute noncancer assessment
Many of the UFs used to account for variability and uncertainty in the development of acute reference values are quite similar to those developed for chronic durations. For acute reference values, though, individual UF values that may be less than 10. UFs are applied based on chemical- or health effect-specific information or based on the purpose of the reference value. The UFs applied in acute reference value derivation include:  1) heterogeneity among humans; 2) uncertainty in extrapolating from animals to humans; 3) uncertainty in LOAEL to NOAEL adjustments; and 4) uncertainty in accounting for an incomplete database on toxic effects of potential concern. Additional adjustments are often applied to account for uncertainty in extrapolation from observations at one exposure duration (e.g., 4 hours) to arrive at a POD for derivation of an acute reference value at another exposure duration (e.g., 1 hour).

Not all acute dose-response values are developed for the same purpose and care must be taken when interpreting the results of an acute assessment of human health effects relative to the reference value or values being exceeded. Where relevant to the estimated exposures, the lack of dose-response values at different levels of severity should be factored into the risk characterization as potential uncertainties.

Environmental Risk Screening Assessment
Uncertainty also exists in the ecological benchmarks for the environmental risk screening assessment. We established a hierarchy of preferred benchmark sources to allow selection of benchmarks for each environmental HAP at each ecological assessment endpoint. In general, EPA benchmarks used at a programmatic level (e.g., Office of Water, Superfund Program) were used if available. If not, we used EPA benchmarks used in regional programs (e.g., Superfund Program). If benchmarks were not available at a programmatic or regional level, we used benchmarks developed by other agencies (e.g., NOAA) or by state agencies.

In all cases (except for lead compounds, which were evaluated through a comparison to the NAAQS), we searched for benchmarks at the following three effect levels, as described in Section 2.6 of this report and in Appendix 9 (Environmental Risk Screen) of this report:  a no-effect level (i.e., NOAEL), threshold-effect level (i.e., LOAEL), and probable-effect level (i.e., PEL).

For some ecological assessment endpoint/environmental HAP combinations, we could identify benchmarks for all three effect levels, but for most we could not. In one case, where different agencies derived significantly different numbers to represent a threshold for effect, we included both. In several cases, only a single benchmark was available. In cases where multiple effect levels were available for a particular PB-HAP and assessment endpoint, we used all of the available effect levels to help us determine whether risk exists if risks could be considered significant and widespread.

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ATSDR, 2012. Agency for Toxic Substances & Disease Registry Toxicological Profile for Manganese. http://www.atsdr.cdc.gov/toxprofiles/tp.asp?id=102&tid=23

Burger, J. 2002. Daily consumption of wild fish and game: Exposures of high end recreationalists. Environmental Health Research. 12(4):343 - 354.

Grimsrud TK and Andersen A., 2010. Evidence of carcinogenicity in humans of water-soluble nickel salts. J Occup Med Toxicol 2010, 5:1-7. Available online at http://www.occup-med.com/content/5/1/7

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IARC, 1990. International Agency for Research on Cancer, 1990. IARC monographs on the evaluation of carcinogenic risks to humans. Chromium, nickel, and welding. Vol. 49. Lyons, France:  International Agency for Research on Cancer, World Health Organization Vol. 49:256.

Morgan, D.L., Little, P.B., Herr, D.W., Moser, V.C., Collins, B., Herbert, R., Johnson, G.A., Maronpot, R.R., Harry, G.J., and Sills, R.C., 2004. Neurotoxicity of carbonyl sulfide in F344 rats following inhalation exposure for up to 12 weeks. Toxicol. Appl. Pharmacol. 200(2):131- 145, 2004.

National Academy of Sciences, 1994. National Research Council. Science and Judgement in Risk Assessment. Washington, DC: National Academy Press.

NRC, 2006. National Research Council. Assessing the Human Health Risks of Trichloroethylene. National Academies Press, Washington DC.

