1 ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 122 [ OW 2002 0068; FRL XXXX X]

RIN 2040 AE71 Amendments to the National Pollutant Discharge Elimination System ( NPDES)

Regulations for Storm Water Discharges Associated with Oil and Gas Exploration,

Production, Processing, or Treatment Operations, or Transmission Facilities.

AGENCY: Environmental Protection Agency ( EPA).

ACTION: Notice of Proposed Rulemaking.

SUMMARY: Today EPA proposes action to codify in the Agency's regulations changes to the Federal Water Pollution Control Act resulting from the Energy Policy Act of 2005.

This proposed action would modify National Pollutant Discharge Elimination System regulations to provide that certain storm water discharges from field activities, including construction, associated with oil and gas exploration, production, processing, or treatment operations, or transmission facilities would be exempt from National Pollutant Discharge Elimination System permit requirements. This action also encourages voluntary application of best management practices for oil and gas field activities and operations to minimize the discharge of pollutants in storm water runoff and protect water quality.

DATES: Comments must be received on or before [ Insert date 45 days after publication date in the Federal Register]. 2 ADDRESSES: Submit your comments, identified by Docket ID No. EPA HQ OW

2002 0068 by one of the following methods:

  www. regulations. gov: Follow the on line instructions for submitting comments.

  E mail: ow docket@ epa. gov   Mail: Water Docket, Environmental Protection Agency, Mailcode: 4101T, 1200 Pennsylvania Ave., NW, Washington, DC 20460. Please include a total of three copies.

  Hand Delivery: EPA Docket Center, EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC 20004. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information.

Instructions: Direct your comments to Docket ID No. EPA HQ OW 2002 0068. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at www. regulations. gov, including any personal information provided, unless the comment includes information claimed to be Confidential Business Information ( CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through www. regulations. gov or e mail. The www. regulations. gov website is an " anonymous access" system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e mail comment directly to EPA without going through www. regulations. gov your e mail address will be automatically captured and included as part of the comment that is placed 3 in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification,

EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. For additional information about EPA's public docket visit the EPA Docket Center homepage at www. epa. gov/ epahome/ dockets. htm. For additional instructions on submitting comments, go to Unit I. C of the SUPPLEMENTARY INFORMATION section of the document.

Docket: All documents in the docket are listed in the www. regulations. gov index.

Although listed in the index, some information is not publicly available, e. g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in www. regulations. gov or in hard copy at the Water Docket, EPA/ DC, EPA West, Room B102, 1301 Constitution Ave.,

NW, Washington, DC 20004. This Docket Facility is open from 8: 00 am to 4: 30 pm,

Monday through Friday, excluding legal holidays. The Docket telephone number is ( 202) 566 2426. The Public Reading Room is open from 8: 30 a. m. to 4: 30 p. m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is ( 202) 566 1744. 4 FOR FURTHER INFORMATION CONTACT: Jeff Smith, Office of Wastewater Management, Office of Water, Environmental Protection Agency ( 4203M)

Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; telephone number: ( 202) 564 0652; fax number: ( 202) 564 6431; e mail address:

smith. jeff@ epa. gov.

SUPPLEMENTARY INFORMATION:

I. General Information A. Does this Action Apply to Me?

Entities potentially affected by this action include operators of oil and gas exploration, production, processing and treatment, and transmission facilities and associated construction activities at oil and gas sites that generally are defined in the following North American Industrial Classification System ( NAICS) codes and titles:

211  Oil and Gas Extraction, 213111  Drilling Oil and Gas Wells, 213112  Support Activities for Oil and Gas Operations, 48611  Pipeline Transportation of Crude Oil and 48621  Pipeline Transportation of Natural Gas.

This description is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. This description identifies the types of entities that EPA is aware could potentially be affected by this action. Other types of entities not identified could also be affected. To determine whether your facility or company is affected by this action, you should carefully examine the applicability criteria in 40 CFR 122.26 ( a)( 2), ( b)( 14)( x), ( b)( 15) and ( e)( 8). If you have questions 5 regarding the applicability of this action to a particular entity, consult the person listed in the preceding A FOR FURTHER INFORMATION CONTACT @

section.

B. What Should I Consider as I Prepare My Comments for EPA?

1. Submitting CBI. Do not submit this information to EPA through www. regulations. gov or e mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is claimed as CBI). In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR Part 2.

2. Tips for Preparing Your Comments. When submitting comments, remember to:

° Identify the rulemaking by docket number and other identifying information ( subject heading, Federal Register date and page number).

° Follow directions  The agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations ( CFR) part or section number.

° Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

° Describe any assumptions and provide any technical information and/ or data that you used.

° If you estimate potential costs or burdens, explain how you arrived at your 6 estimate in sufficient detail to allow for it to be reproduced.

° Provide specific examples to illustrate your concerns, and suggest alternatives.

° Explain your views as clearly as possible.

° Make sure to submit your comments by the comment period deadline identified.

II. Background Information A. NPDES Program In 1972, Congress amended the Federal Water Pollution Control Act ( more commonly referred to as the Clean Water Act or CWA) to prohibit the discharge of any pollutant to waters of the United States from a point source except in compliance with specified provisions of the CWA, including section 402. The principal means by which one may lawfully discharge pollutants into waters of the United States is by obtaining authorization in an NPDES permit issued under CWA section 402. Initial efforts to improve water quality under the NPDES program focused primarily on reducing pollutants in industrial process wastewater and municipal sewage.

As pollution control measures for industrial process wastewater and municipal sewage were implemented and refined, it became increasingly evident that more diffuse sources of water pollution were also significant causes of water quality impairment.

Specifically, storm water runoff draining large surface areas, such as agricultural and urban land, was found to be a major cause of water quality impairment, including the non attainment of designated beneficial uses. As a result, in 1987, Congress added 7 Section 402( p) of the CWA, which directs EPA to develop a two phased approach to regulate storm water discharges under the NPDES program.

The first phase of the national program for controlling storm water, commonly referred to as A Phase I,@ was promulgated on November 16, 1990 ( 55 FR 47990). Phase I requires NPDES permits for storm water discharge from a large number of priority sources, including municipal separate storm sewer systems ( MS4s) generally serving populations of 100,000 or more and industrial activity. EPA defined the term A storm water discharge associated with industrial activity @

in a manner that covered a wide variety of facilities, including construction activities that disturb at least five acres of land ( 40 CFR 122.26( b)( 14)( x)).

The second phase of the storm water program, A Phase II,@ was promulgated on December 8, 1999 ( 64 FR 68722). Phase II expanded the existing program to include discharges of storm water from smaller municipalities in urbanized areas and from construction sites that disturb between one and five acres of land. ( 40 CFR 122.26( b)( 15)( i)). Discharges from these sources have generally needed permit authorization since March 10, 2003 ( 40 CFR 122.26( e)( 8)). Phase II allows certain sources to be excluded from the national program based on a demonstrable lack of impact on water quality. The Phase II rule also allows for other sources not automatically regulated on a national basis to be designated for inclusion based on increased likelihood for localized adverse impact on water quality.

B. NPDES Program Provisions Specific to Oil and Gas Activities The 1987 amendments to the CWA also added language at Section 402( l)( 2) that exempts from NPDES permitting requirements certain storm water discharges from oil 8 and gas exploration, production, processing, or treatment operations or transmission facilities. That provision states that A [ t] he Administrator shall not require a permit under this section, nor shall the Administrator directly or indirectly require any State to require a permit, for discharges of storm water runoff from mining operations or oil and gas exploration, production, processing, or treatment operations or transmission facilities,

composed entirely of flows which are from conveyances or systems of conveyances ( including but not limited to pipes, conduits, ditches, and channels) used for collecting and conveying precipitation runoff and which are not contaminated by contact with, or do not come into contact with, any overburden, raw material, intermediate products, finished product, byproduct, or waste products located on the site of such operations.@

On January 4, 1989, EPA promulgated a rule [ National Pollutant Discharge Elimination System Permit Regulations] that, among other actions, codified the CWA section 402( l)( 2) exemption at what was then 40 CFR 122.26( a)( 3). ( See 54 FR 246).

The preamble to that rule explained that the legislative history of CWA section 402( l)( 2)

suggests that, with respect to oil or grease or hazardous substances, the determination of whether storm water is contaminated by contact with such materials, as established by the Administrator, shall take into consideration whether these materials are present in such storm water runoff in excess of reportable quantities under section 311 of the CWA or section 102 of CERCLA.

The 1990 NPDES Phase I storm water regulations also codified the CWA section 402( l)( 2) exemption, this time moving the regulatory exemption to 40 CFR 122.26( a)( 2)

for uncontaminated storm water discharges from oil and gas activities while also imposing permit requirements for storm water discharges associated with industrial 9 activities, including construction sites disturbing at least five acres ( 40 CFR 122.26( b)( 14)( x)). The Phase I Rule re codification of the CWA section 402( l)( 2)

provision also revised the regulatory language to specify that the " Director may not require a permit" rather than the section 402( l)( 2) language that specifies that the " Administrator shall not require a permit under this section, nor shall the Administrator directly or indirectly require any State to require a permit" for these discharges. This change helped clarify that States may not require permits for these discharges under the NPDES program.

