[Federal Register Volume 84, Number 68 (Tuesday, April 9, 2019)]
[Proposed Rules]
[Pages 14067-14073]
[FR Doc No: 2019-06873]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R10-OAR-2018-0766; FRL-9991-85-Region 10]

Air Plan Approval; Idaho: Infrastructure Requirements for the
2015 Ozone Standard

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: Whenever a new or revised National Ambient Air Quality
Standard (NAAQS) is promulgated, the Clean Air Act requires each State
to submit a plan for the implementation, maintenance, and enforcement
of the standard, commonly referred to as infrastructure requirements.
The Environmental Protection Agency (EPA) is proposing to approve the
Idaho State Implementation Plan (SIP), submitted on September 27, 2018,
as meeting infrastructure requirements for the 2015 ozone NAAQS.

DATES: Comments must be received on or before May 9, 2019.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R10-
OAR-2018-0766, at https://www.regulations.gov. Follow the online
instructions for submitting comments. Once submitted, comments cannot
be edited or removed from regulations.gov. The EPA may publish any
comment received to its public docket. Do not submit electronically any
information you consider to be Confidential Business Information (CBI)
or other information the disclosure of which is restricted by statute.
Multimedia submissions (audio, video, etc.) must be accompanied by a
written comment. The written comment is considered the official comment
and should include discussion of all points you wish to make. The EPA
will generally not consider comments or comment contents located
outside of the primary submission (i.e., on the web, cloud, or other
file sharing system). For additional submission methods, the full EPA
public comment policy, information about CBI or multimedia submissions,
and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Matthew Jentgen at<PHONE_NUMBER>, or
[email protected].

SUPPLEMENTARY INFORMATION: Throughout this document wherever ``we,''
``us,'' or ``our'' is used, it is intended to refer to the EPA.

Table of Contents

I. Background
II. Infrastructure Elements
III. EPA Approach To Review of Infrastructure SIP Submissions
IV. EPA Evaluation
V. Proposed Action
VI. Statutory and Executive Order Reviews

I. Background

    On October 26, 2015 (80 FR 65292) the EPA published a rule revising
the 8-hour ozone NAAQS from 0.075 parts per million (ppm) to a new,
more protective level of 0.070 ppm. After a new or revised standard is
promulgated, the Clean Air Act (CAA) requires each State to submit a
plan for the implementation, maintenance, and enforcement of the
standard, commonly referred to as an infrastructure SIP. On September
27, 2018, the Idaho Department of Environmental Quality (IDEQ)
submitted a SIP revision to meet the 2015 ozone NAAQS infrastructure
requirements.\1\
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    \1\ The September 27, 2018, submission also addressed all
interstate transport requirements at CAA section 110(a)(2)(D) for
the 2015 ozone NAAQS. However, this publication proposes action on
only a portion of those requirements, specifically CAA sections
110(a)(2)(D)(i)(II) and 110(a)(2)(D)(ii). We intend to address the
remainder of the interstate transport requirements in a separate,
future action. See section 110(a)(2)(D) below.
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II. Infrastructure Elements

    CAA section 110(a)(1) provides the procedural and timing
requirements for SIP submissions after a new or revised NAAQS is
promulgated. CAA section 110(a)(2) lists specific elements that each
State must meet related to a newly established or revised NAAQS. The
EPA has issued guidance to help States address these requirements, most
recently on September 13, 2013, (2013 Guidance).\2\ As noted in the
2013 Guidance, to the extent an existing SIP already meets the CAA
section 110(a)(2) requirements, States may certify that fact in their
submissions to the EPA. The requirements, with corresponding CAA
subsections, are listed below:
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    \2\ Stephen D. Page, Director, Office of Air Quality Planning
and Standards. ``Guidance on Infrastructure State Implementation
Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and
110(a)(2).'' Memorandum to EPA Air Division Directors, Regions 1-10,
September 13, 2013 (available at https://www.epa.gov/air-quality-implementation-plans/infrastructure-sip-requirements-and-guidance).
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     110(a)(2)(A): Emission limits and other control measures.
     110(a)(2)(B): Ambient air quality monitoring/data system.
     110(a)(2)(C): Program for enforcement of control measures.
     110(a)(2)(D): Interstate transport.
     110(a)(2)(E): Adequate resources.
     110(a)(2)(F): Stationary source monitoring system.
     110(a)(2)(G): Emergency power.
     110(a)(2)(H): Future SIP revisions.
 110(a)(2)(I): Areas designated nonattainment and meet the
applicable requirements of part D.
 110(a)(2)(J): Consultation with government officials; public
notification; and Prevention of Significant Deterioration (PSD) and
visibility protection.
 110(a)(2)(K): Air quality modeling/data.
 110(a)(2)(L): Permitting fees.
 110(a)(2)(M): Consultation/participation by affected local
entities.

III. EPA Approach To Review of Infrastructure SIP Submissions

    The EPA's 2013 Guidance restated our interpretation that two
elements are not governed by the three-year submission deadline in CAA
section 110(a)(1) because SIPs incorporating necessary local
nonattainment area controls are due on separate schedules, pursuant to
CAA section 172 and the various pollutant-specific subparts 2 through 5
of part D. These are submissions required by: (i) CAA section
110(a)(2)(C), to the extent that subsection refers to a permit program
as required in part D, title I of the CAA, and (ii) CAA section
110(a)(2)(I). As a result, this action does not address CAA section
110(a)(2)(C) with respect to nonattainment new source review (NSR) or
CAA section 110(a)(2)(I). The EPA has also determined that the CAA
section 110(a)(2)(J) provision on visibility is not triggered by a new
NAAQS because the visibility requirements in part C, title I of the CAA
are not changed by a new NAAQS.
    Due to ambiguity in some of the language of CAA section 110(a)(2),
the EPA believes that it is appropriate to

interpret these provisions in the specific context of acting on
infrastructure SIP submissions. The EPA has previously provided
comprehensive guidance on the application of these provisions in the
2013 Guidance and through regional actions on infrastructure
submissions.\3\ Unless otherwise noted below, we are following that
existing approach in acting on this submission. In addition, in the
context of acting on such infrastructure submissions, the EPA evaluates
the submitting State's SIP for facial compliance with statutory and
regulatory requirements, not for the State's implementation of its
SIP.\4\ The EPA has other authority to address any issues concerning a
state's implementation of the rules, regulations, consent orders, etc.
that comprise its SIP.
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    \3\ The EPA explains and elaborates on these ambiguities and its
approach to address them in its 2013 Guidance, as well as in
numerous agency actions, including the EPA's prior action on Idaho's
infrastructure SIP submission to address the 2010 nitrogen dioxide
and 2010 sulfur dioxide NAAQS (August 11, 2014, 79 FR 46707). Please
see our associated April 17, 2014, proposed rule for this discussion
(79 FR 21669, at page 21670).
    \4\ See U.S. Court of Appeals for the Ninth Circuit decision in
Montana Environmental Information Center v. EPA, No. 16-71933 (Aug.
30, 2018).
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IV. EPA Evaluation

110(a)(2)(A): Emission Limits and Other Control Measures

    CAA section 110(a)(2)(A) requires SIPs to include enforceable
emission limits and other control measures, means or techniques
(including economic incentives such as fees, marketable permits, and
auctions of emissions rights), as well as schedules and timetables for
compliance, as may be necessary or appropriate to meet the applicable
requirements of the CAA.
    State submission: The submission cites an overview of the Idaho air
quality laws and regulations, including portions of the Idaho
Environmental Protection and Health Act (EPHA) and the Rules for the
Control of Air Pollution located at IDAPA 58.01.01. Relevant laws cited
include Idaho Code Section 39-105(3)(d) which provides Idaho DEQ
authority to supervise and administer a system to safeguard air
quality, Idaho Code Section 39-115 which provides Idaho DEQ with
specific authority for the issuance of air quality permits, and Idaho
Code Section 39-116 which provides Idaho DEQ authority to establish
compliance schedules for air quality regulatory standards. Relevant
regulations include IDAPA <IP_ADDRESS>.03 (incorporation by reference
of federal regulations), IDAPA <IP_ADDRESS>-228 (permit to construct
rules), IDAPA <IP_ADDRESS>0-410 (operating permit rules), IDAPA
<IP_ADDRESS>0-624 (control of open burning), IDAPA <IP_ADDRESS>5 (visible
emissions requirements and testing), IDAPA <IP_ADDRESS>5 (rules for
sulfur content of fuels), and IDAPA <IP_ADDRESS>0-461 (banking of
emissions).
    EPA analysis: The State regulations identified above were
previously approved by the EPA into the Idaho SIP and demonstrate that
the Idaho SIP includes enforceable emission limits and other control
measures to implement the 2015 ozone NAAQS. We recently approved
updates to the IDAPA regulations to account for the 2015 ozone NAAQS
(83 FR 42033, August 20, 2018). Idaho has no areas designated
nonattainment for the 2015 ozone NAAQS. We note, as stated earlier,
that the EPA does not consider SIP requirements triggered by the
nonattainment area mandates in part D, title I of the CAA to be
governed by the submission deadline of CAA section 110(a)(1).
Regulations and other control measures for purposes of attainment
planning under part D, title I of the CAA are due on a different
schedule than infrastructure SIPs.
    Idaho regulates emissions of ozone precursors through, among other
things, its SIP-approved new source review (NSR) permitting program.
The EPA most recently approved revisions to Idaho's major and minor NSR
permitting programs on May 12, 2017 (82 FR 22083) and August 12, 2016
(81 FR 53290). Idaho's NSR rules incorporate by reference the Federal
nonattainment NSR regulations and Federal PSD regulations at IDAPA
58.01.204 and IDAPA <IP_ADDRESS> respectively. In addition to NSR
permitting regulations, Idaho's Tier II operating permit regulations at
IDAPA <IP_ADDRESS>0-410 require that to obtain an operating permit, the
applicant must demonstrate the source will not cause or significantly
contribute to a violation of any ambient air quality standard. IDAPA
<IP_ADDRESS>1.03 provides that Idaho DEQ will require a Tier II source
operating permit if Idaho DEQ determines emission rate reductions are
necessary to attain or maintain any ambient air quality standard or
applicable PSD increment.
    In addition to permitting provisions, Idaho's SIP contains rules
that limit emissions of nitrogen oxides (NOX) and volatile
organic compounds (VOC) as precursors to ozone formation. These rules
include requirements to reduce pollutants that reduce visibility and
contribute to regional haze (IDAPA <IP_ADDRESS>5-668) and emission
limits for hot mix asphalt plants (IDAPA <IP_ADDRESS>5-808) and other
industries. As a result, we are proposing to approve the Idaho SIP as
meeting the requirements of CAA section 110(a)(2)(A) for the 2015 ozone
NAAQS.

