[Federal Register Volume 88, Number 147 (Wednesday, August 2, 2023)]
[Notices]
[Pages 50943-50945]
[FR Doc No: 2023-16387]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98005; File No. SR-CBOE-2023-019]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove
Proposed Rule Change To Make Permanent the Operation of its Pilot
Program That Allows the Exchange to List P.M.-Settled Third Friday-of-
the-Month Mini-SPX Index Options and Mini-Russell 2000 Index Options
Series

July 27, 2023.

I. Introduction

    On April 19, 2023, Cboe Exchange, Inc. (``Exchange'' or ``Cboe
Options'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to make permanent the operation of its pilot
program (``Program'') that permits the Exchange to list p.m.-settled
third Friday-of-the-month Mini-SPX Index (``XSP'') options and Mini-
Russell 2000 Index (``MRUT''). The proposed rule change was published
for comment in the Federal Register on April 28, 2023.\3\ On June 9,
2023, pursuant to Section 19(b)(2) of the Act,\4\ the Commission
designated a longer period within which to approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to disapprove the proposed rule change.\5\ The
Commission did not receive any comment letters on the proposed rule
change. The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \6\ 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 Securities Exchange Act Release No. 97366 (April 24,
2023), 88 FR 26359 (``Notice'').
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 97678, 88 FR 39285
(June 15, 2023). The Commission designated July 27, 2023, as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to approve or disapprove,
the proposed rule change.
    \6\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change

    The Exchange proposes to make permanent a pilot program that
permits the Exchange to list and trade cash-settled XSP and MRUT
options with third Friday-of-the-month expiration dates (``Expiration
Friday'') whose exercise settlement value is derived from closing
prices on the last trading day prior to expiration (``p.m.-settled
XSP'' and ``p.m.-settled MRUT,'' respectively, and collectively, the
``Pilot Products'').
    In July 2013, the Commission approved the Program to list and trade
p.m.-settled XSP options on a pilot basis.\7\ In February 2021, the
Commission approved a rule change that amended the Program to allow the
exchange to list and trade p.m.-settled MRUT options.\8\ In approving
the Program, the Commission noted its concern about the potential
impact on the market at expiration for the underlying component stocks
for a p.m.-settled, cash-settled index options.\9\ However, the
Commission also recognized the potential impact was unclear.\10\ The
Commission approved the Program on a pilot basis to allow the Exchange
and the Commission to monitor for and assess any potential for adverse
market effects.\11\ In order to facilitate this assessment, the
Exchange committed to provide the Commission with data and analysis in
connection with the Program.\12\ The Exchange has filed to extend the
operation of the Program on multiple occasions \13\ and it is currently
set to expire on the earlier of November 6, 2023, or the date on which
the Program is approved on a permanent basis.\14\
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    \7\ See Securities Exchange Act Release No. 70087 (July 31,
2013), 78 FR 47809 (August 6, 2013) (SR-CBOE-2013-055) (``XSP
Approval Order'').
    \8\ See Securities Exchange Act Release No. 91067 (February 5,
2021) 86 FR 9108 (February 11, 2021) (SR-CBOE-2020-116) (``MRUT
Approval Order'').
    \9\ See XSP Approval Order, 78 FR at 47811; and MRUT Approval
Order, 86 FR at 9109. See also Securities Exchange Act Release Nos.
64599 (June 3, 2011), 76 FR 33798, 33801-02 (June 9, 2011) (order
instituting proceedings to determine whether to approve or
disapprove a proposed rule change to allow the listing and trading
of SPXPM options); 65256 (September 2, 2011), 76 FR 55969, 55970-76
(September 9, 2011) (order approving proposed rule change to
establish a pilot program to list and trade SPXPM options); and
68888 (February 8, 2013), 78 FR 10668, 10669 (February 14, 2013)
(order approving the listing and trading of SPXPM on CBOE).
    \10\ See XSP Approval Order, 78 FR at 47811; and MRUT Approval
Order, 86 FR at 9109.
    \11\ See XSP Approval Order, 78 FR at 47811; and MRUT Approval
Order, 86 FR at 9109.
    \12\ Id.
    \13\ See, e.g., Securities Exchange Act Release Nos. 71424
(January 28, 2014), 79 FR 6249 (February 3, 2014) (SR-CBOE-2014-
004); and 96222 (November 3, 2022), 87 FR 67736 (November 9, 2022)
(SR-CBOE-2022-054).
    \14\ See Securities Exchange Act Release No. 97446 (May 5,
2023), 88 FR 30365 (May 11, 2023).
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    Since the Program's inception in 2013 for XSP and 2021 for MRUT,
the Exchange has submitted reports to the Commission regarding the
Program that detail the Exchange's experience with the Program,
pursuant to the XSP and MRUT Approval Orders.\15\ Specifically, the
Exchange states it has submitted annual pilot reports to the Commission
that contain an analysis of volume, open interest, and trading
patterns.\16\ The analysis examines trading in the Pilot Products, as
well as trading in the securities that comprise the underlying indexes.
Additionally, for series that exceed certain minimum open interest
parameters, the annual reports provide analysis of index price
volatility and share trading activity. The Exchange states it has also
submitted periodic interim reports that contain some, but not all, of
the information contained in the annual reports (together with the
annual reports, the ``pilot reports'').\17\ The Exchange states that,
during the course of the Program, it has provided