NTP, 2016. National Toxicology Program. 2016. Report on Carcinogens, Fourteenth Edition.; Research Triangle Park, NC: U.S. Department of Health and Human Services, Public Health Service. https://ntp.niehs.nih.gov/pubhealth/roc/index-1.html

OEHHA, 2015. California Office of Environmental Health Hazard Assessment. All Acute Reference Exposure Levels developed by OEHHA as of June 2014. http://oehha.ca.gov/air/allrels.html

OMB, 2007. Memorandum for the Heads of Executive Departments and Agencies - Updated Principles for Risk Analysis (September 19, 2007), from Susan E. Dudley, Administrator, Office of Information and Regulatory Affairs, Office of Management and Budget; and Sharon L. Hays, Associate Director and Deputy Director for Science, Office of Science and Technology Policy.
https://georgewbush-whitehouse.archives.gov/omb/memoranda/fy2007/m07-24.pdf

R.P. Subramaniam, P. White and V.J. Cogliano. 2006. Comparison of cancer slope factors using different statistical approaches, Risk Anal. Vol 26, p. 825-830.

Roels HA, Ghyselen P, Buchet JP, et al. 1992. Assessment of the permissible exposure level to manganese in workers exposed to manganese dioxide dust. Br J Ind Med 49:25-34.

Sills, R.C., Morgan, D.L., Herr, D.W., Little, P.B., George, N.M., Ton, T.V., Love, N.E., Maronpot, R.R., and Johnson, G.A., 2004. Contribution of magnetic resonance microscopy in the 12-week neurotoxicity evaluation of carbonyl sulfide in Fischer 344 rats. Toxicol. Pathol. 32:501-510, 2004.

USEPA, 1986. Guidelines for the Health Risk Assessment of Chemical Mixtures. EPA-630-R-98-002. https://www.epa.gov/risk/guidelines-health-risk-assessment-chemical-mixtures

USEPA, 1993a. Integrated Risk Information system Review of Manganese. https://cfpub.epa.gov/ncea/iris2/chemicalLanding.cfm?substance_nmbr=373

USEPA, 1993b. Reference Dose (RfC):  Description and Use in Health Risk Assessments. https://www.epa.gov/iris/reference-dose-rfd-description-and-use-health-risk-assessments

USEPA, 1994a. US Environmental Protection Agency. Methods for Derivation of Inhalation Reference Concentrations and Application of Inhalation Dosimetry. EPA/600/8-90/066F. Office of Research and Development. Washington, DC: U.S.EPA.

USEPA, 1994b. Methods for Derivation of Inhalation Reference Concentrations and Application of Inhalation Dosimetry. https://www.epa.gov/risk/methods-derivation-inhalation-reference-concentrations-and-application-inhalation-dosimetry

USEPA, 1999. Residual Risk Report to Congress. 453R-99-001. https://www3.epa.gov/airtoxics/rrisk/risk_rep.pdf

USEPA, 2000a. Risk Characterization Handbook. EPA 100-B-00-002. https://www.epa.gov/sites/production/files/2015-10/documents/osp_risk_characterization_handbook_2000.pdf

USEPA, 2000b. Supplementary Guidance for Conducting Health Risk Assessment of Chemical Mixtures. EPA-630/R-00-002. https://cfpub.epa.gov/ncea/risk/recordisplay.cfm?deid=20533

USEPA, 2001. National-Scale Air Toxics Assessment for 1996. EPA 453/R - 01 - 003.  January 2001. page 85.

USEPA, 2002a. EPA's Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility, and Integrity of Information Disseminated by the Environmental Protection Agency. EPA Office of Environmental Information. EPA/260R-02-008. https://www.epa.gov/quality/guidelines-ensuring-and-maximizing-quality-objectivity-utility-and-integrity-information

USEPA, 2002b. A Review of the Reference Dose and Reference Concentration Processes. https://www.epa.gov/osa/review-reference-dose-and-reference-concentration-processes

USEPA, 2005a. Revision to the Guideline on Air Quality Models: Adoption of a Preferred General Purpose (Flat and Complex Terrain) Dispersion Model and Other Revisions; Final Rule. 40 CFR Part 51. https://www3.epa.gov/scram001/guidance/guide/appw_05.pdf

USEPA, 2005b. Supplemental guidance for assessing early-life exposure to carcinogens. EPA/630/R-03003F. https://www3.epa.gov/ttn/atw/childrens_supplement_final.pdf

