[Federal Register Volume 81, Number 192 (Tuesday, October 4, 2016)]
[Notices]
[Page 68492]
[FR Doc No: 2016-23996]

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SECURITIES AND EXCHANGE COMMISSION

[File No. 500-1]

In the Matter of Sierra Resource Group, Inc.; Order of Suspension
of Trading

September 29, 2016.
    It appears to the Securities and Exchange Commission that there is
a lack of current and accurate information concerning the securities of
Sierra Resource Group, Inc. (CIK No. 1076966) because it has not filed
a periodic report since it filed its Form 10-Q for the period ending
September 30, 2013, filed on November 19, 2013. Sierra Resource Group,
Inc. is a Nevada corporation with its principal offices in Las Vegas,
Nevada. The company's common stock (ticker ``SIRG'') is quoted on OTC
Link (previously ``Pink Sheets'') operated by OTC Markets Group, Inc.
    The Commission is of the opinion that the public interest and the
protection of investors require a suspension of trading in the
securities of Sierra Resource Group, Inc. Therefore, it is ordered,
pursuant to Section 12(k) of the Securities Exchange Act of 1934, that
trading in the securities of Sierra Resource Group, Inc. is suspended
for the period from 9:30 a.m. EDT on September 29, 2016, through 11:59
p.m. EDT on October 12, 2016.

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2016-23996 Filed 9-29-16; 4:15 pm]
 BILLING CODE 8011-01-P


[Federal Register: January 26, 2010 (Volume 75, Number 16)]
[Rules and Regulations]
[Page 3996-4000]
[DOCID:fr26ja10-7]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2009-0475; FRL-9104-7]

Revisions to the California State Implementation Plan, San
Joaquin Valley Air Pollution Control District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is finalizing a limited approval and limited disapproval
of revisions to the San Joaquin Valley Air Pollution Control District
(SJVAPCD or District) portion of the California State Implementation
Plan (SIP). This action was proposed in the Federal Register on July
17, 2009 and concerns volatile organic compound (VOC) emissions from
steam-enhanced crude oil production well vents, aerospace coating
operations, and polyester resin operations. Under authority of the
Clean Air Act as amended in 1990 (CAA or the Act), this action
simultaneously approves local rules that regulate these emission
sources and directs California to correct rule deficiencies.

DATES: Effective Date: This rule is effective on February 25, 2010.

ADDRESSES: EPA has established docket number EPA-R09-OAR-2009-0475 for
this action. The index to the docket is available electronically at
www.regulations.gov and in hard copy at EPA Region IX, 75 Hawthorne
Street, San Francisco, California. While all documents in the docket
are listed in the index, some information may be publicly available
only at the hard copy location (e.g., copyrighted material), and some
may not be publicly available in either location (e.g., CBI). To
inspect the hard copy materials, please schedule an appointment during
normal business hours with the contact listed in the FOR FURTHER
INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Nicole Law, EPA Region IX, (415) 947-
4126<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us'' and
``our'' refer to EPA.

Table of Contents

I. Proposed Action
II. Public Comments and EPA Responses
III. EPA Action
IV. Statutory and Executive Order Reviews

I. Proposed Action

    On July 17, 2009 (74 FR 34704), EPA proposed a limited approval and
limited disapproval of the following rules that were submitted for
incorporation into the California SIP.

----------------------------------------------------------------------------------------------------------------
             Local agency                  Rule No.               Rule title              Adopted     Submitted
----------------------------------------------------------------------------------------------------------------
SJVAPCD...............................            4401  Steam-Enhanced Crude Oil           12/14/06     05/08/07
                                                         Production Wells.
SJVAPCD...............................            4605  Aerospace Assembly and             09/20/07     03/07/08
                                                         Component Coating Operations.
SJVAPCD...............................            4684  Polyester Resin Operations....     09/20/07     03/07/08
----------------------------------------------------------------------------------------------------------------

    We proposed a limited approval because we determined that these
rules improve the SIP and are largely consistent with the relevant CAA
requirements. We simultaneously proposed a limited disapproval because
some rule provisions do not fully satisfy requirements of section 110
and part D of the Act. The deficiencies include the following:
    1. Rule 4401 authorizes the District to grant a waiver from SIP
requirements, in section 6.2.4.
    2. SJVAPCD has not adequately demonstrated that Rule 4605 and Rule
4684 implement RACT.
    Our proposed action contains more information on the basis for this
rulemaking and on our evaluation of the submittal.

II. Public Comments and EPA Responses

    EPA's proposed action provided a 30-day public comment period.
During this period, we received comments from the following party.
    1. Scott Nester, Director of Planning, San Joaquin Valley Air
Pollution Control District; letter dated and received August 17, 2009.
    After the close of the comment period, we also received comments
from the following party.
    2. Sayed Sadredin, Executive Director/Air Pollution Control Officer
of San Joaquin Valley Air Pollution Control District; letter dated
August 27, 2009 and received August 31, 2009.
    The comments and our responses are summarized below. Although we
are not obligated to address comments submitted after the close of the
comment period, we are addressing below both the District's August 17
comments and those comments in the District's August 27 letter that
pertain to the rules we are acting on today.
    SJVAPCD Aug. 17 Comment #1: The District stated that its staff has
proposed to amend Rule 4684 to implement requirements in the September
2008 Control Techniques Guideline (CTG) for fiberglass boat
manufacturing materials.
    EPA Response: We appreciate SJVAPCD's efforts to promptly address
RACT requirements for sources covered by the 2008 CTG for Fiberglass
Boat Manufacturing Materials (2008 CTG), but we are obligated to act at
this time on the submitted version of Rule 4684. In addition, we note
that Rule 4684 should be revised to address RACT

requirements not only for sources covered by the 2008 CTG, but also for
VOC major sources that are subject to Rule 4684 but not addressed by
the 2008 CTG. See 74 FR 34705.
    SJVAPCD Aug. 17 Comment #2: The District stated that EPA had
commented that the VOC limits, emission control system efficiency, and
application methods in existing Rule 4684 for non-fiberglass boat
manufacturing facilities are less stringent than other air districts'
rules and, therefore, constitute RACT deficiencies. The District
encouraged EPA to fully approve Rule 4684 because: (1) According to
District staff research, no ozone nonattainment areas in other states
have specific regulations on polyester resin operations, (2) the VOC
limits and emission control requirements of Rule 4684 are consistent
with the California Air Resources Board's (CARB's) ``Determination of
Reasonably Available and Best Available Retrofit Control Technology for
Polyester Resin Operations,'' which should define RACT requirements in
the absence of a CTG for this category, and (3) although the limits in
Rule 4684 are not identical to those in other California air districts'
rules, those rules have been recently amended and their limits are
considered beyond RACT.
    EPA Response: The District's characterization of the Rule 4684
deficiencies identified in our proposed action is not entirely
accurate. To clarify, we noted that Rule 4684 appears to apply to major
VOC sources that are not covered by the 2008 CTG, and that the District
had not demonstrated that the more stringent requirements for these
types of sources identified in other California rules are not feasible
in the San Joaquin Valley or otherwise adequately demonstrated that
Rule 4684 implements RACT for these major sources. 74 FR 34704 at
34705.
    As to the District's specific arguments in support of full
approval, we do not agree that these provide a basis for full approval.
First, whether or not any other states with ozone nonattainment areas
have RACT rules for polyester resin operations, SJVAPCD is required to
have such rules under CAA Sec.  182(b)(2) because it regulates
facilities within this source category that are major sources of VOCs.
As noted in the TSD for our proposed action, the RACT rules in three of
four nearby districts that SJVAPCD reviewed as part of its 2009 RACT
SIP contain more stringent monomer content requirements and more
stringent overall capture and control efficiency requirements than Rule
4684.\1\ The District has not demonstrated that these more stringent
requirements are not reasonably achievable or that the requirements in
Rule 4684 implement RACT for non-CTG major VOC sources in the San
Joaquin Valley (i.e., sources other than fiberglass boat manufacturing
facilities).
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    \1\ Technical Support Document For EPA's Notice of Direct Final
Rulemaking On Revisions to the California State Implementation Plan:
EPA's Analysis of San Joaquin Valley Unified Air Pollution Control
District's Rule 4684, Polyester Resin Operations, EPA Region IX, May
2009 (Rule 4684 TSD), at pp. 4-9.
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    Second, we do not agree with the District's assertion that CARB's
``Determination of Reasonably Available and Best Available Retrofit
Control Technology for Polyester Resin Operations'' (RACT and BARCT
Guidance) defines RACT in the absence of a CTG for this source
category. States are required to consider the latest information
available in making RACT determinations and to provide supporting
information with their RACT submissions to EPA.\2\ This is because RACT
can change over time as new technology becomes available or the cost of
technology decreases.
    Indeed, CARB's RACT and BARCT Guidance is dated January 8, 1991,
and since then several California districts near the SJVAPCD have
revised their polyester resin rules to incorporate more stringent
limits. The District has not supported its evaluation of Rule 4684 with
a demonstration that these more stringent requirements are not
economically or technically feasible for major source polyester resin
operations in the San Joaquin Valley.
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    \2\ See 70 FR 71612 at 71655 (November 29, 2005) (Final Rule to
Implement the 8-Hour Ozone National Ambient Air Quality Standard--
Phase 2); see also NRDC v. EPA, 571 F. 3d 1245, 1254 (DC Cir. 2009)
(holding that EPA's case-by-case approach to RACT ensures that
``RACT determinations will reflect advances in technology'').
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    Finally, we note that the more stringent monomer content and
overall capture and control efficiency requirements in the South Coast
Air Quality Management District (SCAQMD) and the Ventura County Air
Pollution Control District (VCAPCD) polyester resin rules that SJVAPCD
reviewed have been effective for many years.\3\ Specifically, the
monomer content limits in section (c)(2)(A) of SCAQMD's polyester resin
rule (Rule 1162) became effective in 2003,\4\ and the 90% overall
capture and control efficiency requirement in the rule has been
effective for at least 15 years.\5\ The monomer content limits in
VCAPCD's polyester resin rule (Rule 74.14) and the 90% overall capture
and control efficiency requirement have been effective since 2005.\6\
As such, we do not believe the District has adequately supported its
assertion that the limits in these rules are ``beyond RACT.''
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    \3\ See pg. 4-349 and 4-350 of SJVAPCD's April 16, 2009 RACT
Demonstration for the District's review of SCAQMD Rule 1162 and
VCAPCD Rule 74.14.
    \4\ See SCAQMD Rule 1162, amended July 11, 2003. SCAQMD
subsequently made other amendments to Rule 1162 that did not alter
the monomer content limits. See SCAQMD Rule 1162 amended July 9,
2004 and SCAQMD Rule 1162 amended July 8, 2005.
    \5\ See SCAQMD Rule 1162, amended May 13, 1994.
    \6\ See VCAPCD Rule 74.14, amended April 12, 2005.
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    SJVAPCD Aug. 17 Comment #3: The District stated that its staff will
review the benefits and costs of ``strengthening this rule beyond RACT
in the context of an attainment plan control measure.''
    EPA Response: We appreciate the District's efforts to strengthen
these rules as part of its broader attainment goals, and we expect
these efforts can proceed consistent with the CAA deadlines associated
with today's final action on Rule 4684.
    SJVAPCD Aug. 27 Comment #1: SJVAPCD requested that we reflect on
its positive working relationship with EPA and its record of
accomplishments, and stated that its enclosed responses would address
most of EPA's concerns. The District stated that the San Joaquin Valley
needs emission reductions as quickly as feasible and that it was,
therefore, hesitant to ``divert resources to unnecessary bureaucratic
work associated with rulemaking projects that are not demonstrated to
have significant potential for additional reductions or
enforceability.'' The District urged that its ``efforts not be delayed
or hampered, and that [the District] receive a full approval for [its]
regulatory efforts.''
    EPA Response: We appreciate the District's efforts to improve air
quality in the San Joaquin Valley as expeditiously as possible. Our
concerns, however, are based on CAA RACT requirements that the District
is required to address in accordance with specified deadlines. These
RACT requirements apply independent of the significance of the
resulting emission reductions or other air quality improvement efforts.
We discuss these requirements further below and in our proposal.
    SJVAPCD Aug. 27 Comment #2: SJVAPCD acknowledged that EPA had
proposed a limited approval/limited disapproval of Rule 4401 because of
the provision that states that waiver requests are ``deemed approved''
by EPA if EPA does not object within 45 days. The District stated,
however, that EPA