the Commission with any additional data or analyses the Commission
requested if it deemed such data or analyses necessary to determine
whether the Program was consistent with the Exchange Act.\18\ The
Exchange states it has made public on its website data and analyses
previously submitted to the Commission under the Program,\19\ and will
continue to make public any data and analyses it submits to the
Commission while the Program is still in effect.\20\
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    \15\ See supra note 12.
    \16\ See Notice, 88 FR at 26361.
    \17\ See id.
    \18\ See Notice, 88 FR at 26361-62.
    \19\ See Notice, 88 FR at 26362. Available at https://www.cboe.com/aboutcboe/legal-regulatory/national-market-system-plans/pm-settlement-spxpm-data.
    \20\ See Notice, 88 FR at 26362.
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    As set forth more fully in the Notice, the Exchange concludes that
the Program does not negatively impact market quality or raise any
unique or prohibitive regulatory concerns.\21\ The Exchange states it
has not identified any evidence from the pilot data indicating that the
trading of p.m.-settled XSP or MRUT options has any adverse impact on
fair and orderly markets on Expiration Fridays for the Mini-SPX Index,
the Mini-RUT Index or the underlying securities comprising the
underlying indexes, nor have there been any observations of abnormal
market movements attributable to p.m.-settled XSP or MRUT options from
any market participants that have come to the attention of the
Exchange.\22\ In order to support its overall assessment of the
Program, the Exchange includes both an assessment of an analysis
conducted at the direction of the staff of the Commission's Division of
Economic and Risk Analysis and the Exchange's review and analysis of
pilot data.\23\ Among other things, the Notice includes the Exchange's
analysis of end of day volatility as well as a comparison of the impact
of quarterly index rebalancing versus p.m.-settled expirations.\24\
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    \21\ See id.
    \22\ See id.
    \23\ See Notice, 88 FR at 26362-65.
    \24\ See Notice, 88 FR at 26363-64. The Exchange states that
although its study specifically evaluated options on the S&P 500
index (``SPX options''), because XSP options overly the same index
comprised of the same securities (just one tenth the size) and MRUT
is also a broad-based index, the Exchange believes it is appropriate
to extrapolate the data to apply the Pilot Products. See Notice, 88
FR at 26365.
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    The Exchange also completed an analysis intended to evaluate
whether the Program impacted the quality of the a.m.-settled options
market.\25\ Specifically, the Exchange compared values of key market
quality indicators (specifically, the bid-ask spread \26\ and effective
spread \27\) in p.m.-settled SPX options (``SPXW'') both before and
after the introduction of Tuesday expirations and Thursday expirations
for SPXW options on April 18 and May 11, 2022, respectively.\28\ The
Exchange believes analyzing the impact of new SPXW options on then-
existing SPXW options permit the Exchange to extrapolate that it is
unlikely the introduction of the Pilot Products significantly impacted
the market quality of a.m.-settled options, such as a.m.-settled SPX or
Russell 2000 index options, respectively, when the Program began.\29\
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    \25\ See Notice, 88 FR at 26364.
    \26\ The Exchange calculated for each of SPXW options (with
Monday, Wednesday, and Friday expirations) and weekly options on the
Standard & Poor's Depositary Receipts S&P 500 ETF (``SPY'') (with
Monday, Wednesday, and Friday expirations) the daily time-weighted
bid-ask spread on the Exchange during its regular trading hours
session, adjusted for the difference in size between SPXW options
and SPY options (SPXW options are approximately ten times the value
of SPY options).
    \27\ The Exchange calculated the volume-weighted average daily
effective spread for simple trades for each of SPXW options (with
Monday, Wednesday, and Friday expirations) and SPY weekly options
(with Monday, Wednesday, and Friday expirations) as twice the amount
of the absolute value of the difference between an order execution
price and the midpoint of the national best bid and offer at the
time of execution, adjusted for the difference in size between SPXW
options and SPY options.
    \28\ For purposes of comparison, the Exchange paired SPXW
options and SPY options with the same moneyness and same days to
expiration.
    \29\ See Notice, 88 FR at 26365.
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    Finally, the Exchange states that the significant changes in the
closing procedures of the primary markets in recent decades, including
considerable advances in trading systems and technology, have
significantly minimized risks of any potential impact of p.m.-, cash-
settled XSP or MRUT options on the underlying cash markets.\30\
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    \30\ See Notice, 88 FR at 26364.
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III. Proceedings To Determine Whether To Approve or Disapprove SR-CBOE-
2023-019, and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \31\ to determine whether the proposed rule
change should be approved or disapproved. Institution of such
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 any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide
additional comment on the proposed rule change to inform the
Commission's analysis of whether to approve or disapprove the proposed
rule change.
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    \31\ 15 U.S.C. 78s(b)(2)(B).
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    Pursuant to Section 19(b)(2)(B) of the Act,\32\ the Commission is
providing notice of the grounds for disapproval under consideration. As
described above, the Exchange has proposed to make permanent a pilot
program that permits the listing and trading of p.m.-settled XSP and
MRUT options with third Friday-of-the-month-expirations. The Commission
is instituting proceedings to allow for additional analysis of, and
input from commenters with respect to, the proposed rule change's
consistency with the Act, and in particular, Section 6(b)(5) of the
Act, which requires, among other things, that the rules of a national
securities exchange be designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to 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.\33\
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    \32\ Id.
    \33\ 15 U.S.C. 78f(b)(5).
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IV. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written
submissions of their data, views, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposed rule
change, is consistent with Sections 6(b)(5) or any other provision of
the Act, or the rules and regulations thereunder. Although there do not
appear to be any issues relevant to approval or disapproval that would
be facilitated by an oral presentation of data, views, and arguments,
the Commission will consider, pursuant to Rule 19b-4 under the Act,\34\
any request for an opportunity to make an oral presentation.\35\
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    \34\ 17 CFR 240.19b-4.
    \35\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (Jun. 4, 1975), grants to
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 Acts 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 August 23, 2023. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
September 6, 2023. The Commission asks that commenters address the
sufficiency of the Exchange's statements in support of the proposal, in
addition to any other comments they may wish to submit about the
proposed rule change.
    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-CBOE-2023-019 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-CBOE-2023-019. 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 the filing also will be available for
inspection and copying at the principal office of the Exchange. 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-CBOE-2023-019 and should be
submitted on or before August 23, 2023. Rebuttal comments should be
submitted by September 6, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-16387 Filed 8-1-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 43 (Monday, March 5, 2012)]
[Rules and Regulations]
[Pages 13009-13010]
[FR Doc No: 2012-5256]

=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 80

[EPA-HQ-OAR-2011-0542; FRL-9642-3]
RIN 2060-AR07

Regulation of Fuels and Fuel Additives: Identification of
Additional Qualifying Renewable Fuel Pathways Under the Renewable Fuel
Standard Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Withdrawal of direct final rule.

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SUMMARY: EPA published a direct final rule on January 5, 2012 to amend
the Renewable Fuel Standard program regulations. Because EPA received
adverse comment, we are withdrawing the direct final rule.

DATES: Effective March 5, 2012, EPA withdraws the direct final rule
published at 77 FR 700, on January 5, 2012.

FOR FURTHER INFORMATION CONTACT: Vincent Camobreco, Office of
Transportation and Air Quality (MC6401A), Environmental Protection
Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone
number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: EPA published a direct final rule on January
5, 2012 (77 FR 700) to amend the Renewable Fuel Standard program
regulations. The amendments would have expanded Table 1 of Sec.
80.1426 to identify additional renewable fuel production pathways and
pathway components that could be used in producing qualifying renewable
fuel under the Renewable Fuel Standard program. We stated in that
direct final rule that if we received adverse comment by February 6,
2012, that we would publish a timely withdrawal in the Federal
Register. We subsequently received adverse comment on several of the
changes included in the revised Table 1 of Sec.  80.1426. Since the
regulatory amendment in the direct final rule was a single Table
including all changes, withdrawal based on the adverse comments we have
received requires withdrawal of the entire revised Table. EPA intends
to address all comments in a subsequent final action, which will be
based on the parallel proposed rule also published on January 5, 2012
(77 FR 462).
    As stated in the direct final rule and the parallel proposed rule,
we will not

institute a second comment period on this action.

    Dated: February 27, 2012.
Lisa P. Jackson,
Administrator.
    Accordingly, the regulatory amendments published on January 5, 2012
(77 FR 700) are withdrawn as of March 5, 2012.

[FR Doc. 2012-5256 Filed 3-2-12; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 76, Number 56 (Wednesday, March 23, 2011)]
[Notices]
[Pages 16464-16466]
[FR Doc No: 2011-6786]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-64091; File No. SR-ISE-2011-04]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Order Approving a Proposed Rule Change To Establish New Classes of
Market Makers for Index Options

March 17, 2011.