110(a)(2)(B): Ambient Air Quality Monitoring/Data System

    CAA section 110(a)(2)(B) requires SIPs to include provisions to
provide for establishment and operation of ambient air quality
monitors, collecting and analyzing ambient air quality data, and making
these data available to the EPA upon request.
    State submission: The submission references IDAPA <IP_ADDRESS> and
IDAPA <IP_ADDRESS>6.05 in response to this requirement. These rules
incorporate by reference 40 CFR part 50 National Primary and Secondary
Air Quality Standards, 40 CFR part 52 Approval and Promulgation of
Implementation Plans, 40 CFR part 53 Ambient Air Monitoring Reference
and Equivalent Methods, and 40 CFR part 58 Appendix B Ambient Air
Quality Surveillance Quality Assurance Requirements for Prevention of
Significant Deterioration. The Idaho submission certifies that under
these rules Idaho meets the infrastructure requirement to implement
ambient air monitoring surveillance systems in accordance with the
requirements of the CAA.
    The Idaho submission references the 2017 Idaho Annual Ambient Air
Monitoring Network Plan, approved by the EPA on November 8, 2017. The
Idaho submission also references the website where the Idaho DEQ
provides the network plan, air quality monitoring summaries, a map of
the monitoring network and real-time air monitoring data.
    EPA analysis: A comprehensive air quality monitoring plan, intended
to meet the requirements of 40 CFR part 58 was submitted by Idaho on
January 15, 1980 (40 CFR 52.670) and approved by the EPA on July 28,
1982. The plan includes statutory and regulatory authority to establish
and operate an air quality monitoring network, including ozone
monitoring. Idaho's SIP-approved regulations in IDAPA <IP_ADDRESS>--228
(permit to construct rules) and IDAPA <IP_ADDRESS>0-410 (operating
permit rules) govern source-specific monitoring and emissions testing
for ozone precursors in accordance with federal reference methods.
Idaho regularly assesses the adequacy of the state monitoring network
and submits that assessment to the EPA for review. In practice, Idaho
operates a comprehensive monitoring network,

including ozone monitoring, compiles and analyzes collected data, and
submits the data to the EPA's Air Quality System on a quarterly basis.
Based on the foregoing, we are proposing to approve the Idaho SIP as
meeting the requirements of CAA section 110(a)(2)(B) for the 2015 ozone
NAAQS.

110(a)(2)(C): Program for Enforcement of Control Measures

    CAA section 110(a)(2)(C) requires each State to include a program
providing for enforcement of all SIP measures and the regulation of
construction of new or modified stationary sources, including a program
to meet PSD and nonattainment NSR requirements.
    State submission: The submission refers to Idaho Code Section 39-
108 which provides Idaho DEQ with both administrative and civil
enforcement authority with respect to the Idaho EPHA, or any rule,
permit or order promulgated pursuant to the EPHA. Criminal enforcement
is authorized at Idaho Code Section 39-109. Emergency order authority,
similar to that under section 303 of the CAA, is located at Idaho Code
Section 39-112. The Idaho submission also refers to laws and
regulations related to air quality permits at IDAPA <IP_ADDRESS>-228
(permit to construct rules).
    The submission also cites the annual incorporation by reference
(IBR) rulemaking which updates Idaho's SIP to include Federal changes
to the NAAQS and PSD program. Idaho's submission certifies that the
annual IBR updates along with IDAPA sections 200-228 (permit to
construct rules) and 575-587 (air quality standards and area
classification) meets the CAA infrastructure requirement to implement
the PSD program.
    EPA analysis: With regard to the requirement to have a program
providing for enforcement of all SIP measures, we are proposing to find
that the Idaho provisions described above provide Idaho DEQ with
authority to enforce the Idaho EPHA, air quality regulations, permits,
and orders promulgated pursuant to the EPHA. Idaho DEQ staffs and
maintains an administrative enforcement program to ensure compliance
with SIP requirements. Idaho DEQ may issue emergency orders to reduce
or discontinue emission of air contaminants where air emissions cause
or contribute to imminent and substantial endangerment. Enforcement
cases may be referred to the State Attorney General's Office for civil
or criminal enforcement. Therefore, we are proposing to approve the
Idaho SIP as meeting the requirements of CAA section 110(a)(2)(C)
related to enforcement for the 2015 ozone NAAQS.
    To generally meet the requirements of CAA section 110(a)(2)(C) with
regard to the regulation of construction of new or modified stationary
sources, a State is required to have PSD, nonattainment NSR, and minor
NSR permitting programs adequate to implement the 2015 ozone NAAQS.
Idaho's SIP-approved PSD program is codified in IDAPA <IP_ADDRESS>-228
(permits to construct) and governed by IDAPA <IP_ADDRESS> (permit
requirements for new major facilities or major modifications in
attainment or unclassifiable areas). We most recently approved
revisions to Idaho's PSD program on August 20, 2018 (83 FR 42033), May
12, 2017 (82 FR 22083) and August 12, 2016 (81 FR 53290). The SIP-
approved program incorporates by reference certain Federal PSD program
requirements at 40 CFR 52.21 as of July 1, 2017, and implements the
2015 ozone NAAQS. As a result, we are proposing to approve the Idaho
SIP as meeting the requirements of CAA section 110(a)(2)(C) with regard
to PSD for the 2015 ozone NAAQS.
    Turning to minor NSR, the EPA approved a consolidated pre-
construction permitting program, including minor NSR, into the Idaho
SIP on June 23, 1986 (51 FR 22810). Over the years, we have approved
revisions to the program as consistent with the CAA and Federal minor
NSR requirements codified at 40 CFR 51.160 through 40 CFR 51.164, most
recently on August 12, 2016 (81 FR 53290). We have determined that the
program regulates construction of new and modified minor sources for
purposes of the 2015 ozone NAAQS.
    Based on the foregoing, we are proposing to approve the Idaho SIP
as meeting the requirements of CAA section 110(a)(2)(C) for the 2015
ozone NAAQS.

110(a)(2)(D): Interstate Transport

    CAA section 110(a)(2)(D)(i) addresses four separate elements, or
``prongs.'' CAA section 110(a)(2)(D)(i)(I) requires SIPs to contain
adequate provisions prohibiting emissions which will contribute
significantly to nonattainment of the NAAQS in any other State (prong
1), and adequate provisions prohibiting emissions which will interfere
with maintenance of the NAAQS by any other State (prong 2). CAA section
110(a)(2)(D)(i)(II) requires SIPs to contain adequate provisions
prohibiting emissions which will interfere with any other State's
required measures to prevent significant deterioration (PSD) of its air
quality (prong 3), and adequate provisions prohibiting emissions which
will interfere with any other State's required measures to protect
visibility (prong 4).
    CAA section 110(a)(2)(D)(ii) states SIPs must include provisions
ensuring compliance with the applicable requirements of CAA sections
126 and 115 (relating to interstate and international pollution
abatement). CAA section 126 requires notification to neighboring States
of potential impacts from a new or modified major stationary source and
specifies how a State may petition the EPA when a major source or group
of stationary sources in a State is thought to contribute to certain
pollution problems in another State. CAA section 115 governs the
process for addressing air pollutants emitted in the United States that
cause or contribute to air pollution that may reasonably be anticipated
to endanger public health or welfare in a foreign country.
    State submission: The submission addresses all interstate transport
requirements of the CAA. This proposed action, however, addresses only
CAA sections 110(a)(2)(D)(i)(II), and 110(a)(2)(D)(ii). We intend to
address the remainder of the interstate transport requirements in a
separate, future action.
    For purposes of CAA 110(a)(2)(D)(i)(II), the submission referenced
Idaho's SIP-approved PSD program and Idaho's Regional Haze SIP
submitted to the EPA on October 25, 2010. Idaho also cites IDAPA
<IP_ADDRESS> that provides notice and comment procedures for various
permit actions with regard to the public and to appropriate federal,
state, international, and local agencies. CAA section 110(a)(2)(D)(ii)
is discussed below.
    EPA analysis: The EPA believes that the PSD sub-element of CAA
section 110(a)(2)(D)(i)(II) (prong 3) is satisfied where major new and
modified stationary sources in attainment and unclassifiable areas are
subject to a SIP-approved PSD program. We most recently approved
revisions to Idaho's SIP-approved PSD program on August 20, 2018 (83 FR
42033), May 12, 2017 (82 FR 22083), and August 12, 2016 (81 FR 53290).
Idaho's SIP-approved PSD program is up-to-date with current Federal
requirements, including implementing the 2015 ozone NAAQS. Therefore,
we are proposing to approve the Idaho SIP as meeting CAA section
110(a)(2)(D)(i)(II) prong 3 with respect to PSD for the 2015 ozone
NAAQS.
    The EPA believes, as noted in the 2013 Guidance, where a State's
regional

haze plan has been approved as meeting all current obligations, a State
may rely upon those provisions in support of its demonstration that it
satisfies CAA section 110(a)(2)(D)(i)(II) as it relates to visibility
(prong 4). On June 9, 2011, we approved a SIP revision which provides
Idaho DEQ authority to address regional haze and to implement best
available retrofit technology (BART) requirements (76 FR 33651).
Subsequently on June 22, 2011, we approved portions of the Idaho
Regional Haze SIP, including the requirements for BART (76 FR 36329).
Finally, on November 8, 2012, we approved the remainder of the Idaho
Regional Haze SIP, including those portions that address CAA provisions
that require states to set Reasonable Progress Goals for their Class I
areas, and to develop a Long-Term Strategy to achieve these goals (77
FR 66929). Because we approved the Idaho plan as meeting regional haze
requirements, we are proposing to approve the Idaho SIP as meeting CAA
section 110(a)(2)(D)(i)(II) prong 4 visibility requirements with
respect to the 2015 ozone NAAQS.
    IDAPA <IP_ADDRESS> provides an opportunity for appropriate Federal,
State, international, and local agencies to participate and identify
any concerns in the permitting process. Idaho issues notice of its
draft permits and neighboring states consistently receive copies of
those drafts. Idaho also has no pending obligations under CAA section
115 or 126(b) of the CAA. Therefore, we are proposing to approve the
Idaho SIP as meeting the requirements of CAA section 110(a)(2)(D)(ii)
for the 2015 ozone NAAQS.