should approve Rule 4401 for two reasons. First, the District stated
that precedent for this language can be found in the October 1998
``Title V Review Protocol Agreement'' between the District and EPA
Region IX, which states that ``During this period, the EPA may approve
the district's proposal either in writing, or by choosing not to
provide written comments.'' The district stated that this language is
identical to the language in Section 6.2.4 of Rule 4401, that Rule 2520
(Federally Mandated Operating Permits) also contains similar language,
and that EPA had not objected to the requirements of Section 6.2.4 in
Rule 4401 during the rulemaking process. Second, the District stated
that ``[w]hile the Clean Air Act may prohibit the District from
requiring the EPA to take action, it does not preclude the EPA from
agreeing to a reasonable timeframe in which to take action, as
indicated by the referenced memo.'' The District further explained that
operators need timely notification of whether their waiver requests
have been approved, due to the time needed to schedule and perform
expensive and time-consuming source tests, and that Rule 4401 should
take these needs into account.
    EPA Response: We disagree with the District's assertion that the
October 1998 ``Title V Review Protocol Agreement'' between the District
and EPA (Title V Agreement) provides precedent for the language in Rule
4401. Title V of the CAA specifically authorizes EPA to object to a
title V operating permit that is not in compliance with CAA applicable
requirements within 45 days after receiving a copy of the proposed
permit from the state/local permitting agency. CAA Sec.  505(b)(1); 40
CFR 70.8(c). The District refers to language in the Title V Agreement
that describes the process following EPA's 45-day review period through
which SJVAPCD will resolve title V objections that EPA has raised.\7\
In this context, where the District has timely submitted information
adequately addressing EPA's objections, EPA has agreed that the
District may in some cases treat our silence as concurrence with the
District's revised proposal.\8\
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    \7\ See ``Title V Permit Review Protocol Agreement: San Joaquin
Valley Unified APCD, United States Environmental Protection Agency,
Region IX,'' October 1998.
    \8\ If the permitting agency fails to adequately address EPA's
objection(s) within 90 days, title V authorizes EPA to issue or deny
the title V permit. CAA Sec.  505(b)(3); 40 CFR 70.8(c). The
District also references SJVAPCD Rule 2520 (Federally Mandated
Operating Permits), which implements title V requirements. These
provisions related to the District's title V operating permit
program are not relevant to our action today.
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    The CAA does not establish any such process for state/local waivers
to the requirements of a federally-approved SIP. To the contrary,
section 110(i) of the Act specifically prohibits EPA and the States
from taking any ``action modifying any requirement of an applicable
implementation plan * * * with respect to any stationary source''
except as otherwise authorized by the Act. Section 6.2.4 of Rule 4401
effectively allows the District to grant a waiver to federally-approved
SIP requirements if EPA does not object within 45 days of receiving the
District's request for concurrence. Without a process that ensures that
any such waiver is granted only upon EPA approval in accordance with
CAA requirements, this provision is inconsistent with the requirements
of the Act and cannot be approved.
    We note that the District may address these concerns by providing
explicit and replicable procedures within the rule that tightly define
how the District's discretion will be exercised to assure equivalent
emission reductions.\9\
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    \9\ See Guidance Document for Correcting Common VOC & Other Rule
Deficiencies (A.K.A., The Little Bluebook), U.S. EPA Region IX,
Revised August 21, 2001, at pg. 17.
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    As to the District's comment that EPA did not object to this
provision during its local rulemaking process, we regret not
identifying this issue earlier but note that our failure to do so does
not remove our obligation to ensure full compliance with the CAA when
taking formal action on SIP submittals.
    SJVAPCD Aug. 27 Comment #3: SJVAPCD acknowledged that EPA had
proposed a limited approval/limited disapproval of Rule 4605 because of
concerns about certain VOC coating limits, but stated that EPA should
approve Rule 4605 for two reasons. First, the District stated that its
staff had compared the limits in Rule 4605 to the limits in EPA's 1997
CTG for coating operations at aerospace facilities and in other
California district rules, and found that (1) Rule 4605's VOC limit for
Sealant (Extrudable/Rollable/Brushable) is consistent with BAAQMD's
Rule 8-29, and (2) Rule 4605's limit for Sealant (Fastener) is
consistent with SCAQMD's Rule 1124 and Ventura County Air Pollution
Control District's Rule 74.13. Second, the District stated that it
plans to amend Rule 4605 during the first quarter of 2010 to
incorporate the coating types and limits contained in the 1997 CTG, and
that it would also consider the additional recommendations provided in
EPA's TSD in its next rule revision process.
    EPA Response: EPA's 1997 CTG on Control of Volatile Organic
Compound Emissions from Coating Operations at Aerospace Manufacturing
and Rework Operations (1997 CTG) generally defines presumptive RACT for
this activity nationwide. In our proposed action (74 FR at 34705), we
noted that the District had not adequately addressed recommendations in
the 1997 CTG for 19 coating categories. The District now identifies
rules in neighboring districts that are consistent with Rule 4605 for
two of these coating categories, but it fails to demonstrate that the
CTG recommendations for those two categories are not reasonably
achievable in the San Joaquin Valley. Moreover, the District fails to
address the other 17 coating categories for which the 1997 CTG
recommends specific limits. In order to satisfy CAA RACT requirements,
the District must either demonstrate that Rule 4605 implements current-
day RACT for all of these coating operations or certify, where
appropriate, that certain coating operations do not occur in the San
Joaquin Valley.
    As to the District's statement that it plans to amend Rule 4605
during the first quarter of 2010 to incorporate the CTG recommendations
and EPA's additional recommendations, we appreciate these rule
improvement efforts but note that we are obligated to act at this time
on the submitted version of Rule 4605.
    SJVAPCD Aug. 27 Comment #4: The District acknowledged that EPA had
proposed a limited approval/limited disapproval of Rule 4684 because of
concerns about the resin and gel coat monomer content limits and
capture and control efficiency requirements. The District stated,
however, that EPA should fully approve the rule for two reasons. First,
the District asserted that the rules in the other districts cited by
EPA should be considered beyond RACT as those rules were recently
adopted, and because there is no CTG for non-fiberglass boat
manufacturing or general polyester resin fiberglass boat manufacturing.
The District stated that ``EPA's long-standing historical position is
that in the absence of a CTG * * * the standards that have been
successfully implemented in other districts or states [are] minimum
RACT unless demonstrated that those standards are beyond RACT,'' and
that the District had made such a demonstration (that the other
districts' rules are beyond RACT) in its RACT analysis for Rule 4686.
The District further stated that some of these rules were developed
after SJVAPCD began developing Rule 4686 and, therefore,