I. Introduction

    On January 12, 2011, the International Securities Exchange, LLC
(``ISE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend its rules to establish
two new classes of market makers for index options traded on the
Exchange. The proposed rule change was published for comment in the
Federal Register on January 31, 2011.\3\ The Commission received no
comments regarding 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. 63761 (January 25,
2011), 76 FR 5412 (``Notice'').
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II. Description of the Proposal

    The Exchange proposed to amend its rules to establish the following
new classes of market makers for certain index options traded on the
Exchange: Index Options Primary Market Makers (``IXPMM'') \4\ and Index
Options Competitive Market Makers (``IXCMM''),\5\ collectively referred
to as IXMMs.
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    \4\ An IXPMM is defined in new ISE Rule 2013(a) as a primary
market maker in Eligible Index Options traded on the Exchange
pursuant to new ISE Rule 2013.
    \5\ An IXCMM is defined in new ISE Rule 2013(a) as a competitive
market maker in Eligible Index Options traded on the Exchange
pursuant to new ISE Rule 2013.
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    The Exchange's proposal to separate out and introduce a new class
of market maker trading licenses that are specific to index options is
intended to allow an opportunity for additional market

participants, who are not currently maker makers on the Exchange's
First Market, to trade new index options as index-specific market
makers.\6\
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    \6\ See Notice, supra note 3, 76 FR at 5412. An IXMM license, by
itself, would not allow the holder thereof to trade in equity or ETF
options traded on the Exchange.
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    Because the Exchange's proposal primarily focuses on newly-listed
index products, the proposal describes how the existing 28 cash-settled
indexes traded on the Exchange will be treated. Specifically, index
options listed on the Exchange prior to December 31, 2010 (``Legacy
Index Options'') already have an PMM assigned. The proposal does not
affect those assignments, and such PMMs will simply continue to
function as PMMs (i.e., as an IXPMM) in its currently-assigned index
option(s). In addition, except as provided above, the proposal provides
that all current and future First Market PMMs and CMMs may trade (as an
IXCMM) all existing and future index products, including both Legacy
Index Options and Eligible Index Options without having to purchase a
separate IXCMM trading license. Market participants that are not
currently a PMM or CMM on the Exchange's First Market will be required
to purchase a new IXMM license in order to trade in index options on
the Exchange.\7\
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    \7\ IXMM trading licenses will not represent ownership of any
equity interest in the Exchange.
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    Eligible Index Options. New ISE Rule 2013(c) defines ``Eligible
Index Options'' as: (i) Index options that have a 6-month average daily
volume of less than 10,000 contracts in the US market; and (ii) index
options that have a trading history of less than 6 months, in which
case the eligibility threshold would be prorated proportionately over
the time that an index was listed in the US market.\8\ Prior to the
listing of an Eligible Index Option, the Exchange will conduct a one-
time eligibility test to determine whether an index product is an
Eligible Index Option. The Exchange will conduct the eligibility test
when an index product is qualified for listing under ISE rules and
prior to its certification with the Options Clearing Corporation.\9\
The following index products are not Eligible Index Options: Russell
2000 Index (``RUT''), the NASDAQ-100 Index (``NDX''), and the Mini-
NASDAQ-100 Index (``MNX'').\10\
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    \8\ For example, if an index has a trading history for just
three months in the US market, the prorated eligibility threshold
applied by ISE would be 20,000 ADV.
    \9\ The Exchange currently follows this process with regards to
the listing of all equity (including ETF) and index option products
traded on the Exchange.
    \10\ See new ISE Rule 2013(c)(2).
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    Legacy Index Options. ISE defines Legacy Index Options as index
options listed on the Exchange prior to December 31, 2010.\11\ New ISE
Rule 2013(c)(3) provides that the current First Market PMM that has an
allocation as PMM in a particular Legacy Index Option will be deemed to
be the IXPMM for Legacy Index Options and, accordingly, will not need
to purchase an IXPMM license to continue to trade as an IXPMM in that
Legacy Index Option. In the event a Legacy Index Option is de-listed
and subsequently re-listed, ISE will allocate the IXPMM license for
that index through the auction process described in Rule 2013.\12\
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    \11\ As of December 31, 2010, the following indexes are Legacy
Index Options: Mini FTSE 100 (symbol, UKX); ISE Semiconductors
(BYT); ISE Electronic Trading (DMA); ISE-Revere Natural Gas (FUM);
ISE Water (HHO); ISE Homeland Security (HSX); ISE Long Gold (HVY);
ISE 250 (IXZ); ISE U.S. Regional Banks (JLO); ISE Oil and Gas
Services (OOG); ISE Integrated Oil and Gas (PMP); ISE Bio-
Pharmaceuticals (RND); ISE Homebuilders (RUF); ISE SINdex (SIN); ISE
Nanotechnology (TNY); ISE Revere Wal-Mart Supplier (WMX); KBW Bank
Index (BKX); KBW Mortgage Finance Index (MFX); Morgan Stanley
Technology Index (MSH); Morgan Stanley Retail Index (MVR); Nasdaq Q-
50 Index (NXTQ); Mini-Russell 2000 (RMN); Russell 1000 Index (RUI);
S&P Mid Cap 400 Index (MID); Standard & Poor's Small Cap 600 Index
(SML).
    \12\ In other words, the delisting of a Legacy Index Option
terminates its status as a Legacy Index Option for purposes of new
ISE Rule 2013.
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    There will be one IXPMM per each Eligible Index Option and Legacy
Index Option.\13\ IXPMM trading licenses shall be permanently granted
as long as the IXPMM meets its stated market quality commitments.\14\
By contrast, all IXCMM trading licenses will be for a term of one year.
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    \13\ See new ISE Rule 2013(c)(3) and (e)(1).
    \14\ See new ISE Rule 2013(e)(1). The Board or designated
committee, however, may suspend or terminate any trading license of
a market maker whenever, in the Board's or designated committee's
judgment, the interests of a fair and orderly market are best served
by such action. See new ISE Rule 2013(e)(1).
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    Allocations Generally. Traditionally, new index products on the
Exchange have been allocated as part of the general allocation to ISE's
``First Market,'' which is the general market for higher-volume equity,
ETF and index options. The Exchange states that it will offer IXMM
trading licenses in a manner similar to how it offers foreign currency
(``FX'') options trading licenses to FX market makers.\15\ IXPMM
allocations will be based on the same methodology ISE currently uses
for FXPMMs in its FX products, which is based, in part, on market
quality commitments.
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    \15\ See Securities Exchange Act Release No. 55575 (April 3,
2007), 72 FR 17963, 17964 (April 10, 2007) (SR-ISE-2006-59).
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    IXPMM Allocations for Eligible Index Options. Current and future
First Market PMMs/CMMs may acquire an IXPMM trading license by
participating in an auction, which involves the submission of a
monetary bid and market quality commitments.
    IXPMM trading licenses will be sold by means of a sealed bid
auction conducted by the Exchange. A separate auction would be
conducted for each index option for which ISE seeks to allocate an
IXPMM. The ``winning'' bid at which an IXPMM trading license is sold is
referred to as the ``Auction Price.'' Together with its bid, a member
seeking an IXPMM trading license must provide, at a minimum, market
quality commitments regarding: (1) The average quotation size it will
disseminate in an Eligible Index Option; and (2) the maximum quotation
spread it will disseminate in such product at least 90% of the time. At
the end of the auction, the Exchange will determine the winning bidder
for an IXPMM trading license based on bid amount and market quality
commitment, and may reject a bid if the Exchange deems a market quality
commitment to be unrealistic or significantly inferior to market
quality commitments submitted by other bidding members. In an auction
for a trading right for an Eligible Index Option, ISE will give
preferred consideration to a First Market PMM/CMM where bid and quality
commitments are equal to those submitted by a new member who is not a
First Market PMM/CMM.
    Once allocated, the IXPMM may change its market quality commitment
only to the extent that the new commitments are an improvement to its
existing commitment. Under new Rule 2013(e)(4), the Exchange will
review and assess market quality commitments on a quarterly basis to
ensure IXPMMs are in compliance with their stated commitments. At the
discretion of the Exchange and subject to the procedural protections
provided under the rules of the Exchange,\16\ failure to meet stated
commitments may result in ISE terminating an allocation and conducting
an auction to reallocate the failing IXPMM's index option.\17\
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    \16\ See Chapter 17 of ISE Rules.
    \17\ See supra note 14.
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    IXCMM Allocations. Current and future First Market PMMs may
request, and if requested will be allocated, an IXCMM trading license
without having to pay any additional fee. A member who is not a First
Market PMM/CMM will be required to purchase an IXCMM trading license to
trade as an IXCMM on the Exchange. IXCMM trading licenses will be
available for purchase at any

