[Federal Register Volume 81, Number 230 (Wednesday, November 30, 2016)]
[Notices]
[Pages 86360-86365]
[FR Doc No: 2016-28774]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79384; File No. SR-NYSEArca-2016-70]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting
Approval of Proposed Rule Proposed Rule Change, as Modified by
Amendment Nos. 1 and 2 Thereto, Regarding Use of Rule 144A Securities
by the Fidelity Corporate Bond ETF, Fidelity Investment Grade Bond ETF,
Fidelity Limited Term Bond ETF, and Fidelity Total Bond ETF

November 23, 2016.

I. Introduction

    On May 11, 2016, NYSE Arca, Inc. (``Exchange'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'' or
``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule
change to permit the Fidelity Corporate Bond ETF, Fidelity Investment
Grade Bond ETF, Fidelity Limited Term Bond ETF, and Fidelity Total Bond
ETF (individually, ``Fund,'' and collectively, ``Funds'') to consider
securities issued pursuant to Rule 144A under the Securities Act of
1933 (``Securities Act'') as debt securities eligible for principal
investment. The proposed rule change was published for comment in the
Federal Register on May 31, 2016.\3\ On June 30, 2016, pursuant to
Section 19(b)(2) of the Act,\4\ the Commission designated a longer
period within which to approve the proposed rule change, disapprove the
proposed rule change, or institute proceedings to determine whether to
disapprove the proposed rule change.\5\ On July 26, 2016, the Exchange
filed Amendment No. 1 to the proposed rule change.\6\ On August 29,
2016, the Commission instituted proceedings under Section 19(b)(2)(B)
of the Act \7\ to determine whether to approve or disapprove the
proposed rule change, as modified by Amendment No. 1 thereto.\8\ In the
Order Instituting Proceedings, the Commission solicited comments to
specified matters related to the proposal.\9\ On November 22, 2016, the
Exchange filed Amendment No. 2 to the proposed rule change.\10\ The
Commission has received no comments on the proposed rule change. This
order grants approval of the proposed rule change, as modified by
Amendment Nos. 1 and 2 thereto.
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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. 77891 (May 24,
2016), 81 FR 34388 (``Notice'').
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 78207, 81 FR 44338
(Jul. 7, 2016). The Commission designated August 29, 2016 as the
date by which the Commission shall either approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
    \6\ In Amendment No. 1, which amended and replaced the proposed
rule change in its entirety, the Exchange: (a) corrected certain
aspects of the the investment descriptions for each Fund in
accordance with the Prior Corporate Bond Releases and Prior Total
Bond Releases (as defined herein); (b) confirmed that all of the
Rule 144A securities in which a Fund invests will be corporate debt
securities for which transactions are reported to TRACE (as defined
herein); and (c) confirmed that FINRA (as defined herein), on behalf
of the Exchange, is able to access, as needed, trade information for
the Rule 144A securities as well as certain other fixed income
securities held by the Funds reported to TRACE. Amendment No. 1 is
available at: https://www.sec.gov/comments/sr-nysearca-2016-70/nysearca201670-1.pdf. Because Amendment No. 1 to the proposed rule
change does not materially alter the substance of the proposed rule
change or raise unique or novel regulatory issues, Amendment No. 1
is not subject to notice and comment.
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 78712, 81 FR 60759
(Sept. 2, 2016) (``Order Instituting Proceedings''). Specifically,
the Commission instituted proceedings to allow for additional
analysis of the proposed rule change's consistency with Section
6(b)(5) of the Act, which requires, among other things, that the
rules of a national securities exchange be ``designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade,'' and ``to protect investors and the
public interest.'' See id., 81 FR at 60764.
    \9\ See id.
    \10\ In Amendment No. 2, which amended and replaced the proposed
rule change in its entirety, the Exchange clarified that no more
than 35% of a Fund's assets may be invested in Rule 144A securities.
Amendment No. 2 is available at: https://www.sec.gov/comments/sr-nysearca-2016-70/nysearca201670-2.pdf. Because Amendment No. 2 to
the proposed rule change does not materially alter the substance of
the proposed rule change or raise unique or novel regulatory issues,
Amendment No. 2 is not subject to notice and comment.
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II. Exchange's Description of the Proposal

    The Commission approved the listing and trading of shares
(``Shares'') of the Funds under NYSE Arca Equities Rule 8.600,\11\
which governs the listing and

trading of Managed Fund Shares. The Exchange proposes to amend the
representation in the Prior Corporate Bond Notice and Prior Total Bond
Notice to provide that each Fund may include Rule 144A securities
within a Fund's principal investments in debt securities (i.e., debt
securities in which at least 80% of a Fund's assets are invested),
provided that no more than 35% of a Fund's assets may be invested in
Rule 144A securities.
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    \11\ See Securities Exchange Act Release Nos. 72068 (May 1,
2014), 79 FR 25923 (May 6, 2014) (SR-NYSEArca-2014-47) (notice of
filing of proposed rule change relating to listing and trading of
Shares of Fidelity Corporate Bond ETF Managed Shares under NYSE Arca
Equities Rule 8.600) (``Prior Corporate Bond Notice''); 72439 (Jun.
20, 2014), 79 FR 36361 (Jun. 26, 2014) (SR-NYSEArca-2014-47) (order
approving proposed rule change relating to listing and trading of
Shares of Fidelity Corporate Bond ETF Managed Shares under NYSE Arca
Equities Rule 8.600) (``Prior Corporate Bond Order'' and, together
with the Prior Corporate Bond Notice, ``Prior Corporate Bond
Releases''); 72064 (May 1, 2014), 79 FR 25908 (May 6, 2014) (SR-
NYSEArca-2014-46) (notice of filing of proposed rule change relating
to listing and trading of Shares of Fidelity Investment Grade Bond
ETF; Fidelity Limited Term Bond ETF; and Fidelity Total Bond ETF
under NYSE Arca Equities Rule 8.600) (``Prior Total Bond Notice'');
72748 (Aug. 4, 2014), 79 FR 46484 (Aug. 8, 2014) (SR-NYSEArca-2014-
46) (order approving proposed rule change relating to listing and
trading of Shares of the Fidelity Investment Grade Bond ETF,
Fidelity Limited Term Bond ETF, and Fidelity Total Bond ETF under
NYSE Arca Equities Rule 8.600) (``Prior Total Bond ETF Order'' and,
together with the Prior Total Bond Notice, ``Prior Total Bond
Releases'').
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A. Exchange's Description of the Funds

    Fidelity Investments Money Management, Inc. (``FIMM''), an
affiliate of Fidelity Management & Research Company (``FMR''), is the
manager (``Manager'') of each Fund. FMR Co., Inc. (``FMRC'') serves as
a sub-adviser for the Fidelity Total Bond ETF. FMRC has day-to-day
responsibility for choosing certain types of investments of foreign and
domestic issuers for Fidelity Total Bond ETF. Other investment
advisers, which also are affiliates of FMR, serve as sub-advisers to
the Funds and assist FIMM with foreign investments, including Fidelity
Management & Research (U.K.) Inc., Fidelity Management & Research (Hong
Kong) Limited, and Fidelity Management & Research (Japan) Inc.
(individually, ``Sub-Adviser,'' and together with FMRC, collectively
``Sub-Advisers''). Fidelity Distributors Corporation is the distributor
for the Funds' Shares.
    The Funds are funds of Fidelity Merrimack Street Trust (``Trust''),
a Massachusetts business trust.\12\ The Exchange represents that the
Shares of the Fidelity Corporate Bond ETF, Fidelity Limited Term Bond
ETF, and Fidelity Total Bond ETF are currently trading on the Exchange.
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    \12\ The Trust is registered under the Investment Company Act of
1940 (``1940 Act''). According to the Exchange, on December 29,
2015, the Trust filed with the Commission an amendment to its
registration statement on Form N-1A under the Securities Act and the
1940 Act relating to the Funds (File Nos. 333-186372 and 811-22796)
(``Registration Statement''). In addition, the Exchange states that
the Trust has obtained certain exemptive relief under the 1940 Act.
See Investment Company Act Release No. 30513 (May 10, 2013) (File
No. 812-14104).
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1. Fidelity Corporate Bond ETF
    As described in the Prior Corporate Bond Notice, the Fidelity
Corporate Bond ETF seeks a high level of current income. The Manager
normally invests at least 80% of Fidelity Corporate Bond ETF assets in
investment-grade corporate bonds and other corporate debt
securities.\13\ Corporate debt securities are bonds and other debt
securities issued by corporations and other business structures, as
described in the Prior Corporate Bond Notice.
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    \13\ According to the Exchange, investment-grade debt securities
include all types of debt instruments, including corporate debt
securities that are of medium and high-quality. An investment-grade
rating means the security or issuer is rated investment-grade by a
credit rating agency registered as a nationally recognized
statistical rating organization with the Commission (for example,
Moody's Investors Service, Inc.), or is unrated but considered to be
of equivalent quality by the Fidelity Corporate Bond ETF's Manager
or Sub-Advisers.
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    The Fidelity Corporate Bond ETF may hold uninvested cash or may
invest it in cash equivalents such as money market securities, or
shares of short-term bond exchanged-traded funds registered under the
1940 Act (``ETFs''), or mutual funds or money market funds, including
Fidelity central funds (special types of investment vehicles created by
Fidelity for use by the Fidelity funds and other advisory clients). The
Manager uses the Barclays U.S. Credit Bond Index as a guide in
structuring the Fund and selecting its investments. FIMM manages the
Fund to have similar overall interest rate risk to the Barclays U.S.
Credit Bond Index.
    As stated in the Prior Corporate Bond Releases, in buying and
selling securities for the Fund, the Manager analyzes the credit
quality of the issuer, security-specific features, current valuation
relative to alternatives in the market, short-term trading
opportunities resulting from market inefficiencies, and potential
future valuation. In managing the Fund's exposure to various risks,
including interest rate risk, the Manager considers, among other
things, the market's overall risk characteristics, the market's current
pricing of those risks, information on the Fund's competitive universe
and internal views of potential future market conditions.
    While the Manager normally invests at least 80% of assets of the
Fund in investment grade corporate bonds and other corporate debt
securities, as described above, the Manager may invest up to 20% of the
Fund's assets in other securities and financial instruments, as
summarized below.
    In addition to corporate debt securities, the debt securities in
which the Fund may invest are U.S. Government securities; repurchase
agreements and reverse repurchase agreements; mortgage- and other
asset-backed securities; loans; loan participations, loan assignments,
and other evidences of indebtedness, including letters of credit,
revolving credit facilities, and other standby financing commitments;
structured securities; stripped securities; municipal securities;
sovereign debt obligations; obligations of international agencies or
supranational entities; and other securities believed to have debt-like
characteristics, including hybrid securities, which may offer
characteristics similar to those of a bond security such as stated
maturity and preference over equity in bankruptcy.
    The Fund may invest in restricted securities, which are subject to
legal restrictions on their sale. Restricted securities generally can
be sold in privately negotiated transactions, pursuant to an exemption
from registration under the Securities Act, or in a registered public
offering.
2. Fidelity Investment Grade Bond ETF
    As described in the Prior Total Bond Notice, the Fidelity
Investment Grade Bond ETF (which has not yet commenced operation) will
seek a high level of current income. The Manager normally will invest
at least 80% of the Fund's assets in investment-grade debt securities
(those of medium and high quality). The debt securities in which the
Fund may invest are corporate debt securities; U.S. Government
securities; repurchase agreements and reverse repurchase agreements;
money market securities; mortgage- and other asset-backed securities;
senior loans; loan participations and loan assignments and other
evidences of indebtedness, including letters of credit, revolving
credit facilities and other standby financing commitments; stripped
securities; municipal securities; sovereign debt obligations; and
obligations of international agencies or supranational entities
(collectively, ``Debt Securities'').
    As described in the Prior Total Bond Notice, the Fidelity
Investment Grade Bond ETF may hold uninvested cash or may invest it in
cash equivalents such as repurchase agreements, shares of short term
bond ETFs, mutual funds, or money market funds, including Fidelity
central funds (special types of investment vehicles created by Fidelity
for use by the Fidelity funds and other advisory clients). The Manager
will use the Barclays U.S. Aggregate Bond Index (``Aggregate Index'')
as a guide in structuring the Fund and selecting its investments, and
will manage the Fund to have similar overall interest rate risk to the
Aggregate Index.
    As described in the Prior Total Bond Notice, the Manager will
consider other factors when selecting the Fidelity