``could not be utilized in the Rule 4686 development process.''
    Second, the District stated that although EPA is not calling out
deficiencies related to the September 2008 fiberglass boat
manufacturing CTG, the District is in the process of amending Rule 4684
to incorporate the CTG recommendations and that rule adoption is
scheduled for September 17, 2009.
    EPA Response: First, we disagree with the District's assertion that
it has demonstrated that the more stringent limits in other districts'
rules are beyond RACT. See response to SJVAPCD Aug. 17 Comment
2, above. Second, we also disagree with the District's
statement that some of the more stringent rules in other districts were
developed after the District had begun its Rule 4684 development
process. The District adopted the version of Rule 4684 that we are
acting on today in 2007, and the more stringent polyester resin rules
that the District referenced in its 2009 RACT SIP were last modified in
2005 or earlier. See response to SJVAPCD Aug. 17 Comment 2,
above. Finally, as to the District's statement that it is in the
process of amending Rule 4684 to incorporate the CTG recommendations,
we appreciate the District's ongoing rule improvement efforts and will
evaluate those rule revisions when they are submitted to us for
incorporation into the SIP. See response to SJVAPCD Aug. 17 Comment
1.

III. EPA Action

    No comments were submitted that change our assessment of the rules
as described in our proposed action. Therefore, as authorized in
sections 110(k)(3) and 301(a) of the Act, EPA is finalizing a limited
approval of the submitted rules. This action incorporates the submitted
rules into the California SIP, including those provisions identified as
deficient. As authorized under section 110(k)(3), EPA is simultaneously
finalizing a limited disapproval of the rules. As a result, sanctions
will be imposed unless EPA approves subsequent SIP revisions that
correct the rule deficiencies within 18 months of the effective date of
this action. These sanctions will be imposed under section 179 of the
Act according to 40 CFR 52.31. In addition, EPA must promulgate a
federal implementation plan (FIP) under section 110(c) unless we
approve subsequent SIP revisions that correct the rule deficiencies
within 24 months of the effective date of this action. Note that the
submitted rules have been adopted by the San Joaquin Valley Air
Pollution Control District, and EPA's final limited disapproval does
not prevent the local agency from enforcing them.

IV. Statutory and Executive Order Reviews

A. Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) has exempted this
regulatory action from Executive Order 12866, entitled ``Regulatory
Planning and Review.''

B. Paperwork Reduction Act

    This action does not impose an information collection burden under
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
Burden is defined at 5 CFR 1320.3(b).

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency
to conduct a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements unless the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities. Small entities include small
businesses, small not-for-profit enterprises, and small governmental
jurisdictions.
    This rule will not have a significant impact on a substantial
number of small entities because SIP approvals and limited approvals/
limited disapprovals under section 110 and subchapter I, part D of the
Clean Air Act do not create any new requirements but simply approve
requirements that the State is already imposing. Therefore, because
this limited approval/limited disapproval action does not create any
new requirements, I certify that this action will not have a
significant economic impact on a substantial number of small entities.
    Moreover, due to the nature of the Federal-State relationship under
the Clean Air Act, preparation of flexibility analysis would constitute
Federal inquiry into the economic reasonableness of State action. The
Clean Air Act forbids EPA to base its actions concerning SIPs on such
grounds. Union Electric Co. v. U.S. EPA, 427 U.S. 246, 255-66 (1976);
42 U.S.C. 7410(a)(2).

D. Unfunded Mandates Reform Act

    Under sections 202 of the Unfunded Mandates Reform Act of 1995
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA
must prepare a budgetary impact statement to accompany any proposed or
final rule that includes a Federal mandate that may result in estimated
costs to State, local, or tribal governments in the aggregate; or to
the private sector, of $100 million or more. Under section 205, EPA
must select the most cost-effective and least burdensome alternative
that achieves the objectives of the rule and is consistent with
statutory requirements. Section 203 requires EPA to establish a plan
for informing and advising any small governments that may be
significantly or uniquely impacted by the rule. EPA has determined that
the limited approval/limited disapproval action promulgated does not
include a Federal mandate that may result in estimated costs of $100
million or more to either State, local, or tribal governments in the
aggregate, or to the private sector. This Federal action approves pre-
existing requirements under State or local law, and imposes no new
requirements. Accordingly, no additional costs to State, local, or
tribal governments, or to the private sector, result from this action.

E. Executive Order 13132, Federalism

    Federalism (64 FR 43255, August 10, 1999) revokes and replaces
Executive Orders 12612 (Federalism) and 12875 (Enhancing the
Intergovernmental Partnership). Executive Order 13132 requires EPA to
develop an accountable process to ensure ``meaningful and timely input
by State and local officials in the development of regulatory policies
that have federalism implications.'' ``Policies that have federalism
implications'' is defined in the Executive Order to include regulations
that have ``substantial direct effects on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.'' Under Executive Order 13132, EPA may not issue a
regulation that has federalism implications, that imposes substantial
direct compliance costs, and that is not required by statute, unless
the Federal government provides the funds necessary to pay the direct
compliance costs incurred by State and local governments, or EPA
consults with State and local officials early in the process of
developing the proposed regulation. EPA also may not issue a regulation
that has federalism implications and that preempts State law unless the
Agency consults with State and local officials early in the process of
developing the proposed regulation.
    This rule will not have substantial direct effects on the States,
on the relationship between the national government and the States, or
on the

distribution of power and responsibilities among the various levels of
government, as specified in Executive Order 13132, because it merely
approves a State rule implementing a Federal standard, and does not
alter the relationship or the distribution of power and
responsibilities established in the Clean Air Act. Thus, the
requirements of section 6 of the Executive Order do not apply to this
rule.

F. Executive Order 13175, Coordination With Indian Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.'' This final rule does not have
tribal implications, as specified in Executive Order 13175. It will not
have substantial direct effects on tribal governments, on the
relationship between the Federal government and Indian tribes, or on
the distribution of power and responsibilities between the Federal
government and Indian tribes. Thus, Executive Order 13175 does not
apply to this rule.

G. Executive Order 13045, Protection of Children From Environmental
Health Risks and Safety Risks

    EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997)
as applying only to those regulatory actions that concern health or
safety risks, such that the analysis required under section 5-501 of
the Executive Order has the potential to influence the regulation. This
rule is not subject to Executive Order 13045, because it approves a
State rule implementing a Federal standard.

H. Executive Order 13211, Actions That Significantly Affect Energy
Supply, Distribution, or Use

    This rule is not subject to Executive Order 13211, ``Actions
Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use'' (66 FR 28355, May 22, 2001) because it is not a
significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act

    Section 12 of the National Technology Transfer and Advancement Act
(NTTAA) of 1995 requires Federal agencies to evaluate existing
technical standards when developing a new regulation. To comply with
NTTAA, EPA must consider and use ``voluntary consensus standards''
(VCS) if available and applicable when developing programs and policies
unless doing so would be inconsistent with applicable law or otherwise
impractical.
    The EPA believes that VCS are inapplicable to this action. Today's
action does not require the public to perform activities conducive to
the use of VCS.

J. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2). This rule will be effective on February 25, 2010.

K. Petitions for Judicial Review

    Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by March 29, 2010. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this rule for the purposes of judicial
review nor does it extend the time within which a petition for judicial
review may be filed, and shall not postpone the effectiveness of such
rule or action. This action may not be challenged later in proceedings
to enforce its requirements (see section 307(b)(2)).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Ozone, Reporting and
recordkeeping requirements, Volatile organic compounds.

    Dated: December 11, 2009.
Laura Yoshii,
Acting Regional Administrator, Region IX.

0
Part 52, Chapter I, Title 40 of the Code of Federal Regulations is
amended as follows:

PART 52--[AMENDED]

0
1. The authority citation for Part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart F--California

0
2. Section 52.220, is amended by adding paragraphs (c)(350)(i)(C)(2),
(354)(i)(E)(11) and (354)(i)(E)(12) to read as follows:

Sec.  52.220  Identification of plan.