time during a calendar year.\18\ All IXCMM trading licenses will expire
at the end of the calendar year in which they are issued but, upon
request by a PMM or CMM, will be renewed for subsequent years on an
annual basis.\19\
---------------------------------------------------------------------------

    \18\ IXCMM trading licenses sold during a calendar year will be
prorated to reflect the number of trading days in the year. See new
ISE Rule 2013(f)(2).
    \19\ See Notice, supra note 3, 76 FR at 5414.
---------------------------------------------------------------------------

    IXMM Duties and Privileges. By amending ISE Rule 802(b) to permit
the allocation of Eligible Index Options, subject to new Rule 2013, ISE
is subjecting market makers in Eligible Index Options to the
obligations imposed on Exchange market makers under Chapter 8 of the
Exchange's rules. Accordingly, once an IXPMM obtains a trading license
in an Eligible Index Option, the IXPMM will have all of the
responsibilities and privileges of a PMM under the Exchange's
rules.\20\ Similarly, once an IXCMM obtains a trading license in an
Eligible Index Option, the IXCMM will have all the responsibilities and
privileges under the Exchange's rules.
---------------------------------------------------------------------------

    \20\ For example, IXPMMs will enjoy privileges that include,
among other things, participation rights and small order execution
preference while accepting responsibilities that include, among
other things, the obligation to provide continuous quotations in an
Eligible Index Option for which it has been allocated, to conducting
the opening rotation on a daily basis for as long as the IXPMM
retains an allocation in an Eligible Index Option.
---------------------------------------------------------------------------

    After an IXPMM has purchased a trading license, the IXPMM may
terminate its status as IXPMM in an index option if the IXPMM is unable
to meet its obligations, provided the IXPMM gives at least 60 days
prior written notice to the Exchange of such termination. In the event
the Exchange is unable to re-allocate the IXPMM's index option product
within the notice period and the index option product is singly listed
on ISE, then the IXPMM will be required to continue to fulfill its
obligations in that product until all open interest has been closed. An
IXCMM may terminate its trading license prior to its scheduled
expiration by providing at least 10 days prior written notice to the
Exchange.

III. Discussion

    The Commission finds that the proposed rule change is consistent
with the requirements of Section 6(b)(5) of the Act,\21\ which
requires, among other things, 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.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b)(5). In approving this proposed rule
change, the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    The Commission believes that the provisions governing the two new
classes of market makers that will be permitted to trade Eligible Index
Options and Legacy Index Options on the Exchange, IXPMMs and IXCMMs,
are consistent with the Act. The Commission notes that IXPMMs and
IXCMMs will be subject to identical obligations that correspond to the
market making obligations applicable to First Market PMMs and CMMs,
respectively.\22\ The Commission notes that, to obtain a trading
license, IXPMMs will be required to provide the Exchange with market
quality commitments \23\ and, if an IXPMM continuously fails to meet
its stated market quality commitments, the Exchange may terminate its
IXPMM allocation.\24\
---------------------------------------------------------------------------

    \22\ See supra note 20.
    \23\ See new ISE Rule 2013(e)(3).
    \24\ See new ISE Rule 2013(e)(4).
---------------------------------------------------------------------------

    The Commission believes that the procedures under which the
Exchange proposes to offer IXMM licenses are reasonably designed to
award such allocations in a fair and reasonable manner. In particular,
the Commission believes that provisions governing IXCMM trading
licenses are designed to ensure that market maker trading licenses will
be widely available because the Exchange will make an unlimited amount
of IXCMM licenses available for purchase by members who are not PMMs or
CMMs on the Exchange's First Market.\25\ In addition, the requirement
that bidders provide market quality commitment in addition to their bid
for an IXPMM allocation will allow the Exchange to grant IXPMM trading
licenses in an objective manner without awarding a trading license
solely based on the highest bid.
---------------------------------------------------------------------------

    \25\ See new ISE Rule 2013(f).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\26\ that the proposed rule change (SR-ISE-2011-04) be, and hereby
is, approved.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\27\
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-6786 Filed 3-22-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: July 16, 2010 (Volume 75, Number 136)]
[Notices]
[Page 41508]
[DOCID:fr16jy10-70]

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

DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Internal Agency Docket No. FEMA-1918-DR; Docket ID FEMA-2010-0002]

West Virginia; Amendment No. 2 to Notice of a Major Disaster
Declaration

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

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

SUMMARY: This notice amends the notice of a major disaster declaration
for the State of West Virginia (FEMA-1918-DR), dated June 24, 2010, and
related determinations.

DATES: Effective Date: June 29, 2010.

FOR FURTHER INFORMATION CONTACT: Peggy Miller, Recovery Directorate,
Federal Emergency Management Agency, 500 C Street, SW., Washington, DC
20472,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: Notice is hereby given that the incident
period for this disaster is closed effective June 29, 2010.

The following Catalog of Federal Domestic Assistance Numbers (CFDA)
are to be used for reporting and drawing funds: 97.030, Community
Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling;
97.033, Disaster Legal Services; 97.034, Disaster Unemployment
Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048,
Disaster Housing Assistance to Individuals and Households in
Presidentially Declared Disaster Areas; 97.049, Presidentially
Declared Disaster Assistance--Disaster Housing Operations for
Individuals and Households; 97.050, Presidentially Declared Disaster
Assistance to Individuals and Households--Other Needs; 97.036,
Disaster Grants--Public Assistance (Presidentially Declared
Disasters); 97.039, Hazard Mitigation Grant.