USEPA, 2005c. Science Policy Council Cancer Guidelines Implementation Workgroup Communication I: Memo from W.H. Farland dated 4 October 2005 to Science Policy Council. https://www.epa.gov/sites/production/files/2015-01/documents/cgiwgcommuniation_i.pdf

USEPA, 2005d. Guidelines for Carcinogen Risk Assessment. U.S. Environmental Protection Agency, Washington, DC, EPA/630/P-03/001F. https://www.epa.gov/risk/guidelines-carcinogen-risk-assessment

USEPA, 2006. Performing risk assessments that include carcinogens described in the Supplemental Guidance as having a mutagenic mode of action. Science Policy Council Cancer Guidelines Implementation Workgroup Communication II: Memo from W.H. Farland dated 14 June 2006. https://www.epa.gov/sites/production/files/2015-01/documents/cgiwg-communication_ii.pdf

USEPA, 2009a. Risk and Technology Review (RTR) Risk Assessment Methodologies: For Review by the EPA's Science Advisory Board with Case Studies  -  MACT I Petroleum Refining Sources and Portland Cement Manufacturing. EPA-452/R-09-006. https://cfpub.epa.gov/si/si_public_record_report.cfm?dirEntryID=238928

USEPA, 2009b. Graphical Arrays of Chemical-Specific Health Effect Reference Values for Inhalation Exposures [Final Report]. EPA/600/R-09/061, 2009. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=211003

USEPA, 2010a. SAB's Response to EPA's RTR Risk Assessment Methodologies. https://yosemite.epa.gov/sab/sabproduct.nsf/0/b031ddf79cffded38525734f00649caf!OpenDocument&TableRow=2.3#2

US EPA, 2010b. Memorandum from Dave Guinnup to Docket EPA-HQ-OAR-2010-0600, entitled, "EPA's Actions in Response to Key Recommendations of the SAB Review of RTR Risk Assessment Methodologies". https://yosemite.epa.gov/sab/sabproduct.nsf/3BE2C36A4ADDC85A85257B48006C88D7/$File/EPA+resp+to+SAB+on+RTR+memo.pdf

USEPA, 2011. Exposure Factors Handbook: 2011 Edition (Final). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R-09/052F. https://cfpub.epa.gov/ncea/risk/recordisplay.cfm?deid=236252

USEPA, 2014a. Table 1. Prioritized Chronic Dose-Response Values (5/9/14). Office of Air Quality Planning and Standards. https://www.epa.gov/fera/dose-response-assessment-assessing-health-risks-associated-exposure-hazardous-air-pollutants

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WHO, 1991. World Health Organization and the European Union's Scientific Committee on Health and Environmental Risks (SCHER, 2006).


[Federal Register Volume 86, Number 15 (Tuesday, January 26, 2021)]
[Notices]
[Pages 7090-7091]
[FR Doc No: 2021-01553]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP20-55-000]

Port Arthur LNG Phase II, LLC; PALNG Common Facilities Company,
LLC; Notice of Availability of the Environmental Assessment for the
Proposed Port Arthur LNG Expansion Project

    The staff of the Federal Energy Regulatory Commission (FERC or
Commission) has prepared an environmental assessment (EA) for the Port
Arthur LNG Expansion Project, proposed by Port Arthur LNG Phase II, LLC
and PALNG Common Facilities Company, LLC (collectively referred to as
Applicant) in the above-referenced docket. The Applicant requests
authorization to expand the previously certificated Port Arthur
Liquefaction Terminal in Jefferson County, Texas by siting,
constructing, and operating additional liquefied natural gas (LNG)
facilities to increase the terminal's capability to liquefy natural gas
for export by 13.46 million tonnes per annum (MTPA). The Port Arthur
LNG Expansion Project would increase the terminal's total liquefaction
capacity from 13.46 MTPA to 26.92 MTPA.
    The EA assesses the potential environmental effects of the
construction and operation of the Port Arthur LNG Expansion Project in
accordance with the requirements of the National Environmental Policy
Act (NEPA). The FERC staff concludes that approval of the proposed
project, with appropriate mitigating measures, would not constitute a
major federal action significantly affecting the quality of the human
environment.
    The U.S. Department of Energy, U.S. Department of Transportation,
and U.S. Coast Guard participated as cooperating agencies in the
preparation of the EA. Cooperating agencies have jurisdiction by law or
special expertise with respect to resources potentially affected by the
proposal and participate in the NEPA analysis.
    The proposed Port Arthur LNG Expansion Project includes the
following facilities:
     Two liquefaction trains (Trains 3 and 4) each with a
maximum LNG production capacity of 6.73 MTPA