The rule also codified at 122.26( c)( 1)( iii) the conditions which would be considered indicative of contamination by contact with overburden, raw material,

intermediate products, finished product, byproduct, or waste products located on the site and would thus necessitate an NPDES storm water permit application by oil and gas exploration, production, processing or treatment operations or transmission facilities.

Section 122.26( c)( 1)( iii) provides as follows:

( iii) The operator of an existing or new discharge composed entirely of storm water from an oil or gas exploration, production, processing, or treatment operation, or transmission facility is not required to submit a permit application in accordance with paragraph ( c)( 1)( i) of this section, unless the facility:

( A) Has had a discharge of storm water resulting in the discharge of a reportable quantity for which notification is or was required pursuant to 40 CFR 117.21 or 40 CFR 302.6 at anytime since November 16, 1987; or 10 ( B) Has had a discharge of storm water resulting in the discharge of a reportable quantity for which notification is or was required pursuant to 40 CFR 110.6 at any time since November 16, 1987; or ( C) Contributes to a violation of a water quality standard.

EPA based this interpretation of contamination on the legislative history of section 402( l)( 2), which directed EPA to consider whether reportable quantities ( RQs) of oil or grease or hazardous substances under either the CWA or CERCLA had been exceeded in determining whether storm water from oil and gas operations had been contaminated by contact with overburden, raw material, intermediate products, finished products,

byproduct, or waste products.

Shortly after issuance of EPA's first general permit specific to storm water discharges associated with construction activity ( Final NPDES General Permits for Storm Water Discharges From Construction Sites, September 9, 1992, 57 FR 41176),

EPA Region 8 raised a question to EPA Headquarters about the applicability of the permit requirements for oil and gas related construction activities. On December 10,

1992, EPA Headquarters sent a memorandum to EPA Region 8 stating that all construction activities that disturb five or more acres must apply for a permit, including those construction activities associated with oil and gas activities.

This memorandum was challenged by a collection of trade associations who asserted that the memorandum was unlawful and requested that the court set it aside as inconsistent with the CWA. The United States Court of Appeals for the Fourth Circuit dismissed this challenge on the grounds that the internal EPA memorandum itself did not 11 constitute an action reviewable by the courts. Appalachian Energy Group v. EPA, 33 F. 3d. 319, 322 ( 4th Cir. 1994).

As noted previously, EPA promulgated the final Phase II Storm Water Rule on December 8, 1999 with a requirement that storm water discharges from small construction activities ( those disturbing between one and five acres) obtain NPDES permit coverage beginning on March 10, 2003. Based on public comments on the January 9, 1998 proposed Phase II rule, EPA had considered including oil and gas exploration sites in its economic analysis for the rulemaking, but further analysis suggested that few, if any, of these sites would actually disturb more than one acre of land. Economic Analysis of the Final Phase II Storm Water Rule, October 1999 ( see p 4

2). Accordingly, EPA decided that separate analysis of this sector was unnecessary.

After promulgating the final Phase II Rule, EPA became aware that close to 30,000 oil and gas sites annually may, in fact, be affected. EPA now believes that the majority of such sites may exceed one acre when the acreage attributed to lease roads, pipeline rightof ways and other infrastructure facilities is apportioned to each site.

In light of this new information, on March 10, 2003, EPA published a rule ( the " deferral rule") that postponed until March 10, 2005, the permit authorization deadline for NPDES storm water permits for oil and gas construction activity that disturbs one to five acres of land. This extension allowed EPA to analyze and better evaluate ( 1) the impact of the permit requirements on the oil and gas industry, ( 2) the appropriate best management practices ( BMPs) for preventing contamination of storm water runoff resulting from construction associated with oil and gas exploration, production,

processing, or treatment operations or transmission facilities, and ( 3) the scope and effect 12 of section 402( l)( 2) and other storm water provisions of the Clean Water Act. 68 FR 11325.

Between 2003 and 2005, EPA gathered information on size, location and other site characteristics to better evaluate compliance costs associated with the control of storm water runoff from oil and gas construction activities. EPA met with various stakeholders and visited a number of oil and gas sites with construction related activities,

to discuss and review existing BMPs for preventing contamination of storm water runoff resulting from construction associated with these oil and gas activities. Additionally,

EPA gathered economic data for the industry and initiated an economic impact analysis of the existing Phase II regulations specific to the oil and gas industry. EPA's preliminary analysis indicated that there could be significant and potentially costly administrative delays in the permitting process for oil and gas construction sites that were not considered in the original economic analysis for the 1999 Phase II rulemaking. As a result, on March 9, 2005, EPA further postponed the date for NPDES regulation for an additional 15 months until June 12, 2006, to provide additional time for the Agency to complete its evaluation of the economic and legal issues that were raised and to assess appropriate procedures and methods for controlling storm water discharges from these sources to mitigate impacts on water quality.

A collection of trade associations petitioned the United States Court of Appeals for the Fifth Circuit for review of the March 10, 2003 deferral rule. The petitioners asserted that the deferral rule represents the Agency =

s first acknowledgment that the NPDES regulations apply to construction activities associated with oil and gas activities,

but that such regulations are inconsistent with CWA section 402( l)( 2). On June 16, 2005, 13 the Fifth Circuit dismissed the petition on the grounds that the issue is not ripe for review.

Specifically, the Court acknowledged EPA's ongoing analysis of this issue and indicated that " any interpretation [ of CWA section 402( l)( 2)] we would provide would necessarily prematurely cut off EPA's interpretive process." Texas Independent Producers and Royalty Owners Ass'n, et al. v. EPA, 413 F. 3d 479, 483 ( 5th Cir. 2005).

III. Description of Proposed NPDES Program Modifications A. Objectives EPA Seeks to Achieve in Today's Proposal The primary purpose of today's proposed rule is to propose modifications to the NPDES regulations in 40 CFR Part 122 based on changes to the Clean Water Act ( CWA)

resulting from the Energy Policy Act of 2005 language ( See Pub. L. 109 58, 119 Stat.

694 ( codified as amended at 33 U. S. C. § 1362 ( 2005))). A second purpose is to encourage voluntary application of best management practices ( BMPs) for oil and gas field activities and operations, including construction, to provide additional protection of water quality from potential storm water discharges.

On August 8, 2005, the President signed into law the Energy Policy Act of 2005.

Section 323 of the Energy Policy Act of 2005 added a new paragraph ( 24) to section 502 of the CWA to define the term " oil and gas exploration, production, processing, or treatment, or transmission facilities" to mean " all field activities or operations associated with exploration, production, processing, or treatment operations, or transmission facilities, including activities necessary to prepare a site for drilling and for the movement and placement of drilling equipment, whether or not such field activities or operations may be considered to be construction activities." This term is used in CWA section 14 402( l)( 2) of the CWA to identify oil and gas activities for which EPA shall not require NPDES permit coverage for certain storm water discharges. The effect of this statutory change is to make construction activities at oil and gas sites eligible for the exemption established by CWA section 402( l)( 2). EPA interprets this extension of the statutory exemption to include construction of drilling sites, drilling waste management pits, and access roads as well as construction of the transportation and treatment infrastructure such as pipelines, natural gas treatment plants, natural gas pipeline compressor stations and crude oil pumping stations.

The action is being published in the Federal Register as a proposed rule to provide the public and interested stakeholders with the opportunity to comment on this rulemaking.

B. Today's Regulatory Approach 1. Requirements for Regulated Entities under Today's Proposal Today =

s action proposes to codify changes to section 502, subpart ( 24) (" Oil and Gas Exploration and Production Defined") of the Clean Water Act ( CWA) into EPA regulations in 40 CFR Part 122 (" EPA Administered Permit Programs: The National Pollutant Discharge Elimination System [ NPDES]"). Specifically, the language in the Energy Policy Act of 2005, signed by the President on August 8, 2005, states that section 502 of the CWA would be amended by adding the following subparagraph at the end of the current section: "( 24) OIL AND GAS EXPLORATION AND PRODUCTION.

The term ` oil and gas exploration, production, processing, or treatment operations or transmission facilities' means all field activities or operations associated with exploration, production, processing, or treatment operations, or transmission facilities, 15 including activities necessary to prepare a site for drilling and for the movement and placement of drilling equipment, whether or not such field activities or operations may be considered to be construction activities."

In extending this statutory extension at CWA section 402( l)( 2) to oil and gas construction activities, Congress did not differentiate among operations on the basis of the size of the disturbed acreage. Accordingly, there is no distinction in today's proposal as to whether the amount of disturbed acreage is less than 1 acre, between 1 and 5 acres,

or greater than 5 acres. Hence, discharges from " large" construction activity ( disturbing at least 5 acres) at oil and gas facilities would be eligible for the exemption from NPDES permitting requirements under today's proposal to the same extent as discharges from small construction activity at such facilities.