Investment Grade Bond ETF's investments, including the credit quality
of the issuer, security-specific features, current valuation relative
to alternatives in the market, short-term trading opportunities
resulting from market inefficiencies, and potential future valuation.
In managing the Fidelity Investment Grade Bond ETF's exposure to
various risks, including interest rate risk, the Manager will consider,
among other things, the market's overall risk characteristics, the
market's current pricing of those risks, information on the Fidelity
Investment Grade Bond ETF's competitive universe, and internal views of
potential future market conditions.
3. Fidelity Limited Term Bond ETF
    As described in the Prior Total Bond Notice, the Fidelity Limited
Term Bond ETF seeks to provide a high rate of income. The Manager
normally invests at least 80% of the Fidelity Limited Term Bond ETF's
assets in investment-grade Debt Securities (those of medium and high
quality).
    The Fidelity Limited Term Bond ETF may hold uninvested cash or may
invest it in cash equivalents such as repurchase agreements, shares of
short term bond ETFs, mutual funds, or money market funds, including
Fidelity central funds (special types of investment vehicles created by
Fidelity for use by the Fidelity funds and other advisory clients). The
Manager uses the Fidelity Limited Term Composite Index (``Composite
Index'') as a guide in structuring the Fund and selecting its
investments. The Manager manages the Fidelity Limited Term Bond ETF to
have similar overall interest rate risk to the Composite Index.
    The Manager considers other factors when selecting the Fidelity
Limited Term Bond ETF's investments, including the credit quality of
the issuer, security-specific features, current valuation relative to
alternatives in the market, short-term trading opportunities resulting
from market inefficiencies, and potential future valuation. In managing
the Fidelity Limited Term Bond ETF's exposure to various risks,
including interest rate risk, the Manager considers, among other
things, the market's overall risk characteristics, the market's current
pricing of those risks, information on the Fund's competitive universe,
and internal views of potential future market conditions.
4. Fidelity Total Bond ETF
    As described in the Prior Total Bond Notice, the Fidelity Total
Bond ETF seeks a high level of current income. The Manager normally
invests at least 80% of the Fidelity Total Bond ETF's assets in Debt
Securities. The Manager allocates the Fidelity Total Bond ETF's assets
across investment-grade, high yield, and emerging market Debt
Securities. The Manager may invest up to 20% of the Fund's assets in
lower-quality Debt Securities.
    The Fidelity Total Bond ETF may hold uninvested cash or may invest
it in cash equivalents such as repurchase agreements, shares of short
term bond ETFs, mutual funds, or money market funds, including Fidelity
central funds (special types of investment vehicles created by Fidelity
for use by the Fidelity funds and other advisory clients).
    The Manager uses the Barclays U.S. Universal Bond Index
(``Universal Index'') as a guide in structuring and selecting the
investments of the Fidelity Total Bond ETF and selecting its
investments, and in allocating the Fidelity Total Bond ETF's assets
across the investment-grade, high yield, and emerging market asset
classes. The Manager manages the Fidelity Total Bond ETF to have
similar overall interest rate risk to the Universal Index. The Manager
considers other factors when selecting the Fund's investments,
including the credit quality of the issuer, security-specific features,
current valuation relative to alternatives in the market, short-term
trading opportunities resulting from market inefficiencies, and
potential future valuation. In managing the Fund's exposure to various
risks, including interest rate risk, the Manager considers, among other
things, the market's overall risk characteristics, the market's current
pricing of those risks, information on the Fund's competitive universe,
and internal views of potential future market conditions.
    As described in the Prior Total Bond Notice, the Manager may invest
the Fidelity Total Bond ETF's assets in Debt Securities of foreign
issuers in addition to securities of domestic issuers.
5. Other Investments of the Funds
    While, as described above, the Manager normally invests at least
80% of assets of Fidelity Limited Term Bond ETF in investment-grade
Debt Securities (and will normally invest at least 80% of assets of the
Fidelity Investment Grade Bond ETF in investment-grade Debt
Securities), and the Manager normally invests at least 80% of assets of
the Fidelity Total Bond ETF in Debt Securities, the Manager may invest
up to 20% of a Fund's assets in other securities and financial
instruments (``Other Investments,'' as described in the Prior Total
Bond Notice). As described in the Prior Corporate Bond Notice and Prior
Total Bond Notice, as part of a Fund's Other Investments, (i.e., up to
20% of a Fund's assets), each Fund may invest in restricted securities,
which are subject to legal restrictions on their sale.\14\
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    \14\ Restricted securities are subject to legal restrictions on
their sale. Restricted securities generally can be sold in privately
negotiated transactions, pursuant to an exemption from registration
under the Securities Act, or in a registered public offering. Rule
144A securities are securities which, while privately placed, are
eligible for purchase and resale pursuant to Rule 144A. Rule 144A
permits certain qualified institutional buyers, such as a Fund, to
trade in privately placed securities even though such securities are
not registered under the Securities Act.
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B. Exchange's Description of the Proposed Change to the Principal
Investments of the Funds

    The Exchange proposes that each Fund may include Rule 144A
securities within a Fund's principal investments in debt securities
(i.e., debt securities in which at least 80% of a Fund's assets are
invested), provided that no more than 35% of a Fund's assets may be
invested in Rule 144A securities. As discussed below, the Exchange
believes it is appropriate for Rule 144A securities to be included as
principal investments of a Fund, subject to the 35% limitation
referenced above, in view of (1) the high level of liquidity in the
market for such securities compared to other debt securities asset
classes, and (2) the high level of transparency in the market for Rule
144A securities, particularly in light of reporting of transaction data
in such securities through the Trade Reporting and Compliance Engine
(``TRACE'') operated by the Financial Industry Regulatory Authority
(``FINRA''). All of the Rule 144A securities in which a Fund invests
will be corporate debt securities for which transactions are reported
in TRACE.
    FMR has represented to the Exchange that Rule 144A securities
account for approximately 20% of daily trading volume in U.S. corporate
bonds. Dealers trade and report transactions in Rule 144A securities in
the same manner as registered corporate bonds. While the average number
of daily trades and U.S. dollar volume in registered corporate bonds is
much higher than in Rule 144A securities, the average lot size is
higher for Rule 144A securities.\15\ Specifically, the average lot size
for 144A securities for the period January 1, 2015 through

