[Federal Register Volume 77, Number 16 (Wednesday, January 25, 2012)]
[Rules and Regulations]
[Pages 3611-3617]
[FR Doc No: 2012-1360]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2011-0455-201131(a); FRL-9621-8]

Approval and Promulgation of Implementation Plans; North
Carolina: Approval of Section 110(a)(1) Maintenance Plan for the
Greensboro-Winston-Salem-High Point 1-Hour Ozone Maintenance Area to
Maintain the 1997 8-Hour Ozone Standards

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is taking direct final action to approve a revision to the
North Carolina State Implementation Plan (SIP), submitted to EPA on
April 13, 2011, with supplemental information submitted on May 18,
2011, by the State of North Carolina, through the North Carolina
Department of Environment and Natural Resources (NCDENR), through the
Department of Air Quality. The revisions propose to modify North
Carolina's SIP to address the required maintenance plan for the 1997 8-
hour ozone national ambient air quality standards (NAAQS) for the
Greensboro-Winston-Salem-High Point, North Carolina 1-hour ozone
maintenance area, hereafter referred to as ``the Triad Area.'' The
Triad Area is comprised of Davidson, Forsyth, and Guilford and a
portion of Davie County. This maintenance plan was submitted to ensure
the continued attainment of the 1997 8-hour ozone NAAQS through the
year 2018 in the Triad Area. EPA is approving these SIP revisions
pursuant to section 110 of the Clean Air Act (CAA or Act). The
submitted maintenance plan meets all of the statutory and regulatory
requirements, and is consistent with EPA's guidance.

DATES: This rule is effective on March 26, 2012 without further notice,
unless EPA receives relevant adverse comment by February 24, 2012. If
EPA receives such comment, EPA will publish a timely withdrawal in the
Federal Register informing the public that this rule will not take
effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2011-0455 by one of the following methods:
    1. www.regulations.gov: Follow the on-line instructions for
submitting comments.
    2. Email<EMAIL_ADDRESS>    3. Fax:<PHONE_NUMBER>.
    4. Mail: EPA-R04-OAR-2011-0455, Regulatory Development Section, Air
Planning Branch, Air, Pesticides and Toxics Management Division, U.S.
Environmental Protection Agency, Region 4, 61 Forsyth Street SW.,
Atlanta, Georgia 30303-8960.
    5. Hand Delivery or Courier: Lynorae Benjamin, Regulatory
Development Section, Air Planning Branch, Air, Pesticides and Toxics
Management Division, U.S. Environmental Protection Agency, Region 4, 61
Forsyth Street SW., Atlanta, Georgia 30303-8960. Such deliveries are
only accepted during the Regional Office's normal hours of operation.
The Regional Office's official hours of business are Monday through
Friday, 8:30 to 4:30, excluding Federal holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R04-OAR-
2011-0455. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
www.regulations.gov, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit through www.regulations.gov or
email, information that you consider to be CBI or otherwise protected.
The www.regulations.gov Web site is an ``anonymous access'' system,
which means EPA will not know your identity or contact information
unless you provide it in the body of your comment. If you send an email
comment directly to EPA without going through www.regulations.gov, your
email address will be automatically captured and included as part of
the comment that is placed in the public docket and made available on
the Internet. If you submit an electronic comment, EPA recommends that
you include your name and other contact information in the body of your
comment and with any disk or CD-ROM you submit. If EPA cannot read your
comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment. Electronic
files should avoid the use of special characters, any form of
encryption, and be free of any defects or viruses. For additional
information about EPA's public docket visit the EPA

Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the electronic docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either electronically in www.regulations.gov or
in hard copy at the Regulatory Development Section, Air Planning
Branch, Air, Pesticides and Toxics Management Division, U.S.
Environmental Protection Agency, Region 4, 61 Forsyth Street SW.,
Atlanta, Georgia 30303-8960. EPA requests that if at all possible, you
contact the person listed in the FOR FURTHER INFORMATION CONTACT
section to schedule your inspection. The Regional Office's official
hours of business are Monday through Friday, 8:30 to 4:30, excluding
Federal holidays.

FOR FURTHER INFORMATION CONTACT: Zuri Farngalo or Jane Spann,
Regulatory Development Section, Air Planning Branch, Air, Pesticides
and Toxics Management Division, U.S. Environmental Protection Agency,
Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303-8960. Zuri
Farngalo may be reached by phone at<PHONE_NUMBER> or by electronic
mail address<EMAIL_ADDRESS>Jane Spann may be reached by phone
at<PHONE_NUMBER> or by electronic mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. EPA's Analysis of North Carolina's Submittals
III. Final Action
IV. Statutory and Executive Order Reviews