In addition to the construction of drilling sites, drilling waste management pits,

and access roads, EPA also interprets the specific phrase in the statutory language " all field activities or operations" [ emphasis added] as being applicable to construction of infield treatment plants and the transportation infrastructure ( e. g., crude oil and natural gas pipelines, natural gas treatment plants and both natural gas pipeline compressor and crude oil pump stations) necessary for the operation of most producing oil and gas fields. Such construction activities would thus be eligible for the CWA section 402( l)( 2) exemption from NPDES permitting requirements.

This proposed regulation would implement Congress' intention, in the Energy Policy Act of 2005, to exclude virtually all oil and gas construction activities from regulation under the NPDES storm water program. However, consistent with the language of CWA section 402( l)( 2), the proposed regulatory changes would not exclude 16 oil and gas construction activities from regulation under the NPDES storm water program when such field activities or operations discharge storm water that has been contaminated by contact with "  any overburden, raw material, intermediate products, finished product, byproduct or waste products located on the site of such operations." [ CWA section 402( l)( 2)].

The legislative history of CWA section 402( l)( 2) provided guidance to EPA in interpreting the phrase " contaminated by contact with." It provides as follows:

" The substitute [ final version of the bill] provides that permits are not required where stormwater runoff is diverted around mining operations or oil and gas operations and does not come in contact with overburden, raw material, product, or process waste. In addition, where stormwater runoff is not contaminated by contact with such materials, as determined by the Administrator, permits are also not required. With respect to oil or grease or hazardous substances, the determination of whether stormwater is ` contaminated by contact with' such materials, as established by the Administrator, shall take into consideration runoff in excess of reportable quantities under section 311 of the Clean Water Act or section 102 of the Comprehensive Environmental Response,

Compensation, and Liability Act of 1980, or in the case of mining operations, above natural background levels."

Based on this language, EPA codified its interpretation of " contaminated by contact with" at 122.26( c)( 1)( iii). It provides that oil and gas operations are exempt except where 17 their discharges contribute reportable quantities of oil or grease or hazardous substances to waters of the United States or contribute to a violation of a water quality standard.

However, a plain reading of CWA section 402( l)( 2) suggests that sites where runoff is not contaminated by contact with raw material, intermediate products, finished product, byproduct or waste products located at the site are not required to obtain NPDES permits, even in situations where the runoff might be contributing to a violation of water quality standards. At the time that EPA promulgated 122.26( c)( 1)( iii), EPA believed it reasonable to presume that causing or contributing to a violation of water quality standards was an indication of contamination as envisioned in the statute. However, now that Congress has explicitly extended the exemption to construction activities associated with oil and gas operations, EPA believes this presumption may no longer be valid in some instances. For example, sediment in runoff related to the clearing of ground or construction of an access road could cause or contribute to a water quality standard violation even where the runoff does not come into contact with raw material,

intermediate products, finished product, byproduct or waste products located at the site.

For this reason, EPA is proposing to clarify in 122.26( a)( 2)( ii) that a water quality standard violation for sediment alone does not trigger a permitting requirement. Because most substances for which an RQ has been established are the types of materials ( eg, oil,

grease, toxic or hazardous chemicals) that would likely not be present in storm water discharge from an oil or gas site other than through contact with exposed raw material,

intermediate products, finished product, byproduct or waste products, EPA would generally consider an exceedance of an RQ as indicative of contamination. This would be true whether such contact occurred during or after construction. Sediment, in contrast, 18 could easily be present in the discharge even without such contact, and thus in and of itself would not lead to a determination of contamination through contact. Sediment could serve as a vehicle for discharges of oil or grease or hazardous substances ( e. g.,

heavy metals) and if an RQ is exceeded or a water quality standard violated for such a pollutant, such contamination could trigger permitting requirements. EPA believes that this interpretation is fully consistent with Congress' intent in enacting the 2005 amendments to CWA section 402( l)( 2), which specifically included within the scope of that exemption construction activities associated with oil and gas sites.

Finally, EPA proposes to reorganize regulatory language in 122.26( a)( 2) to create two new paragraphs: ( i) and ( ii). EPA believes this change is consistent with the existing regulatory framework provided in 122.26( c)( 1)( iii) and ( iv) to separate mining and oil and gas requirements. Proposed paragraph ( i) merely recodifies existing requirements at 122.26( c)( 1)( iv) for storm water discharges from mining operations that come into contact with, any overburden, raw material, intermediate products, finished products,

byproduct, or waste products located on the site of such operations." Proposed paragraph ( ii) clarifies permit requirements for storm water discharges from oil and gas sites consistent with the discussion provided above. In addition, EPA is proposing to add a note to the regulations encouraging operators of oil and gas field activities or operations to implement and maintain Best Management Practices ( BMPs) to minimize the discharge of pollutants, to include sediment, in storm water both during and after construction activities to help protect surface water quality during storm events.

Additional discussion of the importance of these activities is provided in Section III. B. 3. 19 Today's proposed rulemaking would apply to all States, Federal lands and Indian Country regardless of whether EPA is the NPDES permitting authority. Discharges that would be exempted from NPDES permit requirements in today's proposal would be exempted from such NPDES requirements regardless of whether EPA or a State is the permitting authority. EPA wishes to clarify, however, that today's proposal is not intended to interfere with the States' ability to regulate any discharges through a State's non NPDES program. However, if a State were to require a permit for discharges exempt from the Clean Water Act NPDES program requirements, the State's permit requirement would not be considered part of the State's EPA approved NPDES program.

See 40 CFR 123.1( i)( 2).

2. Timeframe for Final Rule EPA intends to issue a final rulemaking in advance of the June 12, 2006 deadline by which oil and gas construction sites that disturb one to five acres of land are currently scheduled to obtain NPDES permits for their discharges. If finalized as proposed, EPA's final rulemaking would effectively exempt all field activities or operations associated with oil and gas exploration, production, processing or treatment and transmission construction activities from regulation under the NPDES storm water permitting program, except in accordance with 122.26( a)( 2)( ii) and ( c)( 1)( iii).

3. Best Management Practices ( BMPs)

In accordance with CWA section 402( l)( 2), today's proposed rule does not require [ emphasis added] that operators select, install, and maintain Best Management Practices ( BMPs) to minimize discharges of pollutants ( including sediment) in storm water;

however, the Agency is adding a note within the regulatory text encouraging [ emphasis 20 added] operators of oil and gas field activities or operations to institute these practices both during and after construction activities whenever practicable.

Installation of effective BMPs would provide additional measures to help protect surface water during storm events. Appropriate controls would be those suitable to the site conditions, both during and after the period of construction, and consistent with generally accepted engineering design criteria and manufacturer specifications. Selection of BMPs could also be affected by seasonal or climate conditions.

Most storm water controls for construction activities can be grouped into three classes: ( a) erosion and sediment controls; ( b) storm water management measures; and ( c)

good housekeeping practices. Erosion and sediment controls address pollutants ( e. g.,

sediment) in storm water generated from the site during active construction related work.

Storm water management measures result in reductions of pollutants in storm water discharged from the site after the construction has been completed. Good housekeeping measures are those practices employed to manage materials on the site and control litter.

While not explicitly required by regulation, some good housekeeping practices may be necessary to ensure that runoff satisfies the conditions in 122.26( a)( 2)( ii) and ( c)( 1)( iii)

for eligibility for the permitting exemption.

Effective soil erosion and sedimentation control typically is accomplished through the use of a suite of BMPs. Operators should design control measures that collectively address the multiple needs of holding soil in place, diverting storm water around active areas with bare soil, slowing water down as it crosses the site, and providing settling areas for soil that has become mobilized. 21 The value of EPA's recommended oil and gas construction site BMPs has already been recognized by many oil and gas site operators. Under the sponsorship of the Independent Petroleum Association of America, the oil and gas industry developed guidance entitled " Guidance Document: Reasonable and Prudent Practices for Stabilization ( RAPPS) of Oil and Gas Construction Sites," Horizon Environmental Services, Inc., April 2004, that describes the application of appropriate BMPs based on general geographical location and the distance, slope, and amount of vegetative cover between the construction activity and the nearest water body. This document is a relatively simple, common sense approach to mitigating environmental consequences arising from a variety of oil and gas construction activities. The document has been widely publicized and a large number of independent oil and gas operating companies have informed EPA that they have adopted the practices outlined in the document in their day to day field construction activities.

4. Other Federal, State, Tribal, and/ or Local Controls EPA expects that operators will comply with applicable Federal, State, Tribal,

and/ or local controls on oil and gas construction activities. For example, today's action does not affect existing requirements established under section 404 of the CWA for discharges of dredge and fill materials to waters of the United States, including requirements as they apply to wetlands. Similarly, the proposed rule does not affect decisions made at the local level on the need for enhanced protection of local water resources. As such, this proposed rulemaking would not curtail the ability of an appropriate environmental management agency ( e. g., State, Tribal or local government)

from imposing specific discharge conditions on an oil and gas operator that would 22 otherwise be exempted under today's proposed rule so long as these requirements are imposed pursuant to authority other than an EPA approved NPDES program. For example, a State or tribe could choose, under its own authorities, to set limits or require that an operator meet certain discharge conditions in sensitive watersheds.