August 31, 2015 was approximately $2.2 million, compared to an average
lot size for the same period of approximately $500,000 for registered
corporate bonds.
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    \15\ Source: MarketAxess Trace Data. For example, for the period
January 1, 2015 through August 31, 2015, for registered bonds and
Rule 144A securities with $1 billion to $1.999 billion the average
daily dollar volume outstanding was approximately $6.8 billion and
$1.7 billion, respectively, and the average lot size was $666,647
and $2,398,292, respectively.
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    The Exchange notes that, in 2013, the Commission approved FINRA
rules relating to dissemination of information regarding transactions
in Rule 144A securities in TRACE.\16\ Transactions executed by FINRA
members became subject to dissemination through FINRA's TRACE on June
30, 2014, thus providing a level of transparency to the Rule 144A
market comparable to that of registered bonds.\17\
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    \16\ See Securities Exchange Act Release Nos. 70009 (Jul. 19,
2013), 78 FR 44997 (Jul. 25, 2103) (SR-FINRA-2013-029) (notice of
filing of a proposed rule change relating to the dissemination of
transactions in TRACE-Eligible securities effected pursuant to Rule
144A); 70345 (Sept. 6, 2013), 78 FR 56251 (Sept. 12, 2013) (SR-
FINRA-2013-029) (order approving proposed rule change relating to
the dissemination of transactions in TRACE-Eligible securities
effected pursuant to Rule 144A). In the proposed rule change, FINRA
proposed to amend FINRA Rule 6750 to provide for the dissemination
of Rule 144A transactions, provided the asset type (e.g., corporate
bonds) currently is subject to dissemination under FINRA Rule 6750;
to amend the dissemination protocols to extend the dissemination
caps currently applicable to the non-Rule 144A transactions in such
asset type (e.g., non-Rule 144A corporate bond transactions) to Rule
144A transactions in such securities; to amend FINRA Rule 7730 to
establish a data set for real-time Rule 144A transaction data and a
second data set for historic Rule 144A transaction data; to amend
the definition of ``Historic TRACE Data'' to reference the three
data sets currently included therein and the proposed fourth data
set; and to make other clarifying and technical amendments. FINRA
Rule 6730(a) requires any transaction in a TRACE-Eligible security
to be reported to TRACE as soon as practicable, but no later than
within 15 minutes of the transaction, subject to specified
exceptions. FINRA Rule 6730(c) requires the trade report to contain
information on size, price, time of execution, amount of commission,
the date of settlement, and other information.
    \17\ The Exchange notes that in a June 30, 2014 press release
``FINRA Brings 144A Corporate Debt Transactions Into the Light,''
FINRA stated: ``144A transactions--resales of restricted corporate
debt securities to large institutions called qualified institutional
buyers (QIBs)--account for a significant portion of the volume in
corporate debt securities. In the first quarter of 2014, 144A
transactions comprised nearly 13 percent of the average daily volume
in investment-grade corporate debt, and nearly 30 percent of the
average daily volume in high-yield corporate debt. 144A transactions
comprised nearly 20 percent of the average daily volume in the
corporate debt market as a whole. Through the Trade Reporting and
Compliance Engine (TRACE), FINRA will disseminate 144A transactions
subject to the same dissemination caps that are currently in effect
for non-144A transactions. The same dissemination cap for
investment-grade corporate bonds ($5 million) applies to both 144A
and non-144A corporate bond transactions, and the $1 million
dissemination cap for high-yield corporate bonds similarly applies
to both 144A and non-144A transactions. 144A transactions are also
subject to the same 15-minute reporting requirement as non-144A
corporate debt transactions.'' See also FINRA Regulatory Notice 13-
35 October 2013.
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    The Exchange further notes that, while the proposed rule change
would categorize Rule 144A securities within a Fund's principal
investments in debt securities (subject to a limitation of investments
in Rule 144A securities to 35% of a Fund's assets), any investments in
Rule 144A securities, of course, would be required to comply with
restrictions under the 1940 Act and rules thereunder relating to
investment in illiquid assets. As stated in the Prior Corporate Bond
Notice and Prior Total Bond Notice, each Fund may hold up to an
aggregate amount of 15% of its net assets in illiquid assets
(calculated at the time of investment), including Rule 144A securities
deemed illiquid by the Manager or Sub-Advisers. Each Fund monitors its
portfolio liquidity on an ongoing basis to determine whether, in light
of current circumstances, an adequate level of liquidity is being
maintained, and will consider taking appropriate steps in order to
maintain adequate liquidity if, through a change in values, net assets,
or other circumstances, more than 15% of a Fund's net assets are held
in illiquid assets. Illiquid assets include assets subject to
contractual or other restrictions on resale and other instruments that
lack readily available markets as determined in accordance with
Commission staff guidance.\18\
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    \18\ The Exchange notes that in a recent rulemaking proposal
relating to open-end fund liquidity risk management programs, the
Commission stated that ``[s]ecurities offered pursuant to rule 144A
under the Securities Act may be considered liquid depending on
certain factors.'' The Commission, citing to the ``Statement
Regarding `Restricted Securities' '' noted: ``The Commission stated
[in the ``Statement Regarding `Restricted Securities' ''] that
`determination of the liquidity of Rule 144A securities in the
portfolio of an investment company issuing redeemable securities is
a question of fact for the board of directors to determine, based
upon the trading markets for the specific security' and noted that
the board should consider the unregistered nature of a rule 144A
security as one of the factors it evaluates in determining its
liquidity.'' See Release Nos. 33-9922; IC-31835; File Nos. S7-16-15;
S7-08-15 (Sept. 22, 2015).
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    Moreover, as stated in the Prior Corporate Bond Notice and Prior
Total Bond Notice, each Fund does not currently intend to purchase any
asset if, as a result, more than 10% of its net assets would be
invested in assets that are deemed to be illiquid because they are
subject to legal or contractual restrictions on resale or because they
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued. For purposes of a
Fund's illiquid assets limitation discussed above, if through a change
in values, net assets, or other circumstances, a Fund were in a
position where more than 10% of its net assets were invested in
illiquid assets, it would consider appropriate steps to protect
liquidity.
    The Prior Corporate Bond Notice and Prior Total Bond Notice stated
that various factors may be considered in determining the liquidity of
a Fund's investments, including: (1) The frequency of trades and quotes
for the asset; (2) the number of dealers wishing to purchase or sell
the asset and the number of other potential purchasers; (3) dealer
undertakings to make a market in the asset; and (4) the nature of the
asset and the nature of the marketplace in which it trades (including
any demand, put or tender features, the mechanics and other
requirements for transfer, any letters of credit or other credit
enhancement features, any ratings, the number of holders, the method of
soliciting offers, the time required to dispose of the security, and
the ability to assign or offset the rights and obligations of the
asset).
    The Exchange believes that the size of the Rule 144A market
(approximately 20% of daily trading volume in U.S. corporate bonds),
the active participation of multiple dealers utilizing trading
protocols that are similar to those in the corporate bond market, and
the transparency of the 144A market resulting from reporting of Rule
144A transactions in TRACE will deter manipulation in trading the
Shares. The Exchange notes that all of the Rule 144A securities in
which a Fund invests will be corporate debt securities for which
transactions are reported in TRACE.
    The Exchange represents that, except for the change described
above, all other representations made in the Prior Corporate Bond
Releases and the Prior Total Bond Releases remain unchanged. The Funds
will continue to comply with all initial and continued listing
requirements under NYSE Arca Equities Rule 8.600.
    The Exchange further represents that the trading in the Shares will
be subject to the existing trading surveillances administered by the
Exchange, as well as cross-market surveillances administered by FINRA,
on behalf of the Exchange, which are designed to detect violations of
Exchange rules and applicable federal securities laws.\19\ 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 and

federal securities laws applicable to trading on the Exchange. The
Exchange or FINRA, on behalf of the Exchange, or both, will communicate
as needed regarding trading in the Shares and underlying exchange-
traded options, futures, exchange-traded equity securities (including
ADRs, EDRs, and GDRs), and other exchange-traded instruments with other
markets and other entities that are members of the ISG, and the
Exchange or FINRA, on behalf of the Exchange, or both, may obtain
trading information regarding trading in the Shares and underlying
exchange-traded options, futures, exchange-traded equity securities
(including ADRs, EDRs, and GDRs), and other exchange-traded instruments
from such markets and other entities. The Exchange may obtain
information regarding trading in the Shares and underlying exchange-
traded options, futures, exchange-traded equity securities (including
ADRs, EDRs, and GDRs), and other exchange-traded instruments from
markets and other entities that are members of ISG or with which the
Exchange has in place a comprehensive surveillance sharing
agreement.\20\ FINRA, on behalf of the Exchange, is able to access, as
needed, trade information for the Rule 144A securities as well as
certain other fixed income securities held by the Funds reported to
TRACE. In addition, as stated in the Prior Corporate Bond Releases and
the Prior Total Bond Releases, investors have ready access to
information regarding the Funds' holdings, the Portfolio Indicative
Value, the Disclosed Portfolio, and quotation and last-sale information
for the Shares.
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    \19\ FINRA conducts cross-market surveillances on behalf of the
Exchange pursuant to a regulatory services agreement. The Exchange
is responsible for FINRA's performance under this regulatory
services agreement.
    \20\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all of the components
of the portfolio for a Fund may trade on exchanges that are members
of the ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.
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    The Exchange also represents that all statements and
representations made in this filing and the Prior Corporate Bond
Releases and Prior Total Bond Releases regarding (a) the description of
the Funds' respective portfolios, (b) limitations on portfolio holdings
or reference assets, or (c) the applicability of Exchange rules and
surveillance procedures shall constitute continued listing requirements
for listing the Shares of the Funds on the Exchange. The Adviser has
represented to the Exchange that it will advise the Exchange of any
failure by a Fund to comply with the continued listing requirements,
and, pursuant to its obligations under Section 19(g)(1) of the Act, the
Exchange will monitor for compliance with the continued listing
requirements. If a Fund is not in compliance with the applicable
listing requirements, the Exchange will commence delisting procedures
under NYSE Arca Equities Rule 5.5(m).

III. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's
proposal, as modified by Amendment Nos. 1 and 2 thereto, is consistent
with the Exchange Act and the rules and regulations thereunder
applicable to a national securities exchange.\21\ In particular, the
Commission finds that the proposed rule change, as modified by
Amendment Nos. 1 and 2 thereto, is consistent with Section 6(b)(5) of
the Exchange Act,\22\ which requires, among other things, that the
Exchange's rules be designed to promote just and equitable principles
of trade, to remove impediments to and perfect the mechanism of a free
and open market and a national market system, and, in general, to
protect investors and the public interest.
---------------------------------------------------------------------------

    \21\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \22\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission notes that transaction information relating to Rule
144A securities is available via TRACE. According to the Exchange, all
of the Rule 144A securities in which a Fund invests will be corporate
debt securities for which transactions are reported in TRACE. The
Commission believes that limiting Rule 144A securities in which a Fund
invests as principal investments to corporate debt securities for which
transactions are reported to TRACE would help to promote market
transparency and provide an appropriate limit on the use of 144A
securities as debt securities eligible for principal investment,
provided that no more than 35% of a Fund's assets may be invested in
Rule 144A securities.
    The Commission notes that, while the proposal would allow a Fund to
consider Rule 144A securities as debt securities eligible for principal
investment, subject to the 35% limitation referenced above, any
investments in such securities would be required to comply with the
restrictions under the 1940 Act and rules thereunder relating to
investments in illiquid assets. As stated in the Prior Corporate Bond
Notice and Prior Total Bond Notice, each Fund may hold up to an
aggregate amount of 15% of its net assets in illiquid assets
(calculated at the time of investment), including Rule 144A securities
deemed illiquid by the Manager or Sub-Advisers. The Manager or Sub-
Advisers, who are responsible for the day-to-day decisions regarding
the liquidity of securities, may consider various factors in
determining the liquidity of a Fund's investments, including: (1) The
frequency of trades and quotes for the asset; (2) the number of dealers
wishing to purchase or sell the asset and the number of other potential
purchasers; (3) dealer undertakings to make a market in the asset; and
(4) the nature of the asset and the nature of the marketplace in which
it trades (including any demand, put or tender features, the mechanics
and other requirements for transfer, any letters of credit or other
credit enhancement features, any ratings, the number of holders, the
method of soliciting offers, the time required to dispose of the
security, and the ability to assign or offset the rights and
obligations of the asset). Ultimately, however, a Fund's Board of
Directors has responsibility for determining the liquidity of
securities (including Rule 144A securities) held by a Fund.
    The Commission further notes that pursuant to the 1940 Act and
rules thereunder, Funds are required to monitor their respective
portfolio's liquidity on an ongoing basis to determine whether, in
light of current circumstances, an adequate level of liquidity is being
maintained, and to consider taking appropriate steps in order to
maintain adequate liquidity if, through a change in values, net assets,
or other circumstances, more than 15% of a Fund's net assets are held
in illiquid assets. Moreover, the Exchange represents that each Fund
does not currently intend to purchase any asset if, as a result, more
than 10% of its net assets would be invested in assets that are deemed
to be illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which
they are valued.
    Importantly, the Commission notes that the Funds will continue to
be listed and traded on the Exchange pursuant to the initial and
continued listing criteria in NYSE Arca Equities Rule 8.600. The
Exchange represents that, except for the change described above, all
other representations made in the Prior Corporate Bond Releases and the
Prior Total Bond Releases remain unchanged. The Commission finds that
providing the Manager or Sub-Advisers of each Fund additional
flexibility to consider Rule 144A securities as debt securities
eligible for principal investment, given the protections discussed
above, is consistent with the Act.

    In support of this proposal, the Exchange represented that:

    (1) The Funds will continue to comply with all initial and
continued listing requirements under NYSE Arca Equities Rule 8.600.
    (2) Each Fund may include Rule 144A securities within a Fund's
principal investments in debt securities (i.e., debt securities in
which at least 80% of a Fund's assets are invested), provided that
no more than 35% of a Fund's assets may be invested in Rule 144A
securities.
    (3) All of the Rule 144A securities in which a Fund invests will
be corporate debt securities for which transactions are reported in
TRACE.
    (4) Trading in the Shares will be subject to the existing
trading surveillances administered by the Exchange, as well as
cross-market surveillances administered by FINRA, on behalf of the
Exchange, which are designed to detect violations of Exchange rules
and applicable federal securities laws. 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 and federal securities laws applicable to trading on the
Exchange.
    (5) The Exchange or FINRA, on behalf of the Exchange, or both,
will communicate as needed regarding trading in the Shares and
underlying exchange-traded options, futures, exchange-traded equity
securities (including ADRs, EDRs, and GDRs), and other exchange-
traded instruments with other markets and other entities that are
members of the ISG, and the Exchange or FINRA, on behalf of the
Exchange, or both, may obtain trading information regarding trading
in the Shares and underlying exchange-traded options, futures,
exchange-traded equity securities (including ADRs, EDRs, and GDRs),
and other exchange-traded instruments from such markets and other
entities. The Exchange may obtain information regarding trading in
the Shares and underlying exchange-traded options, futures,
exchange-traded equity securities (including ADRs, EDRs, and GDRs),
and other exchange-traded instruments from markets and other
entities that are members of ISG or with which the Exchange has in
place a comprehensive surveillance sharing agreement.
    (6) FINRA, on behalf of the Exchange, is able to access, as
needed, trade information for the Rule 144A securities as well as
certain other fixed income securities held by the Funds reported to
TRACE. In addition, as stated in the Prior Corporate Bond Releases
and the Prior Total Bond Releases, investors have ready access to
information regarding the Funds' holdings, the Portfolio Indicative
Value, the Disclosed Portfolio, and quotation and last-sale
information for the Shares.
    (7) Trading in Shares of a Fund will be halted if the circuit
breaker parameters in NYSE Arca Equities Rule 7.12 have been reached
or because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable, and trading in
the Shares will be subject to NYSE Arca Equities Rule
8.600(d)(2)(D), which sets forth circumstances under which Shares of
a Fund may be halted.
    (8) The Exchange represents that the Manager and the Sub-
Advisers are not broker-dealers but are affiliated with one or more
broker-dealers and have each implemented a fire wall with respect to
such broker-dealers regarding access to information concerning the
composition and/or changes to the portfolios, and will be subject to
procedures designed to prevent the use and dissemination of material
non-public information regarding the portfolios.
    (9) The Exchange will obtain a representation from the issuer of
the Shares that the net asset value (``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.
    (10) The Portfolio Indicative Value with respect to Shares of
each Fund will be widely disseminated by one or more major market
data vendors at least every 15 seconds during the Exchange's Core
Trading Session.
    (11) On each business day, before commencement of trading in
Shares in the Core Trading Session on the Exchange, each Fund will
disclose on the Trust's Web site the Disclosed Portfolio that will
form the basis for a Fund's calculation of NAV at the end of the
business day.
    (12) The Trust's Web site will include a form of the prospectus
for the Funds and additional data relating to NAV and other
applicable quantitative information.

    The Exchange also represents that all statements and
representations made in this filing and the Prior Corporate Bond
Releases and Prior Total Bond Releases regarding (a) the description of
the Funds' respective portfolios, (b) limitations on portfolio holdings
or reference assets, or (c) the applicability of Exchange rules and
surveillance procedures shall constitute continued listing requirements
for listing the Shares of the Funds on the Exchange. In addition, the
Adviser has represented to the Exchange that it will advise the
Exchange of any failure by a Fund to comply with the continued listing
requirements, and, pursuant to its obligations under Section 19(g)(1)
of the Act, the Exchange will monitor for compliance with the continued
listing requirements.\23\ If a Fund is not in compliance with the
applicable listing requirements, the Exchange will commence delisting
procedures under NYSE Arca Equities Rule 5.5(m).
---------------------------------------------------------------------------

    \23\ The Commission notes that certain other proposals for the
listing and trading of Managed Fund Shares include a representation
that the exchange will ``surveil'' for compliance with the continued
listing requirements. See, e.g., Securities Exchange Act Release No.
77499 (Apr. 1, 2016), 81 FR 20428 (Apr. 7, 2016) (Notice of Filing
of Amendment No. 2, and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 2, to List and
Trade Shares of the SPDR DoubleLine Short Duration Total Return
Tactical ETF of the SSgA Active Trust), available at: http://www.sec.gov/rules/sro/bats/2016/34-77499.pdf. In the context of this
representation, it is the Commission's view that ``monitor'' and
``surveil'' both mean ongoing oversight of the Fund's compliance
with the continued listing requirements. Therefore, the Commission
does not view ``monitor'' as a more or less stringent obligation
than ``surveil'' with respect to the continued listing requirements.
---------------------------------------------------------------------------

    This approval order is based on all of the Exchange's
representations, including those set forth above and in the Notice, as
modified by Amendment Nos. 1 and 2 to the proposed rule change. The
Commission notes that the Funds must comply with the requirements of
NYSE Arca Equities Rule 8.600 to be listed and traded on the Exchange
on an initial and continuing basis.
    For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment Nos.1 and 2 thereto, is
consistent with Section 6(b)(5) of the Act \24\ and the rules and
regulations thereunder applicable to a national securities exchange.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Exchange Act,\25\ that the proposed rule change (SR-NYSEArca-2016-70),
as modified by Amendment Nos. 1 and 2 thereto, be, and it hereby is,
approved.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\26\
---------------------------------------------------------------------------

    \26\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-28774 Filed 11-29-16; 8:45 am]
BILLING CODE 8011-01-P


  SEQ CHAPTER \h \r 1 SUPPORTING STATEMENT

NATIONAL EMISSION STANDARDS FOR HAZARDOUS AIR POLLUTANTS (NESHAP) FOR
IRON AND STEEL FOUNDRIES AREA SOURCES

PART A

1.0  Identification of the Information Collection

(a) Title and Number of the Information Collection.