I. Background

    In accordance with the CAA, the Triad Area was designated
nonattainment for the 1-hour ozone NAAQS on November 6, 1991. See 56 FR
56694. The designation for the Triad Area was effective on January 6,
1992. See 60 FR 7124.
    On November 13, 1992, the State of North Carolina, through NCDENR,
submitted a request to redesignate the Triad Area to attainment for the
1-hour ozone NAAQS. Included with the 1-hour ozone redesignation
request, North Carolina submitted the required 1-hour ozone monitoring
data and maintenance plan ensuring the Area would remain in attainment
for the 1-hour ozone NAAQS for at least a period of 10 years
(consistent with CAA 175A(a)). The maintenance plan submitted by North
Carolina followed EPA guidance for maintenance areas, subject to
section 175A of the CAA.
    On September 9, 1993, EPA approved North Carolina's request to
redesignate the Triad Area (58 FR 4731) to attainment for the 1-hour
ozone NAAQS. The maintenance plan for the Triad Area became effective
on November 8, 1993. North Carolina provided an update to the Triad
Area maintenance plan on April 4, 2004, in accordance with section
175(A)(b), to extend the maintenance plan to cover additional years
such that the entire maintenance period was for at least 20 years after
the initial redesignation of this Area to attainment. EPA approved
North Carolina's update to the Triad Area's maintenance plan on
September 20, 2004. See 69 FR 56163.
    On April 30, 2004, EPA designated and classified areas for the 1997
8-hour ozone NAAQS (69 FR 23858), and published the final Phase 1 Rule
for implementation of the 1997 8-hour ozone NAAQS (69 FR 23951) (Phase
1 Rule). In the April 30, 2004, rulemaking entitled ``Air Quality
Designations and Classifications for the 8-Hour Ozone National Ambient
Air Quality Standards; Early Action Compact Areas with Deferred
Effective Dates'' (69 FR 23858), EPA designated every county in the
United States unclassifiable/attainment or nonattainment for the new 8-
hour ozone NAAQS. Counties in and around the Triad Area (also known as
the Greensboro-Winston Salem-High Point Area) were designated as
nonattainment with a deferred effective date as part of the Early
Action Compact (EAC) program. (For more information on the EAC \1\
Program, see, http://www.epa.gov/ttn/naaqs/ozone/eac/index.htm.) The
Greensboro-Winston Salem-High Point nonattainment-deferred EAC Area \2\
for the 1997 8-hour ozone NAAQS (which includes the entire Triad Area)
is comprised of Alamance, Caswell, Davidson, Davie, Forsyth, Guilford,
Randolph, and Rockingham counties. One year after the effective date of
EPA's designations for the 1997 8-hour ozone NAAQS (i.e., June 15,
2005), the 1-hour ozone NAAQS was revoked for most areas. However, the
1-hour ozone NAAQS was not revoked for previous 1-hour ozone
nonattainment areas that were currently 8-hour nonattainment-deferred
EAC areas, such as the Greensboro-Winston Salem-High Point EAC Area.
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    \1\ An EAC is an agreement between a State, local governments
and EPA to implement measures not necessarily required by the Act in
order to achieve cleaner air as soon as possible. The program was
designed for areas that approached or monitored exceedances of the
1997 8-hour ozone NAAQS, but were in attainment for the 1-hour ozone
NAAQS. See, http://www.epa.gov/ttn/naaqs/ozone/eac/index.htm, for
further information.
    \2\ A nonattainment-deferred EAC Area is an area that at the
time of EPA's designation had a design value that exceeded the 1997
8-hour ozone NAAQS.
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    The Greensboro-Winston Salem-High Point EAC Area attained the 1997
8-hour ozone NAAQS with a design value of 0.083 parts per million (ppm)
using three years of quality assured data for the years of 2005-2007.
On February 6, 2008, EPA proposed that 13 nonattainment areas with
deferred effective dates, including the Greensboro-Winston Salem-High
Point Area, be designated attainment for the 1997 8-hour ozone NAAQS.
See 73 FR 6863. These areas met all of the milestones of the EAC
program and demonstrated that they were in attainment of the 1997 8-
hour ozone NAAQS as of December 31, 2007. In the same rulemaking, EPA
also proposed that one year after the effective date of these
designations, the 1-hour ozone NAAQS be revoked in these areas and the
transportation conformity requirements for the 1-hour ozone NAAQS no
longer remain in effect in these areas after the revocation. This
rulemaking was finalized on April 2, 2008. See 73 FR 17897. Effective
April 15, 2008, the Greensboro-Winston Salem-High Point EAC Area was
designated as attainment for the 1997 8-hour ozone NAAQS.
    In accordance with section 110(a)(1) of the CAA and the Phase 1
Rule,\3\ North Carolina was required to submit a 10-year maintenance
plan for the portion of the Greensboro-Winston Salem-High Point EAC
Area that comprised the Triad Area (as a former 1-hour ozone
maintenance area) within three years of the effective date (i.e., April
15, 2011) of the Area being designated attainment for the 1997 8-hour
ozone NAAQS. On May 20, 2005, EPA issued guidance providing information
on how a state might fulfill the maintenance plan obligation
established by the CAA and the Phase 1 Rule (Memorandum from Lydia N.
Wegman to Air Division

Directors, Maintenance Plan Guidance Document for Certain 8-hour Ozone
Areas Under Section 110(a)(1) of Clean Air Act, May 20, 2005--hereafter
referred to as the ``Wegman Memorandum''). On April 13, 2011, with
supplemental information submitted on May 18, 2011, North Carolina
provided revisions to EPA to meet the requirements for the 110(a)(1)
maintenance plan for the Triad Area.
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    \3\ On December 22, 2006, the United States Court of Appeals for
the District of Columbia Circuit issued an opinion that vacated
EPA's Phase 1 Rule for the 1997 8-hour Ozone Standard. South Coast
Air Quality Management District. v. EPA, 472 F.3d 882 (DC Cir.
2006). The Court vacated those portions of the Phase 1 Rule that
provided for regulation of the 1997 8-hour ozone nonattainment areas
designated under Subpart 1 in lieu of Subpart 2 (of part D of the
CAA), among other portions. The Court's decision does not alter any
requirements under the Phase 1 Rule for section 110(a)(l)
maintenance plans.
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II. EPA's Analysis of North Carolina's Submittal