* * * * *
    (c) * * *
    (350) * * *
    (i) * * *
    (C) * * *
    (2) Rule 4401, ``Steam-Enhanced Crude Oil Production Wells,''
adopted on December 14, 2006.
* * * * *
    (354) * * *
    (i) * * *
    (E) * * *
    (11) Rule 4605, ``Aerospace Assembly and Component Coating
Operations,'' adopted on September 20, 2007.
    (12) 4684, ``Polyester Resin Operations,'' adopted on September 20,
2007.
* * * * *
[FR Doc. 2010-1385 Filed 1-25-10; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register: December 6, 2006 (Volume 71, Number 234)]
[Notices]
[Page 70801-70804]
[DOCID:fr06de06-106]

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SECURITIES AND EXCHANGE COMMISSION

[(Release No. 34-54813; File No. SR-Amex-2006-19)]

Self-Regulatory Organizations; American Stock Exchange LLC;
Notice of Filing of Proposed Rule Change and Amendment Nos. 1, 2 and 3
Thereto Relating to the Listing and Trading of Options on the Nuveen
Municipal Fund Index

November 22, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(''Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 17, 2006, the American Stock Exchange LLC (``Amex'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II and III below, which Items have been prepared by the
Exchange. On July 12, 2006, the Exchange filed Amendment No. 1 to the
proposed rule change.\3\ On September 19, 2006, the Exchange filed
Amendment No. 2 to the proposed rule change.\4\ On November 13, 2006,
the Exchange filed Amendment No. 3 to the proposed rule change.\5\ The
Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(l).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, Amex clarified the Index symbol and the
rationale for the product.
    \4\ In Amendment No. 2, Amex replaced the original rule filing
in its entirety and incorporated the previously filed Amendment No.
1.
    \5\ In Amendment No. 3, Amex made modifications to the Purpose
section to clarify the ``Index Calculation and Maintenance'' section
and included representations made by Nuveen regarding the existence
of firewalls to address insider trading concerns.
---------------------------------------------------------------------------

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

    The Exchange proposes to list and trade options on the Price-Return
Nuveen Municipal Closed-End Fund Index (``NMUNP'') (the ``Nuveen
Municipal Fund Index'' or ``Index''), an index based on the shares of
exchange-listed closed-end management investment companies that are
exempt from federal income tax by investing in portfolios of bonds
issued by state and local governments and agencies (``Closed-End
Funds'' or ``Funds'').
    The text of the proposed rule change is available on the Amex's Web
site at http://www.amex.com, at the Amex Office of the Secretary, and

at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to permit the Exchange
to list and trade cash-settled, European-style index options on the
Price-Return Nuveen Municipal Fund Index. The Exchange believes that
options on the Index will be the first index options based on an index
of closed-end funds. The proposed Index options are intended for the
use of investors

desiring to achieve exposure to a broad section of the national tax-
free municipal closed-end fund market, as well as a hedging vehicle for
those investors holding such closed-end funds.
    The Index is a capitalization-weighted index based entirely on the
shares of Closed-End Funds listed on either the Amex, New York Stock
Exchange, Inc. (the ``NYSE'') or the Nasdaq Stock Market, Inc.
(``Nasdaq'') that are exempt from federal income tax through investment
in bonds issued by state and local governments and agencies. Each
component is a NMS stock as defined in Rule 600 under the Securities
Exchange Act of 1934 (the ``1934 Act''). Currently, the Index is
comprised of the shares of Closed-End Funds that are listed on the Amex
or NYSE.
    Index Design and Composition. The Nuveen Municipal Fund Index is
designed to be a broad representation of the U.S. municipal fund
market. This Index is capitalization-weighted and includes only those
Closed-End Funds domiciled in the U.S. and its territories and that are
traded on the Amex, NYSE, or Nasdaq. The component Closed-End Funds are
weighted by their market capitalization, which is calculated by
multiplying the primary market price by the outstanding shares.
    Each of the component Closed-End Funds are required to have a
minimum market capitalization of at least $100 million and an average
monthly trading volume over the prior six (6) months of at least
500,000 shares. In addition, for newly listed Closed-End Funds to be an
index component, at least one (1) dividend payment with an ex-date
prior to inclusion in the Index is required.
    The Index is calculated based on a market capitalization weighting
methodology. In a market capitalization index, components are weighted
based on total market value of the outstanding shares, i.e., share
price times the number of shares outstanding. The Exchange states that
this type of index typically fluctuates in line with the price moves of
the components. After the initial weighting of the Index, the weights
are updated in conjunction with scheduled quarterly adjustments.
    As of January 31, 2006, the Closed-End Funds comprising the Nuveen
Municipal Fund Index had an average market capitalization of $414
million, ranging from a high of $1.9 billion (Nuveen Municipal Value
Fund Inc. (NUV)) to a low of $101 million (MBIA Capital/Claymore
Managed Duration Investment Grade Municipal Fund (MZF)). The number of
available shares outstanding ranged from a high of 194.9 million (NUV)
to a low of 7.9 million (MZF), and averaged 31.9 million shares. The
six-month average daily trading volume for Index components was 45,000
shares per day, ranging from a high of 159,100 shares per day (NUV) to
a low of 13,100 shares per day (Morgan Stanley Quality Municipal
Securities (IQM)).
    Index Calculation and Maintenance. The value of the Index will be
calculated by the Amex on behalf of Nuveen and will be disseminated at
15-second intervals during regular Amex trading hours to market
information vendors via the Consolidated Tape Association (``CTA'') or
by other major market data vendors (from another Amex market data
feed).
    The Exchange states that the methodology used to calculate the
value of the Nuveen Municipal Fund Index is similar to the methodology
used to calculate the value of other well-known market-capitalization
weighted indexes. The level of the Index reflects the total market
value of the component Closed-End Funds relative to a particular base
period and is computed by dividing the total market value of the
Closed-End Funds in the Index by the index divisor. The divisor is
adjusted periodically to maintain consistent measurement of the Index.
The Index commenced on December 31, 1994 with a base value of 1000.00.
On December 30, 2005, the Index value was 1144.05.
    Options on the Nuveen Municipal Fund Index will expire on the
Saturday following the third Friday of the expiration month. Trading in
options on the Index will normally cease at 4:15 p.m. Eastern time
(``ET'') on the Thursday preceding an expiration Saturday. The exercise
settlement value at expiration of each Nuveen Municipal Fund Index
option will be calculated by the Amex on behalf of Nuveen, based on the
opening prices of the Index's component Closed-End Funds on the last
business day prior to expiration (``Settlement Day'').\6\ The
Settlement Day is normally the Friday preceding ``Expiration
Saturday.'' If a component Closed-End Fund in the Index does not trade
on Settlement Day, the last reported sales price in the primary market
from the previous trading day would be used to calculate the settlement
value. Settlement values for the Index will be disseminated by the Amex
over the CTA.
---------------------------------------------------------------------------

    \6\ The aggregate exercise value of the option contract is
calculated by multiplying the Index value by the Index multiplier,
which is 100.
---------------------------------------------------------------------------

    The Nuveen Municipal Fund Index is monitored and maintained by the
Amex. The Amex is responsible for making all necessary adjustments to
the Indexes to reflect component deletions, share changes, stock
splits, stock dividends (other than an ordinary cash dividend), and
stock price adjustments due to restructuring, mergers, or spin-offs
involving the underlying components. Some corporate actions, such as
stock splits and stock dividends, require simple changes to the
available shares outstanding and the stock prices of the component
securities. Other corporate actions, such as share issuances, change
the market value of the Indexes and would require the use of an index
divisor to effect adjustments.
    The Index is reviewed each December, March, June, and September to
ensure that at least 90% of the Index weight is accounted for by
components that continue to represent the universe of Closed-End Funds
that meet the Index methodology maintenance requirements. To remain in
the Index, components must maintain a market capitalization of at least
$75 million and have a six (6) month average monthly trading volume
over 250,000 shares. Changes to Index components and/or the component
share weights typically take effect after the close of trading on the
third Friday of each calendar quarter month in connection with
quarterly rebalancing. The Amex and Nuveen,\7\ by mutual agreement, may
change the number of issues comprising the Index by adding or deleting
one or more components contained in the Index with one or more
substitute Closed-End Funds. If an Index component is added or deleted
during a quarterly rebalance, the share weights used in the calculation
of the Index will be updated based upon current shares outstanding. The
Index components and their share weights are determined and announced
prior to taking effect. The share weight of each component in the Index
portfolio remains fixed between quarterly reviews, except in the event
of certain types of corporate actions such as splits, reverse splits,
stock dividends, or similar events. The share weights used in the Index
calculation are not

typically adjusted for shares issued or repurchased between quarterly
reviews.
---------------------------------------------------------------------------

    \7\ The Commission notes that Nuveen, because it selects the
components for the Index, has represented to Amex that it prohibits
individuals at Nuveen who will be privy to information about future
changes to the Nuveen Municipal Fund Index rules or constituent
stocks from trading on that information, for their own benefit or
for the benefit of Nuveen's clients. Additionally, Nuveen has
represented that it has firewalls around the personnel who have
access to information concerning changes and adjustments to the
Index. Telephone conversation between Jeffrey P. Burns, Associate
General Counsel, Amex, and Florence Harmon, Senior Special Counsel,
Division of Market Regulation (``Division''), Commission on November
17, 2006.
---------------------------------------------------------------------------