110(a)(2)(E): Adequate Resources

    CAA section 110(a)(2)(E) requires each State to provide (i)
necessary assurances that the State will have adequate personnel,
funding, and authority under State law to carry out the SIP (and is not
prohibited by any provision of Federal or State law from carrying out
the SIP or portion thereof), (ii) requirements that the State comply
with the State board provisions under CAA section 128 and (iii)
necessary assurances that, where the State has relied on a local or
regional government, agency, or instrumentality for the implementation
of any SIP provision, the State has responsibility for ensuring
adequate implementation of such SIP provision.
    State submission: The submission refers to Idaho Code Section 39-
106, which gives the Idaho DEQ Director authority to hire personnel to
carry out duties of the department. In addition, the submission
references Idaho Code 39-107, which establishes the State's Board of
Environmental Quality, and Executive Order 2016-07 which addresses
composition requirements of the Idaho Board of Environmental Quality.
Finally, the Idaho submission references Idaho Code Section 39-129,
which authorizes Idaho DEQ to enter into binding agreements with local
governments that are enforceable as orders.
    EPA analysis: We are proposing to find that the above-referenced
provisions provide Idaho with adequate authority to carry out SIP
obligations with respect to the 2015 ozone NAAQS as required by CAA
section 110(a)(2)(E)(i). With regard to CAA section 110(a)(2)(E)(ii),
we previously approved a revision to the Idaho SIP for purposes of
meeting CAA section 128 and CAA section 110(a)(2)(E)(ii) on October 24,
2013 (78 FR 63394). Idaho renewed the Executive Order addressing
certain board requirements for an additional four years on December 14,
2016 (Executive Order No. 2016-07).\5\ We note that the Idaho Code
Title 59 Chapter 7 (Ethics in Government Act), relied on for previous
SIP Infrastructure actions, was relocated to Idaho Code Title 74
Chapter 4. Importantly, the relevant, substantive components of the
law, approved for purposes of SIP authority, were retained.\6\ Finally,
we are proposing to find that Idaho has provided necessary assurances
that, where Idaho has relied on a local or regional government, agency,
or instrumentality for the implementation of any SIP provision, Idaho
has responsibility for ensuring adequate implementation of the SIP with
regard to the 2015 ozone NAAQS as required by CAA section
110(a)(2)(E)(iii). Therefore, we are proposing to approve the Idaho SIP
as meeting the requirements of CAA section 110(a)(2)(E) for the 2015
ozone NAAQS.
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    \5\ Letter to EPA from John Tippits, Director of Department of
Environmental Quality ``SIP Elements for State Boards Under Clean
Air Act Section 110(a)(1)-(2). January 3, 2017.
    \6\ See Idaho House Bill 90, effective July 1, 2015.
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110(a)(2)(F): Stationary Source Monitoring System

    CAA section 110(a)(2)(F) requires (i) the installation,
maintenance, and replacement of equipment, and the implementation of
other necessary steps, by owners or operators of stationary sources to
monitor emissions from such sources, (ii) periodic reports on the
nature and amounts of emissions and emissions-related data from such
sources, and (iii) correlation of such reports by the State agency with
any emission limitations or standards established pursuant to the CAA,
which reports shall be available at reasonable times for public
inspection.
    State submission: The submission states that the statutes and rules
governing air quality permits provide Idaho DEQ with the ability to
monitor stationary source emissions for compliance purposes and make
data available to the public. The submission references the following
provisions:
     IDAPA <IP_ADDRESS>, which includes source testing methods
and procedures for source testing and reporting to the Idaho DEQ;
     IDAPA <IP_ADDRESS>, which provides Idaho DEQ authority to
issue information orders and orders to conduct source emissions
monitoring, record keeping, reporting and other requirements;
     IDAPA <IP_ADDRESS>, which contains conditions for permits
to construct;
     IDAPA <IP_ADDRESS>, which contains procedures for issuing
permits to construct, including public processes;
     IDAPA <IP_ADDRESS>4, which contains procedures for issuing
Tier II operating permits, including public processes;
     IDAPA <IP_ADDRESS>5, which contains conditions for Tier II
operating permits, including sampling ports, instrumentation to monitor
and record, and performance testing; and
     Idaho Code 9-342A and IDAPA 58.01.21 which address public
records.
    The Idaho submission also states that Idaho reports emissions data
for the six criteria pollutants to the EPA's National Emissions
Inventory, which is updated every three years.
    EPA analysis: The provisions cited in the submission establishes
compliance requirements for sources subject to major and minor source
permitting to monitor emissions, keep and report records, and collect
ambient air monitoring data. The provisions cited also provide Idaho
DEQ authority to issue orders to collect additional information as
needed for Idaho DEQ to ascertain compliance. In addition, IDAPA
<IP_ADDRESS> (conditions for permits to construct) and <IP_ADDRESS>5
(conditions for tier II operating permits) provide Idaho DEQ authority
to establish permit conditions requiring instrumentation to monitor and
record emissions data, and instrumentation for ambient monitoring to
determine the effect emissions from the stationary source or facility
may have, or are having, on the air quality in any area affected by the
stationary source or facility. This information is made available to
the public through public processes outlined at IDAPA

<IP_ADDRESS> (procedures for issuing permits) for permits to construct
and <IP_ADDRESS>4 (procedures for issuing permits) for Tier II operating
permits.
    Additionally, the State is required to submit emissions data to the
EPA for purposes of the National Emissions Inventory (NEI). The NEI is
the EPA's central repository for air emissions data. All states are
required to submit a comprehensive emissions inventory every three
years and report emissions for certain larger sources annually through
the EPA's online Emissions Inventory System. States report emissions
data for the six criteria pollutants and their associated precursors--
nitrogen oxides, sulfur dioxide, ammonia, lead, carbon monoxide,
particulate matter, and volatile organic compounds. Many states also
voluntarily report emissions of hazardous air pollutants. The EPA
compiles the emissions data, supplementing it where necessary, and
releases it to the general public through the website https://www.epa.gov/air-emissions-inventories/national-emissions-inventory-nei.
    Idaho's SIP and practices are adequate for the stationary source
monitoring systems related to the 2015 ozone NAAQS. The statutes and
rules provide Idaho DEQ with the ability to monitor stationary source
emissions for compliance purposes and make data publicly available.
Based on the analysis above, we are proposing to approve the Idaho SIP
as meeting the requirements of CAA section 110(a)(2)(F) for the 2015
ozone NAAQS.

110(a)(2)(G): Emergency Episodes

    CAA section 110(a)(2)(G) requires States to provide for authority
to address activities causing imminent and substantial endangerment to
public health, including adequate contingency plans to implement the
emergency episode provisions in their SIPs.
    State submission: The Idaho submission cites Idaho Code 39-112
which provides emergency order authority comparable to that in CAA
section 303. In addition, the submission cites the Idaho Air Pollution
Emergency Rules (IDAPA <IP_ADDRESS>0-562).
    EPA analysis: CAA section 303 provides authority to the EPA
Administrator to restrain any source from causing or contributing to
emissions which present an ``imminent and substantial endangerment to
public health or welfare, or the environment.'' We find that Idaho Code
Section 112 provides the Idaho DEQ Director with comparable authority.
    The Idaho air pollution emergency rules at IDAPA <IP_ADDRESS>0-562
were previously approved by the EPA on January 16, 2003 (68 FR 2217).
Idaho's air pollution emergency rules include ozone, establish stages
of episode criteria, provide for public announcement whenever any
episode stage has been determined to exist, and specify emission
control actions to be taken at each episode stage, consistent with the
EPA emergency episode SIP requirements set forth at 40 CFR part 51
subpart H (prevention of air pollution emergency episodes, sections
51.150 through 51.153) for ozone. Therefore, we are proposing to
approve the Idaho SIP as meeting the requirements of CAA section
110(a)(2)(G) for the 2015 ozone NAAQS.

110(a)(2)(H): Future SIP Revisions

    CAA section 110(a)(2)(H) requires that SIPs provide for revision of
a State plan (i) from time to time as may be necessary to take account
of revisions of a national primary or secondary ambient air quality
standard or the availability of improved or more expeditious methods of
attaining the standard, and (ii), except as provided in paragraph
110(a)(3)(C), whenever the Administrator finds that the SIP is
substantially inadequate to attain the NAAQS which it implements or to
otherwise comply with any additional requirements under the CAA.
    State submission: The submission refers to Idaho Code Sections 39-
105(2) and (3)(d) which provide Idaho DEQ with broad authority to
revise rules, in accordance with Idaho administrative procedures for
rulemaking, to meet national ambient air quality standards as
incorporated by reference in IDAPA <IP_ADDRESS>.
    EPA analysis: We find that Idaho has adequate authority to
regularly update the SIP to take into account revisions of the NAAQS
and other related regulatory changes. In practice, Idaho regularly
updates the SIP for purposes of NAAQS revisions and other related
regulatory changes. We most recently approved revisions to the Idaho
SIP on August 20, 2018 (83 FR 422033). Idaho has incorporated by
reference the 2015 ozone NAAQS into the Idaho SIP. Therefore, we are
proposing to approve the Idaho SIP as meeting the requirements of CAA
section 110(a)(2)(H) for the 2015 ozone NAAQS.