    As mentioned above, on April 13, 2011, the State of North Carolina,
through NCDENR submitted a SIP revision, with supplemental information
submitted on May 18, 2011, containing the 1997 8-hour ozone maintenance
plan for the Triad Area as required by section 110(a)(1) of the CAA and
the provisions of EPA's Phase 1 Rule. See 40 CFR 51.905(a)(4). The
purpose of the April 13, 2011, submission is to ensure continued
attainment and maintenance of the 1997 8-hour ozone NAAQS until 2018
for this attainment area. The May 18, 2011, supplemental information
contained Appendix C SESARM reference document, and Appendix D the
Public Notice Report, which were both inadvertently left out of the
original submittal.
    As required, North Carolina's plan provides data showing continued
attainment and maintenance of the 1997 8-hour ozone NAAQS in the Triad
Area for at least 10 years from the effective date of this Area's
designation as attainment for the 1997 8-hour ozone NAAQS. The plan
also includes components illustrating how the Area will continue
attainment of the 1997 8-hour ozone NAAQS and provides contingency
measures. The section 110(a)(1) maintenance plan components for the
Triad Area are discussed below.
    (a) Attainment Inventory. In order to demonstrate maintenance in
the aforementioned area, North Carolina developed comprehensive
inventories of volatile organic compounds (VOC) and nitrogen oxides
(NOX) emissions from area, point, on-road mobile, non-road
mobile (including aircraft, locomotive and marine (ALM)),\4\ and
manmade emission sources using 2007 as the base year. According to the
May 20, 2005, Maintenance Plan Guidance Document for Certain 8-Hour
Ozone Areas Under Section 110(a)(1) of the Clean Air Act, a state may
use one of the three years for which the 1997 8-hour attainment
designation was based (2001, 2002 and 2003) as their attainment
inventory base year. However, due to the fact that the Triad Area was
an EAC area, the effective date of designation was deferred to April
15, 2008, and therefore consideration of a later base year of 2005,
2006, or 2007 was required for the purpose of an emissions inventory.
See 69 FR 23857. For the purpose of this maintenance plan, North
Carolina chose 2007 as the attainment level emissions base year for the
Triad Area. The State's submittal contains the detailed inventory data
and summaries by source category for the Triad Area.
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    \4\ No commercial marine vessels operate in Davidson, Davie,
Forsyth or Guilford counties so there are no emissions reported for
this category.
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    In accordance with USEPA's Air Emissions Reporting Rule
requirements, North Carolina compiles a statewide emissions inventory
for point sources on an annual basis. Area source emissions are
estimated by multiplying an emission factor by a known indicator like
number of employess or population. On-road mobile emissions of VOC and
NOX were estimated using the MOVES2010a mobile model. Non-
road mobile emissions data were derived using the U.S. EPA's NONROAD
2008 model with the exception of railroad locomotives and aircraft
engines that are estimated by using an emission factor.
    In projecting data for the maintenance year 2018 emissions
inventories, North Carolina used several methods to project data from
the base year 2007 to the interim years 2011, and 2018. These projected
inventories were developed using EPA-approved technologies and
methodologies including the Southeastern Emissions Modeling, Analysis,
and Planning methodology. Projected point, area, and non-road mobile
source inventories were developed using the 2007 base year inventories
and economic growth factors from EPA's Economic Growth and Analysis
System.
    The following tables provide VOC and NOX emissions data
for the 2007 base attainment year inventories, as well as projected VOC
and NOX emissions inventory data for 2010, 2014, and 2018.
The Phase 1 Rule provides that the 10-year maintenance period begin as
of the effective date of designation for the 1997 8-hour NAAQS for the
Area. The designations for the 13 EAC attainment areas (of which the
Greensboro-Winston Salem- High Point Area (inclusive of the Triad Area)
was one) were effective in April 2008 so the maintenance period must
end no earlier than 2018.

                                       Table 1--2007 VOC and NOX Base Year Emissions Inventory for the Triad Area
                                                                       [Tons/day]
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                         County                                Point           Area           Onroad          Nonroad         Manmade          Total
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                                                                                --VOC emissions--
                                                         -----------------------------------------------------------------------------------------------
Davidson................................................            3.83            6.83            6.60            1.97           19.23           38.46
Davie...................................................            0.19            4.68            1.85            1.32            8.04           16.08
Forsyth.................................................            4.03           16.53           12.05            3.79            36.4           54.54
Guilford................................................            9.68           22.62           17.41            8.33           58.04          116.08
                                                         -----------------------------------------------------------------------------------------------
    Total *.............................................           17.73           50.66           37.91           15.41          121.71          225.16
                                                         -----------------------------------------------------------------------------------------------
                                                                                --NOX emissions--
                                                         -----------------------------------------------------------------------------------------------
Davidson................................................            2.73            0.62           15.08            3.56           21.99           43.98
Davie...................................................            0.06            0.21            5.03            0.78            6.08           12.16
Forsyth.................................................            2.22            0.99           27.73            4.94           35.88           56.14
Guilford................................................            1.06            2.01           42.78           11.83           57.68          115.36
                                                         -----------------------------------------------------------------------------------------------
    Total *.............................................            6.07            3.83           90.62           21.11          121.63          227.64
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* Due to conventional rounding rules, emission totals listed in Tables 1 and 2 may not reflect the absolute mathematical totals.

                      Table 2--Projected VOC and NOX Emissions Inventory for the Triad Area
                                                   [Tons/day]
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                           Source type                                 2007            2011            2018
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                                                                                --NOX emissions--
                                                                 -----------------------------------------------
Point...........................................................            6.07            6.19            6.47
Area............................................................            3.83            3.87            3.88
Onroad..........................................................           90.62           64.56           36.00
Nonroad.........................................................           21.11           16.96           10.78
Manmade                                                                   121.63           91.58           57.13
                                                                 -----------------------------------------------
    Total *.....................................................          243.26          183.16          114.26
                                                                 -----------------------------------------------
                                                                                VOC emissions--
                                                                 -----------------------------------------------
Point...........................................................           17.73           17.75           17.80
Area............................................................           50.66           54.96           64.53
Onroad..........................................................           37.91           26.16           15.37
Nonroad.........................................................           15.41           12.11            8.81
Manmade.........................................................          121.71          110.98          106.51
                                                                 -----------------------------------------------
    Total *.....................................................          243.42          221.96          213.02
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* Due to conventional rounding rules, emission totals listed in Tables 1 and 2 may not reflect the absolute
  mathematical totals.