(13.46 MTPA total). Each liquefaction train would be composed of a feed
gas treatment unit consisting of a mercury removal unit; hydrogen
sulfide scavenger bed to remove hydrogen sulfide; amine unit to remove
carbon dioxide; a dehydration unit to remove water; a heavy hydrocarbon
removal unit to remove isopentane and heavier hydrocarbons; and a
liquefaction unit consisting of a main cryogenic heat exchanger,
refrigeration system, and end flash drum;
     one new low-pressure ground flare;
     new flare knockout drums;
     one new boil-off gas (BOG) compressor unit to compress BOG
and deliver as fuel to gas turbine;
     two new utility and instrument air compressor packages to
deliver air to two new air drier packages;
     one new 3.675 megawatt capacity diesel powered standby
generator; and
     shifting location of some equipment from Base Project,
including LNG storage tanks, and modifications and additions to
approved utilities, fire and gas detection systems, control system,
firewater system, spill containment, tertiary berm, and infrastructure
needed to accommodate the two additional liquefaction trains.
    The Commission mailed a copy of the Notice of Availability to
federal, state, and local government representatives and agencies;
elected officials; Native American tribes; potentially affected
landowners and other interested individuals and groups. The EA is only
available in electronic format. It may be viewed and downloaded from
the FERC's website (www.ferc.gov), on the natural gas environmental
documents page (https://www.ferc.gov/industries-data/natural-gas/environment/environmental-documents). In addition, the EA may be
accessed by using the eLibrary link on the FERC's website. Click on the
eLibrary link (https://elibrary.ferc.gov/eLibrary/search), select
``General Search'' and enter the docket number in the ``Docket Number''
field (i.e. CP20-55). Be sure you have selected an appropriate date
range. For assistance, please contact FERC Online Support at
<EMAIL_ADDRESS>or toll free at<PHONE_NUMBER>, or for TTY,
contact<PHONE_NUMBER>.
    The EA is not a decision document. It presents Commission staff's
independent analysis of the environmental issues for the Commission to
consider when addressing the merits of all issues in this proceeding.
Any person wishing to comment on the EA may do so. Your comments should
focus on the EA's disclosure and discussion of potential environmental
effects, reasonable alternatives, and measures to avoid or lessen
environmental impacts. The more specific your comments, the more useful
they will be. To ensure that the Commission has the opportunity to
consider your comments prior to making its decision on this project, it
is important that we receive your comments in Washington, DC on or
before 5:00 p.m. Eastern Time on February 15, 2021.
    For your convenience, there are three methods you can use to file
your comments to the Commission. The Commission encourages electronic
filing of comments and has staff available to assist you at (866) 208-
3676 or<EMAIL_ADDRESS>Please carefully follow these
instructions so that your comments are properly recorded.
    (1) You can file your comments electronically using the eComment
feature on the Commission's website (www.ferc.gov) under the link to
FERC Online. This is an easy method for submitting brief, text-only
comments on a project;
    (2) You can also file your comments electronically using the
eFiling feature on the Commission's website (www.ferc.gov) under the
link to FERC Online. With eFiling, you can provide comments in a
variety of formats by attaching them as a file with your submission.
New eFiling users must first create an account by clicking on
``eRegister.'' You must select the type of filing you are making. If
you are filing a comment on a particular project, please select
``Comment on a Filing''; or
    (3) You can file a paper copy of your comments by mailing them to
the Commission. Be sure to reference the project docket number (CP20-
55-000) on your letter. Submissions sent via the U.S. Postal Service
must be addressed to: Kimberly D. Bose, Secretary, Federal Energy
Regulatory Commission, 888 First Street NE, Room 1A, Washington, DC
20426. Submissions sent via any other carrier must be addressed to:
Kimberly D. Bose, Secretary, Federal Energy Regulatory Commission,
12225 Wilkins Avenue, Rockville, Maryland 20852.
    Filing environmental comments will not give you intervenor status,
but you do not need intervenor status to have your comments considered.
Only intervenors have the right to seek rehearing or judicial review of
the Commission's decision. At this point in this proceeding, the
timeframe for filing timely intervention requests has expired. Any
person seeking to become a party to the proceeding must file a motion
to intervene out-of-time pursuant to Rule 214(b)(3) and (d) of the
Commission's Rules of Practice and Procedures (18 CFR 385.214(b)(3) and
(d)) and show good cause why the time limitation should be waived.
Motions to intervene are more fully described at https://www.ferc.gov/ferc-online/ferc-online/how-guides.
    Additional information about the project is available from the
Commission's Office of External Affairs, at (866) 208-FERC, or on the
FERC website (www.ferc.gov) using the eLibrary link. The eLibrary link
also provides access to the texts of all formal documents issued by the
Commission, such as orders, notices, and rulemakings.
    In addition, the Commission offers a free service called
eSubscription which allows you to keep track of all formal issuances
and submittals in specific dockets. This can reduce the amount of time
you spend researching proceedings by automatically providing you with
notification of these filings, document summaries, and direct links to
the documents. Go to https://www.ferc.gov/ferc-online/overview to
register for eSubscription.