IV. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review Under Executive Order 12866, ( 58 FR 51735 ( October 4, 1993)) the Agency must determine whether the regulatory action is A significant @

and therefore subject to OMB review and the requirements of the Executive Order. The Order defines A significant regulatory action @

as one that is likely to result in a rule that may:

( 1) have an annual effect on the economy of $ 100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition,

jobs, the environment, public health or safety, or State, local, or tribal governments or communities;

( 2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

( 3) alter materially the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or ( 4) raise novel legal or policy issues arising out of legal mandates, the President =

s priorities, or the principles set forth in the Executive Order.

Pursuant to the terms of Executive Order 12866, EPA has determined that this is a " significant regulatory action" within the meaning of the Executive Order. EPA has 23 submitted this action to OMB for review. Changes made in response to OMB suggestions or recommendations will be documented in the public record.

B. Paperwork Reduction Act This proposed rule would not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U. S. C. 3501, et seq., as this rulemaking is deregulatory and imposes no new requirements.

Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency.

This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information; processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information.

An Agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA =

s regulations are listed in 40 CFR Part 9.

C. Regulatory Flexibility Act The Regulatory Flexibility Act ( RFA), 5 U. S. C. 601 et seq., generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic 24 impact on a substantial number of small entities. Small entities include small businesses,

small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of today =

s final rule on small entities, small entity is defined as: ( 1) a small business based on Small Business Administration size standards; ( 2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and ( 3) a small organization that is any not for profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of today's proposed rule on small entities, I certify that this action would not have a significant economic impact on a substantial number of small entities. In determining whether a rule would have a significant economic impact on a substantial number of small entities, the impact of concern is any significant adverse economic impact on small entities, since the primary purpose of the regulatory flexibility analyses is to identify and address regulatory alternatives " which minimize any significant economic impact of the rule on small entities." 5 USC 603 and 604. Thus, an agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small entities subject to the rule. Today =

s proposed rule, by expanding the universe of oil and gas operations eligible for the NPDES permit exemption created by CWA section 402( l)( 2),

would relieve the regulatory burden for certain discharges associated with construction activity at exploration, production, processing, or treatment operations, or transmission 25 facilities to obtain an NPDES storm water permit. We have therefore concluded that today's proposed rule would relieve a regulatory burden for all affected small entities.

D. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 ( UMRA), Pub. L. 104 4,

establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost benefit analysis, for proposed and final rules with " Federal mandates" that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $ 100 million or more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost effective or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost effective or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted.

Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, 26 educating, and advising small governments on compliance with the regulatory requirements.

Today's proposed rule contains no Federal mandates ( under the regulatory provisions of Title II of the UMRA) for State, local, or tribal governments or the private sector. The proposed rule imposed no enforceable duty on any State, local or tribal governments or the private sector. Thus, today =

s proposed rule is not subject to the requirements of sections 202 and 205 of the UMRA.

E. Executive Order 13132: Federalism Executive Order 13132, entitled A Federalism @

( 64 FR 43255, August 10, 1999),

requires EPA to develop an accountable process to ensure A meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.@ The phrase A Policies that have federalism implications @

is defined in the Executive Order to include regulations that have A 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.@

This proposed rule does not have federalism implications. It would 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. Thus, Executive Order 13132 does not apply to this rule.

F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments 27 Executive Order 13175, entitled, A Consultation and Coordination with Indian Tribal Governments @

( 65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure A meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.@ This proposed rule does not have any Tribal implications as specified in Executive Order 13175. It would 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, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule. EPA specifically solicits additional comment on this proposed rule from tribal officials.

G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks Executive Order 13045, A Protection of Children from Environmental Health Risks and Safety Risks @

( 62 FR 19885, April 23, 1997), applies to any rule that: ( 1) is determined to be A economically significant @

as defined under Executive Order 12866, and ( 2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria,

the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. This proposed rule is not subject to the Executive Order because it is not economically significant as defined under Executive Order 12866, and because the Agency does not have reason to 28 believe the environmental health or safety risks addressed by this action present a disproportionate risk to children.

H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use This proposed rule is not a " significant energy action" as defined in Executive Order 13211, " Actions Concerning Regulations That Significantly Affect Energy Supply,

Distribution, or Use ( 66 FR 28355 ( May 22, 2001)) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.

I. National Technology Transfer and Advancement Act Section 12( d) of the National Technology Transfer and Advancement Act of 1995 ( A NTTAA @), Pub L. No. 104 113, section 12( d) ( 15 U. S. C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e. g., materials specifications, test methods, sampling procedures,

and business practices) that are developed or adopted by voluntary consensus standard bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

This proposed rulemaking does not involve technical standards. Therefore, EPA is not considering the use of any voluntary consensus standards.

List of Subjects in 40 CFR Part 122 29 Administrative practice and procedure, Confidential business information,

Environmental protection, Hazardous substances, Reporting and recordkeeping requirements, Water pollution control.

Dated:

Stephen L. Johnson,

Administrator For the reasons set forth in the preamble, Chapter I of Title 40 of the Code of Federal Regulations is proposed to be amended as follows: 30 PART 122 B EPA ADMINISTERED PERMIT PROGRAMS: THE NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM 1. The authority citation for part 122 continues to read as follows:

Authority: The Clean Water Act, 33 U. S. C. 1251 et seq.

Subpart B  [ Amended]

2. Amend § 122.26 as follows:

a. Revise paragraph ( a)( 2) to add two new subsections ( i) and ( ii), and b. Revised pargraph ( e)( 8);

The additions and revisions read as follows:

§ 122.26 Storm water discharges ( applicable to State NPDES programs, see §

122.35).

( a) * * *

( 2) The Director may not require a permit for discharges of storm water runoff from the following:

( i) Mining operations or systems of conveyances ( including but not limited to pipes, conduits, ditches, and channels) used for collecting and conveying precipitation runoff and which are not contaminated by contact with or that have not come into contact with, any overburden, raw material, intermediate products, finished product, byproduct or waste products located on the site of such operations, except in accordance with §

122.26( c)( 1)( iv).

( ii) All field activities or operations associated with oil and gas exploration,

production, processing, or treatment operations, or transmission facilities, including 31 activities necessary to prepare a site for drilling and for the movement and placement of drilling equipment, whether or not such field activities or operations may be considered to be construction activities, except in accordance with § 122.26( c)( 1)( iii). Discharges of sediment from construction activities associated with oil and gas exploration, production,

processing, or treatment operations, or transmission facilities are not subject to the provisions of 122.26( c)( 1)( iii)( C).

[ NOTE TO: 122.26( a)( 2)( ii): EPA encourages operators of oil and gas field activities or operations to implement and maintain Best Management Practices ( BMPs) to minimize discharge of pollutants, to include sediment, in storm water both during and after construction activities to help ensure protection of surface water quality during storm events. Appropriate controls would be those suitable to the site conditions and consistent with generally accepted engineering design criteria and manufacturer specifications. Selection of BMPs could also be affected by seasonal or climate conditions.

* * * * *

( e) * * *

( 8) For any storm water discharge associated with small construction activities identified in paragraph ( b)( 15)( i) of this section, see § 122.21( c)( 1). Discharges from these sources require permit authorization by March 10, 2003, unless designated for coverage before then.