110(a)(2)(I): Nonattainment Area Plan Revision Under Part D

    There are two elements identified in CAA section 110(a)(2) not
governed by the three-year submission deadline of CAA section 110(a)(1)
because SIPs incorporating necessary local nonattainment area controls
are due on nonattainment area plan schedules pursuant to section 172
and the various pollutant-specific subparts 2 through 5 of part D.
These are submissions required by: (i) CAA section 110(a)(2)(C) to the
extent that subsection refers to a permit program as required in part
D, title I of the CAA, and (ii) section 110(a)(2)(I) which pertain to
the nonattainment planning requirements of part D, title I of the CAA.
As a result, this action does not address CAA section 110(a)(2)(C) with
respect to nonattainment NSR or CAA section 110(a)(2)(I).

110(a)(2)(J): Consultation With Government Officials

    CAA section 110(a)(2)(J) requires States to provide a process for
consultation with local governments and Federal Land Managers carrying
out NAAQS implementation requirements pursuant to CAA section 121. CAA
section 110(a)(2)(J) further requires States to notify the public if
NAAQS are exceeded in an area and to enhance public awareness of
measures that can be taken to prevent exceedances. Lastly, CAA section
110(a)(2)(J) requires States to meet applicable requirements of part C,
title I of the CAA related to prevention of significant deterioration
and visibility protection.
    State submission: The submission refers to laws and regulations
relating to public participation processes for SIP revisions and
permitting programs. The submission refers to IDAPA <IP_ADDRESS>, 364,
and 404 which provide for public processes related to new source
construction permits and operating permits. The submission also refers
to Idaho Code Section 39-105(3)(c) which promotes outreach with local
governments and Idaho Code Section 39-129 which provides authority for
Idaho DEQ to enter into agreements with local governments. In addition,
the Idaho submission references the Idaho transportation conformity
rules and regional haze rules which provide for consultation processes.
With regard to public notification, the Idaho submission states that
Idaho DEQ submits information to EPA's AIRNOW program and provides
daily air quality index scores for many locations throughout Idaho.
Finally, with regard to PSD, the submission references the Idaho rules
for major source permitting at IDAPA <IP_ADDRESS> through 223,
including PSD requirements for sources in attainment and unclassifiable
areas.
    EPA analysis: The Idaho SIP includes specific provisions for
consulting with local governments and Federal Land Managers as
specified in CAA section 121, including the Idaho rules for major

source PSD permitting. The EPA most recently approved Idaho permitting
rules at IDAPA <IP_ADDRESS> and <IP_ADDRESS>4, which provide opportunity
and procedures for public comment and notice to appropriate Federal,
State and local agencies, on November 26, 2010 (75 FR 47530). We most
recently approved Idaho's rules that define transportation conformity
consultation on April 12, 2001 (66 FR 18873), and Idaho's regional haze
rules on June 9, 2011 (76 FR 33651). In practice, Idaho DEQ routinely
coordinates with local governments, states, Federal Land Managers and
other stakeholders on air quality issues including permitting action,
transportation conformity, and regional haze. Therefore, we are
proposing to find that the Idaho SIP meets the requirements of CAA
section 110(a)(2)(J) for consultation with government officials for the
2015 ozone NAAQS.
    CAA section 110(a)(2)(J) also requires the public be notified if
NAAQS are exceeded in an area and to enhance public awareness of
measures that can be taken to prevent exceedances. The EPA calculates
an air quality index for five major air pollutants regulated by the
CAA: Ground-level ozone, particulate matter, carbon monoxide, sulfur
dioxide, and nitrogen dioxide. The EPA AIRNOW program provides this air
quality index daily to the public, including health effects and actions
members of the public can take to reduce air pollution. Idaho actively
participates and submits information to the AIRNOW program, in addition
to the EPA's Enviroflash Air Quality Alert program. Idaho DEQ also
provides the daily air quality index to the public on the DEQ website
at http://www.deq.idaho.gov/air-quality/monitoring/daily-reports-and-forecasts.aspx, as well as measures that can be taken to prevent
exceedances. Therefore, we are proposing to find that the Idaho SIP
meets the requirements of CAA section 110(a)(2)(J) for public
notification for the 2015 ozone NAAQS.
    Turning to the requirement in CAA section 110(a)(2)(J) that the SIP
meet the applicable requirements of part C of title I of the CAA, we
have evaluated this requirement in the context of CAA section
110(a)(2)(C) with respect to permitting. The EPA most recently approved
revisions to Idaho's PSD program on August 20, 2018 (83 FR 42033).
Please see our discussion at section 110(a)(2)(C). Therefore, we are
proposing to approve the Idaho SIP as meeting the requirements of CAA
section 110(a)(2)(J) with respect to PSD for the 2015 ozone NAAQS.
    With regard to the applicable requirements for visibility
protection, the EPA recognizes that states are subject to visibility
and regional haze program requirements under part C of the CAA. In the
event of the establishment of a new NAAQS, however, the visibility and
regional haze program requirements under part C do not change. Thus, we
find that there is no new applicable requirement relating to visibility
triggered under CAA section 110(a)(2)(J) when a new NAAQS becomes
effective. Based on the above analysis, we are proposing to approve the
Idaho SIP as meeting the requirements of CAA section 110(a)(2)(J) for
the 2015 ozone NAAQS.

110(a)(2)(K): Air Quality and Modeling/Data

    CAA section 110(a)(2)(K) requires that SIPs provide for (i) the
performance of air quality modeling as the Administrator may prescribe
for the purpose of predicting the effect on ambient air quality of any
emissions of any air pollutant for which the Administrator has
established a NAAQS, and (ii) the submission, upon request, of data
related to such air quality modeling to the Administrator.
    State submission: The submission states that air quality modeling
is conducted during development of revisions to the SIP, as appropriate
for Idaho to demonstrate attainment with required air quality
standards. Idaho cites IDAPA <IP_ADDRESS>.02 and IDAPA <IP_ADDRESS>2.03
which address permit to construct and Tier II operating permit
application procedures and modeling requirements for estimating ambient
concentrations, respectively. Modeling is also addressed in Idaho's
source permitting process as discussed at section 110(a)(2)(A) above.
Estimates of ambient concentrations are based on requirements specified
in 40 CFR part 51, Appendix W (Guidelines on Air Quality Models) which
is incorporated by reference at IDAPA <IP_ADDRESS>.
    EPA analysis: We most recently approved IDAPA <IP_ADDRESS>
(incorporations by reference) on August 20, 2018 (83 FR 42033). This
rule incorporates by reference the following EPA regulations:
Requirements for Preparation, Adoption, and Submittal of Implementation
Plans, 40 CFR part 51; National Primary and Secondary Ambient Air
Quality Standards, 40 CFR part 50; Approval and Promulgation of
Implementation Plans, 40 CFR part 52; Ambient Air Monitoring Reference
and Equivalent Methods, 40 CFR part 53; and Ambient Air Quality
Surveillance, 40 CFR part 58 revised as of July 1, 2015.
    Idaho's incorporation by reference of 40 CFR part 51 as of July 1,
2017 captures the EPA's recent changes to the Federal Guidelines on Air
Quality Models codified in 40 CFR part 51, appendix W (Appendix W)
(January 17, 2017, 82 FR 5182). Idaho's SIP requires modeled estimates
of ambient concentrations based on the current version of Appendix W,
consistent with the EPA's implementing regulations in 40 CFR part 51.
Therefore, we are proposing to approve the Idaho SIP as meeting the
requirements of CAA section 110(a)(2)(K) for the 2015 ozone NAAQS.

110(a)(2)(L): Permitting Fees

    CAA section 110(a)(2)(L) directs SIPs to require each major
stationary source to pay permitting fees to cover the cost of
reviewing, approving, implementing and enforcing a permit.
    State submission: The submission refers to IDAPA <IP_ADDRESS>7-397,
which set the requirements for the annual registration of Tier I (title
V) sources and the annual assessment and payment of fees to support the
Tier I permitting program. The EPA approved Idaho's title V permitting
program on October 4, 2001 (66 FR 50574). The submission also
references IDAPA <IP_ADDRESS>7-409 which set the requirements for Tier
II operating permit processing fees and usage.
    EPA analysis: We approved Idaho's title V program on October 4,
2001 (66 FR 50574) with an effective date of November 5, 2001. While
Idaho's operating permit program is not formally approved into the
State's SIP, it is a legal mechanism the State can use to ensure that
Idaho DEQ has sufficient resources to support the air program,
consistent with the requirements of the SIP. Before the EPA can grant
full approval, a state must demonstrate the ability to collect adequate
fees. Idaho's title V program included a demonstration the State will
collect a fee from title V sources above the presumptive minimum in
accordance with 40 CFR 70.9(b)(2)(i). Idaho regulations require
permitting fees for major sources subject to new source review, as
specified at IDAPA <IP_ADDRESS>--227. Therefore, we are proposing to
conclude that Idaho has satisfied the requirements of CAA section
110(a)(2)(L) for the 2015 ozone NAAQS.

110(a)(2)(M): Consultation/Participation by Affected Local Entities

    CAA section 110(a)(2)(M) requires States to provide for
consultation and participation in SIP development by

local political subdivisions affected by the SIP.
    State submission: The submission references IDAPA <IP_ADDRESS>, 364
and 404 which provide for the public processes related to developing
and issuing air quality permits. In addition, the submission references
the transportation conformity consultation and public processes at
IDAPA <IP_ADDRESS>3--574. Finally, the submission references the
consultation and participation process outlined in 40 CFR 51.102,
incorporated by reference at IDAPA <IP_ADDRESS>.
    EPA analysis: The EPA most recently approved IDAPA <IP_ADDRESS>
(incorporations by reference), which incorporates by reference EPA
regulations at 40 CFR part 51--Requirements for Preparation, Adoption,
and Submittal of Implementation Plans on August 20, 2018 (83 FR 42033).
In addition, we most recently approved Idaho permitting rules at IDAPA
<IP_ADDRESS> and <IP_ADDRESS>4, which provide opportunity and procedures
for public comment and notice to appropriate federal, state and local
agencies, on November 26, 2010 (75 FR 47530). Finally, we approved the
State rules that define transportation conformity consultation on April
12, 2001 (66 FR 18873). Therefore, we are proposing to approve the
Idaho SIP as meeting the requirements of CAA section 110(a)(2)(M) for
the 2015 ozone NAAQS.

V. Proposed Action

    The EPA is proposing to find that the Idaho SIP meets the following
CAA section 110(a)(2) infrastructure elements for the 2015 ozone NAAQS:
(A), (B), (C), (D)(i)(II), (D)(ii), (E), (F), (G), (H), (J), (K), (L),
and (M). This action is being taken under section 110 of the CAA.