    Dated: January 15, 2021.
Kimberly D. Bose,
Secretary.
[FR Doc. 2021-01553 Filed 1-25-21; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 83, Number 167 (Tuesday, August 28, 2018)]
[Notices]
[Pages 43865-43866]
[FR Doc No: 2018-18604]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP18-538-000]

Sendero Carlsbad Gateway, LLC; Notice of Application

    On August 9, 2018, Sendero Carlsbad Gateway, LLC (Sendero), 1000
Louisiana Street, Suite 6900, Houston, Texas 77002, filed an
application pursuant to section 7 of the Natural Gas Act (NGA) and Part
157 of the Federal Energy Regulatory Commission's (Commission)
regulations requesting authorization to construct, install, own,
operate and maintain a new 23.28 mile, 24-inch-diameter, interstate
natural gas pipeline and appurtenant facilities to be located in Eddy
County, New Mexico and Culberson County, Texas, all as more fully set
forth in the application, which is open to the public for inspection.
The filing may also be viewed on the web at http://www.ferc.gov using
the ``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number field to access the document. For
assistance, contact FERC at [email protected] or call toll-
free,<PHONE_NUMBER> or TTY,<PHONE_NUMBER>.
    Any questions regarding Sendero's application should be directed to
Brad Boister, Chief Commercial Officer, Sendero Carlsbad Gateway, LLC,
1000 Louisiana Street, Suite 6900, Houston, Texas 77002, or phone (832)
917-6952, or by email [email protected].
    Pursuant to Section 157.9 of the Commission's rules, 18 CFR 157.9,
within 90 days of this Notice the Commission staff will either:
complete its environmental assessment (EA) and place it into the
Commission's public record (eLibrary) for this proceeding, or issue a
Notice of Schedule for Environmental Review. If a Notice of Schedule
for Environmental Review is