	“NESHAP for Iron and Steel Foundries Area Sources.”  This is a new
information collection request (ICR) and the EPA tracking number is
2267.02.

 (b) Short Characterization.

	This ICR covers information collection requirements in the final area
source NESHAP for iron and steel foundries (40 CFR Part 63, Subpart
ZZZZZ).  Potential respondents are owners or operators of any existing
or new iron or steel foundry that is an area source of hazardous air
pollutants (HAP) emissions.  Research and development facilities are not
covered by the rule.  Foundries covered by the rule would not be
required to obtain a Title V operating permit.

	The final rule establishes different requirements for foundries based
on size.  Small iron and steel foundries are required to comply with
pollution prevention management practices for scrap materials, the
removal of mercury switches, and binder formulations.  Large iron and
steel foundries are required to comply with the same pollution
prevention management practices as small foundries in addition to
emissions limitations for melting furnaces and foundry operations.
Existing foundries with an annual metal melt production greater than
20,000 tons and new foundries with an annual metal melt capacity greater
than 10,000 tons are classified as large foundries.  Existing foundries
with an annual metal melt production of 20,000 tons or less and new
foundries with an annual metal melt capacity of 10,000 tons or less are
classified as small foundries.

For metallic scrap, the pollution prevention management practices
require foundries to operate according to written specifications for the
use of only certain types of materials that do not generate HAP or that
have been depleted (to the extent possible) of organics and HAP metals.
The final  standards for mercury require foundries that melt scrap from
motor vehicles either to purchase (or otherwise obtain) the motor
vehicle scrap only from scrap providers participating in an EPA-approved
program for the removal of mercury switches or to comply with
alternative provisions.  The requirements for binder formulations
require foundries to use on one type of production line chemical
formulations that do not contain methanol as a specific ingredient of
the catalyst formulation.  The management practices also include a
pollution prevention initiative to encourage foundries to investigate
and switch to nonHAP binders and coating materials by requiring records
of the annual quantity and composition of each HAP-containing chemical
binder or coating material used to make molds and cores.  The NESHAP
allows foundries 2 years after promulgation to comply with the
management practices for mercury, 1 year to comply with the opacity
limit for melt shops, and 6 months for other requirements.

Small foundries would submit two types of one-time notifications
required by the NESHAP general provisions and keep records of specific
information to demonstrate compliance with the rule requirements.  The
final rule also requires small foundries to calculate for each calendar
month their 12-month rolling average production rate to ensure that the
facility continues to meet the size criteria that defines a small iron
and steel foundry.  Records of the monthly production rate and monthly
rolling average calculations are required.  A small foundry must report
any deviation from these requirements within 30 days.

	Large area source foundries are required to comply with the pollution
prevention management practices in addition to emissions standards for
metal melting furnaces and foundry operations.  The owner or operator
may elect to comply with emissions limits for particulate matter (PM) or
total metal HAP.  The final rule contains provisions for demonstrating
compliance with the limits using emissions averaging.  The owner or
operator of an existing affected source is required to conduct initial
and periodic visual inspections of PM control devices (baghouses, wet
scrubbers, electrostatic precipitators).  Foundries using a baghouse to
comply with the PM emission limit may choose to install and operate a
bag leak detection system instead of conducting the initial and periodic
inspections.  Bag leak detection systems are required at new foundries.
New source foundries must use a  continuous parameter monitoring system
(CPMS) to measure and record pressure drop and scrubber water flow rate
for a wet scrubber and/or a CPMS to measure and record the hourly
average voltage and secondary current (or total power input) to an
electrostatic precipitator.  Monthly inspections of capture systems are
also be required.  An operation and maintenance plan for control devices
also is required.  Foundries also must conduct an opacity test at least
every 6 months to demonstrate compliance with an opacity limit for
fugitive emissions from buildings or structures housing foundry
operations.  Alternatively, foundries may conduct semiannual visible
emissions observations by Method 22.  The Method 22 test is considered
successful if no visible emissions are observed for 90 percent of a
1-hour test.  A Method 9 opacity test is required if the Method 22 test
is not successful.

	Large foundries will demonstrate initial compliance with emissions
limits through performance tests.  The owner or operator of an existing
area source may certify initial compliance based on the results of a
previous performance test that meets the rule requirements.  Subsequent
performance tests for furnaces are to be performed every 5 years.
Provisions also are included for demonstrating compliance through
emissions averaging.  A facility that uses emissions averaging must
conduct monthly compliance determinations by calculating the weighted
average emissions for furnaces in the emissions averaging group.
Consistent with the NESHAP General Provisions, large foundries are
required to submit one-time notifications; comply with requirements for
startup, shutdown, and malfunction (SSM) plans and reports;  submit
semiannual excess emissions and monitoring system performance reports;
and maintain records of specific information to ensure that the rule
requirements are being achieved and maintained.  The information
requirements for foundries are listed in Attachment 1.

2.  Need For and Use of the Collection

(a)	Need/Authority for the Collection.

	Section 112 of the Clean Air Act (CAA) requires EPA to establish NESHAP
for both major and area sources of HAP that are listed for regulation
under CAA section 112(c).  An area source is a stationary source that is
not a major source (i.e., an area source does not emit and does not have
the potential to emit more than 10 tons per year of any single HAP or
more than 25 tons per year of any combination of HAP).  Requirements for
area sources in CAA sections 112(c)(3) and 112(k) direct EPA to (1)
identify at least 30 air toxics that present the greatest potential
health threat in the largest number of urban areas and (2) to identify
sufficient area source categories to ensure that sources representing 90
percent or more of the of the emissions of the 30 “listed” HAP are
subject to regulation.  EPA implements these requirements through the
Integrated Urban Air Toxics Strategy (64 FR 38715, July 19, 1999).  Both
iron foundries and steel foundries were added to the Integrated Urban
Air Toxics Strategy Area Source Category List in 2002 (67 FR 43113)
based on emissions of HAP metals (chromium, lead, manganese, and
nickel).  We are issuing this standard in response to a court-ordered
deadline that requires EPA to issue standards for 10 source categories
listed pursuant to section 112(c)(3) and (k) by December 15, 2007
(Sierra Club v. U.S. Environmental Protection Agency, no. 01-1537,
D.D.C).

Under  CAA section 112(d)(5), we may elect to promulgate HAP standards
for area sources based on the use of generally available control
technology (GACT) or management practices used by the sources.  We can
consider costs and economic impacts in determining GACT, which is
particularly important when developing regulations for source categories
that may have few establishments and many small businesses, or when
determining whether additional control is needed for sources that are
already well-controlled as a result of other air emissions standards.
Facilities in these two source categories are either minimally
controlled as a result of State and local requirements for PM or
uncontrolled, and many of the 427 area source facilities are small
entities.  We have developed the final NESHAP based on GACT.

	Foundries also emit small quantities of mercury, dioxins, and HAP
organics from furnaces that melt scrap that contain tramp materials such
as mercury-containing switches and chlorinated plastics.  Organic HAP
emissions also result from the use of binder and coating formulations.
As required by the Pollution Prevention Act of 1990, we reviewed the
rule prior to proposal to identify opportunities to apply pollution
prevention measures which “reduce the volume of, or eliminate
emissions of, such emissions through process changes, substitution of
materials, or other modifications.”  As a result, we are establishing
pollution prevention management practices for the control of HAP
(organics, metals, and mercury) in the charge materials used by
foundries.  We are also requiring the use of non-methanol binder
formulations in certain applications and a recordkeeping requirement for
information on the quantity and composition of each HAP-containing
binder or coating material used to make molds and cores.

	Certain records and reports are necessary for the Administrator to
confirm the compliance status of area sources, identify any new or
reconstructed sources subject to the standards, and confirm that the
standards are being achieved on a continuous basis.  These recordkeeping
and reporting requirements are specifically authorized by section 114 of
the Clean Air Act (42 U.S.C. 7414) and set out in the part 63 NESHAP
General Provisions.  Under part 63, the owner or operator must keep each
record for 5 years following the date of each occurrence, measurement,
maintenance, corrective action, report, or record.

 (b)	Use/Users of the Data.

	The information will be used by the delegated authority (State agency
or Regional Administrator if there is no delegated State agency) to
ensure that the emissions limits and other requirements are being
achieved.  Based on review of the recorded information at the site and
the reported information, the delegated permitting authority can
identify facilities that may not be in compliance and decide which
plants, records, or processes may need inspection.

3.	Nonduplication, Consultations, and Other Collection Criteria

(a)	Nonduplication.

A computer search of EPA's ongoing ICR's revealed no duplication of
information-gathering efforts.  The information collection requirements
in 40 CFR part 63, Subpart EEEEE apply only to iron and steel foundries
that are major sources of HAP.

 (b)  Public Notice Required Prior to ICR Submission to OMB.

	This section is not applicable because this is a rule-related ICR.

(c)	Consultations.

The final rules were developed in consultation with individual plants
and trade associations.  The non-EPA persons consulted on the
information collection activities are identified in Table 1.

TABLE 1.  PERSONS CONSULTED ON THE INFORMATION COLLECTION ACTIVITIES

Contact	Organization	Telephone Number

Amy Blankenbiller	American Foundry Society<PHONE_NUMBER>

Raymond Monroe	Steel Founders’ Society of America<PHONE_NUMBER>

(d)	Effects of Less Frequent Collection.

	If the relevant information were collected less frequently, the
delegated authority (State or EPA) would not be reasonably assured that
a plant is in compliance with the standards.

(e)	General Guidelines.

	None of the guidelines in 5 CFR 1320.6 are being exceeded.