    In the event of a merger between two components, the share weight
of the surviving entity may be adjusted to account for any shares
issued in this acquisition. The Exchange may substitute components or
change the number of issues included in the Index, based on changing
conditions in the industry or in the event of certain types of
corporate actions, such as mergers, acquisitions, spin-offs, and
reorganizations. In the event of component or share weight changes to
the Index portfolio, the payment of dividends other than ordinary cash
dividends, spin-offs, rights offerings, re-capitalization, or other
corporate actions affecting a component of the Index, the index divisor
may be adjusted to ensure that such corporate actions do not affect the
Index level.
    The Exchange will apply the following maintenance standards for
continued listing: (i) The number of securities in the Index may not
drop by one-third or more from the number of components in the Index at
the time of initial listing; \8\ (ii) no more than 10% or more of the
weight of the Index is represented by component securities having a
market value of less than $75 million; (iii) no more than 10% or more
of the weight of the Index is represented by component securities
trading less than 15,000 shares per day; (iv) the largest component
security in the Index accounts for no more than 15% of the weight of
the Index, or the largest five components in the aggregate account for
more than 50% of the weight of the Index on the first day of January
and July each year; \9\ or (v) the component securities will be listed
and traded on the Amex, the NYSE, or NASDAQ.\10\
---------------------------------------------------------------------------

    \8\ The Exchange states that the Index currently has 86
components, and therefore, may not be comprised of less than 57
components. This representation replaces any prior representation to
the effect that the Index could be comprised of no less than 10
components. Telephone conversation between Jeffrey P. Burns,
Associate General Counsel, Amex, and Florence Harmon, Senior Special
Counsel, Division, Commission on November 17, 2006.
    \9\ Telephone conversation between Jeffrey P. Burns, Associate
General Counsel, Amex, and Florence Harmon, Senior Special Counsel,
Division, Commission on November 21, 2006 to remove this footnote.
    \10\ These maintenance standards are adapted from Commentary .03
of Amex Rule 901C to address the unique characteristics of the
closed-end fund Index components, which may not always satisfy
Commentary .03(4) of Amex Rule 901C. Telephone conversation between
Jeffrey P. Burns, Associate General Counsel, Amex, and Florence
Harmon, Senior Special Counsel, Division, Commission on November 23,
2006.
---------------------------------------------------------------------------

    If the Index ceases to be maintained or calculated, or its values
are not disseminated at least every 15 seconds by the Amex over the CTA
(or another major market data vendor) or the above Index maintenance
standards are not satisfied, the Exchange would not list any additional
series for trading and would limit all transactions in options on the
Index to closing transactions only for the purpose of maintaining a
fair and orderly market and protecting investors.
    Contract Specifications. The Nuveen Municipal Fund Index is a broad
stock index group as defined in Amex Rule 900C(b)(1). Options on the
Index would be European-style and a.m. cash-settled. The Exchange's
standard trading hours for broad-based index options (9:30 a.m. to 4:15
p.m. ET), as set forth in Commentary .02 to Amex Rule 1, will apply to
options on the Nuveen Municipal Fund Index. Exchange rules that apply
to the trading of options on broad-based indexes will also apply to
options on the Index.\11\ The trading of these options will also be
subject to, among others, Exchange rules governing margin requirements
and trading halt procedures for index options.
---------------------------------------------------------------------------

    \11\ See Amex Rules 900C through 980C.
---------------------------------------------------------------------------

    For options on the Nuveen Municipal Fund Index, the Exchange
proposes to establish an aggregate position limit of 25,000 contracts
on the same side of the market, provided that no more than 15,000 of
such contracts are in the nearest expiration month series.\12\
---------------------------------------------------------------------------

    \12\ The same limits that apply to position limits would apply
to exercise limits for these products.
---------------------------------------------------------------------------

    Commentary .01(c) to Rule 904C provides that position limits for
hedged index options may not exceed twice the established position
limits for broad stock index groups. The Exchange proposes that a hedge
exemption of 37,500 be available for the Index.
    Furthermore, proprietary accounts of member organizations could
receive an exemption of up to three times the established position
limit for the purpose of facilitating public customer orders, to the
extent they comply with the procedures and criteria listed in
Commentary .02 to Amex Rules 950(d) and 950(d)--ANTE.
    The Exchange proposes to apply broad-based index margin
requirements for the purchase and sale of options on the Nuveen
Municipal Fund Index. Accordingly, purchases of put or call options
with nine months or less until expiration would have to be paid for in
full. Writers of uncovered put or call options would have to deposit/
maintain 100% of the option proceeds, plus 15% of the aggregate
contract value (current index level x $100), less any out-of-the-money
amount, subject to a minimum of the option proceeds plus 10% of the
aggregate contract value for call options and a minimum of the option
proceeds plus 10% of the aggregate exercise price amount for put
options.
    The Exchange proposes to set a strike price interval of at least
2\1/2\ points, at a minimum, for a near-the-money series in a near-term
expiration month when the level of the Index is below 200, a 5-point
strike price interval, at a minimum, for any options series with an
expiration up to one year, and at least a 10-point strike price
interval for any longer-term option. The minimum tick size for series
trading below $3 would be $0.05, and for series trading at or above $3
would be $0.10.
    The Exchange proposes to list options on the Index in the three
consecutive near-term expiration months, plus up to three successive
expiration months in the March cycle. For example, consecutive
expirations of January, February, March, plus June, September, and
December expirations would be listed.\13\ In addition, long-term option
series having up to 60 months to expiration will be traded.\14\ The
trading of long-term options on the Index will be subject to the same
rules that govern all the Exchange's index options, including sales
practice rules, margin requirements, and trading rules.
---------------------------------------------------------------------------

    \13\ See Amex Rule 903C(a).
    \14\ See Amex Rule 903C(a)(iii).
---------------------------------------------------------------------------

    Surveillance and Capacity. The Exchange represents that it has an
adequate surveillance program in place for options on the Nuveen
Municipal Fund Index and intends to apply those same procedures that it
applies to the Exchange's other index options. In addition, the
Exchange is a member of the Intermarket Surveillance Group (``ISG'').
The members of the ISG include all of the national securities
exchanges, plus the NASD. The ISG members work together to coordinate
surveillance and share information regarding the stock and options
markets. In addition, the major futures exchanges are affiliated
members of the ISG, which allows for the sharing of surveillance
information for potential intermarket trading abuses.
    The Exchange also represents that it has the necessary systems
capacity to support the new options series that would result from the
introduction of options on the Nuveen Municipal Fund Index, including
long-term options.
2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is
consistent with Section 6(b) of the Act \15\

in general, and furthers the objectives of Section 6(b)(5),\16\ in
particular, in that it is 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, in general, to protect investors and the
public interest.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition.

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

    The Exchange did not receive any written comments on the proposed
rule change.

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which NASD consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
    The Commission is considering granting accelerated approval of the
proposed rule change, as amended, at the end of a 15-day comment
period.\17\
---------------------------------------------------------------------------

    \17\ Amex has requested accelerated approval of this proposed
rule change, as amended, prior to the 30th day after the date of
publication of the notice of filing thereof, following the
conclusion of a 15-day comment period. Telephone conversation
between Jeffrey P. Burns, Associate General Counsel, Amex, and
Florence Harmon, Senior Special Counsel, Division, Commission on
November 21, 2006.
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-Amex-2006-19 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Amex-2006-19. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all

written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provision of 5 U.S.C. 552, will be available for inspection and copying
in the Commission's Public Reference Room. Copies of such filing also
will be available for inspection and copying at the principal office of
the Amex. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submission should refer to File Number SR-Amex-
2006-19 and should be submitted on or before December 21, 2006.
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\18\
Nancy M. Morris,
Secretary.
[FR Doc. E6-20572 Filed 12-5-06; 8:45 am]

BILLING CODE 8011-01-P


number of strikes each party may exercise, should expedite panel
appointment and reduce the likelihood that the Director will have to
appoint an arbitrator who was not on the original lists sent to
parties. The Commission notes that in Amendments 5 to the Customer Code
and Industry Code, NASD proposed additional changes to the list
selection procedures to further reduce the likelihood that extended
lists would be needed. NASD also explained changes in the list
selection software that would check for certain arbitrator conflicts
before lists are sent to

parties.\203\ Taken as a whole, these changes should improve the
efficacy and efficiency of the arbitration process and of the forum
generally.
---------------------------------------------------------------------------

    \203\ For example, MATRICS would exclude from the lists sent to
the parties arbitrators who are family members, employees, clients,
or shareholders of a party, or have an account with, have initiated
legal action against, or performed legal services for a party.
---------------------------------------------------------------------------

O. Proposed Rules 12406 and 13406--Appointment of Arbitrators

    While the current Code is silent on when arbitrators are appointed,
it can be the subject of questions. NASD stated that Proposed Rules
12406(d) and 13406(d) under the Customer Code and Industry Code,
respectively, would clarify that the appointment of arbitrators occurs
when the Director sends notice to the parties of the names of the
arbitrators on the panel. In addition, consistent with the purpose of
reorganizing the current Code, the arbitrator oath requirement that is
in Rule 10327 of the current Code would be included in Proposed Rules
12406 and 13406.
    The Commission believes that these proposed rules should improve
the clarity of the arbitration rules and promote the efficacy and
efficiency of the arbitration process and forum generally.