W. Craig Fugate,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2010-17376 Filed 7-15-10; 8:45 am]
BILLING CODE 9111-23-P


Economic Impact Screening Analysis for Proposed Adjustments to the Allowance System for Controlling HCFC Production, Import, and Export

		   Stratospheric Protection Division
U.S. Environmental Protection Agency
Washington, D.C. 20460

Prepared with support from:
ICF International
1725 Eye Street, NW
Washington, DC 20006

June 2014

Contents
List of Tables	3
1.	Introduction	4
2.	Summary of General Approach and Key Analytical Assumptions	5
3.	HCFC-22	7
3.1.	Small Entities Potentially Subject to the Rulemaking	7
3.2.	Estimated Economic Impact on Affected Small Entities	7
Reporting Costs	7
Impact on Sales	8
4.	Other HCFCs	9
4.1.	Small Entities Potentially Subject to the Rule Making	9
4.2.	Estimated Economic Impact on Affected Small Entities	9
Compliance Costs	9
Impact on Sales	9
5.	Other Regulatory Changes	10
605(a) Use Exemption for HCFC-123 Fire Suppression Applications	10
De Minimis Exemption	10
Reporting Requirements for Reclaimers	10
6.	Conclusion	11
Appendix: HCFC Allocations	12

List of Tables
Table 1: Proposed Regulatory Options for HCFC-22	4
Table 2: Proposed Regulatory Options for Other HCFCs	4
Table 3: General Steps and Approach for Small Business Impact Analyses	5
Table 4: HCFCs, Alternatives, and Average Sales Prices ($/kg)	6
Table 5: HCFC-22 Consumption Allowance Holders Impacted By the Proposed Regulations	7
Table 6: Compliance Costs for Small Entities Submitting Paper Forms	8
Table 7: Estimated Economic Benefit of HCFC-22 Allowance Allocation (Thousand $)	8
Table 8: Other HCFC Small Business Allowance Holders	9
Table 9: Estimated Economic Impact of Allowance Allocation (Thousand $)	10
Table 10: Summary of Net Economic Benefit of the Proposed Allocations, By Company (Thousand $)	11
Table 11: HCFC-22 Allocations, by Small Business (MT)	12
Table 12: HCFC-123 Allocations, by Small Business (MT)	12
Table 13: HCFC-124 Allocations, by Small Business (MT)	12

1. Introduction
This screening analysis has been prepared in accordance with the Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA). For all rules subject to the RFA, a screening analysis is required to first determine what, if any, direct impact a proposed rulemaking may have on small entities. For rules that pose "a significant economic impact on a substantial number of small entities" (SISNOSE), an initial and final regulatory flexibility analysis is also required.
The following screening analysis assesses the potential economic impacts on small entities associated with the adjustments to the allowance system for controlling HCFC production, import, and export from 2015 -  - 2019. The proposed allowance allocations are for HCFC-22, HCFC-142b, HCFC-123, HCFC-124, HCFC-225ca/cb, and HCFC-141b.
Table 1 provides a summary of the regulatory options proposed for HCFC-22 consumption allowances. EPA is finalizing Option 1b, a 5-year linear approach starting at 10,000 MT, with an annual decrease of 2,000 MT.
Table 1: Proposed Regulatory Options for HCFC-22
                                    Option
                          Proposed Regulatory Option
                           HCFC-22 Allocations (MT)

                                     2015
                                     2016
                                     2017
                                     2018
                                     2019
                                     2020
                                       1
5-year linear approach with an allocation of 13,700 MT in 2015 and annual decreases of ~2,700 MT
                                                                        13,700
                                                                         10,900
                                                                         8,200
                                                                         5,500
                                                                         2,700
                                                                              0
                                      1b
5-year linear approach with an allocation of 10,000 MT in 2015and annual decreases of 2,000 MT
                                                                         10,000
                                                                          8,000
                                                                          6,000
                                                                          4,000
                                                                          2,000
                                                                              0
                                      1c
5-year linear approach with an  allocation of 16,700 MT in 2015 and annual decreases of 3,360 MT
                                                                         16,700
                                                                         13,340
                                                                          9,980
                                                                          6,620
                                                                          3,260
                                                                              0
                                       2
3-Year Linear Approach*
                                                                        12,400
                                                                          8,300
                                                                         4,100
                                                                           0
                                                                            0
                                                                           0
                                       3
Estimation Approach
                                                                        23,100
                                                                        20,900
                                                                        15,100
                                                                        11,500
                                                                         6,200
                                                                              0
*EPA also proposed a 3-Year Linear Approach starting at 15,000 MT in 2015.
Table 2 provides a summary of the proposed allocations for other HCFCs. For HCFC-142b, EPA is finalizing an allocation of 35 MT in 2015 with an annual decrease of 5 MT. For HCFC-123, EPA is finalizing its proposal to allocate 2,000 MT each year (which is 100 percent of the HCFC-123 consumption baseline). For HCFC-124, EPA is finalizing an allocation of 200 MT of production and consumption allowances each year. No allowances are being provided for HCFC-141b and HCFC-225ca/cb beyond 2014.
Table 2: Proposed Regulatory Options for Other HCFCs
                                     HCFC
                          Proposed Regulatory Option
                             HCFC Allocations (MT)

                                     2015
                                     2016
                                     2017
                                     2018
                                     2019
                                     2020
                                   HCFC-142b
35 MT in 2015, with an annual decrease of 5 MT
                                                                             35
                                                                             30
                                                                             25
                                                                             20
                                                                             15
                                                                              0
                                   HCFC-123
100% of baseline
                                                                          2,000
                                                                          2,000
                                                                          2,000
                                                                          2,000
                                                                          2,000
                                                                              ?

1900 MT in 2015 through 2017, declining to 1400 in 2018 and 2019
                                                                          1,900
                                                                          1,900
                                                                          1,900
                                                                          1,400
                                                                          1,400
                                                                              ?
                                   HCFC-124
200 MT per year
                                                                            200
                                                                            200
                                                                            200
                                                                            200
                                                                            200
                                                                              ?
                                   HCFC-141b
Remove petition process from regulations as of January 1, 2015
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                 HCFC-225ca/cb
Limited exemption to allow entities that have HCFC-225ca/cb in inventory prior to January 1, 2015 to continue to use HCFC-225ca/cb beyond that date.
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
                                                                              0
The remainder of this report is organized as follows:
   * Section 2 presents the general approach and assumptions used, consistent with EPA guidelines.
   * Section 3 identifies the small entities potentially affected by the regulatory action for HCFC-22 and then estimates the economic impact on those affected entities.
   * Section 4 identifies the small entities potentially affected by the regulatory action for other HCFCs and then estimates the economic impact on those entities.
   * Section 5 addresses the potential small business impacts of other regulatory changes.
   * Section 6 summarizes the aggregate small business impacts of the rulemaking.
   * The Appendix provides a summary of HCFC allocations by entity and year.
2. Summary of General Approach and Key Analytical Assumptions
Table 3 shows the analytical steps and approach taken to prepare the screening analysis.
Table 3: General Steps and Approach for Small Business Impact Analyses
Step
Approach
Identify the companies that are expected to be directly impacted by each regulatory option
EPA regulations at 40 CFR 82.15(a) and (b) prohibit the production and import of HCFCs for which EPA has apportioned baseline allowances without calendar-year (or "annual") allowances. As a result, in the absence of a final 2015-2019 rule, production and import of HCFC-22 and HCFC-142b, as well as HCFC-123, HCFC-124 and HCFC-225ca/cb would be prohibited in 2015 and beyond.