issued, it will indicate, among other milestones, the anticipated date
for the Commission staff's issuance of the EA for this proposal. The
filing of the EA in the Commission's public record for this proceeding
or the issuance of a Notice of Schedule for Environmental Review will
serve to notify federal and state agencies of the timing for the
completion of all necessary reviews, and the subsequent need to
complete all federal authorizations within 90 days of the date of
issuance of the Commission staff's EA.
    There are two ways to become involved in the Commission's review of
this project. First, any person wishing to obtain legal status by
becoming a party to the proceedings for this project should, on or
before the comment date stated below file with the Federal Energy
Regulatory Commission, 888 First Street NE, Washington, DC 20426, a
motion to intervene in accordance with the requirements of the
Commission's Rules of Practice and Procedure (18 CFR 385.214 or
385.211) and the Regulations under the NGA (18 CFR 157.10). A person
obtaining party status will be placed on the service list maintained by
the Secretary of the Commission and will receive copies of all
documents filed by the applicant and by all other parties. A party must
submit 7 copies of filings made in the proceeding with the Commission
and must mail a copy to the applicant and to every other party. Only
parties to the proceeding can ask for court review of Commission orders
in the proceeding.
    However, a person does not have to intervene in order to have
comments considered. The second way to participate is by filing with
the Secretary of the Commission, as soon as possible, an original and
two copies of comments in support of or in opposition to this project.
The Commission will consider these comments in determining the
appropriate action to be taken, but the filing of a comment alone will
not serve to make the filer a party to the proceeding. The Commission's
rules require that persons filing comments in opposition to the project
provide copies of their protests only to the party or parties directly
involved in the protest.
    Persons who wish to comment only on the environmental review of
this project should submit an original and two copies of their comments
to the Secretary of the Commission. Environmental commentors will be
placed on the Commission's environmental mailing list, will receive
copies of the environmental documents, and will be notified of meetings
associated with the Commission's environmental review process.
Environmental commentors will not be required to serve copies of filed
documents on all other parties. However, the non-party commentors will
not receive copies of all documents filed by other parties or issued by
the Commission (except for the mailing of environmental documents
issued by the Commission) and will not have the right to seek court
review of the Commission's final order.
    The Commission strongly encourages electronic filings of comments,
protests and interventions in lieu of paper using the ``eFiling'' link
at http://www.ferc.gov. Persons unable to file electronically should
submit an original and 5 copies of the protest or intervention to the
Federal Energy regulatory Commission, 888 First Street NE, Washington,
DC 20426.
    Comment Date: 5:00 p.m. Eastern Time on September 12, 2018.

    Dated: August 22, 2018.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2018-18604 Filed 8-27-18; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 75, Number 127 (Friday, July 2, 2010)]
[Notices]
[Pages 38584-38585]
[FR Doc No: 2010-16145]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62395; File No. SR-Phlx-2010-18]

Self-Regulatory Organizations; NASDAQ OMX PHLX, Inc.; Order
Approving a Proposed Rule Change To Codify Prices for Co-Location
Services

June 28, 2010.

I. Introduction

    On January 29, 2010, NASDAQ OMX PHLX (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change
relating to co-location services and related fees. The proposed rule
change was published for comment in the Federal Register on February 9,
2010.\3\ The Commission received no comment letters on the proposal.
This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 61486 (February 3,
2010), 75 FR 6426 (``Notice'').
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II. Description

    As described in the Notice, the Exchange is proposing to codify
fees for its existing co-location services. Co-location services are a
suite of hardware, power, telecommunication, and other ancillary
products and services that allows market participants and vendors to
place their trading and communications equipment in close physical
proximity to the quoting and execution facilities of the Exchange. Phlx
provides co-location services and imposes fees through Nasdaq
Technology Services LLC and pursuant to agreements with the owner/
operator of its data center where both the Exchange's quoting and
trading facilities and co-located customer equipment are housed.\4\
Users of co-location services include private extranet providers, data
vendors, as well as the Exchange members and non-members. The use of
co-location services is entirely voluntary.
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    \4\ Currently, the Exchange provides its co-location services
through data centers located in the New York City and Mid-Atlantic
areas.
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    As detailed in its fee schedule, the Exchange imposes a uniform set
of fees for various co-location services, including: fees for cabinet
space usage, or options for future space usage; installation and
related power provision for hosted equipment; connectivity among
multiple cabinets being used by the same customer as well as customer
connectivity to the Exchange and telecommunications providers; \5\ and
related maintenance and consulting services. Fees related to cabinet
and power usage are incremental, with additional charges being imposed
based on higher levels of cabinet and/or power usage, the use of non-
standard cabinet sizes or special cabinet cooling equipment, or the re-
selling of cabinet space.
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    \5\ The Exchange states that these fees are for
telecommunications connectivity only. Market data fees are charged
independently by NASDAQ OMX PHLX and other exchanges.
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    NASDAQ OMX PHLX is implementing a Cabinet Proximity Option program
where, for a monthly fee, customers can obtain an option for future use
on available currently-unused cabinet floor space in proximity to their
existing equipment. Under the program, customers can reserve up to
maximum of 20 cabinets that the Exchange will