[Federal Register Volume 88, Number 186 (Wednesday, September 27, 2023)]
[Notices]
[Pages 66541-66547]
[FR Doc No: 2023-20962]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98475; File No. SR-NASDAQ-2023-037]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend NOM Options 7, Section 2

September 21, 2023.
    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 September 13, 2023, The Nasdaq Stock Market LLC (``Nasdaq'' 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. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

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

    The Exchange proposes to amend The Nasdaq Options Market LLC
(``NOM'') Pricing Schedule at Options 7, Section 2.\3\
---------------------------------------------------------------------------

    \3\ On September 13, 2023, the Exchange withdrew SR-NASDAQ-2023-
033 and replaced it with the instant rule change.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at
the principal office of the Exchange, 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 Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

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

1. Purpose
    The Exchange proposes to amend NOM's Pricing Schedule at Options 7,
Section 2, Nasdaq Options Market--Fees and Rebates. Today, NOM Options
7, Section 2(1) provides for various fees and rebates applicable to NOM
Participants.
    Today, Customer,\4\ Professional,\5\ and NOM Market Maker \6\
Rebates to Add Liquidity in Penny Symbols are paid per the highest tier
achieved among the available tiers. The tiers for Customer and
Professional Rebates to Add Liquidity in Penny Symbols are below.
---------------------------------------------------------------------------

    \4\ The term ``Customer'' or (``C'') applies to any transaction
that is identified by a Participant for clearing in the Customer
range at The Options Clearing Corporation (``OCC'') which is not for
the account of broker or dealer or for the account of a
``Professional'' (as that term is defined in Options 1, Section
1(a)(47)). See Options 7, Section 1(a).
    \5\ The term ``Professional'' or (``P'') means any person or
entity that (i) is not a broker or dealer in securities, and (ii)
places more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s) pursuant
to Options 1, Section 1(a)(47). All Professional orders shall be
appropriately marked by Participants. See Options 7, Section 1(a).
    \6\ The term ``NOM Market Maker'' or (``M'') is a Participant
that has registered as a Market Maker on NOM pursuant to Options 2,
Section 1, and must also remain in good standing pursuant to Options
2, Section 9. In order to receive NOM Market Maker pricing in all
securities, the Participant must be registered as a NOM Market Maker
in at least one security. See Options 7, Section 1(a).
---------------------------------------------------------------------------

Monthly Volume
    Tier 1: Participant adds Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols of up to 0.10% of total industry customer equity and
ETF option average daily volume (``ADV'') contracts per day in a month.
    Tier 2: Participant adds Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols above 0.10% of total industry customer equity and ETF
option ADV contracts per day in a month.
    Tier 3: Participant: (a) adds Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols above 0.20% of total industry customer equity and ETF
option ADV contracts per day in a month; or (b) adds Customer and/or
Professional liquidity in Penny Symbols and/or Non-Penny Symbols above
0.05% of total industry customer equity and ETF option ADV contracts
per day in a month and qualifies for MARS.
    Tier 4: Participant adds Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols above 0.30% of total industry customer equity and ETF
option ADV contracts per day in a month.
    Tier 5: Participant adds Customer, Professional, Firm, Non-NOM
Market Maker and/or Broker-Dealer liquidity in Penny Symbols and/or
Non-Penny Symbols above 0.40% of total industry customer equity and ETF
option ADV contracts per day in a month.
    Tier 6##: Participant adds Customer, Professional, Firm,
Non-NOM Market Maker and/or Broker-Dealer liquidity in Penny Symbols
and/or Non-Penny Symbols above 0.70% or more of total industry customer
equity and ETF option ADV contracts per day in a month, or Participant:
(1) adds Customer and/or Professional liquidity in Penny Symbols and/or
Non-Penny Symbols of 0.10% or more of total industry customer equity
and ETF option ADV contracts per day in a month, and (2) has added
liquidity in all securities through one or more of its Nasdaq Market
Center MPIDs that represent 1.00% or more of Consolidated Volume in a
month or qualifies for MARS (defined below).
    To determine the applicable percentage of total industry customer
equity and ETF option average daily volume for a Customer and
Professional Rebate to Add Liquidity in Penny Symbols, unless otherwise
stated, the Participant's Penny Symbol and Non-Penny Symbol Customer
and/or Professional volume that adds liquidity will be included.\7\
---------------------------------------------------------------------------

    \7\ See note 1 in Options 7, Section 2.
---------------------------------------------------------------------------

    With respect to the NOM Market Maker Rebates to Add Liquidity in
Penny Symbols, today, rebates are paid on the below tier
qualifications.
Monthly Volume
    Tier 1: Participant adds NOM Market Maker liquidity in Penny
Symbols and/or Non-Penny Symbols of up to 0.10% of total industry
customer equity and ETF option average daily volume (``ADV'') contracts
per day in a month.
    Tier 2: Participant adds NOM Market Maker liquidity in Penny
Symbols and/or Non-Penny Symbols above 0.10% of total industry customer
equity and ETF option ADV contracts per day in a month.
    Tier 3: Participant: (a) adds NOM Market Maker liquidity in Penny
Symbols and/or Non-Penny Symbols above 0.20% of total industry customer
equity and ETF option ADV contracts per day in a month; or (b)(1) adds
NOM Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols
above 0.07% of total industry customer equity and ETF option ADV
contracts per day in a month, (2) transacts in all securities through
one or more of its Nasdaq Market Center MPIDs that represent (i) 0.70%
or more of Consolidated Volume (``CV'') which adds liquidity in the
same month on The Nasdaq Stock Market or (ii) 70 million shares or more
ADV which adds liquidity in the same month on The Nasdaq Stock Market,
(3) transacts in Tape B securities through one or more of its Nasdaq
Market Center MPIDs that represent 0.10% or more of CV which adds
liquidity in the same month on The Nasdaq Stock Market, and (4)
executes greater than 0.01% of CV via Market-on- Close/Limit-on-Close
(``MOC/LOC'') volume within The Nasdaq Stock Market Closing Cross in
the same month.
    Tier 4: Participant adds NOM Market Maker liquidity in Penny
Symbols and/or Non-Penny Symbols of above 0.60% of total industry
customer equity and ETF option ADV contracts per day in a month.
    Tier 5: Participant adds NOM Market Maker liquidity in Penny
Symbols and/or Non-Penny Symbols of above 0.40% of total industry
customer equity and ETF option ADV contracts per day in a

month and transacts in all securities through one or more of its Nasdaq
Market Center MPIDs that represent 0.40% or more of Consolidated Volume
(``CV'') which adds liquidity in the same month on The Nasdaq Stock
Market.
    Tier 6: Participant: (a)(1) adds NOM Market Maker liquidity in
Penny Symbols and/or Non-Penny Symbols above 0.95% of total industry
customer equity and ETF option ADV contracts per day in a month, (2)
executes Total Volume of 250,000 or more contracts per day in a month,
of which 30,000 or more contracts per day in a month must be removing
liquidity, and (3) adds Firm, Broker-Dealer and Non-NOM Market Maker
liquidity in Non-Penny Symbols of 10,000 or more contracts per day in a
month; or (b)(1) adds NOM Market Maker liquidity in Penny Symbols and/
or Non-Penny Symbols above 1.50% of total industry customer equity and
ETF option ADV contracts per day in a month, and (2) executes Total
Volume of 250,000 or more contracts per day in a month, of which 15,000
or more contracts per day in a month must be removing liquidity.
    Total Volume is defined as Customer, Professional, Firm, Broker-
Dealer, Non-NOM Market Maker and NOM Market Maker volume in Penny
Symbols and/or Non-Penny Symbols which either adds or removes liquidity
on NOM. Finally, today, Broker-Dealers,\8\ Firms \9\ and Non-NOM Market
Makers \10\ are paid a $0.10 per contract Rebate to Add Liquidity in
Penny Symbols regardless of the tier.
---------------------------------------------------------------------------

    \8\ The term ``Broker-Dealer'' or (``B'') applies to any
transaction which is not subject to any of the other transaction
fees applicable within a particular category. See Options 7, Section
1(a).
    \9\ The term ``Firm'' or (``F'') applies to any transaction that
is identified by a Participant for clearing in the Firm range at
OCC. See Options 7, Section 1(a).
    \10\ The term ``Non-NOM Market Maker'' or (``O'') is a
registered market maker on another options exchange that is not a
NOM Market Maker. A Non-NOM Market Maker must append the proper Non-
NOM Market Maker designation to orders routed to NOM. See Options 7,
Section 1(a).
---------------------------------------------------------------------------

Proposal
NOM Market Maker--Note 4
    At this time, the Exchange proposes to amend note 4 of Options 7,
Section 2 which currently applies to Participants who achieve the NOM
Market Maker Tier 3 or Tier 4 Rebate to Add Liquidity in Penny Symbols.
Note 4 of Options 7, Section 2 currently states, ``Participants who
achieve the NOM Market Maker Tier 3 or Tier 4 Rebate to Add Liquidity
will receive $0.40 per contract to add liquidity in the following
symbols: AAPL, SPY, QQQ, IWM, and VXX.'' The Exchange proposes to amend
this rebate in note 4 of Options 7, Section 2 and also offer a second
additional rebate.
    First, the Exchange proposes to amend the existing rebate of $0.40
per contract in note 4 of Options 7, Section 2, which is paid to
Participants who achieve the NOM Market Maker Tier 3 or Tier 4 Rebate
to Add Liquidity in Penny Symbols to $0.39 per contract. Second, the
Exchange proposes to remove the symbols ``AAPL'' and ``VXX'' as
eligible for the existing rebate. Third, the Exchange proposes to offer
an additional rebate, in note 4 of Options 7, Section 2, of $0.33 per
contract to add liquidity in SPY, QQQ, and IWM to Participants who
achieve the NOM Market Maker Tier 2 Rebate to Add Liquidity in Penny
Symbols and execute 1 million shares or more ADV in the same month
utilizing the M-ELO order type \11\ on The Nasdaq Stock Market,
provided the Participant also transacts in all securities through one
or more of its Nasdaq Market Center MPIDs that represent (i) 0.45% or
more of Consolidated Volume (``CV'') which adds liquidity in the same
month on The Nasdaq Stock Market or (ii) 45 million shares or more ADV
which adds liquidity in the same month on The Nasdaq Stock Market.
---------------------------------------------------------------------------