By allocating allowances for 2015 through 2019 to specific companies, this rulemaking directly impacts those allowance holders named in the rule. Other entities may experience indirect effects as a result of market changes influenced by the rule, but these are not to be considered in this analysis. See Cement Kiln Recycling Coalition v. EPA, 255 F.3d 855, 869 (D.C. Cir. 2001) (the D.C. Circuit "has consistently rejected the contention that the RFA applies to small businesses indirectly affected by the regulation of other entities.").
Determine what proportion of allowance holders are small businesses
A North American Industry Classification System (NAICS) code was identified for each HCFC allowance holder identified in the proposed rule and at 40 CFR 82.17 and 82.19. Available economic data about each allowance holder (i.e., number of employees, annual sales) was obtained from the Dun and Bradstreet databases. Dun and Bradstreet is a public company that collects and licenses information on over 200 million businesses and corporations worldwide.
Of the allowance holders, small businesses were identified using the U.S. Small Business Administration's table of small business size standards matched to NAICS codes (table effective as of July 22, 2013). The small business threshold was defined by the number of employees in the company and varied between 100 and 1,000 employees.
For the purpose of quantifying the economic impact of the regulation, make assumptions about alternative refrigerants produced and imported in the absence of the proposed rulemaking
For the purposes of quantifying economic impact, this analysis has made some choices regarding which HCFC alternatives are imported and produced in the absence of the HCFC allowances allocated under the 2015-2019 rulemaking. These choices are not intended to imply expectations about the individual business decisions of allowance holders, or to represent the full range of available alternatives. For the purpose of this analysis, the selected alternative is a proxy for the set of alternatives that could be used, based on projections of the most common alternatives to existing HCFCs from EPA's Vintaging Model. The analysis assumes that alternatives are produced and imported in the same volumes as the HCFCs they would replace.
Quantify the economic impact on small businesses
This rulemaking authorizes allowance holders to voluntarily continue producing and importing HCFCs. As such, there are few direct costs of compliance. The proposed regulation does not change reporting requirements; however, production and import of HCFCs -- as authorized by this proposed rulemaking -- triggers HCFC reporting and recordkeeping requirements in 40 CFR part 82, subpart A.  These reporting costs are included in this screening analysis.
No incremental capital costs are assumed to be incurred in order to comply with the 2015-2019 rule; this rulemaking allows allowance holders to continue to produce and import HCFCs after 2014.
By authorizing allowance holders to continue producing and importing HCFCs, this rulemaking also provides some economic benefit to those allowance holders given the relatively higher selling price of HCFCs versus alternatives (see Table 4). This benefit is estimated by multiplying the sales price differential between the HCFC and the proxy alternative by the HCFC allocation proposed for each allowance holder.

All costs and savings values are expressed in constant year 2013 U.S. dollars. Because all costs and savings are experienced on an annual basis, no discounting was needed to present annual costs for the purposes of this screening analysis.

Table 4 shows the average sales prices of HCFCs and non-HCFC alternatives. As noted above, the selection of alternatives was based on projections of the most common alternatives to these HCFCs from EPA's Vintaging Model. Prices were based on publicly available information from refrigerant distributors, as well as information provided through industry inquiries.
Table 4: HCFCs, Alternatives, and Average Sales Prices ($/kg)
                                     HCFC
                               Sale Price ($/kg)
                                  Alternative
                               Sale Price ($/kg)
                            Price Difference ($/kg)
                                    HCFC-22
                                    $14.30
                                    R-410A
                                     $4.40
                                     $9.90
                                   HCFC-123
                                    $27.20
                                   HFC-134a
                                    $17.30
                                     $9.90
                                   HCFC-124
                                    $13.20
                                    R-404A
                                    $11.00
                                     $2.20
3. HCFC-22
For the purposes of this analysis, the economic impact of EPA's final allocation (Option 1b) of a five-year linear drawdown from 10,000 MT is singularly considered.
   3.1. Small Entities Potentially Subject to the Rulemaking
Nine of the 19 HCFC-22 consumption allowance holders are classified as small businesses, based on the size standards associated with the NAICS code for each company (see Table 5). None of the HCFC-22 production allowance holders are classified as small businesses.
Table 5: HCFC-22 Consumption Allowance Holders Impacted By the Proposed Regulations
                                    Company
                                     NAICS
                          NAICS Industry Description
                              Number of Employees
                     Size Standards in Number of Employees
Altair Partners
                                    424690
Other Chemical and Allied Products Merchant Wholesalers
                                       4
                                      100
H.G. Refrigeration Supply
                                    423740
Refrigeration Equipment and Supplies Merchant Wholesalers
                                      10
                                      100

                                    423730
Warm Air Heating and Air-Conditioning Equipment and Supplies Merchant Wholesalers

Mexichem Fluor Inc.
                                    325998
All Other Miscellaneous Chemical Product and Preparation Manufacturing
                                      70
                                      500
Kivlan & Company
                                    423740
Refrigeration Equipment and Supplies Merchant Wholesalers
                                       3
                                      100

                                    423730
Warm Air Heating and Air-Conditioning Equipment and Supplies Merchant Wholesalers

Mondy Global
                                    423740
Refrigeration Equipment and Supplies Merchant Wholesalers
                                       4
                                      100
Reficentro
                                    423730
Warm Air Heating and Air-Conditioning Equipment and Supplies Merchant Wholesalers
                                      93
                                      100

                                    423740
Refrigeration Equipment and Supplies Merchant Wholesalers

R-Lines
                                    312111
Soft Drink Manufacturing
                                       7
                                      500
Saez Distributors
                                    423730
Warm Air Heating and Air-Conditioning Equipment and Supplies Merchant Wholesalers
                                      30
                                      100
USA Refrigerants
No NAICS code, employee data, or sales data found. Other information suggests the company has fewer than 100 employees thus USA Refrigerants has been included in this analysis.
Company data obtained from Dun and Bradstreet (2013).
   3.2. Estimated Economic Impact on Affected Small Entities
This section summarizes the annual reporting costs for HCFC-22 small business allowance holders, as well as the economic benefit associated with the continued production and import of HCFCs.
Reporting Costs
EPA monitors actual production and import of HCFCs through the recordkeeping and reporting requirements previously-established in the regulations in 40 CFR part 82, subpart A. Regulated entities are required to submit reporting forms in either paper or electronic format on a quarterly basis. These data are collected and maintained by EPA to help the agency oversee the total production and consumption of controlled substances and monitor compliance with limits and restrictions on production, imports, and trades.
Although the requirement to report is not is not a new requirement in the 2015-2019 rulemaking, entities must comply with 40 CFR part 82, subpart A to use allowances; thus EPA is accounting for this cost to estimate the economic impact of the proposed regulation. The costs differ depending on whether entities are submitting an electronic or paper report. In 2013, no small entities used the electronic reporting system; this analysis assumes that all small entities will be reporting using paper forms.
Information on the estimated burden of reporting is obtained from the EPA's 2012 Information Collection Request (ICR) for the Reporting and Recordkeeping Requirements of the HCFC Allowance System. The time required for an entity to submit one paper report is estimated at 4.5 hours based on consultations from industry. Operations and maintenance (O&M) costs are estimated at $5.00 for each report; these costs include photocopying, packaging, and postage. Table 6 summarizes the annual costs to comply with 40 CFR part 82, subpart A, which is approximately $1,970 per year.
Table 6: Compliance Costs for Small Entities Submitting Paper Forms