(f)	Confidentiality.

	All information submitted to the Agency for which a claim of
confidentiality is made will be safeguarded according to the Agency
policies set forth in Title 40, Chapter 1, Part 2, Subpart B --
Confidentiality of Business Information (see 40 CFR 2; 41 FR 36902,
September 1, 1976; amended by 43 FR 39999, September 28, 1978; 43 FR
42251, September 28, 1978; 44 FR 17674, March 23, 1979).

(g)  Sensitive Questions.

	This section is not applicable because this ICR does not involve
matters of a sensitive nature.

4.	The Respondents and the Information Requested

(a)	Respondents/NAICS Codes.

	Potential respondents under Subpart ZZZZZ are owners or operators of
any existing or new iron foundry or steel foundry that is an area source
of HAP emissions.  The North American Industry Classification System
(NAICS) codes for iron and steel foundries are 331511, 331512, and
331513.  We estimate that a total of 427 area source foundries will be
subject to the NESHAP; no new area sources are projected during the 3
year period of this ICR.

 (b) Information Requested.

	(i)  Data Items, Including Recordkeeping Requirements.  Attachment 1,
Source Data and Information Requirements, summarizes the data items,
including recordkeeping and reporting requirements.

	(ii)  Respondent Activities.  The respondent activities required by the
final rule are identified in Tables 2A (for small foundries) and 2B (for
large foundries) and are introduced in section 6(a).

5.	The Information Collected–Agency Activities, Collection
Methodology, and Information Management

(a)	Agency Activities.

	The Agency activities are provided in Table 3 and are introduced in
section 6(c).

(b)	Collection Methodology and Management.

	Data and records maintained by the respondents are tabulated and
published for use in compliance and enforcement programs of the
delegated authority.  The monitoring reports submitted to the delegated
authority are used for problem identification, as a check on source
operation and maintenance, and for compliance determinations.  EPA is
the delegated authority until the State agency is delegated authority to
implement the final rule.  Therefore, information contained in the
reports submitted to the Regional Administrator will be entered into the
Air Facility System (AFS), which is operated and maintained by EPA's
Office of Compliance.  AFS is EPA’s database for the collection,
maintenance, and retrieval of compliance data for approximately 125,000
industrial and government-owned facilities.  EPA uses the AFS for
tracking air pollution compliance and enforcement by local and state
regulatory agencies, EPA regional offices and EPA headquarters.  EPA and
its delegated authorities can edit, store, retrieve and analyze the
data.

(c)  Small Entity Flexibility.

	A small entity for this industry is defined by the Small Business
Administration as a firm having no more than 500 employees.  A total of
319 of the 427 iron and steel foundries are small entities.
Approximately 45 percent (37 of 83) of the large iron and steel
foundries (annual metal melt production greater than 20,000 tons) are
owned by small entities while 85 percent (292 of 344) of the small iron
and steel iron and steel foundries are owned by small entities.  The
final  rule includes a specific compliance option for small foundries
that provides a maximum degree of operational flexibility, and the ICR
requirements are the minimum necessary to demonstrate compliance.  Since
proposal, we have further reduced the impacts on small entities by
increasing the threshold definition for a small foundry from an annual
melt production of 10,000 tons to 20,000 tons.  Our analyses show that
the final NESHAP will not result in a significant economic impact on a
substantial number of small entities.  No small entities are expected to
incur an economic impact that is greater than 3 percent of its revenue.
The number of foundries that may incur an economic impact greater than 1
percent of their revenues ranges from an average of 9 to a maximum (at
the 98th percentile) of 13.

 (d)  Collection Schedule.

	The specific frequency for each information collection activity within
this request is shown in Tables 2A and 2B.

6.   Estimating the Burden and Cost of the Collection

(a)  Estimating Respondent Burden.

	The annual burden estimates for the final NESHAP are shown in Tables 2A
and 2B.  These numbers were derived from estimates based on EPA’s
experience with other standards.  No burden estimates are provided for
new area sources because no new facilities are expected during the
3-year period of this ICR.  These estimates represent the maximum burden
that would be imposed by the final rule based on a size threshold of
20,000 tons per year of metal melted.

(b)  Estimating Respondent Costs.

	The information collection activities for the final NESHAP are
presented in Tables 2A and 2B.

(i)  Estimating Labor Costs.  Labor rates and associated costs are based
on Bureau of Labor Statistics (BLS) data.  Technical, management, and
clerical average hourly rates for private industry workers in the
foundry industry (NAICS 331500) were taken from the United States
Department of Labor, Bureau of Labor Statistics, May 2006 available at
http://www.bls.gov.  Wages for occupational groups are used as the basis
for the labor rates with a total compensation of $34.33/hour for
technical, $46.66/hour for managerial, and $15.79/hour for clerical.
These rates represent salaries plus fringe benefits and do not include
the cost of overhead.  An overhead rate of 110 percent is used to
account for these costs.  The fully-burdened hourly wage rates used to
represent respondent labor costs are:  technical at $72.09, management
at $97.99, and clerical at $33.16.

	(ii)  Estimating Capital and Operations and Maintenance (O&M) Costs.
As shown in Table 2B, the estimate of capital costs for large foundries
is $59,620 with no O&M costs.  This cost does not include the cost of
any monitoring equipment because the final rule requires visual
inspections instead of automated monitoring equipment at existing
affected sources. This cost does include the cost of a file cabinet for
data storage.

	(iii) Capital/Startup vs. O&M Costs.  The estimate of capital/startup
costs versus O&M costs is shown in Table 2B.  No O&M costs would occur
over the 3-year period of this ICR.

	(iv) Annualizing Capital Costs.  Table 2B shows an estimate of the
annualized cost of capital to be $8,490 per year.

 (c)  Estimating Agency Burden and Cost.

	Because the information collection requirements were developed as an
incidental part of standards development, no costs can be attributed to
the development of the information collection requirements.  Because
reporting and recordkeeping requirements on the part of the respondents
are required under the part 63 NESHAP General Provisions, no operational
costs would be incurred by the Federal Government.  Publication and
distribution of the information are part of the Compliance Data System,
with the result that no Federal costs can be directly attributed to the
ICR.  Examination of records to be maintained by the respondents will
occur incidentally as part of the periodic inspection of sources that is
part of EPA's overall compliance and enforcement program, and,
therefore, is not attributable to the ICR.  The only costs that the
Federal government will incur are user costs associated with the
analysis of the reported information, as presented in Table 3.

	The Agency labor rates are from the Office of Personnel Management
(OPM) 2007 General Schedule which excludes locality rates of pay.  These
rates can be obtained from Salary Table 2007-GS available on the OPM
website,   HYPERLINK "http://www.opm.gov/oca/06tables/html/gs_h.asp"
http://www.opm.gov/oca/06tables/html/gs_h.asp . The government employee
labor rates are $14.60/hour for clerical (GS-6, Step 3), $26.98 for
technical (GS-12, Step 1), and $36.36/hr for management (GS-13, Step 5).
 These rates were increased by 60 percent to include fringe benefits and
overhead.  The fully-burdened wage rates used to represent Agency labor
costs are:  clerical at $ $22.66; technical at $47.97, and management at
$58.18.

(d) 	Estimating the Respondent Universe and Total Burden and Costs.

There are 427 existing iron and steel foundries.  No new sources are
expected during the next 3 years.  Consequently, the average number of
respondents during the 3 year period of this ICR is 142.33.  A total of
344 of the 427 facilities are foundries with a metal melting rate of
20,000 tpy or less and 83 have metal melting rates greater than 20,000
tpy.  Consequently, the average number of small foundries during the
3-year period of this ICR is 114.67 and the average number of large
foundries is 27.67.

The only components of the total annual responses for small foundries
attributable to this ICR are two one-time initial notifications for each
facility.  Large foundries are required to submit two one-time initial
notifications; prepare an operation and maintenance plan and a startup,
shutdown, and malfunction plan, and submit semiannual compliance
reports.  The number of total annual responses for Subpart ZZZZZ is
estimated as:  (114.67 annual average respondents × 1 notification) +
(114.67 annual average respondents × 1 notification) + (27.67 annual
average respondents x 1 deviations report) + (27.67 annual average
respondents × 2 written plans) + (27.67 annual average respondents x 2
semiannual reports).   Therefore, the number of total annual responses
for Subpart ZZZZZ is 367.7.

(e)	Bottom Line Burden Hours and Cost Tables.

	(i)  Respondent tally.  The bottom line respondent burden hours and
costs, presented in Table 2 are calculated by adding person-hours per
year down each column for technical, managerial, and clerical staff, and
by adding down the cost column.

The average annual burden for the monitoring, recordkeeping, and
reporting requirements in Subpart ZZZZZ for small foundries is 3,555
person hours with an annual average cost of $248,288 with no capital and
O&M costs.  The average annual burden for the monitoring, recordkeeping,
and reporting requirements in Subpart ZZZZZ for large foundries is 2,469
person hours with an annual average cost of $172,430; the annualized
capital cost is $8,490 with no operation and maintenance costs.  The
average annual burden for the monitoring, recordkeeping, and reporting
requirements in Subpart ZZZZZ for all iron and steel foundry area
sources is 6,064 person hours with an annual average cost of $420,718
with annualized capital costs of $8,490 and no O&M costs.

	(ii)  The Agency tally.  The total annual Federal Government cost is
$32,675 for 657.2 total annual hours.  The bottom line Agency burden
hours and costs presented in Tables 3 are calculated by adding
person-hours per year down each column for technical, managerial, and
clerical staff, and by adding down the cost column.

	(iii)  Variations in the annual bottom line.   This section does not
apply since no significant variation is anticipated.

(f)	Reasons for Change in Burden.