P. Proposed Rules 12409 and 13409--Arbitrator Recusal

    The current Code does not address arbitrator recusal. To provide
guidance to parties, Proposed Rules 12409 and 13409 of the Customer
Code and Industry Code, respectively, would provide that any party may
ask an arbitrator to recuse himself or herself from the panel for good
cause. The proposed rule would also clarify procedures for seeking an
arbitrator's recusal.
    The Commission believes that, in clarifying the procedures for
seeking an arbitrator's recusal, the proposed rules promote the
efficacy and efficiency of the arbitration process and forum.

Q. Proposed Rules 12411 and 13411--Replacement of Arbitrators

    Under the current Code, the provisions regarding the replacement of
arbitrators are contained in several different sections, and contain
numerous cross-references to other rules. Proposed Rules 12411 and
13411 of the Customer Code and Industry Code, respectively, consolidate
the various current rules, but contain no substantive changes, with two
exceptions. Under Rule 10313 of the current Code, if an arbitrator is
disqualified or becomes otherwise unable or unwilling to serve after
the first pre-hearing conference or the first hearing begins, whichever
is earlier, but before the award is issued, the parties may elect to
proceed with the remaining arbitrators by notifying the Director within
five business days of their being notified of the vacancy. Under
Proposed Rules 12411 and 13411 of the Customer Code and Industry Code,
respectively, the parties may agree to proceed with only the remaining
arbitrators regardless of when the vacancy occurs.\204\
---------------------------------------------------------------------------

    \204\ In addition, parties may stipulate to the removal of an
arbitrator, including a replacement arbitrator, at any time.
Telephone conversation among Jean Feeney, Vice President, NASD;
Mignon McLemore, Assistant Chief Counsel, NASD Dispute Resolution;
and Gena Lai, Special Counsel, Division of Market Regulation, SEC
(Dec. 19, 2006).
---------------------------------------------------------------------------

    The Commission believes that, by allowing for more flexibility in
the arbitration process and giving parties more control in arbitrator
selection, the proposed rules should improve the efficacy and
efficiency of the arbitration process and of the forum generally. We
also note that NASD has explained that parties would be informed of the
vacancy and their options simultaneously.

R. Proposed Rules 12414 and 13414--Determinations of Arbitration Panel

    Rule 10325 of the current Code provides that all rulings and
determinations of the panel must be made by a majority of the
arbitrators. Proposed Rules 12414 and 13414 of the Customer Code and
Industry Code, respectively, provide that all rulings and
determinations of the panel must be made by a majority of the
arbitrators, unless the parties agree, or unless the Customer Code or
Industry Code, respectively, or applicable law, provides otherwise. The
proposed rules reflect that under the Customer Code or Industry Code,
and applicable law, some decisions of the panel may be made by a single
member of a three-arbitrator panel.\205\ Also, applicable law may
permit a single arbitrator to issue a subpoena. The Commission notes,
however, that an award must contain the signature of a majority of the
panel, notwithstanding the agreement of the parties.\206\
---------------------------------------------------------------------------

    \205\ For example, Proposed Rules 12503 and 13503 provide that
some motions may be decided by a single arbitrator.
    \206\ See Section 0, Proposed Rule 12904 (Awards).
---------------------------------------------------------------------------

    The Commission believes that, by allowing for more flexibility in
the arbitration process and by clarifying that arbitrators must make
determinations in accordance with applicable law, the proposed rules
promotes the efficacy and efficiency of the arbitration process and of
the forum generally.

S. Proposed Rules 12500 and 13500--Initial Prehearing Conferences

    Since the adoption of the current Discovery Guide in 1999, IPHCs
have become standard practice in NASD arbitrations. The IPHC gives the
panel and the parties an opportunity to organize the management of the
case, set a discovery cut-off date, identify and establish a schedule
for potential motions, schedule hearing dates, determine whether
mediation is desirable, and resolve many other preliminary issues. NASD
stated that users of the forum have found the IPHC to be a valuable
tool in managing the administration of arbitrations. Proposed Rules
12500 and 13500 of the Customer Code and Industry Code, respectively,
would codify the portion of the current Discovery Guide relating to
IPHCs.
    The Commission believes that codifying the provisions in the
current Discovery Guide concerning IPHCs should streamline the
administration of arbitrations and clarify the purposes and procedures
of IPHCs. Thus, the proposed rules should promote the efficacy and
efficiency of arbitration proceedings and of the forum generally.

T. Proposed Rules 12502 and 13502--Recording Prehearing Conferences

    The current Code is silent with respect to whether and under what
circumstances a prehearing conference will be tape-recorded. Proposed
Rules 12502 and 13502 of the Customer Code and Industry Code,
respectively, would provide that prehearing conferences are generally
not tape-recorded as a matter of course, but that a panel may decide to
tape-record a prehearing conference on its own initiative, or at the
request of a party.
    The Commission believes that the proposed rules would inform
parties that the option to tape-record a prehearing conference is
available and provide useful guidance to parties and arbitrators
regarding when and under what circumstances prehearing conferences may
be tape-recorded. Thus, the proposed rules should promote the efficacy
and efficiency of arbitration proceedings and of the forum generally.

U. Proposed Rules 12503 and 13503--Motions

    Although motions are increasingly common in arbitration, the
current Code does not refer to motions or provide any guidance with
respect to motions practice. As a result, NASD stated that motions
practice lacks uniformity, and

that both parties and arbitrators are often unsure how motions should
be made, responded to, or decided. Proposed Rules 12503 and 13503 of
the Customer Code and Industry Code, respectively, would establish
procedures and deadlines for making, responding to, and deciding
motions.
    The Commission believes that the proposed rules would provide
standardized guidance to parties concerning a frequent practice in
arbitration, while balancing the goal of maintaining the informal
nature of arbitration. This is consistent with the purpose of providing
an accessible, user-friendly set of rules to users and administrators
of the arbitration forum and of improving the efficacy and efficiency
of the arbitration forum. Infrequent users of the arbitration forum in
particular should benefit from being informed that motions practice may
be a part of arbitration, and what procedures may be involved.
    In light of concerns expressed by commenters, the Commission
expects NASD to monitor the effects of these rules on the efficacy and
efficiency of the arbitration forum, including any increases in
hearings scheduled as a result of motions, the length of time in which
cases are resolved, or costs to the customer, in an ongoing effort to
determine whether future amendments may be warranted.

V. Proposed Rules 12505-12511 and 13505-13511--Discovery

    The current Discovery Guide establishes guidelines for discovery,
rather than mandatory procedures. As a result, NASD stated that a
frequent comment made by users of the NASD forum, particularly with
respect to customer cases, is that discovery procedures are routinely
ignored, resulting in significant delay and the frequent need for
arbitrator intervention in the discovery process.
    Proposed Rules 12505-12511 of the Customer Code would codify the
discovery procedures outlined in the current Discovery Guide, with some
changes designed to minimize the number of discovery disputes in NASD
arbitrations. The Customer Code would not contain the Document
Production Lists, which would remain in the Discovery Guide, but would
make clear that either producing or objecting to documents on
applicable lists, as well as other documents requested by parties, is
mandatory. Proposed Rules 13505-13511 of the Industry Code would
contain similar changes, providing specific guidance about how to make
and respond to discovery requests, and clarifying that compliance with
the discovery provisions of the Industry Code is mandatory.
    The proposed rules would also extend the time that parties have to
respond from 30 to 60 days. In addition, Proposed Rules 12512 and 13512
would codify the sanctions provisions of the Discovery Guide, and
clarify the authority of arbitrators to sanction parties for non-
compliance with discovery rules or orders of the panel.
    The Commission believes that codifying the discovery procedures
outlined in the Discovery Guide and the authority of arbitrators to
impose sanctions for violating those procedures should encourage
parties to comply with their discovery obligations, thereby minimizing
discovery disputes and allowing cases to proceed as expeditiously as
possible. Thus, the proposed rules should improve the efficacy and
efficiency of the arbitration process and of the forum generally.