                                     Hours
                           Number of Activities/Year
                                  Hours/Year
                                Labor ($/Year)
                               O&M ($/Year)
                           Total ($/Year/Respondent)
Paper Submission
                                                                            4.5
                                                                              4
                                                                             18
                                                                     $1,949.72
                                                                         $20.00
                                                                      $1,969.72
Impact on Sales
This rulemaking authorizes small business allowance holders to continue importing HCFCs in quantities equal to or less than their allowance allocation in a given year (see Appendix). In the absence of the rulemaking, it is assumed that importers and distributors would transition to an alternative refrigerant and sell similar volumes as HCFC-22. For the purpose of this analysis, it is assumed that entities would transition to R-410A in lieu of HCFC-22, and that the cost to the importer of purchasing and importing the chemical is approximately the same, regardless of whether it is an HCFC or HFC. Therefore, the economic impact is equal to the sales price differential between HCFC-22 and R-410A (see Table 4), multiplied by each allowance holder's HCFC allocation. The compliance costs associated with HCFC import are accounted for in Table 10, which shows the net economic benefit of the 2015-2019 HCFC allocations. Because HCFC-22 currently sells for a higher price than R-410A, the economic impact is a benefit, as shown in Table 7.
Table 7: Estimated Economic Benefit of HCFC-22 Allowance Allocation (Thousand $)
                                    Company
                                     2015
                                     2016
                                     2017
                                     2018
                                     2019
Altair Partners
                                                                         $209.3
                                                                         $167.4
                                                                         $125.6
                                                                          $83.7
                                                                          $41.9
H.G. Refrigeration Supply
                                                                          $27.8
                                                                          $22.2
                                                                          $16.7
                                                                          $11.1
                                                                           $5.6
Mexichem Fluor Inc.
                                                                       $1,764.6
                                                                       $1,411.7
                                                                       $1,058.8
                                                                         $705.8
                                                                         $352.9
Kivlan & Company
                                                                       $1,442.1
                                                                       $1,153.7
                                                                         $865.3
                                                                         $576.9
                                                                         $288.4
Mondy Global
                                                                         $195.3
                                                                         $156.2
                                                                         $117.2
                                                                          $78.1
                                                                          $39.1
Reficentro
                                                                          $31.9
                                                                          $25.5
                                                                          $19.1
                                                                          $12.7
                                                                           $6.4
R-Lines
                                                                          $43.8
                                                                          $35.0
                                                                          $26.3
                                                                          $17.5
                                                                           $8.8
Saez Distributors
                                                                          $26.3
                                                                          $21.0
                                                                          $15.8
                                                                          $10.5
                                                                           $5.3
USA Refrigerants
                                                                          $10.3
                                                                           $8.2
                                                                           $6.2
                                                                           $4.1
                                                                           $2.1
4. Other HCFCs
This analysis also considers the final allocation options selected for HCFC-123 and HCFC-124. Specifically, this analysis assess the economic impact of allocating 200 MT of HCFC-124 consumption and production allowances, and 2,000 MT of HCFC-123 consumption allowances.
   4.1. Small Entities Potentially Subject to the Rule Making
Based on the small business size standards associated with the NAICS codes, there are three small businesses impacted by the 2015-2019 rulemaking for other HCFCs (see Table 8). Perfect Technology Center has allocations for HCFC-123, ICOR for HCFC-124, and Tulstar Products for both. There are no small businesses with HCFC-142b baseline allowances.
Table 8: Other HCFC Small Business Allowance Holders
                                    Company
                                     NAICS
                          NAICS Industry Description
                              Number of Employees
                     Size Standards in Number of Employees
Perfect Technology Center, LP
                                    333249
Other Industrial Machinery Manufacturing
                                      40
                                      500

                                    334512
Automatic Environmental Control Manufacturing for Residential, Commercial and Appliance Use

Tulstar Products
                                    424690
Other Chemical and Allied Products Merchant Wholesalers
                                      16
                                      100
ICOR
                                    325199
All Other Basic Organic Chemical Manufacturing
                                      16
                                     1,000
Company data obtained from Dun and Bradstreet (2013).
   4.2. Estimated Economic Impact on Affected Small Entities
This section summarizes the annual reporting costs for the HCFC allowance holders identified in Table 8 and the economic benefit associated with the continued production and import of HCFCs.
Compliance Costs
The reporting requirements for HCFC-123 and HCFC-124 allowance holders are the same as for HCFC-22. This analysis assumes that small entities are reporting quarterly using a paper form with the same time, wage, and O&M costs as outlined in Table 6. Tulstar Product is the only small entity with allowances for two HCFCs (-123 and -124); this analysis assumes that the reporting cost for two HCFCs is the same as for one HCFC.
Impact on Sales
Similar to the approach described for HCFC-22, this analysis assesses the impact of the regulation on sales of each HCFC by estimating the sales expected with and without the 2015-2019 rulemaking. See the Appendix for allowances allocated to each small business. For the purpose of this analysis, it is assumed that entities would transition to HFC-134a in lieu of HCFC-123, and to R-404A instead of HCFC-124, and that the cost to the importer of purchasing and importing the chemical is approximately the same, regardless of whether it is an HCFC or HFC. Therefore, the economic impact is equal to the sales price differential between the HCFC and the alternative (see Table 4), multiplying by the HCFC allocation proposed for each allowance holder. Because HCFC-123 and -124 currently sell for a higher price than HFC-134a and R-404A, respectively, the economic impact is a benefit, as shown in Table 9.
Table 9: Estimated Economic Impact of Allowance Allocation (Thousand $)
                                    Company
                                     2015
                                     2016
                                     2017
                                     2018
                                     2019
Perfect Technology Center, LP
                                                                          $90.1
                                                                          $90.1
                                                                          $90.1
                                                                          $90.1
                                                                          $90.1
Tulstar Products
                                                                        $386.44
                                                                        $386.44
                                                                        $386.44
                                                                        $386.44
                                                                        $386.44
ICOR
                                                                         $14.83
                                                                         $14.83
                                                                         $14.83
                                                                         $14.83
                                                                         $14.83
5. Other Regulatory Changes
EPA is also allowing for continued use of HCFC-123 as a fire suppression agent through 2019, allowing for a de minimis exemption from the CAA section 605(a) use prohibition taking effect in 2015, and making changes to the section 608 reporting requirements for reclaimers. For more specific information on these parts of the final rule, please see the preamble in the Federal Register (also available at docket ID: EPA-HQ-OAR-2013-0263).
605(a) Use Exemption for HCFC-123 Fire Suppression Applications
EPA is finalizing its proposal to align its regulations with the recent amendment to CAA section 605(a) and allow for continued use of HCFC-123 in nonresidential streaming fire suppression applications. EPA has not considered the economic impact further because this exemption is relieving a regulatory burden that would prohibit production and import of HCFC-123 for use in new non-residential streaming fire suppression products.
De Minimis Exemption
EPA is finalizing its proposed de minimis exemption allowing any person with HCFC-225ca/cb in inventory prior to January 1, 2015, to use that material as a solvent. EPA is also finalizing a de minimis exemption allowing any person with HCFC-124 in inventory prior to January 1, 2015, to use that material as a sterilant for biological indicators. EPA has not considered the economic impact further because this exemption is relieving a regulatory burden that would have required entities to destroy or render their existing inventory of HCFCs "used" before the prohibition on use as a sterilant or as a solvent takes effect.
Reporting Requirements for Reclaimers
EPA is finalizing its proposal (1) to require a reclaimer to notify EPA when there is a change in business management, location, or contact information and (2) to require disaggregated information for all reclaimed refrigerants as part of annual reporting to EPA. The agency is not finalizing its proposed incorporation by reference of AHRI 700-2012 at this time due to the ongoing review of the standard by ASHRAE and AHRI.
EPA believes that notification of changes in business information would improve accountability and benefit reclaimers in the long run. Without accurate information, EPA may not be able to communicate with a reclaimer in a timely manner. Additionally, as a benefit to the public, the agency wants to ensure that its website listing certified reclaimers and their contact information is accurate. With regards to requiring refrigerant reclamation data, EPA believes this change will clarify what information it needs from reclaimers up front, and will alleviate the need for additional back-and-forth between EPA and reclamation companies that in the past were not submitting refrigerant-specific data.