VI. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP
submission that complies with the provisions of the CAA and applicable
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in
reviewing SIP submissions, the EPA's role is to approve State choices,
provided that they meet the criteria of the CAA. Accordingly, this
proposed action merely approves State law as meeting Federal
requirements and does not impose additional requirements beyond those
imposed by State law. For that reason, this proposed action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Orders
12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21,
2011);
     Is not an Executive Order 13771 (82 FR 9339, February 2,
2017) regulatory action because SIP approvals are exempted under
Executive Order 12866;
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because it does not involve technical standards; and
     Does not provide the EPA with the discretionary authority
to address, as appropriate, disproportionate human health or
environmental effects, using practicable and legally permissible
methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, the SIP is not approved to apply on any Indian
reservation land or in any other area where the EPA or an Indian tribe
has demonstrated that a tribe has jurisdiction. In those areas of
Indian country, the rule does not have tribal implications and will not
impose substantial direct costs on tribal governments or preempt tribal
law as specified by Executive Order 13175 (65 FR 67249, November 9,
2000).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone,
Particulate matter, Reporting and recordkeeping requirements, Sulfur
oxides, Volatile organic compounds.

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

    Dated: March 27, 2019.
Chris Hladick,
Regional Administrator, Region 10.
[FR Doc. 2019-06873 Filed 4-8-19; 8:45 am]
 BILLING CODE 6560-50-P


[Federal Register: April 10, 2008 (Volume 73, Number 70)]
[Notices]
[Page 19544-19550]
[DOCID:fr10ap08-105]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57619; File No. SR-NYSEArca-2008-25]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Amendment No. 1 to Proposed Rule Change and Order Granting
Accelerated Approval of Such Proposed Rule Change, as Modified by
Amendment No. 1 Thereto, Relating to Rules Permitting the Listing and
Trading of Managed Fund Shares, Trading Hours and Halts, Listing Fees
Applicable To Managed Fund Shares, and the Listing and Trading of
Shares of the PowerShares Active AlphaQ Fund, PowerShares Active Alpha
Multi-Cap Fund, PowerShares Active Mega-Cap Portfolio, and the
PowerShares Active Low Duration Portfolio

April 4, 2008.

I. Introduction

    On February 27, 2008, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange''), through its wholly owned subsidiary, NYSE Arca Equities,
Inc. (``NYSE Arca Equities'' or ``Corporation''), filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \1\
and Rule 19b-4 thereunder,\2\ a proposed rule change seeking to: (1)
Add new NYSE Arca Equities Rule 8.600 to permit the listing and
trading, or trading pursuant to unlisted trading privileges (``UTP''),
of securities issued by an actively managed, open-end investment
management company (``Managed Fund Shares''); (2) list and trade the
shares (``Shares''), offered by PowerShares Actively Managed Exchange-
Traded Fund Trust (``Trust''), of the PowerShares Active AlphaQ Fund,
PowerShares Active Alpha Multi-Cap Fund, PowerShares Active Mega-Cap
Portfolio, and the PowerShares Active Low Duration Portfolio
(collectively, the ``Funds''); (3) amend NYSE Arca Equities Rule 7.34
(Trading Sessions) to reference Managed Fund Shares; and (4) amend its
listing fees to include Managed Fund Shares under the term ``Derivative
Securities Products.'' The proposed rule change was published for
comment in the Federal Register on March 5, 2008.\3\ The Commission
received no comments regarding the proposal. On March 31, 2008, the
Exchange filed Amendment No. 1 to the proposed rule change.\4\ This
order provides notice of, and solicits comments from interested persons
regarding, Amendment No. 1 to the proposed rule change and approves the
proposed rule change, as modified by Amendment No. 1, on an accelerated
basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 57395 (February 28,
2008), 73 FR 11974 (``Notice'').
    \4\ In Amendment No. 1, the Exchange added Commentary .07 to
proposed NYSE Arca Equities Rule 8.600 which would require the
following: (1) If the investment adviser to the Investment Company
(as defined herein) issuing Managed Fund Shares is affiliated with a
broker-dealer, such investment adviser must erect a ``firewall''
between such investment adviser and the broker-dealer with respect
to access to information concerning the composition and/or changes
to the Investment Company portfolio; and (2) personnel who make
decisions on the Investment Company's portfolio composition must be
subject to procedures designed to prevent the use and dissemination
of material non-public information regarding the applicable
Investment Company portfolio. In addition, the Exchange provided a
representation that PowerShares Capital Management LLC, the
investment adviser of the Funds, is affiliated with a broker-dealer
and has therefore implemented a firewall with respect to such
broker-dealer regarding access to information concerning the
composition and/or changes to the Fund's portfolio. Lastly, the
Exchange provided a description of the ethical and fiduciary
requirements under the Investment Advisers Act of 1940 (``Advisers
Act'') and rules thereunder, as they apply to PowerShares Capital
Management LLC.
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II. Description of the Proposal

    The Exchange proposes to add new NYSE Arca Equities Rule 8.600 to
permit the listing and trading, or trading pursuant to UTP, of Managed
Fund Shares, which are securities issued by an actively managed, open-
end investment management company. The Exchange also proposes to amend
NYSE Arca Equities Rule 7.34 (Trading Sessions) to reference Managed
Fund Shares in paragraph (a)(3)(A), relating to hours of the Exchange's
Core Trading Session, and paragraph (a)(4)(A), relating to trading
halts when trading pursuant to UTP during the Exchange's Opening
Session.\5\ In addition, the Exchange proposes to amend its listing
fees by incorporating Managed Fund Shares in the term ``Derivative
Securities Products.'' Finally, pursuant to new NYSE Arca Equities Rule
8.600, the Exchange proposes to list and trade the Shares of the Funds.
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    \5\ See NYSE Arca Equities Rule 7.34(a) (setting forth,
generally, the three trading sessions on the Exchange: (1) Opening
Session, from 4 a.m. to 9:30 a.m. Eastern Time or ``ET''; (2) Core
Trading Session, from 9:30 a.m. to 4 p.m. ET; and (3) Late Trading
Session, from 4 p.m. to 8 p.m. ET).
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Proposed Listing Rules for Managed Fund Shares

    Under proposed NYSE Arca Equities Rule 8.600(c)(1), a ``Managed
Fund Share'' is a security that: (1) Represents an interest in a
registered investment company (``Investment Company'') organized as an
open-end management investment company or similar entity, that invests
in a portfolio of securities selected by the Investment Company's
investment adviser consistent with the Investment Company's investment
objectives and policies; (2) is issued in a specified aggregate minimum
number in return for a deposit of a specified portfolio of securities
and/or a cash amount with a value equal to the next determined net
asset value (``NAV''); and (3) when aggregated in the same specified
minimum number, may be redeemed at a holder's request, which holder
will be paid a specified portfolio of securities and/or cash with a
value equal to the next determined NAV.
    Proposed NYSE Arca Equities Rule 8.600(c)(2) defines ``Disclosed
Portfolio'' as the identities and quantities of the securities and
other assets held by the Investment Company that will form the basis
for the Investment Company's calculation of the NAV at the end of the
business day. Proposed NYSE Arca Equities Rule 8.600(c)(3) defines
``Portfolio Indicative Value'' as the estimated indicative value of a
Managed Fund Share based on current information regarding the value of
the securities and other assets in the Disclosed Portfolio. Finally,
proposed NYSE Arca Equities Rule 8.600(c)(4) defines ``Reporting
Authority'' as, in respect of a particular series of Managed Fund
Shares, the Corporation,\6\ an institution, or a reporting service
designated by the Corporation or by the Exchange that lists a
particular series of Managed Fund Shares (if the Corporation is trading
such series pursuant to UTP) as the official source for calculating and
reporting information relating to such series, including, but not
limited to, the (i) Portfolio Indicative Value, (ii) the

Disclosed Portfolio, (iii) the amount of any cash distribution to
holders of Managed Fund Shares, (iv) NAV, or (v) other information
relating to the issuance, redemption, or trading of Managed Fund
Shares. A series of Managed Fund Shares may have more than one
Reporting Authority, each having different functions.
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    \6\ The ``Corporation'' means NYSE Arca Equities. See NYSE Arca
Equities Rule 1.1(k) (defining Corporation).
---------------------------------------------------------------------------