    As shown in Table 2 above, the Triad Area is projected to steadily
decrease its total VOC and NOX emissions from the base year
of 2007 to the maintenance year of 2018. This VOC and NOX
emission decrease demonstrates continued attainment/maintenance of the
1997 8-hour ozone NAAQS for ten years from 2008 (the year the Area was
effectively designated attainment for the 1997 8-hour ozone NAAQS) as
required by the CAA and Phase 1 Rule. NOx and VOC emissions are
expected to decrease approximately 47 and 9 percent, respectively, from
the attainment base year to 2018. These projected reductions of ozone
precursors signal continued maintenance of the 1997 8-hour ozone NAAQS.
    The attainment inventories submitted by North Carolina for this
Area are consistent with the criteria as discussed in the Wegman
Memorandum (For more information on the Wegman Memorandom see http://www.epa.gov/ttn/oarpg/t1/memoranda/policymem33d.pdf.) EPA finds that
the future emission levels for the projected years 2011, and 2018, are
expected to be less than the attainment level emissions in 2007. In the
event that future 1997 8-hour ozone monitoring values in the Triad Area
are found to violate the 1997 8-hour ozone NAAQS, the contingency plan
section of the Triad Area's maintenance plan includes measures that
will be promptly implemented to ensure that the Triad Area returns to
attainment of the 1997 ozone NAAQS. Please see Section (d) Contingency
Plan, below, for additional information related to the contingency
measures in the maintenance plan.
    (b) Maintenance Demonstration. The primary purpose of a maintenance
plan is to demonstrate how an area will continue to remain in
attainment with the 1997 8-hour ozone standards for the 10-year period
following the effective date of designation as unclassifiable/
attainment. The required end projection year for the Triad Area is
2018. As discussed in Section (a) Attainment Inventory above, North
Carolina identified the level of ozone-forming emissions that were
consistent with attainment of the NAAQS for ozone in 2007. North
Carolina projected VOC and NOX emissions for 2011 and 2018.
EPA finds that the future emissions levels in these years are expected
to be below the emissions levels in 2007 in the Triad Area.
    North Carolina's SIP revisions for the maintenance plan for the
Triad Area also relies on a combination of several air quality measures
that will provide for additional 1997 8-hour ozone emissions reductions
in this Area. The Triad Area is also benefiting from the following
reductions that are occurring in other states in the Southeast: (1)
North Carolina Clean Smokestacks Act, (2) Atlanta/Northern Kentucky/
Birmingham 1-hour SIPs, (3) NOX reasonably available control
technology in 1997 8-hour ozone nonattainment area SIP, and (4)
implementation of NOX SIP Call Phase 1 in southeastern
states. Moreover, despite the legal status of the Clean Air Interstate
Rule (CAIR) as remanded, many facilities have already installed or are
continuing with plans to install emission controls that may benefit the
Triad Area.
    (c) Consideration of CAIR. The NOX SIP Call requires
states to make significant, specific emissions reductions. It also
provided a mechanism, the NOX Budget Trading Program, which
states could use to achieve those reductions. When EPA promulgated
CAIR, it discontinued (starting in 2009) the NOX Budget
Trading Program, 40 CFR 51.121(r), but created another mechanism--the
CAIR NOX ozone season trading program--which states could
use to meet their SIP Call obligations (70 FR 25289-90). EPA notes that
a number of states, when submitting SIP revisions to require sources to
participate in the CAIR NOX ozone season trading program,
removed the SIP provisions that required sources to participate in the
NOX Budget Trading Program.
    In 2008, the US Court of Appeals for the D.C. Circuit remanded CAIR
to the Agency, leaving existing CAIR programs in place while directing
EPA to replace them as rapidly as possible with a new rule consistent
with the CAA. Therefore, the provisions of CAIR, including the
NOX ozone season trading program, remain in place during the
remand (North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008)), and
continue to satisfy the trading requirements of the NOX SIP
Call, as EPA is no longer administering the NOX Budget
Trading Program. Nonetheless, all states, regardless of the current
status of their regulations that previously required participation in
the NOX Budget Trading Program, will remain subject to all
of the requirements in the NOX SIP Call, even when the
existing CAIR NOX ozone season trading program is replaced
by the Cross State

Air Pollution Rule (CSAPR) in 2012. That rule, promulgated on July 6,
2011, replaces and strengthens the 2005 CAIR trading programs, and
meets the CAA requirements and responds to the court's concerns. In
addition, the anti-backsliding provisions of 40 CFR 51.905(f)
specifically provide that the provisions of the NOX SIP
Call, including the statewide NOX emission budgets, continue
to apply after revocation of the 1-hour standards.
    All NOX SIP Call states, including North Carolina, have
SIPs that currently satisfy their obligations under the SIP Call, and
the SIP Call reduction requirements are being met. EPA will continue to
enforce the requirements of the NOX SIP Call even after the
CSAPR takes effect. For these reasons, EPA believes that regardless of
the status of the CAIR and CSAPR programs, the NOX SIP call
requirements can be relied upon in demonstrating maintenance.
    (d) Ambient Air Quality Monitoring. The table below shows design
values \5\ for the Triad Area. The ambient ozone monitoring data were
collected at sites that were selected with assistance from EPA and are
considered representative of the areas of highest concentration. The
State of North Carolina will continue to conduct ambient air quality
monitoring programs for ozone in the Triad Area. All monitoring
programs will continue in accordance with applicable EPA monitoring
requirements contained in 40 CFR Part 58. Any modification to the
ambient air monitoring network will be accomplished through close
consultation with EPA. The Triad Area has not had a monitored design
value that exceeded the 1997 8-hour NAAQS since the 2002-2004 design
value time-period as seen in Table 3.\6\
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    \5\ The air quality design value at a monitoring site is defined
as the concentration that when reduced to the level of the standard
ensures that the site meets the standard. For a concentration-based
standard, the air quality design value is simply the standard-
related test statistic. Thus, for the primary and secondary 1997 8-
hour ozone standards, the 3-year average annual fourth-highest daily
maximum 8-hour average ozone concentration is also the air quality
design value for the site. 40 CFR 50, Appendix I, Section 3.
    \6\ Under EPA regulations found at 40 CFR part 50, the 1997 8-
hour ozone NAAQS are attained when the 3-year average of the annual
fourth-highest daily maximum 8-hour ambient air quality ozone
concentrations is less than 0.08 parts per million (i.e. 0.084 when
rounding is considered).