These minor changes do not increase burden and may in fact lessen burden on small reclamation businesses by ensuring that businesses that have already reported do not have to spend additional time responding to follow-up requests from EPA. These changes also ensure that EPA can reach businesses in a timely manner with any necessary information and that reclaimer contact information provided to the public on EPA's website is accurate. As such, EPA does not consider there to be any additional cost to small businesses and the broader regulated community.
6. Conclusion
EPA's Final Guidance for EPA Rulewriters: Regulatory Flexibility Act as amended by the Small Business Regulatory Enforcement Fairness Act (2006) recommends performing a sales test -- which calculates annual compliance costs as a percentage of annual sales -- and then comparing the results of that sales test to a decision matrix to determine whether to certify no significant economic impact on a substantial number of small entities (SISNOSE). A decision matrix typically defines threshold levels for the economic impact (e.g., net costs are less than 1% for all affected small entities). Based on the screening analysis presented in Sections 3 and 4 above, however, the proposed rulemaking is expected to have a net economic benefit to the small businesses that are directly affected (allowance holders). These net benefits are shown in Table 10 below for each impacted small business.
Thus, this screening analysis suggests that the 2015-2019 rulemaking could be presumed to have no SISNOSE because it is expected to result in a net benefit to directly affected small businesses.
Table 10: Summary of Net Economic Benefit of the Proposed Allocations, By Company (Thousand $)
                                    Company
                                     2015
                                     2016
                                     2017
                                     2018
                                     2019
Altair Partners
                                                                       $207.32
                                                                       $165.47
                                                                       $123.61
                                                                        $81.75
                                                                        $39.89
H.G. Refrigeration Supply
                                                                        $25.80
                                                                        $20.24
                                                                        $14.69
                                                                         $9.14
                                                                         $3.58
Mexichem Fluor Inc.
                                                                     $1,762.62
                                                                     $1,409.70
                                                                     $1,056.78
                                                                       $703.87
                                                                       $350.95
Kivlan & Company
                                                                     $1,440.18
                                                                     $1,151.75
                                                                       $863.32
                                                                       $574.89
                                                                       $286.46
Mondy Global
                                                                       $193.33
                                                                       $154.27
                                                                       $115.21
                                                                        $76.15
                                                                        $37.09
Reficentro
                                                                        $29.89
                                                                        $23.52
                                                                        $17.15
                                                                        $10.78
                                                                         $4.40
R-Lines
                                                                        $41.81
                                                                        $33.05
                                                                        $24.30
                                                                        $15.54
                                                                         $6.79
Saez Distributors
                                                                        $24.32
                                                                        $19.06
                                                                        $13.80
                                                                         $8.55
                                                                         $3.29
USA Refrigerants
                                                                         $8.33
                                                                         $6.27
                                                                         $4.21
                                                                         $2.15
                                                                         $0.09
Perfect Technology Center, LP
                                                                         $88.12
                                                                         $88.12
                                                                         $88.12
                                                                         $88.12
                                                                         $88.12
Tulstar Products
                                                                        $384.47
                                                                        $384.47
                                                                        $384.47
                                                                        $384.47
                                                                        $384.47
ICOR
                                                                         $12.86
                                                                         $12.86
                                                                         $12.86
                                                                         $12.86
                                                                         $12.86
Appendix: HCFC Allocations

Table 11: HCFC-22 Allocations, by Small Business (MT)
                                    Company
                             Baseline Allocation
                                     2015
                                     2016
                                     2017
                                     2018
                                     2019
Altair Partners
                                                                       302.011
                                                                         21.14
                                                                         16.91
                                                                         12.68
                                                                          8.46
                                                                          4.23
H.G. Refrigeration Supply
                                                                        40.068
                                                                          2.80
                                                                          2.24
                                                                          1.68
                                                                          1.12
                                                                          0.56
Mexichem Fluor Inc.
                                                                     2,546.305
                                                                        178.24
                                                                        142.59
                                                                        106.94
                                                                         71.30
                                                                         35.65
Kivlan & Company
                                                                     2,081.018
                                                                        145.67
                                                                        116.54
                                                                         87.40
                                                                         58.27
                                                                         29.13
Mondy Global
                                                                       281.824
                                                                         19.73
                                                                         15.78
                                                                         11.84
                                                                          7.89
                                                                          3.95
Reficentro
                                                                        45.979
                                                                          3.22
                                                                          2.57
                                                                          1.93
                                                                          1.29
                                                                          0.64
R-Lines
                                                                        63.172
                                                                          4.42
                                                                          3.54
                                                                          2.65
                                                                          1.77
                                                                          0.88
Saez Distributors
                                                                        37.936
                                                                          2.66
                                                                          2.12
                                                                          1.59
                                                                          1.06
                                                                          0.53
USA Refrigerants
                                                                        14.865
                                                                          1.04
                                                                          0.83
                                                                          0.62
                                                                          0.42
                                                                          0.21

Table 12: HCFC-123 Allocations, by Small Business (MT)
                                    Company
                             Baseline Allocation
                                     2015
                                     2016
                                     2017
                                     2018
                                     2019
Perfect Technology Center, LP
                                                                         9.100
                                                                          9.1
                                                                           9.1
                                                                           9.1
                                                                           9.1
                                                                           9.1
Tulstar Products
                                                                        34.800
                                                                          34.8
                                                                          34.8
                                                                          34.8
                                                                          34.8
                                                                          34.8

Table 13: HCFC-124 Allocations, by Small Business (MT)
                                    Company
                             Baseline Allocation
                                     2015
                                     2016
                                     2017
                                     2018
                                     2019
ICOR
                                                                         81.220
                                                                           6.74
                                                                           6.74
                                                                           6.74
                                                                           6.74
                                                                           6.74
Tulstar Products
                                                                       229.582
                                                                         19.06
                                                                         19.06
                                                                         19.06
                                                                         19.06
                                                                         19.06