    Proposed NYSE Arca Equities Rule 8.600(d) sets forth the initial
and continued listing criteria applicable to Managed Fund Shares.
Proposed NYSE Arca Equities Rule 8.600(d)(1) provides that, for each
series of Managed Fund Shares, the Corporation will establish a minimum
number of Managed Fund Shares required to be outstanding at the time of
commencement of trading. In addition, the Corporation will obtain a
representation from the issuer of each series of Managed Fund Shares
that the NAV per share for the series will be calculated daily and that
the NAV and the Disclosed Portfolio will be made available to all
market participants at the same time.
    Proposed NYSE Arca Equities Rule 8.600(d)(2) provides that each
series of Managed Fund Shares will be listed and traded subject to
application of the following continued listing criteria: (1) The
Portfolio Indicative Value for Managed Fund Shares will be widely
disseminated by one or more major market data vendors at least every 15
seconds during the time when the Managed Fund Shares trade on the
Corporation; (2) the Disclosed Portfolio will be disseminated at least
once daily and will be made available to all market participants at the
same time; and (3) the Reporting Authority that provides the Disclosed
Portfolio must implement and maintain, or be subject to, procedures
designed to prevent the use and dissemination of material, non-public
information regarding the actual components of the portfolio.
    Proposed NYSE Arca Equities Rule 8.600(d)(2)(C) provides that the
Corporation will consider the suspension of trading in, or removal from
listing of, a series of Managed Fund Shares under any of the following
circumstances: (1) If, following the initial twelve-month period after
commencement of trading on the Exchange of a series of Managed Fund
Shares, there are fewer than 50 beneficial holders of the series of
Management Fund Shares for 30 or more consecutive trading days; (2) if
the value of the Portfolio Indicative Value is no longer calculated or
available or the Disclosed Portfolio is not made available to all
market participants at the same time; (3) if the Investment Company
issuing the Managed Fund Shares has failed to file any filings required
by the Commission or if the Corporation is aware that the Investment
Company is not in compliance with the conditions of any exemptive order
or no-action relief granted by the Commission to the Investment Company
with respect to the series of Managed Fund Shares; or (4) if such other
event shall occur or condition exists which, in the opinion of the
Corporation, makes further dealings on the Corporation inadvisable.
    Proposed NYSE Arca Equities Rule 8.600(d)(2)(D) provides that, if
the Portfolio Indicative Value of a series of Managed Fund Shares is
not being disseminated as required, the Corporation may halt trading
during the day in which the interruption to the dissemination of the
Portfolio Indicative Value occurs. If the interruption to the
dissemination of the Portfolio Indicative Value persists past the
trading day in which it occurred, the Corporation will halt trading no
later than the beginning of the trading day following the interruption.
If a series of Managed Fund Shares is trading on the Corporation
pursuant to UTP, the Corporation will halt trading in that series as
specified in NYSE Arca Equities Rule 7.34(a), as proposed to be
amended. In addition, if the Exchange becomes aware that the NAV or the
Disclosed Portfolio with respect to a series of Managed Fund Shares is
not disseminated to all market participants at the same time, it will
halt trading in such series until such time as the NAV or the Disclosed
Portfolio is available to all market participants.
    Proposed NYSE Arca Equities Rule 8.600(d)(2)(E) provides that, upon
termination of an Investment Company, the Corporation requires that
Managed Fund Shares issued in connection with such entity be removed
from Corporation listing. Proposed NYSE Arca Equities Rule
8.600(d)(2)(F) provides that voting rights shall be as set forth in the
applicable Investment Company prospectus. Proposed NYSE Arca Equities
Rule 8.600(e) relates to the limitation of Corporation liability.
    Proposed Commentary .01 to new NYSE Arca Equities Rule 8.600
provides that the Corporation will file separate proposals under
Section 19(b) of the Act before the listing and/or trading of Managed
Fund Shares. Proposed Commentary .02 provides that transactions in
Managed Fund Shares will occur during the trading hours specified in
NYSE Arca Equities Rule 7.34(a), as proposed to be amended. Proposed
Commentary .03 provides that the minimum price variation for quoting
and entry of orders in Managed Fund Shares is $0.01. Proposed
Commentary .04 provides that the Exchange will implement written
surveillance procedures for Managed Fund Shares.
    Proposed Commentary .05 to new NYSE Arca Equities Rule 8.600, which
is substantially similar to existing Commentary .01(i) to NYSE Arca
Equities Rule 5.2(j)(3), provides that, for Managed Fund Shares based
on an international or global portfolio, the statutory prospectus or
the application for exemption from provisions of the Investment Company
Act of 1940 (``1940 Act'') for the series of Managed Fund Shares must
state that such series must comply with the federal securities laws in
accepting securities for deposits and satisfying redemptions with
redemption securities, including that the securities accepted for
deposits and the securities used to satisfy redemption requests are
sold in transactions that would be exempt from registration under the
Securities Act of 1933. Proposed Commentary .06 to new NYSE Arca
Equities Rule 8.600, which is substantially similar to existing
Commentary .01(h) to NYSE Arca Equities Rule 5.2(j)(3), sets forth
certain obligations of ETP Holders \7\ with respect to Managed Fund
Shares that receive an exemption from certain prospectus delivery
requirements under Section 24(d) of the 1940 Act. Lastly, Commentary
.07 to new NYSE Arca Equities Rule 8.600 provides that, if the
investment adviser of the Investment Company issuing Managed Fund
Shares is affiliated with a broker-dealer, such investment adviser must
erect a ``firewall'' between such investment adviser and broker-dealer
with respect to access to information regarding the composition and/or
changes to the Investment Company's portfolio. In addition, proposed
Commentary .07 further requires that personnel who make decisions on
the Investment Company's portfolio composition must be subject to
procedures designed to prevent the use and dissemination of material
non-public information regarding the Investment Company's portfolio.
The Exchange states that Commentary .07 is similar to Commentary
.03(a)(i) and (iii) to NYSE Arca Equities Rule 5.2(j)(3); however, the
proposed Commentary in connection with the establishment of a
``firewall'' between the investment

adviser and the broker-dealer reflects the applicable open-end fund's
portfolio, not an underlying benchmark index, as is the case with
current exchange-traded funds.
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    \7\ An ``ETP Holder'' is a sole proprietorship,
partnership,corporation, limited liability company, or other
organization in good standing that has been issued an Equity Trading
Permit or ``ETP.'' An ETP Holder must be a registered broker or
dealer pursuant to Section 15 of the Act (15 U.S.C. 78o). See NYSE
Arca Equities Rule 1.1(m) and (n) (defining ETP and ETP Holder).
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Amendments to NYSE Arca Equities Rule 7.34

    The Exchange proposes to amend NYSE Arca Equities Rule
7.34(a)(3)(A) to add Managed Fund Shares to the list of securities for
which the Core Trading Session on the Exchange concludes at 4:15 p.m.
ET. In addition, the Exchange proposes to amend NYSE Arca Equities Rule
7.34(a)(4)(A) to include Managed Fund Shares under ``Derivative
Securities Products'' in connection with trading halts for trading
pursuant to UTP on the Exchange.

Amendments to Listing Fees

    The Exchange proposes to add Managed Fund Shares to the securities
included under the term ``Derivative Securities Products,'' as defined
in the NYSE Arca Equities Schedule of Fees and Charges for Exchange
Services.\8\
---------------------------------------------------------------------------

    \8\ Further descriptions regarding key features of Managed Fund
Shares, including information about interests in a registered
investment company, exemptive relief under the 1940 Act, intraday
trading of Managed Fund Shares, creation and redemption of Managed
Fund Shares, Portfolio Disclosure, and Portfolio Indicative Value,
among other things, can be found in the Notice. See Notice, supra
note 3.
---------------------------------------------------------------------------

Description of the Funds and the Trust

    The Shares will be offered by the Trust, a business trust organized
under the laws of the State of Delaware and registered with the
Commission as an open-end management investment company.\9\ The Trust
currently consists of the four Funds, each a separate, actively managed
exchange-traded fund. The Exchange represents that: (1) The Funds will
not purchase or sell securities in markets outside the United States;
and (2) the Shares will conform to the initial and continued listing
criteria under proposed NYSE Arca Equities Rule 8.600 and Commentary
thereto.\10\
---------------------------------------------------------------------------

    \9\ The Exchange states that the Trust is registered under the
1940 Act. On November 26, 2007 the Trust filed with the Commission a
Registration Statement for the Funds on Form N-1A under the
Securities Act and under the 1940 Act (File Nos. 333-147622 and 811-
22148) (``Registration Statement''). On November 16, 2007 the Trust
filed with the Commission on Form 40-6C/A an Amended and Restated
Application (``Application'') for an Amended Order under Sections
6(c) and 17(b) of the 1940 Act (File No. 812-13386-04). See
Investment Company Act Release No. 28140 (February 1, 2008), 73 FR
7328 (February 7, 2008) (File No. 812-13386) (providing notice of
application for an exemptive order under Section 6 of the 1940 Act).
    \10\ The Exchange further represents that, for initial and/or
continued listing, Managed Fund Shares must also be in compliance
with Rule 10A-3 under the Act, as provided by NYSE Arca Equities
Rule 5.3. See 17 CFR 240.10A-3. In addition, the Exchange represents
that PowerShares Capital Management LLC, the investment adviser for
the Funds, is affiliated with a broker-dealer, AIM Distributors,
Inc., and has implemented a firewall with respect to such broker-
dealer regarding access to information concerning the composition
and/or changes to the Fund's portfolio. Further, the Exchange
represents that the investment adviser and its related personnel are
subject to Rule 204A-1 under the Advisers Act, which relates to
codes of ethics for investment advisers. Rule 204A-1 requires
investment advisers to adopt a code of ethics that reflects the
fiduciary nature of the relationship to clients as well as
compliance with other applicable securities laws. Accordingly, the
Exchange notes that ``firewall'' procedures, as well as procedures
designed to prevent the misuse of non-public information by an
investment adviser, must be consistent with Rule 204A-1 under the
Advisers Act. In addition, Rule 206(4)-7 under the Advisers Act (17
CFR 275.206(4)-7) makes it unlawful for an investment adviser to
provide investment advice to clients, unless such investment adviser
has (i) Adopted and implemented written policies and procedures
reasonably designed to prevent violation, by the investment adviser
and its supervised persons, of the Advisers Act and the rules
thereunder; (ii) implemented, at a minimum, an annual review
regarding the adequacy of such policies and procedures and the
effectiveness of their implementation; and (iii) designated an
individual (who is a supervised person) responsible for
administering such policies and procedures. See also Section 204A of
the Advisers Act (15 U.S.C. 80b-4a) (requiring investment advisers
to establish, maintain, and enforce written policies and procedures
reasonably designed to prevent the misuse of material, non-public
information by such investment adviser or any person associated with
such investment adviser).
---------------------------------------------------------------------------

    Detailed descriptions of the investment objectives, strategies, and
methodologies of the four Funds, management and structure of the Funds,
and other relevant information relating to the Shares and Funds can be
found in the Notice, the Registration Statement, and/or the
Application, as applicable.