     Table 3--Maximum 8-Hour Ozone Design Values for the Triad Area
                                  [ppm]
------------------------------------------------------------------------
                                                                  Design
                             Years                                value
------------------------------------------------------------------------
2001-2003......................................................    0.093
2002-2004......................................................    0.087
2003-2005......................................................    0.082
2004-2006......................................................    0.081
2005-2007......................................................    0.083
2006-2008......................................................    0.082
2007-2009......................................................    0.079
2008-2010......................................................    0.076
------------------------------------------------------------------------

    The maximum design value for 2008 through 2010 identified in Table
3 demonstrates attainment of the 1997 8-hour ozone NAAQS at a level of
0.076 ppm. Further, these design values indicate that the Triad Area is
expected to continue attainment of the 1997 8-hour ozone NAAQS based on
a gradual decrease in the design values. The attainment level for the
1997 8-hour ozone standards is 0.08 ppm, effectively 0.084 ppm with the
rounding convention. In the event that a design value for the Triad
Area monitors exceed the 1997 8-hour ozone standards, one or more
contingency measures included in North Carolina's maintenance plan
would be promptly implemented in accordance with the contingency plan,
as discussed below.
    (e) Contingency Plan. In accordance with 40 CFR 51.905(a)(4)(ii)
and the Wegman Memorandum, the section 110(a)(1) maintenance plan
includes contingency provisions to promptly correct a violation of the
1997 8-hour ozone NAAQS that may occur. The State of North Carolina has
established three triggers to activate contingency measures including:
(1) A violation of the 1997 ozone NAAQS at any of the Triad area
monitors, (2) monitored ozone levels indicating that an actual ozone
NAAQS violation is imminent, and (3) a monitored fourth high exceedance
of 1997 8-hour ozone NAAQS at any monitor. In the maintenance plan, if
contingency measures are triggered, North Carolina has committed to
implement the measures as expeditiously as practicable, including
adopting one or more contingency measures as expeditiously as practical
and implementing the measures within 24 months of the triggering event.
The State's contingency measures include: (1) NOX Reasonably
Available Control Technology on stationary sources in the Triad
maintenance area; (2) diesel inspection and maintenance program; (3)
implementation of diesel retrofit programs, including incentives for
performing retrofits; and, (4) additional controls in upwind areas.
    These contingency measures and schedules for implementation satisfy
EPA's long-standing guidance on the requirements of section 110(a)(1)
of continued attainment. Continued attainment of the 1997 8-hour ozone
NAAQS in the Triad Area will depend, in part, on the air quality
measures discussed previously (see section II). In addition, North
Carolina commits to verify the 1997 8-hour ozone status in this
maintenance plan through periodic ozone precursor emission inventory
updates. Emission inventory updates will be completed by 18 months
following the end of the inventory year to verify continued attainment
of the 1997 8-hour ozone NAAQS.

III. Final Action

    Pursuant to section 110(a)(1) of the CAA, EPA is approving the
maintenance plan addressing the 1997 8-hour ozone NAAQS in the Triad
Area, submitted by the State of North Carolina, through NCDENR, on
April 13, 2011, with supplemental information submitted on May 18,
2011. The maintenance plan ensures continued attainment of the 1997 8-
hour ozone NAAQS through the maintenance year 2018. EPA has evaluated
North Carolina's submittal and has determined that it meets the
applicable requirements of the CAA and EPA regulations, and is
consistent with EPA policy. On March 12, 2008, EPA issued revised ozone
NAAQS. The current action, however, is being taken to address
requirements under the 1997 8-hour ozone NAAQS.
    EPA is publishing this rule without prior proposal because the
Agency views this as a non-controversial amendment and anticipates no
adverse comments. However, in the proposed rules section of this
Federal Register publication, EPA is publishing a separate document
that will serve as the proposal to approve the SIP revision should
adverse comment be filed. This rule will be effective on March 26, 2012
without further notice unless the Agency receives adverse comment by
February 24, 2012. If EPA receives such comments, then EPA will publish
a document withdrawing the final rule and informing the public that the
rule will not take effect. All public comments received will then be
addressed in a subsequent final rule based on the proposed rule. EPA
will not institute a second comment period on this action. Any parties
interested in commenting must do so at this time. If no such comments
are received, the public is advised this rule will be effective on
March 26, 2012 and no

further action will be taken on the proposed rule.

IV. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP
submission that complies with the provisions of the Act and applicable
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in
reviewing SIP submissions, EPA's role is to approve state choices,
provided that they meet the criteria of the CAA. Accordingly, this
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 action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Order
12866 (58 FR 51735, October 4, 1993);
     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 application of those requirements would be inconsistent
with the CAA; and
     Does not provide 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, this rule does not have tribal implications as specified
by Executive Order 13175 (65 FR 67249, November 9, 2000), because the
SIP is not approved to apply in Indian country located in the state,
and EPA notes that it will not impose substantial direct costs on
tribal governments or preempt tribal law.
    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this action and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by March 26, 2012. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this action for the purposes of judicial review nor
does it extend the time within which a petition for judicial review may
be filed, and shall not postpone the effectiveness of such rule or
action. Parties with objections to this direct final rule are
encouraged to file a comment in response to the parallel notice of
proposed rulemaking for this action published in the proposed rules
section of today's Federal Register, rather than file an immediate
petition for judicial review of this direct final rule, so that EPA can
withdraw this direct final rule and address the comment in the proposed
rulemaking. This action may not be challenged later in proceedings to
enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

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

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

    Dated: January 12, 2012.
 A. Stanley Meiburg,
Acting Regional Administrator, Region 4.