    \11\ The M-ELO order type, also known as the ``Midpoint Extended
Life Order,'' is a Non-Displayed Order priced at the midpoint
between the National Best Bid and Offer (``NBBO'') and is eligible
for execution only against other eligible M-ELOs and only after a
minimum period of 10 milliseconds (``Holding Period'') has passed
after acceptance of the Order by the System. All market participants
on The Nasdaq Stock Market LLC may utilize this order type. See
Nasdaq Equities 4, Rule 4702(b)(14). Of note, the Commission
recently approved a rule proposal amending the Holding Period of the
M-ELO order type so that it may adjust dynamically between .025 and
2.5 milliseconds upon real-time assessments of market conditions.
See Securities and Exchange Act Release No. 98321 (September 7,
2003), 88 FR 62850 (September 13, 2023) (SR-NASDAQ-2022-079). This
rule change has not yet been implemented.
---------------------------------------------------------------------------

    Therefore, in order to qualify for the new $0.33 per contract
rebate to add liquidity in SPY, QQQ, and IWM, in note 4 of Options 7,
Section 2, a Participant must first qualify for the NOM Market Maker
Tier 2 Rebate to Add Liquidity in Penny Symbols and execute 1 million
shares or more ADV in the same month utilizing the M-ELO order type on
The Nasdaq Stock Market. Further, a Participant must transact in all
securities through one or more of its Nasdaq Market Center MPIDs that
represent either (i) 0.45% or more of CV which adds liquidity in the
same month \12\ on The Nasdaq Stock Market; or (ii) 45 million shares
or more ADV which adds liquidity in the same month on The Nasdaq Stock
Market to receive a $0.33 per contract to add liquidity in SPY, QQQ,
and IWM.
---------------------------------------------------------------------------

    \12\ The Exchange notes that 0.45% or more of Consolidated
Volume (``CV'') is approximately $44 million.
---------------------------------------------------------------------------

    The Exchange believes the amendment to the current rebate in note 4
of Options 7, Section 2 will continue to incentivize Participants to
add liquidity to NOM to qualify for the $0.39 per contract rebate to
add liquidity in SPY, QQQ, and IWM despite the lower rebate ($0.40 to
$0.39 per contract) and removal of AAPL and VXX. Additionally, the
Exchange believes that introducing a new $0.33 rebate for Participants
who achieve the NOM Market Maker Tier 2 Rebate to Add Liquidity in
Penny Symbols, in addition to other qualifications, will create an
additional opportunity for Market Makers to increase their liquidity
adding activity on the Exchange's equity market. The Exchange believes
that the new note 4 rebate qualifying criteria will incentivize
participation in greater volume from cross asset activity, which would
improve the overall quality of the Exchange's marketplace to the
benefit of all market participants, both on NOM and The Nasdaq Stock
Market.
NOM Market Maker--Tier 3 Qualifier
    The Exchange also proposes to amend the qualifications in the Tier
3 NOM Market Maker Rebate to Add Liquidity in Penny Symbol that
currently state,

    Participant: (a) adds NOM Market Maker liquidity in Penny
Symbols and/or Non-Penny Symbols above 0.20% of total industry
customer equity and ETF option ADV contracts per day in a month; or
(b)(1) adds NOM Market Maker liquidity in Penny Symbols and/or Non-
Penny Symbols above 0.07% of total industry customer equity and ETF
option ADV contracts per day in a month, (2) transacts in all
securities through one or more of its Nasdaq Market Center MPIDs
that represent (i) 0.70% or more of Consolidated Volume (``CV'')
which adds liquidity in the same month on The Nasdaq Stock Market or
(ii) 70 million shares or more ADV which adds liquidity in the same
month on The Nasdaq Stock Market, (3) transacts in Tape B securities
through one or more of its Nasdaq Market Center MPIDs that represent
0.10% or more of CV which adds liquidity in the same month on The
Nasdaq Stock Market, and (4) executes greater than 0.01% of CV via
Market-on-Close/Limit-on-Close (``MOC/LOC'') volume within The
Nasdaq Stock Market Closing Cross in the same month.

    The Exchange proposes to amend the Tier 3 NOM Market Maker Rebate
to Add Liquidity in Penny Symbol qualifications in several ways. First,
the Exchange proposes to amend the (b)(1) qualifier to require NOM
Market Maker liquidity in Penny Symbols and/or Non-Penny Symbols above
0.15% of total industry customer equity and ETF

option ADV contracts per day in a month (a change from 0.07% to 0.15%).
Second, the Exchange proposes to amend the (b)(2)(i) qualifier to
require 0.50% or more of CV which adds liquidity in the same month on
The Nasdaq Stock Market (a change from 0.70% to 0.50%). Third, the
Exchange proposes to amend the (b)(2)(ii) qualifier to require 50
million shares or more ADV which adds liquidity in the same month on
The Nasdaq Stock Market (a change from 70 million to 50 million
shares). Fourth, the Exchange proposes to remove the current (b)(3) and
(4) qualifiers and replace those qualifiers with a new (b)(3) qualifier
that requires a Participant to execute 1.5 million shares or more ADV
in the same month utilizing the M-ELO order type on The Nasdaq Stock
Market. In order to qualify for the Tier 3 NOM Market Maker Rebate to
Add Liquidity a Participant must meet either the Tier 3 (a) or (b)
requirements. To the extent a Participant desires to qualify for the
Tier 3 (b) requirements, all 3 parts of the requirement must be met.
The proposed new language of the Tier 3 NOM Market Maker Rebate to Add
Liquidity would provide,

    Participant: (a) adds NOM Market Maker liquidity in Penny
Symbols and/or Non-Penny Symbols above 0.20% of total industry
customer equity and ETF option ADV contracts per day in a month; or
(b)(1) adds NOM Market Maker liquidity in Penny Symbols and/or Non-
Penny Symbols above 0.15% of total industry customer equity and ETF
option ADV contracts per day in a month, (2) transacts in all
securities through one or more of its Nasdaq Market Center MPIDs
that represent (i) 0.50% or more of Consolidated Volume (``CV'')
which adds liquidity in the same month on The Nasdaq Stock Market or
(ii) 50 million shares or more ADV which adds liquidity in the same
month on The Nasdaq Stock Market, and (3) executes 1.5 million
shares or more ADV in the same month utilizing the M-ELO order type
on The Nasdaq Stock Market.

    The Exchange believes that the proposed Tier 3 NOM Market Maker
Rebate to Add Liquidity will continue to provide NOM Participants an
opportunity to qualify for the NOM Market Maker Tier 3 Rebate to Add
Liquidity in more than one way. The proposed new Tier 3 NOM Market
Maker Rebate to Add Liquidity (b) qualifiers will incentivize greater
options participation with the amendment to (b)(1) increasing the
percentage of total industry customer equity and ETF option ADV
contracts per day in a month from 0.07% to 0.15%; decreasing the
(b)(2)(i) percentage of CV required to add liquidity on The Nasdaq
Stock Market from 0.70% to 0.50%; lowering the current share
requirement for participation in The Nasdaq Stock Market as part of
(b)(2)(ii) from 70 to 50 million shares; and adding a new (b)(3)
requirement to utilize M-ELO to execute 1.5 million shares or more ADV
on The Nasdaq Stock Market. The amended qualifiers for (b) within Tier
3 will incentivize participation in greater volume from cross asset
activity, which would improve the overall quality of the Exchange's
marketplace to the benefit of all market participants, both on NOM and
The Nasdaq Stock Market.
2. Statutory Basis
    The proposed changes to its Pricing Schedule are reasonable in
several respects. As a threshold matter, the Exchange is subject to
significant competitive forces in the market for options transaction
services that constrain its pricing determinations in that market. The
fact that this market is competitive has long been recognized by the
courts. In NetCoalition v. Securities and Exchange Commission \13\
(``NetCoalition''), the D.C. Circuit stated, ``[n]o one disputes that
competition for order flow is `fierce.' . . . As the SEC explained,
`[i]n the U.S. national market system, buyers and sellers of
securities, and the broker-dealers that act as their order-routing
agents, have a wide range of choices of where to route orders for
execution'; [and] `no exchange can afford to take its market share
percentages for granted' because `no exchange possesses a monopoly,
regulatory or otherwise, in the execution of order flow from broker
dealers'. . . .'' \14\
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    \13\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \14\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
---------------------------------------------------------------------------

    Numerous indicia demonstrate the competitive nature of this market.
For example, clear substitutes to the Exchange exist in the market for
options transaction services. The Exchange is only one of sixteen
options exchanges to which market participants may direct their order
flow. Within this environment, market participants can freely and often
do shift their order flow among the Exchange and competing venues in
response to changes in their respective pricing schedules. Within the
foregoing context, the proposal represents a reasonable attempt by the
Exchange to attract additional order flow to the Exchange and increase
its market share relative to its competitors.