	This section does not apply because this is a new ICR.

 (g)  Burden Statement

	The average annual respondent burden for the final NESHAP for iron and
steel foundry area sources is estimated at 14 hours.   Burden means the
total time, effort, or financial resources expended by persons to
generate, maintain, retain, or disclose or provide information to or for
a Federal agency.  This includes the time needed to review instructions;
develop, acquire, install, and utilize technology and systems for the
purposes of collecting, validating, and verifying information,
processing and maintaining information, and disclosing and providing
information; adjust the existing ways to comply with any previously
applicable instructions and requirements; train personnel to be able to
respond to a collection of information; search data sources; complete
and review the collection of information; and transmit or otherwise
disclose the information.

	An agency may not conduct or sponsor, and a person is not required to
respond to a collection of information unless it displays a currently
valid OMB control number.  The OMB control numbers for EPA's regulations
in 40 CFR part 63 are listed in 40 CFR part 9.

PART B

	This section is not applicable because statistical methods are not used
in data collection associated with the final rules.TABLE 2A.  ANNUAL
RESPONDENT BURDEN AND COSTS FOR SMALL FOUNDRIES

Burden item	(A) Person-hours per occurrence	(B)  No. of occurrences per
respondent	(C) Person-hours per respondent (C=A*B)	(D) Respondents per
yeara	(E) Technical person-hours per year (E=C*D)	(F) Management
person-hours per year

 (E*0.05)	(G) Clerical person-hours per year (E*0.1)	(H) Costb, $

1.  Applications	N/A

2.  Surveys and Studies	N/A

3.  Acquisition, Installation, and Utilization of Technology and Systems
N/A

4.  Reporting Requirements

A.  Read instructions	4	1	4	114.67	458.68	22.934	45.868	 $36,836

B.  Required activities

     Scrap specifications	4	1	4	114.67	458.68	22.934	45.868	 $36,836

Monthly rolling average calculation	0.25	12	3	114.67	344.01	17.2005
34.401	 $27,627

     No methanol binder formulationc 	0	0	0	0	0	0	0	 $-

C.  Create information	See 4B

D.  Gather existing information	See 4B

E.  Write report	See 4B

     Initial notification of applicability	2	1	2	101	202	10.1	20.2
$16,222

     Notification of compliance status	4	1	4	114.67	458.68	22.934	45.868
 $36,836

Deviations report	1	1	1	57.34	57.34	2.867	5.734	 $4,605

     Notification of construction/reconstruction	N/A

     Notification of anticipated startup	N/A

     Notification of actual startup	N/A

     Notification of special compliance requirements	N/A

     Request for compliance extension	N/A

     Notification of performance test	N/A

     Site specific test plan	N/A

     Notification of performance evaluation	N/A

     Quality assurance plan for CEMS/COMS	N/A

     NESHAP waiver request	N/A

     Startup, shutdown, and malfunction plan/reports	N/A

     Semiannual excess emissions reports	N/A

5.  Recordkeeping Requirements

A.  Read instructions	See 4A

B.  Plan activities	See 4A

C.  Implement activities	See 4A

D   Develop record system 	2	1	2	114.67	229.34	11.467	22.934	 $18,418

E.  Time to enter information d	0.1	52	5.2	114.67	596.284	29.8142
59.6284	 $47,886

F.  Time to transmit or disclose information	0.25	2	0.5	114.67	57.335
2.86675	5.7335	 $4,604

G.  Time to adjust existing ways	2	1	2	114.67	229.34	11.467	22.934
$18,418

F.  Time to train personnele	NA

G.  Time for audits	N/A

TOTAL LABOR BURDEN AND COST

	 3,555 	 $248,288

     Annualized cost of capital

$0

     Operation and maintenance (O&M)

$0

     Total (capital recovery plus O&M)

$0

N/A = not applicable.

a There are 427 existing iron and steel foundries that area sources.  No
new sources are projected during the 3-year term of this ICR.
Therefore, the average number of total respondents per year is 142.33.
A total of 344 of the 427 facilities are small foundries and 83 are
large foundries.  Consequently, the average number of small foundries
during the 3-year period of this ICR is 114.67 and the average number of
large foundries is 27.67.   No new sources are expected during the next
3 years.  For the purposed of deviation reports, 1 report per year is
estimated for one-half (50.5) of the 114.67 respondents per year.

b  This ICR uses the following labor rates: The fully-burdened hourly
wage rates used to represent respondent labor costs are:  technical at
$72.09, management at $97.99, and clerical at $33.16.  Technical,
management, and clerical average hourly rates for private industry
workers in the foundry industry (NAICS 331500) were taken from the
United States Department of Labor, Bureau of Labor Statistics, May 2006
available at http://www.bls.gov. The rates have been increased by 110%
to account for the benefit packages available to those employed by
private industry.

c No burden would be incurred for this requirement because all small
area source foundries are already meeting the no methanol requirement.

d  Small foundries must record information to demonstrate compliance
with pollution prevention management practices for metallic scrap and
binder formulations.

TABLE 2B.  ANNUAL RESPONDENT BURDEN AND COSTS FOR LARGE FOUNDRIES

Burden item	(A) Person-hours per occurrence	(B)  No. of occurrences per
respondent	(C) Person-hours per respondent (C=A*B)	(D) Respondents per
yeara	(E) Technical person-hours per year (E=C*D)	(F) Management
person-hours per year (E*0.05)	(G) Clerical person-hours per year
(E*0.1)	(H) Costb, $

1.  Applications	N/A

	2.  Surveys and Studies	N/A

	3.  Acquisition, Installation, and Utilization of Technology and
Systems 	N/A

	4.  Reporting Requirements

	A.  Read instructions	8	1	8	27.67	221.4	11.1	22.1	$17,777

B.  Required activities

     Scrap material specifications	4	1	4	27.67	110.7	5.5	11.1	$8,889

     Prepare operation & maintenance plan	8	1	8	27.67	221.4	11.1	22.1
$17,777

     No methanol binder formulationc 	4	1	4	0.67	2.68	0.134	0.268	$215

Initial/subsequent performance testsd	0	0	0	0	0.0	0.0	0.0	$0

Initial and periodic inspections of PM control devices, monthly
inspection of capture systemsd	0	0	0	0	0.0	0.0	0.0	$0

 Monthly emissions averaging calculationsd	0	0	0	0	0.0	0.0	0.0	$0

C.  Create information	See 4B

	D.  Gather existing information	See 4B

	E.  Write report	See 4B

	     Initial notification of applicability	4	1	4	27.67	110.7	5.5	11.1
$8,889

     Notification of compliance status	8	1	8	27.67	221.4	11.1	22.1
$17,777

     Notification of construction/reconstruction	N/A

	     Notification of anticipated startup	N/A

	     Notification of actual startup	N/A

	     Notification of special compliance requirements	N/A

	     Request for compliance extension	N/A

	     Notification of performance testd	1	1	1	27.67	27.7	1.4	2.8	$2,222

     Site specific test pland	0	0	0	0	0.0	0.0	0.0	$0

     Notification of performance evaluation	N/A

	     Quality assurance plan for CEMS/COMS	N/A

	     NESHAP waiver request	N/A

	     Startup, shutdown, and malfunction plan/reports	4	1	4	27.67	110.7
5.5	11.1	$8,889

     Semiannual excess emissions reportsd	2	2	4	27.67	110.7	5.5	11.1
$8,889

5.  Recordkeeping Requirements

	A.  Read instructions	See 4A

	B.  Plan activities	See 4A

	C.  Implement activities	See 4A

	D   Develop record system 	4	1	4	27.67	110.7	5.5	11.1	$8,889

E.  Time to enter information e	0.5	52	26	27.67	719.4	36.0	71.9	$57,775

F.  Time to transmit or disclose information	0.25	2	1	27.67	13.8	0.7	1.4
$1,111

G.  Time to adjust existing ways	2	1	2	27.67	55.3	2.8	5.5	$4,444

F.  Time to train personnelf	4	1	4	27.67	110.7	5.5	11.1	$8,889

G.  Time for audits	N/A

	TOTAL LABOR BURDEN AND COST

	  2,469 	$172,430

     Annualized cost of capitalg

	$8,490

     Operation and maintenance (O&M) h

$0

     Total (capital recovery plus O&M) g

$8,490

N/A = not applicable.

a There are 427 existing iron and steel foundries that area sources.  No
new sources are projected during the 3-year term of this ICR.
Therefore, the average number of respondents per year is 142.33.  A
total of 344 of the 427 facilities are small foundries and 83 are large
foundries.  Consequently, the average number of small foundries during
the 3-year period of this ICR is 114.67 and the average number of large
foundries is 27.67

 b  This ICR uses the following labor rates: The fully-burdened hourly
wage rates used to represent respondent labor costs are:  technical at
$72.09, management at $97.99, and clerical at $33.16.  Technical,
management, and clerical average hourly rates for private industry
workers in the foundry industry (NAICS 331500) were taken from the
United States Department of Labor, Bureau of Labor Statistics, May 2006
available at http://www.bls.gov. The rates have been increased by 110%
to account for the benefit packages available to those employed by
private industry.

c Two large area source foundries (2 foundries over 3 years = 0.67
foundries per year) are expected to have to change formulations to meet
the no methanol requirement.

d  These activities are not expected to occur during the first 3 years
of this ICR.

e   Large foundries must record information to demonstrate compliance
with pollution prevention management practices for metallic scrap and
binder formulations and information to demonstrate compliance with
monitoring; inspection; operation and maintenance; startups, shutdowns,
and malfunctions; and other requirements of the General Provisions (40
CFR part 63, subpart A).

f   Large foundries are expected to monitor visible emissions using a
trained employee.

g  Based on capital cost of $59,620 for file storage cabinets,  7
percent interest, and 20-year equipment life (capital recovery factor =
0.142).  No costs for monitoring equipment are estimated because no
monitoring equipment is required for existing foundries.