Availability of Information

    The Funds' Web site (http://www.powershares.com), which will be
publicly available prior to the public offering of the Shares, will
include a form of the prospectus for each Fund that may be downloaded.
The Web site will include for each Fund additional quantitative
information updated on a daily basis, including: (1) Daily trading
volume, the prior business day's reported closing price, NAV and mid-
point of the bid/ask spread at the time of calculation of such NAV (the
``Bid/Ask Price''),\11\ and a calculation of the premium and discount
of the Bid/Ask Price against the NAV; and (2) data in chart format
displaying the frequency distribution of discounts and premiums of the
daily Bid/Ask Price against the NAV, within appropriate ranges, for
each of the four previous calendar quarters. On each business day,
before commencement of the Core Trading Session, each Fund will
disclose on its Web site the Disclosed Portfolio that will form the
basis for the Fund's calculation of NAV at the end of the business
day.\12\
---------------------------------------------------------------------------

    \11\ The Bid/Ask Price of a Fund is determined using the highest
bid andthe lowest offer on the Exchange as of the time of
calculation of such Fund's NAV. The records relating to Bid/Ask
Prices will be retained by the Funds and their service providers.
    \12\ Under accounting procedures followed by the Funds, trades
made on the prior business day (``T'') will be booked and reflected
in the NAV on the current business day (``T+1''). Accordingly, the
Funds will be able to disclose at the beginning of the business day
the portfolio that will form the basis for the NAV calculation at
the end of the business day.
---------------------------------------------------------------------------

    Investors interested in a particular Fund can also obtain the
Trust's Statement of Additional Information (``SAI''), each Fund's
Shareholder Reports, and its Form N-CSR and Form N-SAR, filed twice a
year. The Trust's SAI and Shareholder Reports are available free upon
request from the Trust, and those documents and the Form N-CSR and Form
N-SAR may be viewed on-screen or downloaded from the Commission's Web
site (http://www.sec.gov).
    Information regarding market price and volume is and will be
continually available on a real-time basis throughout the day on
brokers' computer screens and other electronic services. The previous
day's closing price and trading volume information will be published
daily in the financial section of newspapers. Quotation and last sale
information for the Shares will be available via the facilities of the
Consolidated Tape Association (``CTA''). In addition, the Portfolio
Indicative Value will be disseminated by the Exchange at least every 15
seconds during the Core Trading Session through the facilities of CTA.
The NAV of each Fund will normally be determined as of the close of the
regular trading session on the New York Stock Exchange LLC (ordinarily
4 p.m. ET) on each business day.

Trading Halts

    With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of a Fund.\13\ Trading in the Shares of the Funds
will be halted if the circuit breaker parameters under NYSE Arca
Equities Rule 7.12 are reached. Trading also may be halted because of
market conditions or for reasons that, in the view of the Exchange,
make trading in the Shares inadvisable. These may

include: (1) The extent to which trading is not occurring in the
securities comprising the Disclosed Portfolio and/or the financial
instruments of a Fund; or (2) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present. Trading in the Shares will be subject to proposed
NYSE Arca Equities Rule 8.600(d)(2)(D), which sets forth circumstances
under which trading in the Shares of a Fund may be halted.
---------------------------------------------------------------------------

    \13\ See Commentary .04 to NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------

Trading Rules

    The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. The Shares will trade
on the NYSE Arca Marketplace from 4 a.m. to 8 p.m. ET, in accordance
with NYSE Arca Equities Rule 7.34 (Opening, Core, and Late Trading
Sessions).\14\ The Exchange states that it has appropriate rules to
facilitate transactions in the Shares during all trading sessions.
---------------------------------------------------------------------------

    \14\ See supra note 5.
---------------------------------------------------------------------------

Surveillance

    The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products (which will include
Managed Fund Shares) to monitor trading in the Shares. The Exchange
represents that these procedures are adequate to properly monitor
Exchange trading of the Shares in all trading sessions and to deter and
detect violations of Exchange rules. The Exchange's current trading
surveillance focuses on detecting securities trading outside their
normal patterns. When such situations are detected, surveillance
analysis follows and, where appropriate, investigations are opened to
review the behavior of all relevant parties for all relevant trading
violations. The Exchange may obtain information via the Intermarket
Surveillance Group (``ISG'') from other exchanges who are members or
affiliate members of ISG. In addition, the Exchange also has a general
policy prohibiting the distribution of material, non-public information
by its employees.

Information Bulletin

    Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin (``Bulletin'') of the special
characteristics and risks associated with trading the Shares.
Specifically, the Bulletin will discuss the following: (1) The
procedures for purchases and redemptions of Shares in Creation Unit
aggregations (and that Shares are not individually redeemable); (2)
NYSE Arca Equities Rule 9.2(a), which imposes a duty of due diligence
on its ETP Holders to learn the essential facts relating to every
customer prior to trading the Shares;\15\ (3) the risks involved in
trading the Shares during the Opening and Late Trading Sessions when an
updated Portfolio Indicative Value will not be calculated or publicly
disseminated; (4) how information regarding the Portfolio Indicative
Value is disseminated; (5) the requirement that ETP Holders deliver a
prospectus to investors purchasing newly issued Shares prior to or
concurrently with the confirmation of a transaction; and (6) trading
information.
---------------------------------------------------------------------------

    \15\ NYSE Arca Equities Rule 9.2(a) provides that an ETP Holder,
before recommending a transaction, must have reasonable grounds to
believe that the recommendation is suitable for the customer based
on any facts disclosed by the customer as to his other security
holdings and as to his financial situation and needs. Further, the
rule provides, with a limited exception, that prior to the execution
of a transaction recommended to a non-institutional customer, the
ETP Holder shall make reasonable efforts to obtain information
concerning the customer's financial status, tax status, investment
objectives, and any other information that the ETP Holder believes
would be useful to make a recommendation.
---------------------------------------------------------------------------

    In addition, the Bulletin will reference that the Fund is subject
to various fees and expenses described in the Registration Statement
and will discuss any exemptive, no-action, and interpretive relief
granted by the Commission from any rules under the Act. The Bulletin
will also disclose that the NAV for the Shares will be calculated after
4 p.m. ET each trading day.

III. Discussion

    After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\16\ In particular, the Commission believes that the proposal
is consistent with Section 6(b)(5) of the Act,\17\ which requires,
among other things, that the rules of a national securities exchange be
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and in general, to protect investors and the
public interest.
---------------------------------------------------------------------------

    \16\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
    \17\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Proposed Listing Rules for Managed Fund Shares

    The Commission finds that NYSE Arca's proposal contains adequate
rules and procedures to govern the listing and trading of Managed Fund
Shares on the Exchange.\18\ Prior to listing and/or trading on the
Exchange, NYSE Arca must file a separate proposed rule change pursuant
to Section 19(b) of the Act for each series of Managed Fund Shares. All
such securities listed and/or traded under proposed NYSE Arca Equities
Rule 8.600 will be subject to the full panoply of NYSE Arca Equities
rules and procedures that currently govern the trading of equity
securities on the Exchange.
---------------------------------------------------------------------------

    \18\ The Commission believes that the proposed rules and
procedures are adequate with respect to the Fund Shares. However,
the Commission notes that other proposed series of Managed Fund
Shares may require additional Exchange rules and procedures to
govern their listing and trading on the Exchange. For example, in
the case of a proposed series of Managed Fund Shares that are based
on a portfolio, at least in part, of non-U.S. securities, rules
relating to comprehensive surveillance sharing agreements and
quantitative initial and continued listing standards may be
required.
---------------------------------------------------------------------------

    For the initial listing of each series of Managed Fund Shares under
proposed NYSE Arca Equities Rule 8.600(d)(1), the Exchange must
establish a minimum number of Managed Fund Shares required to be
outstanding at the commencement of trading. In addition, the Exchange
must obtain a representation from the issuer of Managed Fund Shares
that the NAV per share will be calculated daily and that the NAV and
the Disclosed Portfolio will be made available to all market
participants at the same time.
    The Commission believes that the proposed continued listing and
trading standards under proposed NYSE Arca Equities Rule 8.600(d)(2)
are adequate to ensure transparency of key values and information
regarding the securities. For continued listing of each series of
Managed Fund Shares, the Portfolio Indicative Value must be widely
disseminated by one or more major market data vendors at least every 15
seconds during the time when the Managed Fund Shares trade on the
Exchange. Further, the Disclosed Portfolio must be disseminated at
least once daily and made available to all market participants at the
same time.
    The Commission finds that the Exchange's rules with respect to
trading halts under proposed NYSE Arca Equities Rule 8.600(d)(2)(D)
should help ensure the availability of key values and information
relating to Managed Fund Shares. If the Portfolio Indicative Value is
not being disseminated as required, the Exchange may halt trading
during

the day in which the interruption to the dissemination of the Portfolio
Indicative Value occurs. If the interruption of such value persists
past the trading day in which it occurred, the Exchange must halt
trading no later than the beginning of the trading day following the
interruption.\19\ In addition, if the Exchange becomes aware that the
NAV or Disclosed Portfolio related to a series of Managed Fund Shares
is not being disseminated to all market participants at the same time,
the Exchange will halt trading in such series of Managed Fund
Shares.\20\ Finally, in exercising its discretion to halt or suspend
trading in the Shares, the Exchange may consider all relevant factors,
including the extent to which trading is not occurring in the
securities comprising the Disclosed Portfolio and/or the financial
instruments of a Fund or whether other unusual conditions or
circumstances that are detrimental to the maintenance of a fair and
orderly market are present.
---------------------------------------------------------------------------

    \19\ Under proposed NYSE Arca Equities Rule 8.600(d)(2)(D), if a
series of Managed Fund Shares is trading on the Exchange pursuant to
unlisted trading privileges, the Exchange will halt trading in that
series as specified in NYSE Arca Equities Rule 7.34(a)(4). See NYSE
Arca Equities Rule 7.34(a)(4) (setting forth rules regarding trading
halts for trading pursuant to UTP of certain derivative securities
products).
    \20\ The Exchange may resume trading in such series of Managed
Fund Shares only when the NAV or Disclosed Portfolio is disseminated
to all market participants. See proposed NYSE Arca Equities Rule
8.600(d)(2)(D).
---------------------------------------------------------------------------