NOM Market Maker--Note 4

    Amending note 4 of Options 7, Section 2, which currently applies to
Participants who achieve the NOM Market Maker Tier 3 or Tier 4 Rebate
to Add Liquidity in Penny Symbols is reasonable in several ways. The
Exchange believes the amendment to the current rebate in note 4 of
Options 7, Section 2 will continue to incentivize Participants to add
liquidity to NOM to qualify for the $0.39 per contract rebate to add
liquidity in SPY, QQQ, and IWM despite the lower rebate ($0.40 to $0.39
per contract) and removal of AAPL and VXX. The Exchange notes that it
proposes to limit the rebate to adding liquidity in SPY, QQQ, and IWM,
and not AAPL and VXX, because options on these broad-based Exchange-
Traded Funds collectively have large volumes. The amended $0.39 per
contract rebate remains higher than the NOM Market Maker Tier 3 or Tier
4 Rebates to Add Liquidity of $0.30 and $0.32 per contract,
respectively. Additionally, amending note 4 of Options 7, Section 2 to
introduce an additional rebate for Participants who achieve the NOM
Market Maker Tier 2 Rebate to Add Liquidity in Penny Symbols is
reasonable because it will create an additional opportunity for Market
Makers to increase their liquidity adding activity on the Exchange's
equity market. The Exchange believes that the new note 4 rebate
qualifying criteria will incentivize participation in greater volume
from cross asset activity, which would improve the overall quality of
the Exchange's marketplace to the benefit of all market participants,
both on NOM and The Nasdaq Stock Market. The proposed new Tier 2 NOM
Market Maker Rebate to Add Liquidity in Penny Symbols of $0.33 per
contract is higher than the Tier 2 NOM Market Maker Rebate to Add
Liquidity of $0.25 per contract. Finally, the Exchange notes that all
NOM Participants are required to become members of The Nasdaq Stock
Market pursuant to General 3 Membership and Access rules. Therefore, a
NOM Participant is able to transact the requisite volume on NOM as an
Options Participant and also utilize the M-ELO order type as a member
of The Nasdaq Stock Market. All members of The Nasdaq Stock Market LLC
may utilize the M-ELO order type.
    Amending note 4 of Options 7, Section 2, which currently applies to
Participants who achieve the NOM Market Maker Tier 3 or Tier 4 Rebate
to Add Liquidity in Penny Symbols is equitable and not unfairly
discriminatory because the Exchange

will pay the Tier 3 and 4 NOM Market Maker rebates uniformly to any
qualifying Participants. Additionally, amending note 4 of Options 7,
Section 2 to introduce an additional rebate for Participants who
achieve the NOM Market Maker Tier 2 Rebate to Add Liquidity in Penny
Symbols is equitable and not unfairly discriminatory because the
Exchange will pay the new Tier 2 NOM Market Maker rebate uniformly to
any qualifying Participants. The Exchange notes that all NOM
Participants are required to become members of The Nasdaq Stock Market
pursuant to General 3 Membership and Access rules. Therefore, a NOM
Participant is able to transact the requisite volume on NOM as an
Options Participant and also utilize the M-ELO order type as a member
of The Nasdaq Stock Market. All members of The Nasdaq Stock Market LLC
may utilize the M-ELO order type. Additionally, Market Makers add value
through continuous quoting and the commitment of capital.\15\ Because
Market Makers have these obligations to the market and regulatory
requirements that normally do not apply to other market participants,
the Exchange believes that offering these rebates to Market Makers is
equitable and not unfairly discriminatory in light of their
obligations. Finally, encouraging Market Makers to add greater
liquidity benefits all market participants, both on NOM and The Nasdaq
Stock Market, in the quality of order interaction.
---------------------------------------------------------------------------

    \15\ See Options 2, Sections 4 and 5.
---------------------------------------------------------------------------

NOM Market Maker--Tier 3 Qualifier
    Amending the Tier 3 NOM Market Maker Rebate to Add Liquidity
qualifications in several ways \16\ is reasonable because Participants
will continue to have more than one way to qualify for the Tier 3 NOM
Market Maker Rebate to Add Liquidity in Penny Symbols.\17\ The proposed
new Tier 3 NOM Market Maker Rebate to Add Liquidity in Penny Symbols
part (b) qualifier will incentivize greater options participation with
the amendment to (b)(1) as it increases the percentage of total
industry customer equity and ETF option ADV contracts per day in a
month from 0.07% to 0.15%. Further part (b)(2)(i) decreases the
percentage of CV required to add liquidity on The Nasdaq Stock Market
from 0.70% to 0.50%, lowers the current share requirement for
participation in The Nasdaq Stock Market as part of (b)(2)(ii) from 70
to 50 million shares, and adds a new (b)(3) requirement to utilize M-
ELO to execute 1.5 million shares or more ADV on The Nasdaq Stock
Market. The amended qualifiers for (b) within Tier 3 will incentivize
participation in greater volume from cross asset activity, which would
improve the overall quality of the Exchange's marketplace to the
benefit of all market participants, both on NOM and The Nasdaq Stock
Market. All NOM Participants are required to become members of The
Nasdaq Stock Market pursuant to General 3 Membership and Access rules.
Therefore, a NOM Participant is able to transact the requisite volume
on NOM as an Options Participant and also utilize the M-ELO order type
as a member of The Nasdaq Stock Market.
---------------------------------------------------------------------------

    \16\ First, the Exchange proposes to amend the (b)(1) qualifier
to require NOM Market Maker liquidity in Penny Symbols and/or Non-
Penny Symbols above 0.15% of total industry customer equity and ETF
option ADV contracts per day in a month (a change from 0.07% to
0.15%). Second, the Exchange proposes to amend the (b)(2)(i)
qualifier to require 0.50% or more of CV which adds liquidity in the
same month on The Nasdaq Stock Market (a change from 0.70% to
0.50%). Third, the Exchange proposes to amend the (b)(2)(ii)
qualifier to require 50 million shares or more ADV which adds
liquidity in the same month on The Nasdaq Stock Market (a change
from 70 million to 50 million shares). Fourth, the Exchange proposes
to remove the current (b)(3) and (4) qualifiers and replace those
qualifiers with a new (b)(3) qualifier that requires a Participant
to execute 1.5 million shares or more ADV in the same month
utilizing the M-ELO order type on The Nasdaq Stock Market.
    \17\ In order to qualify for the Tier 3 NOM Market Maker Rebate
to Add Liquidity a Participant must meet the (a) or (b) requirements
within the tier.
---------------------------------------------------------------------------

    Amending the Tier 3 NOM Market Maker Rebate to Add Liquidity in
Penny Symbols qualifications in several ways \18\ is equitable and not
unfairly discriminatory because the Exchange will pay the Tier 3 NOM
Market Maker Rebate to Add Liquidity uniformly to all Participants that
qualify for this tier. All NOM Participants are required to become
members of The Nasdaq Stock Market pursuant to General 3 Membership and
Access rules. Therefore, a NOM Participant is able to transact the
requisite volume on NOM as an Options Participant and also utilize the
M-ELO order type as a member of The Nasdaq Stock Market. Additionally,
Market Makers add value through continuous quoting and the commitment
of capital.\19\ Because Market Makers have these obligations to the
market and regulatory requirements that normally do not apply to other
market participants, the Exchange believes that offering the rebate to
only Market Makers is equitable and not unfairly discriminatory in
light of their obligations. Finally, encouraging Market Makers to add
greater liquidity on both NOM and The Nasdaq Stock Market benefits all
market participants, both on NOM and The Nasdaq Stock Market, in the
quality of order interaction.
---------------------------------------------------------------------------

    \18\ See supra note 14.
    \19\ See Options 2, Sections 4 and 5.
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable, equitable, and not
unfairly discriminatory to pay a rebate to add liquidity in SPY, QQQ,
and IWM, as compared to other options, because pricing by symbol is a
common practice on many U.S. options exchanges as a means to
incentivize order flow to be sent to an exchange for execution in the
most actively traded options classes, in this case actively traded
Penny Symbols. SPY, QQQ, and IWM are among the most actively traded
options in the U.S. The Exchange believes that this pricing will
incentivize members to transact options in SPY, QQQ, and IWM on NOM in
order to obtain higher NOM Market Maker rebates in Penny Symbols.

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 not necessary or appropriate in
furtherance of the purposes of the Act.
Intermarket Competition
    The Exchange operates in a highly competitive market in which
market participants can readily favor competing venues if they deem fee
levels at a particular venue to be excessive, or rebate opportunities
available at other venues to be more favorable. In such an environment,
the Exchange must continually adjust its pricing to remain competitive
with other exchanges. Because competitors are free to modify their
pricing in response, and because market participants may readily adjust
their order routing practices, the Exchange believes that the degree to
which pricing changes in this market may impose any burden on
competition is extremely limited because other options exchanges offer
similar pricing.
    Moreover, as noted above, price competition between exchanges is
fierce, with liquidity and market share moving freely between exchanges
in reaction to fee and rebate changes. In sum, if the changes proposed
herein are unattractive to market participants, it is likely that the
Exchange will lose market share as a result. Accordingly, the Exchange
does not believe that the proposed changes will impair the ability of
members or competing order execution venues to maintain their
competitive standing in the financial markets.