endeavor to provide as close as reasonably possible to the customer's
existing cabinet space, taking into consideration power availability
within segments of the datacenter and the overall efficiency of use of
datacenter resources as determined by the Exchange. Should reserved
datacenter space be needed for use, the reserving customer will have
three business days to formally contract with the Exchange for full
payment for the reserved cabinet space in contention or it will be
reassigned. In making determinations to require exercise or
relinquishment of reserved space as among numerous customers, the
Exchange will take into consideration several factors, including:
Proximity between available reserved cabinet space and the existing
space of a customer seeking additional space for actual cabinet usage;
a customer's ratio of cabinets in use to those reserved; the length of
time that a particular reservation(s) has been in place; and any other
factor that the Exchange deems relevant to ensure overall efficiency in
use of the datacenter space.
    In the Notice, the Exchange made certain representations regarding
its co-location services. First, the Exchange represents that co-
location customers are not provided any separate or superior means of
direct access to the Exchange quoting and trading facilities, nor does
the Exchange offer any separate or superior means of access to the
Exchange quoting and trading facilities as among co-location customers
themselves within the datacenter. Second, the Exchange represents that
it does not make available to co-located customers any market data or
data feed product or service for data going into, or out of, the
Exchange systems that is not likewise available to all the Exchange
members.\6\ Finally, the Exchange represents that all orders sent to
the Exchange market enter the marketplace through the same central
system quote and order gateway regardless of whether the sender is co-
located in the Exchange data center or not. In short, according to the
Exchange, it has created no special market technology or programming
that is available only to co-located customers and has organized its
systems to minimize, to the greatest extent possible, any advantage for
one customer versus another.
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    \6\ The Exchange made a 10Gb fiber connection available to co-
located customers early in the first quarter of 2010. On March 26,
2010, the Exchange filed a proposed rule change that would, among
other things, establish pricing for 10Gb fiber connections for
customers who are not co-located in Phlx's datacenter. See SR-Phlx-
2010-89.
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    The Exchange also has represented that co-location services are
generally available to all qualified market participants who desire
them. With the exception of customers participating in the Cabinet
Proximity Option program, the Exchange allocates cabinets and power on
a first-come/first-serve basis. Should available cabinet inventory
shrink to 40 cabinets or less, the Exchange will limit new cabinet
orders to a maximum of 4 cabinets each, and all new cabinets will be
limited to a maximum power level of 5kW. Should available cabinet
inventory shrink to zero, the Exchange will place firms seeking
services on a waiting list based on that the Exchange receives signed
orders for the services from the firm. In order to be placed on the
waiting list, a firm must have utilized all existing cabinets they
already have in the datacenter. Once on the list, the firms, on a
rolling basis, will be allocated a single 5kW cabinet each time one
becomes available. After receiving a cabinet, the firm will move to the
bottom of the waiting list.

III. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\7\
In particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\8\ which requires that the
rules of a national securities exchange provide for the equitable
allocation of reasonable dues, fees and other charges among its members
and issuers and other persons using its facilities, and with Section
6(b)(5) of the Act,\9\ which requires, among other things, that that
the rules of a national securities exchange be designed to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system
and, in general, to protect investors and the public interest, and not
be designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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    \7\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that the proposed co-location fees are
reasonable and equitably allocated insofar as they are applied on the
same terms to similarly-situated market participants. The Commission
notes that charges may vary depending on the use of cabinet space and/
or power usage. In addition, the Commission believes that the co-
location services described in the proposed rule change are not
unfairly discriminatory because: (1) Co-location services are offered
to all interested market participants who request them and pay the
appropriate fees; (2) as represented by Phlx, the Exchange has
architected its systems so as to reduce or eliminate differences among
users of its systems, whether co-located or not; and (3) the Exchange
has stated that it has sufficient space to accommodate new co-locaters
and has set forth in the proposed rule change objective procedures to
allocate space should it become limited in the future.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-Phlx-2010-18) be, and hereby
is, approved.
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    \10\ 15 U.S.C. 78s(b)(2).
    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-16145 Filed 7-1-10; 8:45 am]
BILLING CODE 8010-01-P