    40 CFR part 52 is amended as follows:

PART 52--[AMENDED]

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

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

Subpart II--North Carolina

0
2. Section 52.1770(e) is amended by adding new entries for ``1997 8-
Hour Ozone 110(a)(1) Maintenance Plan for the Triad Area'' and
``Supplement to 110(a)(1) Maintenance Plan for the Triad Area'' to read
as follows at the end of the table:

Sec.  52.1770  Identification of plan.

* * * * *
    (e) * * *

                              EPA-Approved North Carolina Non-Regulatory Provisions
----------------------------------------------------------------------------------------------------------------
                                State effective
          Provision                   date        EPA approval date           Federal Register citation
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
1997 8-Hour Ozone 110(a)(1)              4/13/11            3/26/12  [Insert citation of publication.]
 Maintenance Plan for the
 Triad Area.
Supplement to 110(a)(1)                5/18/2011            3/26/12  [Insert citation of publication.]
 Maintenance Plan for the
 Triad Area.
----------------------------------------------------------------------------------------------------------------

[FR Doc. 2012-1360 Filed 1-24-12; 8:45 am]
BILLING CODE P


[Federal Register Volume 84, Number 49 (Wednesday, March 13, 2019)]
[Notices]
[Pages 9183-9189]
[FR Doc No: 2019-04561]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85267; File No. SR-CboeEDGX-2019-007]

Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice
of Filing and Immediate Effectiveness of a Proposed Rule Change To
Amend the Bats Auction Mechanism (``BAM'')

March 7, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 5, 2019, Cboe EDGX Exchange, Inc. (the ``Exchange'' or
``EDGX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

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

    Cboe EDGX Exchange, Inc. (the ``Exchange'' or ``EDGX'') proposes to
amend the Bats Auction Mechanism (``BAM''). The text of the proposed
rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/options/regulation/rule_filings/edgx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.

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

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

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

1. Purpose
    In 2016, the Exchange's parent company, Cboe Global Markets, Inc.
(``Cboe Global''), which is the parent company of Cboe Exchange, Inc.
(``Cboe Options'') and Cboe C2 Exchange, Inc. (``C2''), acquired the
Exchange, Cboe EDGA Exchange, Inc. (``EDGA''), Cboe BZX Exchange, Inc.
(``BZX or BZX Options''), and Cboe BYX Exchange, Inc. (``BYX'' and,
together with C2, Cboe Options, the Exchange, EDGA, and BZX, the ``Cboe
Affiliated Exchanges''). The Cboe Affiliated Exchanges are working to
align certain system functionality, retaining only intended differences
between the Cboe Affiliated Exchanges, in the context of a technology
migration. Cboe Options intends to migrate its technology to the same
trading platform used by the Exchange, C2, and BZX Options in the
fourth quarter of 2019. The proposal set forth below is intended to add
certain functionality to the Exchange's System that is available on
Cboe Options in order to ultimately provide a consistent technology
offering for market participants who interact with the Cboe Affiliated
Exchanges. Although the Exchange intentionally offers certain features
that differ from those offered by its affiliates and will continue to
do so, the Exchange believes that offering similar functionality to the
extent practicable will reduce potential confusion for Users.
    The proposed rule change amends Rule 21.19 related to BAM, which
the proposed rule change renames as the Automated Improvement Mechanism
(``AIM''). This is the name of the corresponding price improvement
auction mechanism on Cboe Options, and the proposed rule change will
refer to the Exchange's auction process as AIM.\5\
---------------------------------------------------------------------------

    \5\ See Cboe Options Rule 6.74A. The proposed rule change also
replaces the reference to BAM with AIM in Rule 22.12(c).
---------------------------------------------------------------------------

    The proposed rule change will permit the Initiating Order to
consist of one or more solicited orders. This will accommodate multiple
contra-parties and increase the opportunities for customer orders to be
submitted into an AIM Auction with the potential for price improvement,
since the Initiating Order must stop the full size of the Agency Order.
This has no impact on the execution of the Agency Order, which may
already trade against multiple contra-parties depending on the final
auction price, as set forth in proposed paragraph (e). This proposed
change is consistent with Cboe Options AIM functionality.\6\
---------------------------------------------------------------------------

    \6\ See Cboe Options Regulatory Circular RG17-074 (May 19,
2017); see also NASDAQ ISE, LLC (``ISE'') Rule 723(b).
---------------------------------------------------------------------------

    The proposed rule change adopts a Sweep and AIM order, which is the
submission of two orders for crossing in an AIM Auction with a stop
price that does not need to be within the BBO and where the Exchange
sweeps all Protected Quotes, as defined in Rule 27.1, by routing one or
more ISOs, as necessary, to execute against the full displayed size of
any Protected Quote with a price better than the stop price, as well as
sweep all interest in the EDGX Options Book with a price better than
the stop price simultaneously with the commencement of the AIM Auction.
Any execution(s) resulting from these sweeps accrue to the Agency
Order.\7\ This proposed order is consistent with the current BAM ISO
functionality,\8\ except the Exchange will route the ISOs on behalf of
the User rather than requiring the User to route the ISOs itself.
Additionally, the proposed rule change is consistent with Cboe Options
functionality.\9\ This proposed order type will provide Users with an
additional, efficient method to initiate an AIM while preventing trade-
throughs.
---------------------------------------------------------------------------

    \7\ In other words, any contracts executed at an away exchange
would count as execution against the Agency Order (and thus reduce
the size of the Agency Order available for execution during an AIM
Auction). This is consistent with how ISOs work for all order types.
    \8\ See current Rule 21.19(b)(6) and proposed Rule
21.19(b)(3)(A); see also Cboe Options Rule 6.53(q).
    \9\ See Cboe Options Rule 6.53(r).
---------------------------------------------------------------------------