Intramarket Competition
    The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
    Amending note 4 of Options 7, Section 2, which currently applies to
Participants who achieve the NOM Market Maker Tier 3 or Tier 4 Rebate
to Add Liquidity in Penny Symbols does not impose an undue burden on
competition because the Exchange will pay the Tier 3 and 4 NOM Market
Maker rebates uniformly to any qualifying Participants. Additionally,
amending note 4 of Options 7, Section 2 to introduce an additional
rebate for Participants who achieve the NOM Market Maker Tier 2 Rebate
to Add Liquidity in Penny Symbols does not impose an undue burden on
competition because the Exchange will pay the new Tier 2 NOM Market
Maker rebate uniformly to any qualifying Participants. The Exchange
notes that all NOM Participants are required to become members of The
Nasdaq Stock Market pursuant to General 3 Membership and Access rules.
Therefore, a NOM Participant is able to transact the requisite volume
on NOM as an Options Participant and also utilize the M-ELO order type
as a member of The Nasdaq Stock Market. All members of The Nasdaq Stock
Market LLC may utilize the M-ELO order type. Additionally, Market
Makers add value through continuous quoting and the commitment of
capital.\20\ Because Market Makers have these obligations to the market
and regulatory requirements that normally do not apply to other market
participants, the Exchange believes that offering these rebates to
Market Makers does not impose an undue burden on competition in light
of their obligations. Finally, encouraging Market Makers to add greater
liquidity benefits all market participants, both on NOM and The Nasdaq
Stock Market, in the quality of order interaction.
---------------------------------------------------------------------------

    \20\ See Options 2, Sections 4 and 5.
---------------------------------------------------------------------------

    Amending the Tier 3 NOM Market Maker Rebate to Add Liquidity in
Penny Symbols qualifications in several ways \21\ does not impose an
undue burden on competition because the Exchange will pay the Tier 3
NOM Market Maker Rebate to Add Liquidity in Penny Symbols uniformly to
all Participants that qualify for this tier. All NOM Participants are
required to become members of The Nasdaq Stock Market pursuant to
General 3 Membership and Access rules. Therefore, a NOM Participant is
able to transact the requisite volume on NOM as an Options Participant
and also utilize the M-ELO order type as a member of The Nasdaq Stock
Market. Additionally, Market Makers add value through continuous
quoting and the commitment of capital.\22\ Because Market Makers have
these obligations to the market and regulatory requirements that
normally do not apply to other market participants, the Exchange
believes that offering the rebate to only Market Makers does not impose
an undue burden on competition in light of their obligations. Finally,
encouraging Market Makers to add greater liquidity on both NOM and The
Nasdaq Stock Market benefits all market participants, both on NOM and
The Nasdaq Stock Market, in the quality of order interaction.
---------------------------------------------------------------------------

    \21\ See supra note 14.
    \22\ See Options 2, Sections 4 and 5.
---------------------------------------------------------------------------

    The Exchange believes that paying a rebate to add liquidity in SPY,
QQQ, and IWM, as compared to other options, does not impose an undue
burden on competition because pricing by symbol is a common practice on
many U.S. options exchanges as a means to incentivize order flow to be
sent to an exchange for execution in the most actively traded options
classes, in this case actively traded Penny Symbols. SPY, QQQ, and IWM
are among the most actively traded options in the U.S. The Exchange
believes that this pricing will incentivize members to transact options
in SPY, QQQ, and IWM on NOM in order to obtain higher NOM Market Maker
rebates in Penny Symbols.

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

    No written comments were either solicited or received.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\23\
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
file number
    SR-NASDAQ-2023-037 on the subject line.

Paper Comments

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

All submissions should refer to file number SR-NASDAQ-2023-037. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NASDAQ-2023-037 and should
be submitted on or before October 18, 2023.
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12).

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

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-20962 Filed 9-26-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: August 11, 2009 (Volume 74, Number 153)]
[Notices]
[Page 40211-40212]
[DOCID:fr11au09-99]

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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2009-N-0335]

Review of Post-Inspection Responses

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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

SUMMARY: The Food and Drug Administration (FDA) is announcing a program
to support public health protection by facilitating the timely issuance
of warning letters. The program establishes a timeframe for the
submission and agency review of post-inspection responses to
inspectional

observations that are communicated to a firm through issuance of a form
FDA 483, list of inspectional observations.

DATES: The program will begin on September 15, 2009.

FOR FURTHER INFORMATION CONTACT:  Karen Stutsman, Division of
Compliance Policy (HFC-230), Office of Enforcement, Office of
Regulatory Affairs, Food and Drug Administration, 5600 Fishers Lane,
Rockville, MD 20857,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    FDA issues a form FDA 483, Inspectional Observations, upon
completion of an inspection, to notify an inspected establishment's top
management of objectionable conditions relating to products and/or
processes, or other violations of the Federal Food, Drug, and Cosmetic
Act and related acts, that were observed during the inspection.
    The FDA 483 form includes this preprinted instruction: ``This
document lists observations made by the FDA representative(s) during
the inspection of your facility. They are inspectional observations;
and do not represent a final agency determination regarding your
compliance. If you have an objection regarding an observation, or have
implemented, or plan to implement corrective action in response to an
observation, you may discuss the objection or action with the FDA
representative(s) during the inspection or submit this information to
FDA at the address [on the form].''
    When FDA determines, based on the inspection, that the
establishment is in violation of the Federal Food, Drug, and Cosmetic
Act or another statute that we enforce, we may issue a warning letter.
Warning letters are issued only for significant violations that may
lead to enforcement action if they are not promptly and adequately
corrected. The decision to issue a warning letter is made by senior
officials within FDA, often including the product center, after a
thorough review of all of the relevant facts.
    It is not uncommon for an inspected establishment to respond in
writing to observations made on an FDA 483 to describe completed or
ongoing corrective actions or to promise future corrections. In fact,
some inspected establishments submit multiple responses to FDA,
sometimes over many months. Delayed and multiple responses to an FDA
483 have resulted in delays in the issuance of warning letters while
these responses are reviewed and addressed. FDA's timely issuance of a
warning letter should help to achieve prompt voluntary compliance and
is therefore in the public interest.
    While FDA considers corrective actions, and other factors, in
determining whether to issue a warning letter, ongoing or promised
corrective actions generally do not preclude the issuance of a warning
letter. A warning letter is an important means of notifying regulated
industry of violations and achieving prompt voluntary correction.
Warning letters serve to ensure that the seriousness and scope of the
violations are understood by top management of the inspected
establishment, and that the appropriate resources are allocated to
fully correct the violations and to prevent their recurrence. FDA is
initiating a program to establish a timeframe for the submission of
such post-inspection responses to FDA 483 inspectional observations for
FDA's consideration in deciding whether to issue a warning letter.
Under the program (described in more detail later in this document),
the agency will not ordinarily delay the issuance of a warning letter
in order to review a response to an FDA 483 that is received more than
15 business days after the FDA 483 was issued.
    The purpose of this program is to optimize resource utilization,
facilitate the timely issuance of warning letters, and promote prompt
correction of violations. FDA will use the information from the program
to determine whether to make the program permanent. FDA will conduct an
assessment of the program after approximately 18 months.

II. Program Description

    Under the program, before issuing a warning letter, FDA will
generally allow firms 15 business days to provide a response to FDA 483
observations. If we receive a response to FDA 483 observations within
15 business days after the FDA 483 was issued, we plan to conduct a
detailed review of the response before determining whether to issue a
warning letter. If we issue a warning letter after reviewing a firm's
timely response, the warning letter will recognize receipt of the
response and reply as to the apparent adequacy of the firm's corrective
actions set forth in the response. Additional correspondence from FDA
may be issued with regard to the response, if needed.
    If we receive a response to FDA 483 observations more than 15
business days after the FDA 483 was issued, we do not plan to routinely
include a response on the apparent adequacy of the firm's corrective
actions in the warning letter. Rather, we plan to evaluate the response
along with any other written material provided as the direct response
to the warning letter (a firm's response to a warning letter may
reference any of the firm's earlier responses).
    Note that FDA, at its discretion, may issue Warning Letters at any
time, independent of receiving a response; and that firms are expected
to implement needed corrections to conform to the requirements of the
Federal Food, Drug, and Cosmetic Act and associated regulations
regardless of whether they respond in writing to FDA or whether such a
response is reviewed by FDA.
    After the 18-month time period, FDA will evaluate this program and
decide whether to continue it with or without adjustments.

    Dated: August 4, 2009.
Jeffrey Shuren,
Associate Commissioner for Policy and Planning.
[FR Doc. E9-19107 Filed 8-10-09; 8:45 am]

BILLING CODE 4160-01-S