W. Proposed Rules 12512 and 13512--Subpoenas

    Rule 10322 of the current Code provides that arbitrators and any
counsel of record to a proceeding shall have the power of the subpoena
process as provided by law, and that all parties must be given a copy
of a subpoena upon its issuance. The rule also provides that parties
shall produce documents and make witnesses available to each other to
the fullest extent possible without resort to the subpoena process.
    Proposed Rules 12512 and 13512 of the Customer Code and Industry
Code, respectively, are substantially similar to Rule 10322, but also
would require a party issuing a subpoena to send copies to all other
parties at the same time and in the same manner as the party that was
issued the subpoena.
    The Commission believes that the proposed rules should help ensure
that all parties receive notice of a subpoena in a timely manner. Thus,
they should improve the efficacy and efficiency of the arbitration
process and of the forum generally. We note that NASD acknowledged
commenters' concerns and noted that a separate rule filing, recently
approved by the Commission, addresses additional changes to the
subpoena process.\207\

X. Proposed Rules 12514 and 13514--Exchange of Documents and Witness
Lists

    Rule 10321 of the current Code provides that, at least 20 calendar
days before the first scheduled hearing date, all parties must serve on
each other copies of the documents in their possession and identify the
witnesses that they intend to present at the hearing. The arbitrators
may exclude from the arbitration any documents not exchanged or
witnesses not identified as part of this exchange. Parties need not
exchange copies of documents or identify witnesses that may be used for
cross-examination or rebuttal, however.
    Proposed Rules 12514 and 13514 would provide that parties would
only need to exchange the documents or identify the witnesses that they
intend to present at the hearing that were not already exchanged or
identified, e.g., through the discovery process. The proposed rules
would create a presumption that parties could not present any documents
not exchanged or call any witnesses not identified within the time
provided by the rules, unless the panel determines that good cause
exists. The proposed rules specifically provide that good cause
includes the need to use documents or call witnesses for rebuttal or
impeachment purposes based on developments at the hearing.
    The Commission believes that the proposed rules, by minimizing the
volume of documents and amount of information that parties must
exchange before a hearing, should improve the efficiency of the
arbitration process. We particularly note that in Amendments 5 to the
Customer Code and Industry Code, NASD clarified the meaning of
``rebuttal or impeachment purposes.''

Y. Proposed Rules 12601 and 13601--Postponements

    Rule 10319 of the current Code provides that the arbitrator(s) may,
in their discretion, adjourn any hearing either upon their own
initiative or upon the request of any party to the arbitration.
Proposed Rules 12601 and 13601 of the Customer Code and Industry Code,
respectively, would provide that a panel may not grant requests to
postpone a hearing that are made within 10 days of a scheduled hearing
session unless the panel determines that good cause exists. NASD stated
that these provisions are intended to reduce the number of last-minute
requests for postponements, a practice that many users of the forum
believe results in unnecessary delay and unfairness to parties. The
proposed

rules also would codify applicable postponement fees. Under the
Proposed Rule 12601(b), however, the postponement fee would no longer
double for a subsequent postponement request by the same party, as
under the current Code. According to NASD, this change is intended to
avoid the confusion that may result when one party requesting a
postponement has made a previous request, but another party requesting
the same postponement has not. Instead, parties would pay the same
amount per postponement request.
---------------------------------------------------------------------------

    \207\ See Order Approving Proposed Rule Change and Amendment
Nos. 1, 2, and 3 Thereto and Notice of Filing and Order Granting
Accelerated Approval to Amendment No. 4 to Revise Rule 10322 of the
NASD Code of Arbitration Procedure Pertaining to Subpoenas and the
Power to Direct Appearances, supra note 152.
---------------------------------------------------------------------------

    The Commission believes that the proposed rules strike a balance
between providing parties with the flexibility to postpone hearings,
while discouraging parties from abusing this flexibility by requiring
good cause for last-minute postponements. The proposed rules also
reasonably address potential confusion in the way postponement fees are
imposed and respond to the unnecessary delay and potential unfairness
that last-minute postponements may cause.

Z. Proposed Rules 12702 and 13702--Withdrawal of Claims

    The current Code does not contain any guidance with respect to
withdrawing claims. According to NASD, this occasionally causes
confusion, particularly with respect to the consequences of withdrawing
a claim at a particular stage in an arbitration. To provide guidance to
parties, Proposed Rules 12702 and 13702 of the Customer Code and
Industry Code, respectively, would provide that before a claim has been
answered by a party, a claimant may withdraw the claim against that
party with or without prejudice. However, after a claim has been
answered by a party, a claimant may only withdraw its claim against
that party with prejudice, unless the panel decides, or the claimant
and that party agree, otherwise.
    In the Customer Code Notice and Industry Code Notice, the
Commission solicited comment on whether Proposed Rules 12702 and 13702
of the Customer Code and Industry Code, respectively, appropriately
address the concern of allowing claimants to withdraw claims without
prejudice, while protecting respondents from expending significant
resources to respond to a claim that is later withdrawn or having to
respond to the same claim multiple times. Several commenters stated
that Proposed Rule 12702(b) has no corollary in any court's civil
procedure rules.\208\ These commenters suggested that Proposed Rule
12702 should give arbitrators the authority to decide whether a claim,
if withdrawn after an answer is filed, should be withdrawn with or
without prejudice.
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    \208\ Boliver, Canning, Evans, Ilgenfritz, Josel, Komninos,
Lapidus, Lea, Lipner, Lopez, Magary, PIABA, Pounds, Rosenfield,
Shewan, Stoltmann, Sutherland, and Willner.
---------------------------------------------------------------------------

    The Commission notes that Proposed Rules 12702(b) and 13702(b)
would provide arbitrators with the authority suggested by the
commenters and also allow a claim to be withdrawn without prejudice
after an answer is filed if the parties mutually agree. The Commission
believes that the rationale for the proposed rules would deter the
withdrawal and refiling of claims in order to select a new panel, and
are a reasonable accommodation of the competing interests in the forum.

AA. Proposed Rules 12800 and 13800--Simplified Arbitration

    Rule 10302 of the current Code includes the provisions that apply
to simplified arbitrations. Some of these provisions repeat procedures
that also apply to regular cases, while others, such as deadlines for
pleadings, are particular to simplified cases. Proposed Rules 12800 and
13800 of the Customer Code and Industry Code, respectively, would be
streamlined, by including only those provisions that are unique to
simplified cases. The proposed rules also would harmonize the deadlines
for pleadings in simplified cases with those in regular cases. NASD
stated that frequent users of the forum report that the deadlines in
simplified cases are routinely extended under the current rule. To
provide better guidance to parties, NASD stated that the Customer and
Industry Codes should reflect that, in practice, the time to answer in
simplified cases is typically the same as it is in regular cases.
Therefore, as in regular cases, requests for extensions would now be
governed by Proposed Rules 12207 or 13207 (Extension of Deadlines), as
appropriate, which would provide that deadlines set by the Customer
Code or Industry Code, as appropriate, may be extended by the Director
for good cause. In simplified cases, the Director would consider the
expedited nature of simplified cases in determining whether good cause
existed.
    In addition, Proposed Rules 12800 and 13800 would address the
selection and use of a single arbitrator and when a three-arbitrator
panel would be required, and would eliminate the ability of the single
arbitrator to require a hearing, but still allow the customer to
request a hearing. Furthermore, the arbitrator would no longer have the
option of dismissing without prejudice a counterclaim or other
responsive pleading that increased the amount in dispute above the
simplified case threshold. If a pleading increased the amount in
dispute above the threshold, the case would be administered under the
regular provisions of the Code.
    The Commission believes that these changes should make the
simplified arbitration process easier for parties to understand, and
should streamline and simplify the administration of small claims in
the NASD forum. The proposed rules thus should promote the efficacy and
efficiency of the arbitration process and of the forum generally, for
simplified cases.

BB. Proposed Rules 12900-12903 and 13900-13903--Fees

    NASD stated that a frequent criticism of the current Code is that
the fee schedules are difficult to understand, particularly with
respect to what claimants must pay at the time of filing. To address
this issue, and to make the fee schedules easier to read, the fee
schedules in Proposed Rules 12900-12903 and Proposed Rules 13900-13903
of the Customer Code and Industry Code, respectively, vary from those
of the current Code in two significant ways.
    First, the filing fee and the hearing session deposit--two separate
fees due at filing--have been combined into one single fee that is paid
when a claim is filed. With two exceptions, described below, the
amounts paid by claimants would not change. Although what is now the
refundable hearing session deposit would no longer be paid separately,
an amount equal to the current hearing session deposit or a portion
thereof may be refunded if NASD receives notice that the case has been
settled more than 10 calendar days prior to the hearing on the merits.
The consolidation of the filing fee and the hearing session deposit is
intended to make it easier for claimants to understand how much they
have to pay when they file a claim and what, if any, portion of that
fee may be refunded.
    Second, the filing fee schedule has been simplified. Currently,
there are 14 separate fee brackets in the filing fee schedule for
claimants. The proposed changes would result in little change to the
total amount of fees paid by claimants when filing a claim. In
particular, a claimant's overall filing fees would decrease by $50 for
claims of $30,000 to $50,000, and would increase by $100 for claims of
$1 million to $3 million. The member filing

fee schedule includes corresponding changes.
    The Commission believes that the proposed changes will simplify the
fee schedule, eliminate three repetitive high-end brackets, and align
the brackets in the filing fee schedule with the brackets in the member
filing fee and surcharge schedules. Taken as a whole, the proposed
rules should make the fee schedules easier to understand and therefore
make the arbitration process more transparent. The Commission finds
that these proposed changes are consistent with Section 15A(b)(5) \209\
of the Act, which requires that a national securities association have
rules that provide for the equitable allocation of reasonable dues,
fees, and other charges among its members and other persons using its
facilities. In addition, the Commission finds that these proposed
changes are consistent with Section 15A(b)(6),\210\ which provide,
among other things, that the rules of a national securities association
may not be designed to permit unfair discrimination between customers,
issuers, brokers or dealers, to fix minimum profits, or to impose any
schedule or fix rates of commissions, allowances, discounts, or other
fees to be charged by its members.
---------------------------------------------------------------------------