    The Exchange may also consider the suspension of trading in, or
removal from listing of, a series of Managed Fund Shares if: (1)
Following the initial twelve-month period after commencement of trading
on the Exchange of a series of Managed Fund Shares, there are fewer
than 50 beneficial holders of the series of the Managed Fund Shares for
30 or more consecutive trading days; (2) the value of the Portfolio
Indicative Value is no longer calculated or available, or the Disclosed
Portfolio is not made available to all market participants at the same
time; (3) the Trust has not filed, on a timely basis, any required
filings with the Commission, or if the Exchange becomes aware that the
Trust is not in compliance with the conditions of any exemptive order
or no-action relief granted by the Commission to or otherwise
applicable to the Trust; or (4) such other event shall occur or
condition exists which, in the opinion of the Exchange, makes further
dealings of the Managed Fund Shares on the Exchange inadvisable.
    The Commission believes that the foregoing requirements of proposed
NYSE Arca Equities Rule 8.600 should help to prevent trading when a
reasonable degree of transparency cannot be assured and to maintain a
fair and orderly market for Managed Fund Shares. The Commission also
believes that the proposed listing and trading rules for Managed Fund
Shares, many of which track existing Exchange rules relating to
Investment Company Units, are reasonably designed to promote a fair and
orderly market for such Managed Fund Shares by, among other things,
requiring disclosure of information that may be necessary to price
Managed Fund Shares. The proposed rules also require surveillance
procedures,\21\ establish trading guidelines,\22\ and impose other
requirements.\23\ In addition, Commentary .07 to proposed NYSE Arca
Equities Rule 8.600 requires that: (1) If the investment adviser of the
Investment Company is affiliated with a broker-dealer, such investment
adviser must erect a ``firewall'' between such investment adviser and
broker-dealer with respect to access to information regarding the
composition and/or changes to the Investment Company's portfolio; and
(2) personnel who make decisions on the Investment Company's portfolio
composition must be subject to procedures designed to prevent the use
and dissemination of material non-public information regarding the
Investment Company's portfolio. Lastly, proposed NYSE Arca Equities
Rule 8.600(d)(2)(B)(ii) requires that the Reporting Authority that
provides the Disclosed Portfolio implement and maintain, or be subject
to, procedures designed to prevent the use and dissemination of
material non-public information regarding the actual components of the
portfolio.
---------------------------------------------------------------------------

    \21\ See Commentary .04 to proposed NYSE Arca Equities Rule
8.600. See also supra note 18.
    \22\ See Commentaries .02 and .03 to proposed NYSE Arca Equities
Rule 8.600.
    \23\ See, e.g., Commentaries .05 and .06 to proposed NYSE Arca
Equities Rule 8.600.
---------------------------------------------------------------------------

Amendments to NYSE Arca Equities Rule 7.34 and Listing Fees

    As proposed, Managed Fund Shares will be: (1) Added to the list of
securities for which the Core Trading Session on the Exchange concludes
at 4:15 p.m. ET; and (2) included under the term ``Derivative
Securities Products,'' as defined in NYSE Arca Equities Rule
7.34(a)(4), in connection with trading halts for trading pursuant to
UTP on the Exchange. In addition, Managed Fund Shares will be included
under the term ``Derivative Securities Products,'' as defined in the
NYSE Arca Equities Schedule of Fees and Charges for Exchange Services,
and, as a result, the Exchange's listing fees will be applicable to a
series of Managed Fund Shares. The Commission finds that the conforming
changes made to the Exchange's rules governing trading hours, trading
halts, and listing fees are reasonable and promote transparency of the
rules to be imposed with respect to a series of Managed Fund Shares.

Proposal To List and Trade the Shares of the Fund

    The Exchange proposes to list and trade the Fund Shares pursuant to
proposed NYSE Arca Equities Rule 8.600 and Commentary thereto. The
Exchange represents that the Shares will conform to the initial and
continued listing criteria under such proposed rule.\24\
---------------------------------------------------------------------------

    \24\ See supra note 10.
---------------------------------------------------------------------------

    The Commission believes that the proposal to list and trade the
Shares of the Fund on the Exchange is consistent with Section
11A(a)(1)(C)(iii) of the Act,\25\ which sets forth Congress' finding
that it is in the public interest and appropriate for the protection of
investors and the maintenance of fair and orderly markets to assure the
availability to brokers, dealers, and investors of information with
respect to quotations for and transactions in securities. Quotations
and last-sale information for the Shares will be disseminated by means
of the facilities of the CTA. In addition, the Portfolio Indicative
Value will be disseminated at least every 15 seconds during the Core
Trading Session, in accordance with proposed NYSE Arca Equities Rule
8.600(d)(2)(A), and on each business day before commencement of the
Core Trading Session, each Fund will disclose on its respective Web
site the Disclosed Portfolio that will form the basis for the Funds'
calculation of NAV at the end of the business day, which ordinarily
occurs at 4 p.m. ET. The Funds' Web site will also include for each
Fund additional quantitative information updated on a daily basis,
including, among other things, daily trading volume, prior reported
closing prices, and NAV-related data.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    Furthermore, the Commission believes that the proposal to list and
trade the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading when a reasonable degree of transparency cannot be
assured. The Commission notes that the Exchange is required to obtain a
representation from the Trust, prior to listing, that the NAV per Share
for the

Funds will be calculated daily, and that the NAV and the Disclosed
Portfolio will be made available to all market participants at the same
time.\26\ The Exchange may consider the suspension of trading in, or
removal from listing of, the Shares if the value of the Portfolio
Indicative Value is no longer calculated or available or the Disclosed
Portfolio is not made available to all market participants at the same
time. Commentary .07 to proposed NYSE Arca Equities Rule 8.600
restricts certain personnel of PowerShares Capital Management LLC with
respect to use and dissemination of information concerning the
composition and/or changes to the Fund's portfolio and requires the
establishment of a ``firewall'' between PowerShares Capital Management
LLC and any affiliated broker-dealers.\27\ In addition, proposed NYSE
Arca Equities Rule 8.600(d)(2)(B)(ii) requires that the Reporting
Authority that provides the Disclosed Portfolio implement and maintain,
or be subject to, procedures designed to prevent the use and
dissemination of material non-public information regarding the actual
components of the portfolio.
---------------------------------------------------------------------------

    \26\ See proposed NYSE Arca Equities Rule 8.600(d)(1)(B).
    \27\ See supra note 10.
---------------------------------------------------------------------------

    The Commission further believes that the trading rules and
procedures to which the Shares will be subject pursuant to this
proposal are consistent with the Act. The Exchange has represented that
the Shares are equity securities subject to Exchange's rules governing
the trading of equity securities.
    In support of this proposal, the Exchange has made the following
representations:
    (1) The Shares will conform to the initial and continued listing
criteria under proposed NYSE Arca Equities Rule 8.600.
    (2) The Exchange's surveillance procedures are adequate to properly
monitor the trading of the Shares in all trading sessions and to deter
and detect violations of Exchange rules. Specifically, the Exchange
intends to utilize its existing surveillance procedures applicable to
derivative products, which will include Managed Fund Shares, to monitor
trading in the Shares.\28\
---------------------------------------------------------------------------

    \28\ See supra note 18.
---------------------------------------------------------------------------

    (3) Prior to the commencement of trading, the Exchange will inform
its ETP Holders in a Bulletin of the special characteristics and risks
associated with trading the Shares, including procedures for purchases
and redemptions of Shares, suitability requirements under NYSE Arca
Equities Rule 9.2(a), the risks involved in trading the Shares during
the Opening and Late Trading Sessions when an updated Portfolio
Indicative Value will not be calculated or publicly disseminated,
information regarding the Portfolio Indicative Value, prospectus
delivery requirements, and other trading information. In addition, the
Bulletin will disclose that the Funds are subject to various fees and
expenses, as described in the Registration Statement, and will discuss
any exemptive, no-action, and interpretive relief granted by the
Commission from any rules under the Act. Finally, the Bulletin will
disclose that the NAV for the Shares will be calculated after 4 p.m. ET
each trading day.
    (4) The Exchange represents that the Trust is required to comply
with Rule 10A-3 under the Act \29\ for the initial and continued
listing of the Shares, as provided under NYSE Arca Equities Rule 5.3.
---------------------------------------------------------------------------

    \29\ 17 CFR 240.10A-3. See supra note 10.
---------------------------------------------------------------------------

    This approval order is based on the Exchange's representations.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning Amendment No. 1 to the proposed rule change,
including whether the proposed rule change, as modified by Amendment
No. 1 thereto, is consistent with the Act. Comments may be submitted by
any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca-2008-25 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2008-25. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying 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. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2008-25 and should
be submitted on or before May 1, 2008.

V. Accelerated Approval

    The Commission finds good cause for approving the proposed rule
change, as modified by Amendment No. 1 thereto, prior to the thirtieth
day after the date of publication of notice of filing of Amendment No.
1 in the Federal Register. In Amendment No. 1, the Exchange provided
additional safeguards in Commentary .07 to proposed NYSE Arca Equities
Rule 8.600 that relate to restricted access and dissemination of key
information regarding the composition of, and changes to, the
Investment Company portfolio, including the requirement of
``firewalls'' to be erected around certain personnel of the investment
adviser to the Investment Company, to the extent such investment
adviser is a registered broker-dealer or affiliated with a registered
broker-dealer, and procedures designed to prevent the use and
dissemination of material non-public information regarding such
portfolio. In addition, the Exchange represented that PowerShares
Capital Management LLC, the investment adviser of the Funds, has
implemented a firewall with respect to its broker-dealer affiliate
regarding access to information concerning the composition and/or
changes to the Fund's portfolio and is already subject to the
provisions of applicable rules under the Advisers Act.\30\ The
Commission notes that Commentary .07 is based on, and substantially
similar to, Commentary .01(b)(1) to NYSE Arca

Equities Rule 5.2(j)(3) and Commentary .06 to Amex Rule 1000B.\31\ The
Commission believes that Amendment No. 1 strengthens the proposal by
promoting fair disclosure of Investment Company portfolio information
and raises no new regulatory issues. Accordingly, the Commission finds
good cause for approving the proposal, as modified by Amendment No. 1
thereto, on an accelerated basis.
---------------------------------------------------------------------------

    \30\ See supra note 10.
    \31\ See Securities Exchange Act Release No. 57514 (March 17,
2008), 73 FR 15230 (March 21, 2008) (SR-Amex-2008-02) (approving,
among other things, the listing standards for Managed Fund Shares,
including Commentary .06 to Amex Rule 1000B, which relates to
``firewalls'' and the protection of information regarding the
Investment Company's portfolio).
---------------------------------------------------------------------------

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\32\ that the proposed rule change (SR-NYSEArca-2008-25), as
modified by Amendment No. 1 thereto, be, and it hereby is, approved on
an accelerated basis.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\33\
---------------------------------------------------------------------------

    \33\ See 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-7514 Filed 4-9-08; 8:45 am]

BILLING CODE 8011-01-P