    The proposed rule change clarifies that if an Initiating Member
submits an AIM Sweep or Sweep and AIM order, the stop price may be
inferior to the Initial NBBO, but is still subject to the price
improvement requirement in proposed subparagraph (b)(1)(A). In other
words, while AIM Sweep and Sweep and AIM orders permit an Initiating
Member to stop an Agency Order at a price inferior to the NBBO at the
time it submits the Agency Order to an AIM Auction, the Initiating
Member must still comply with the price-improvement requirement for
smaller-sized orders if the width of the NBBO is $0.01. For example, if
an Initiating Member submits an Agency Order to buy for 20 contracts as
a Sweep and AIM with a stop price of 1.01 when the NBBO is 1.00 x 1.01,
the System rejects the Agency Order (and the Initiating Order). Note if
the Initiating Member instead submitted an AIM Sweep, the Exchange
initiates an AIM, because the Initiating Member is responsible for
submitting the ISO and the System cannot confirm that the NBBO width
will ultimately be $0.01. However, the Initiating Member is still
responsible for complying with the price-improvement requirement for
smaller-sized orders if the width of the resulting NBBO following
execution of the ISO is $0.01.
    Proposed Rule 21.19(e)(1) provides that the Initiating Order
allocation percentage is based on the number of contracts remaining of
the Agency Order after execution against Priority Customer orders
rather than the initial size of the Agency Order. This ensures the size
used to determine the allocation percentage for the Initiating Order
will be based on the same number of contracts that would otherwise be
available to other contra-side interest. The proposed rule change is
the same as the rules of other options exchanges.\10\
---------------------------------------------------------------------------

    \10\ See, e.g., ISE Rule 723(d)(2) and MIAX Rule 515A,
Interpretation and Policy .11.
---------------------------------------------------------------------------

    Additionally, pursuant to current Rule 21.19(b)(1)(A), the
Initiating Member may receive an allocation up to 50% of the Agency
Order if there interest from one other User at the stop price or 40% of
the Agency Order if there is interest from two or more other Users at
the stop price. Pursuant to proposed Rule 21.19(e)(1)(B), the
Initiating Order may receive an allocation up to the greater of one
contract or such percentage. If the Agency Order is small, it is
possible that the Initiating Order may receive no contracts due to
rounding. For example, if the Agency Order is for two contracts, and at
the end of the AIM Auction there is a Priority Customer order for one
contract at the final auction price and two other participants at the
final auction price, allocation would be as follows (based on the
proposed change above that the allocation percentage is based on the
number of contracts remaining after execution against Priority Customer
orders), the Initiating Order would receive zero contracts (40% of the
one remaining contract after execution against the Priority Customer
order contract, which is 0.4 that gets rounded down to zero), and the
remaining contra-interest would receive the final contract. This
proposed change will ensure that the Initiating Order will receive at
least a partial execution in an AIM Auction of a small order, and thus
continue to incentive Options Members to submit customer orders into
AIM auctions for potential price improvement. This is also consistent
with current AIM priority, which provides that the Initiating Order has
priority over non-Priority Customer

orders. This proposed change is the same as other options
exchanges.\11\
---------------------------------------------------------------------------

    \11\ See, e.g., Cboe Options Rule 6.74A(b)(3)(F); and Miami
International Securities Exchange, LLC (``MIAX'') Rule
515A(a)(2)(iii)(H).
---------------------------------------------------------------------------

    Additionally, the proposed Sweep and AIM order described above
provides that the paired orders submitted as a Sweep and AIM order may
not both be for the accounts of Priority Customers.\12\ Unlike an AIM
ISO (for which the Initiating Member sends an ISO),\13\ the Exchange
sends the ISO for a Sweep and AIM order and then receives the fill
report for the ISO during the AIM Auction period, so it knows by the
end of the AIM Auction how much of the Agency Order is left for
execution against contra-interest on the Exchange. If both orders were
for Priority Customers, they would immediately cross pursuant to
paragraph (f) (as described below), prior to the Exchange receiving
information regarding the size of any executions on away exchanges (and
thus prior to knowing the NBBO that price of the immediate cross should
have traded through). Not permitting pairs of Priority Customer orders
to be submitted as Sweep and AIM orders ensures that the Agency Order
is not oversubscribed, which can be prevented if there is an AIM
Auction period, and that the immediate cross occurs at a price at or
better than the NBBO. Users can submit these pairs of orders through
the AIM Auction process. The Exchange believes there is minimal demand
to submit pairs of Priority Customer orders as Sweep and AIM orders.
---------------------------------------------------------------------------

    \12\ See proposed Rule 21.19(b)(3)(B).
    \13\ Users are responsible for sending the ISO order for an AIM
ISO, and thus the Exchange does not need to wait for a fill report
for the ISO. Because it is a User's responsibility to send the ISO,
and thus account for any executions resulting from that ISO at away
exchanges (and the resulting NBBO), the proposed rule change does
not prohibit pairs of Priority Customer orders to be submitted as an
AIM ISO. However, the Exchange believes there is minimal demand for
use of this order type for pairs of Priority Customer orders.
---------------------------------------------------------------------------

    Current Rule 21.19(c)(2) (and proposed paragraph (f)) provides that
the System does not initiate a Customer-to-Customer AIM Immediate Cross
if there is a resting Priority Customer order on the same side and at
the same price as the Agency Order, and instead cancels the Agency
Order and Initiating Order. However, current subparagraph (c)(3) will
initiate an AIM Auction if the resting Priority Customer order is on
the opposite side and at the same price as the Agency Order. Pursuant
to the proposed rule change, the System will also cancel the Agency
Order and Initiating Order in this situation rather than initiate the
auction process. The Exchange believes it is appropriate to cancel in
this situation, as that will ensure the Agency Order will not trade at
the same price as a resting Priority Customer. This is consistent with
the provision in proposed subparagraph (f)(1), which states a Customer-
to-Customer AIM Immediate Cross may not occur at the same price as any
Priority Customer resting on the EDGX Options Book. This is the same as
Cboe Options functionality.\14\
---------------------------------------------------------------------------