    \209\ 15 U.S.C. 78o-3(b)(5).
    \210\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

VI. Amendments 5, 6, and 7 to the Customer Code and Amendments 5, 6,
and 7 to the Industry Code

    The Commission finds that the proposed changes in Amendments 5, 6,
and 7 to the Customer Code and Amendments 5, 6, and 7 to the Industry
Code are consistent with the Act and, in particular, are designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, and, in general, to protect
investors and the public interest. The Commission finds that the
proposed changes are designed to accomplish these ends by providing a
user-friendly, reorganized set of rules that make the arbitration
process more transparent and by clarifying certain aspects and
procedures of arbitration in the NASD forum.\211\
---------------------------------------------------------------------------

    \211\ In approving these amendments, the Commission has
considered the amendments' impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

A. Amendment 5 to the Customer Code and Amendment 5 to the Industry
Code

    The Commission finds good cause for approving Amendment 5 to the
Customer Code and Amendment 5 to the Industry Code prior to the
thirtieth day after the date of publication of notice thereof in the
Federal Register. The Commission believes that NASD's responses and
proposed changes in Amendment 5 to the Customer Code and Amendment 5 to
the Industry Code, as summarized in Sections 0 and 0, above, reasonably
address concerns expressed in comments submitted in connection with the
Customer Code and Industry Code. The changes proposed in Amendment 5 to
the Customer Code and Amendment 5 to the Industry Code provide
clarification and do not significantly alter the Customer Code and
Industry Code, as amended by Amendments 1, 2, 3, and 4 of each
respective code, which were subject to a full notice and comment
period.
    In connection with the Customer Code, commenters suggested various
substantive changes relative to current practices or policies
established under the current Code. NASD stated that many of these
comments were beyond the scope of the rule filing, the principal
purposes of which were stated in the Customer Code Notice as: (1)
Revising the current Code into plain English; (2) reorganizing the
current Code into more logical, user-friendly sections, including
creating separate codes for customer and industry arbitrations and for
mediations; and (3) implementing specific substantive rule changes,
including codifying several common practices to provide more guidance
to parties and arbitrators, and streamlining the administration of
arbitrations in the NASD forum.\212\ The Commission finds NASD's
determination that these comments are beyond the scope of the rule
filing to be reasonable because they suggest substantive changes from
the current Code that were not intended to be addressed by this rule
filing. Thus, the Commission finds NASD's determination not to amend
the proposed rule changes in connection with these comments at this
time also to be reasonable. We note that NASD has committed to consider
some of these comments in determining whether future amendments are
warranted, as indicated in Section 0.
---------------------------------------------------------------------------

    \212\ See comments relating to Proposed Rule 12100(n)--
Definition of Public Arbitrator/Proposed Rule 12100(r)--Definition
of Non-Public Arbitrator (Section 0); Proposed Rule 12200--
Arbitration Under an Arbitration Agreement or the Rules of NASD
(Section 0); Proposed Rule 12101--Elective Arbitration (Section 0);
Proposed Rule 12206--Time Limits (Section 0); Proposed Rule 12300--
Filing and Serving Documents/Proposed Rule 12302--Filing an Initial
Statement of Claim (Section 0); Proposed Rule 12307--Deficient
Claims/Proposed Rule 12308--Loss of Defenses Due to Untimely or
Incomplete Answer (Section 0); Proposed Rule 12312--Multiple
Claimants/Proposed Rule 12313 Multiple Respondents (Section 0);
Proposed Rule 12401--Number of Arbitrators (Section 0); Proposed
Rule 12406--Appointment of Arbitrators; Discretion to Appoint
Arbitrators Not on List (Section 0); Proposed Rule 12408--
Disclosures Required of Arbitrators (Section 0); Proposed Rule
12410--Removal of Arbitrator by Director (Section 0); Proposed Rule
12506--Document Production Lists (Sections 0, 0); Proposed Rule
12514--Exchange of Documents and Witness Lists Before Hearing
(Section 0); Proposed Rule 12801--Default Proceedings (Section 0);
Proposed Rule 12900--Fees Due When a Claim is Filed (Section 0).
---------------------------------------------------------------------------

    For all the foregoing reasons and the overall importance of the
proposed rules, the Commission finds good cause for granting
accelerated approval to Amendments 5 to the Customer Code and Industry
Code, and finds that these amendments are consistent with Section
19(b)(2) of the Act.

B. Amendment 6 to the Customer Code and Amendment 6 to the Industry
Code

    The Commission finds good cause for approving Amendment 6 to the
Customer Code and Amendment 6 to the Industry Code prior to the
thirtieth day after the date of publication of notice thereof in the
Federal Register. In these amendments, NASD responded to concerns
raised by commenters in connection with Amendment 5 to the Customer
Code, which has not previously been published by the Commission for
public comment but nonetheless was the subject of 125 comments after it
was made public by NASD. These commenters' concerns centered on
Proposed Rule 12504, summarized in Section 0, above. In Amendment 6 to
the Customer Code and Amendment 6 to the Industry Code, respectively,
NASD withdrew Proposed Rule 12504 and all references thereto from the
Customer Code, and withdrew Proposed Rule 13504 and all references
thereto from the Industry Code.\213\
---------------------------------------------------------------------------

    \213\ Proposed Rule 12504 has been re-filed as a separate
proposed rule change and published for public comment. See supra
note 23.
---------------------------------------------------------------------------

    The Commission finds that NASD's withdrawal of Proposed Rules 12504
and 13504 from the proposed rule changes is a reasonable response to
commenters' concerns that will allow the present proposed rule changes
to proceed while providing NASD with time to consider concerns relating
to dispositive motions separately. For all the foregoing reasons and
the overall importance of the proposed rules, the Commission finds good
cause for granting accelerated approval to Amendment 6 to the Customer
Code and Amendment 6 to the Industry Code, and finds that they are
consistent with Section 19(b)(2) of the Act.

C. Amendment 7 to the Customer Code and Amendment 7 to the Industry
Code

    The Commission finds good cause for approving Amendment 7 to the

Customer Code and Amendment 7 to the Industry Code prior to the
thirtieth day after the date of publication of notice thereof in the
Federal Register. In these amendments, NASD makes further
clarifications to the proposed rule changes and responds to certain
comments, as described in Sections 0 and 0, above. The Commission
believes that NASD's responses and proposed changes in these amendments
reasonably address commenters' concerns. The Commission believes the
changes proposed in Amendment 7 to the Customer Code and Amendment 7 to
the Industry Code provide clarification and do not significantly alter
the Customer Code and Industry Code, as amended by Amendments 1, 2, 3,
and 4 of each code, which were subject to a full notice and comment
period. For all the foregoing reasons and the overall importance of the
proposed rules, the Commission finds good cause for granting
accelerated approval to Amendment 7 to the Customer Code and Amendment
7 to the Industry Code, and finds that they are consistent with Section
19(b)(2) of the Act.

VII. Text of Amendments 5, 6, and 7 to the Customer Code

    For the text of Amendment 5, 6, and 7 to the Customer Code, as well
as amendments to the narrative portion and the exhibits of the Customer
Code filing, please see NASD's Web site at the following URL: http://www.nasd.com/
[fxsp0]RulesRegulation/RuleFilings/[fxsp0]2003RuleFilings/

NASDW--009306?=802.

VIII. Text of Amendments 5, 6, and 7 to the Industry Code

    For the text of Amendments 5, 6, and 7 to the Industry Code, as
well as amendments to the narrative portion and exhibits of the
Industry Code filing, please see NASD's Web site at the following URL:
http://www.nasd.com/RulesRegulation/[fxsp0]RuleFilings/2004RuleFilings/

[fxsp0]NASDW--009295.

IX. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendments 5, 6,
and 7 to the Customer Code and Amendments 5, 6, and 7 to the Industry
Code are consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NASD-2003-158 or SR-NASD-2004-011, as appropriate, on
the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASD-2003-158 or SR-
NASD-2004-011, as appropriate. The file number should be included on
the subject line if e-mail is used. To help the Commission process and
review your comments more efficiently, please use only one method. The
Commission will post all comments on the Commission's Internet Web site
(http://www.sec.gov/rules/sro.shtml). Copies of the submission, all

subsequent amendments, all written statements with respect to the
proposed rule changes that are filed with the Commission, and all
written communications relating to the proposed rule changes between
the Commission and any person, other than those that may be withheld
from the public in accordance with the provisions of 5 U.S.C. 552, will
be available for inspection and copying in the Commission's Public
Reference Section, 100 F Street, NE., Washington, DC 20549. Copies of
such filing will also be available for inspection and copying at the
principal office of NASD. All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to SR-NASD-2003-
158 or SR-NASD-2004-011, as appropriate, and should be submitted on or
before February 21, 2007.

X. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\214\ that the proposed rule changes (SR-NASD-2003-158 and SR-NASD-
2004-011), as amended, be, and hereby are, approved.
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    \214\ 15 U.S.C. 78s(b)(2).
    \215\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\215\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-1382 Filed 1-30-07; 8:45 am]

BILLING CODE 8011-01-P