TABLE 3.  ANNUAL BURDEN AND COST TO THE AGENCY

Burden Item	(A) Person hours per occurrence	(B) Occurrences per
respondent	(C) Plants per year a	(D) Technical hours/year (D=A*B*C)	(E)
Management   hours/year (E=0.05*D)	(F) Clerical-hours/year (F=0.1*D)
(G) Costb, $

Report Review:

	  Initial notification of applicability 	1	1	142.33	142.3	7.1	14.2
$7,564

Deviation reports	1	1	50.1	50.1	2.5	5.0	$2,662

  Startup, shutdown, malfunction plan/report	2	1	142.33	142.3	7.1	14.2
$7,564

  Notification of compliance status	2	1	142.33	142.3	7.1	14.2	$7,564

  Semiannual excess emissions report	2	1	142.33	142.3	7.1	14.2	$7,564

TOTAL BURDEN AND COST

	712.3	$32,917

 a There are 427 existing iron and steel foundries that are area
sources.  No new sources are projected during the 3-year term of this
ICR.  Therefore, the average number of respondents per year is 142.33.
No travel is expected.

b  This ICR uses the following average hourly labor rates: 58.18 for
managerial (GS-13, Step 5, $36.36 x 1.6), $43.14 (GS-12, Step 1, $29.98
x 1.6) for technical and $22.66 (GS-6, Step 3, $14.16 x 1.6) for
clerical.  These rates are from the Office of Personnel Management (OPM)
(2007 General Schedule( which excludes locality rates of pay.

ATTACHMENT 1.  INFORMATION REQUIREMENTS

 Requirement for new and existing sources 	Citation for small
foundries	Citation for large foundries	Citation for NESHAP general
provisions

Initial and periodic inspections for baghouses, wet scrubber, and
electrostatic precipitator at existing source;  	NA	§63.10897(a)	NA

CPMS for wet scrubber at new source	NA	§63.10897(b)	NA

CPMS for electrostatic precipitator at new source	NA	§63.10897(c)	NA

BLDS or inspections for baghouse at existing source; BLDS for baghouse
at new source.	NA	§63.10897(d)	NA

Monthly capture system inspections	NA	§63.10897(e)	NA

Semiannual opacity tests	NA	§63.10898(i)	NA

CMS performance evaluation	NA	NA

	Metal melting furnaces and fugitive emissions 	NA	§63.10898	40 CFR
63.7

CMS performance evaluation	NA	NA	40 CFR 63.8(e)(3)

Notification of applicability	§63.10890(b)	§63.10900(a), Table 3	40
CFR 63.9(b)(2)

Notification of construction/ reconstruction 1	§63.10890(f)
§63.10900(a), Table 3	40 CFR 63.9(b)(5)

Notification of special compliance requirements  1	§63.10890(f)
§63.10900(a), Table 3	40 CFR 63.9(d)

Notification of performance test	NA	§63.10900(a), Table 3	40 CFR
63.9(c)

Notification of opacity/VE observations	NA	§63.10900(a), Table 3	40 CFR
63.9(f)

Additional CMS notifications	NA	NA	40 CFR 63.9(g)

Notification of compliance status	§63.10890(c)	§63.10900(a), Table 3
40 CFR 63.9(h)(1)

Notification of changes in information  1	§63.10890(f)	§63.10900(a),
Table 3	40 CFR 63.9(j)

Scrap management material specifications 	§63.10885(b),(c)

NA

Operation and maintenance plan	NA	§63.10896(a)	NA

Startup, shutdown, and malfunction plan	NA	§63.10900(a), Table 3	40 CFR
63.6(e)(3)

Performance test plan	NA	§63.10900(a), Table 3	40 CFR 63.7(c)(2)

CMS quality control plan	NA	§63.10900(a), Table 3	40 CFR 63.8(d)

CMS performance evaluation test plan	NA	NA	40 CFR 63.8(e)(3)

Information to support notifications	§63.10890(e)(1)	§63.10900(a),
Table 3	40 CFR 63.10(b)(2)

Material specifications	§63.10890(e)(2)	§63.10899(b)(1)	NA

Mercury	§63.10890(e)(3)-(4)	§63.10899(b)(2)-(3)	NA

Nonmethanol binder chemical formulations	§63.10890(e)(5)
§63.10899(b)(4)	NA

Annual quantity and composition of each HAP-containing chemical binder
or coating material 	§63.10890(e)(6)	§63.10899(b)(5)	NA

Metal melt production	§63.10890(e)(7)	§63.10899(b)(6)

	Operation and maintenance plan	NA	§63.10899(b)(7)	NA

If applicable, emissions averaging plan	NA	§63.10899(b)(8)	NA

Bag leak detection system (new sources)	NA	§63.10899(b)(9)	NA

Capture system inspections	NA	§63.10899(b)(10)	NA

CPMS specifications	NA	§63.10899(b)(11)	NA

Corrective action	NA	§63.10899(b)(12)	NA

PM control device log of inspections/maintenance	NA	§63.10899(b)(13)	NA

Semiannual excess emissions/deviation reports	§63.10890(f)
§63.10899(c), Table 3	40 CFR 63.10(e)(3)

Initial performance test report	NA	§63.10900(a), Table 3	40 CFR
63.7(e)(1)

CMS performance evaluation report	NA	NA	40 CFR 63.8(e)(5)

SSM reports	NA	§63.10900(a), Table 3	40 CFR 63.6(e)(3)

1 Requirement is not expected to occur during the 3-year term of this
ICR

 PAGE

 PAGE  4

  PAGE  12

  PAGE   19


[Federal Register Volume 78, Number 53 (Tuesday, March 19, 2013)]
[Proposed Rules]
[Pages 16824-16825]
[FR Doc No: 2013-06288]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Chapter I

[Docket No. FDA-2013-N-0227]

Tobacco Product Manufacturing Practice; Establishment of a Public
Docket

AGENCY: Food and Drug Administration, HHS.

ACTION: Establishment of a public docket; request for comments.

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

SUMMARY: The Food and Drug Administration (FDA) is establishing a
public docket to obtain input on recommendations for regulations on
good manufacturing practice for tobacco products that were submitted to
FDA by a group of 13 tobacco companies (tobacco companies'
recommendations). FDA is establishing this docket to provide an
opportunity for all interested parties to comment on the tobacco
companies' recommendations and to share information that will improve
FDA's understanding of the tobacco industry and its manufacturing
operations.

DATES: Submit electronic or written comments on the tobacco companies'
recommendations by May 20, 2013.

ADDRESSES: Submit electronic comments to http://www.regulations.gov.
Submit written comments to the Division of Dockets Management (HFA-
305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061,
Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Andrea Bautista, Center for Tobacco
Products, Food and Drug Administration, 9200 Corporate Blvd.,
Rockville, MD 20850,<PHONE_NUMBER>, email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

    On June 22, 2009, the Family Smoking Prevention and Tobacco Control
Act (Pub. L. 111-31; 123 Stat. 1776) was signed into law, amending the
Federal Food, Drug, and Cosmetic Act (the FD&C Act) and giving FDA
authority to regulate tobacco product manufacturing, distribution, and
marketing. The new provisions include, among other things, the
authority to issue regulations related to tobacco product manufacturing
practice in order to protect the public health and to assure that
tobacco products are in compliance with the FD&C Act. Specifically,
section 906(e) of the FD&C

Act (21 U.S.C. 387f(e)) provides that ``in applying manufacturing
restrictions to tobacco, the Secretary shall * * * prescribe
regulations (which may differ based on the type of tobacco product
involved) requiring that the methods used in, and the facilities and
controls used for, the manufacture, preproduction design validation
(including a process to assess the performance of a tobacco product),
packing, and storage of a tobacco product conform to current good
manufacturing practice, or hazard analysis and critical control point
methodology.''
    On January 10, 2012, a group of 13 tobacco companies submitted to
FDA: (1) Recommendations for good manufacturing practice regulations,
(2) a preamble to the recommended regulations, and (3) a cover letter
with a meeting request (Ref. 1). The preamble, as noted in the cover
letter, provides the participating tobacco companies' common
perspective and interpretation of the recommended regulations. On May
2, 2012, representatives of the tobacco companies met with FDA to
present an overview of their recommendations and their approach to
developing them.
    FDA is establishing a docket to provide an opportunity for all
interested parties to comment on the tobacco companies' recommendations
and to share information that will improve FDA's understanding of the
tobacco industry and its manufacturing operations.

II. Comments

    Interested persons may submit either electronic comments regarding
the tobacco companies' recommendations to http://www.regulations.gov or
written comments to the Division of Dockets Management (see ADDRESSES).
It is only necessary to send one set of comments. Identify comments
with the docket number found in brackets in the heading of this
document. Received comments may be seen in the Division of Dockets
Management between 9 a.m. and 4 p.m., Monday through Friday, and will
be posted to the docket at http://www.regulations.gov.

III. Reference

    The following reference has been placed on display in the Division
of Dockets Management (see ADDRESSES) and may be seen by interested
persons between 9 a.m. and 4 p.m., Monday through Friday, and is
available electronically at http://www.regulations.gov.
    1. Recommendations for Tobacco Product Good Manufacturing Practices
Regulation and Request for Meeting, submitted to FDA, January 10, 2012.

    Dated: March 12, 2013.
Leslie Kux,
Assistant Commissioner for Policy.
[FR Doc. 2013-06288 Filed 3-15-13; 11:15 am]
BILLING CODE 4160-01-P