    \14\ See Cboe Options Rule 6.74A, Interpretation and Policy .08.
---------------------------------------------------------------------------

    The proposed rule change also makes various clarifications in, and
nonsubstantive changes to, Rule 21.19, including the following:
     The definition of ``Initiating Member'' moves from current
paragraph (a) to the introductory paragraph, where the first reference
to the submitting Options Member is first used.
     The restriction that a solicited order cannot be for the
account of any Options Market Maker registered in the applicable series
on the Exchange moves from current paragraph (a)(6) to the introductory
paragraph.
     The provision that all options traded on the Exchange are
eligible for AIM moves from current paragraph (a) to proposed
subparagraph (a)(1).
     The requirement that the Initiating Member mark the Agency
Order for AIM processing moves from current paragraph (b)(1)(A), which
relates to the Auction process, to proposed subparagraph (a)(2), as
this is a requirement to initiate an Auction rather than being a part
of the Auction process.
     Proposed paragraph (a)(3) states there is no minimum size
for Agency Orders, and that the Initiating Order must be for the same
size as the Agency Order. This is consistent with current
functionality, as the current rule states Agency Orders may have size
smaller than and greater than 50 contracts, and states the Initiating
Member must stop the entire Agency Order.\15\
---------------------------------------------------------------------------

    \15\ See current Rule 21.19(a)(1); see also Cboe Options Rule
6.74A, Interpretation and Policy .03.
---------------------------------------------------------------------------

     Proposed paragraph (a)(4) states the minimum increment for
the Agency Order and Initiating Order is $0.01. This is consistent with
current subparagraph (a)(1), except the proposed rule change eliminates
Exchange flexibility to change the increment, as the Exchange does not
intend to increase the minimum increment.
     The provision that states an Initiating Member may not
submit an Agency Order if the NBBO is crossed moves from current
subparagraph (a)(5) to proposed subparagraph (a)(6). The proposed rule
change adds this does not apply in the case of an AIM ISO or Sweep and
AIM order, consistent with the definitions of those two terms.
     Proposed subparagraph (a)(5) states an Initiating Member
may not designate an Agency Order or Initiating Order as Post Only.
This is consistent with current functionality, and the proposed rule
change is merely clarifying this in the Rules. The Exchange believes
this is appropriate, as the purpose of a Post Only order is to not
execute upon entry and instead rest in the EDGX Options Book, while the
purpose of an AIM Auction is to receive an execution following the
auction but prior to entering the EDGX Options Book.
     The provisions that require the stop price be at least
$0.01 better than the NBBO if the Agency Order is for less than 50
option contracts, and at or better than the NBBO in all other
situations (if the Agency Order is for 50 contracts or more, or the NBO
width is greater than $0.01) moves from current subparagraph (a)(1) to
proposed subparagraph (b)(1), as proposed paragraph (b) contains all
provisions regarding the price of the Agency and Initiating Orders.\16\
The proposed rule change makes no substantive change to these price
requirements.
---------------------------------------------------------------------------

    \16\ The proposed rule change clarifies the size requirements
for mini-option contracts, which are \1/10\th the size of standard
option contracts. This is consistent with current functionality and
is merely adding detail to the rule. See Rule 19.6, Interpretation
and Policy .07 (which permits the listing of mini-options); see also
Cboe Options Rule 6.74A(a)(3).
---------------------------------------------------------------------------

     The provisions that require the stop price be at least
$0.01 better than an order (including a Priority Customer order) at the
EDGX BBO on the same side as the Agency Order or at or better than a
non-Priority Customer order at the EDGX BBO on the same side as the
Agency Order if the Agency Order is a Priority Customer order (and the
Priority Customer overlay applies) moves from current paragraph (a)(2)
to proposed paragraph (b)(2), as proposed paragraph (b) contains all
provisions regarding the price of the Agency and Initiating Orders. The
proposed rule change makes no substantive change to these price
requirements.
     The provisions that state an Agency Order must satisfy all
of the eligibility and price requirements are moved from various
locations in the rule, including current subparagraphs (a)(4) and
(a)(5), to proposed paragraphs (a) and (b). This also clarifies which
requirements must be met in order for an Agency Order to be accepted
and initiate an AIM Auction.

     The proposed rule change simplifies current subparagraph
(b)(1)(A) (and proposed subparagraph (b)(4)) regarding the instructions
an Initiating Member must specify regarding the prices at which it is
willing to trade with the Agency Order. The proposed rule change makes
no substantive changes to these provisions.
     The provision regarding the submission of ISOs to BAM
moves from current subparagraph (b)(6) to proposed subparagraph
(b)(3)(A). These orders are renamed as AIM Sweep orders or AIM ISO
orders. This is consistent with an AIM Sweep Order in Cboe Options Rule
6.53(q), as well as current functionality. The proposed rule change
merely adds detail regarding how these orders work (substantively the
same as the Cboe Options definition of an AIM Sweep Order). The
functionality for these orders is not changing.
     The provision regarding concurrent AIM Auctions moves from
current subparagraph (a)(3) and Interpretation and Policy .04 to
proposed subparagraph (c)(1). The proposed rule change makes no
substantive changes to the provisions regarding concurrent AIM
Auctions.
     The provision that does not permit the Agency Order to be
modified or cancelled after the Initiating Member submits the Agency
Order to an AIM Auction moves from current subparagraph (b)(1)(A) to
proposed paragraph (c)(4).
     Proposed subparagraph (c)(5) clarifies that an AIM
response may only participate in the AIM Auction with the Auction ID
specified in the response. This is consistent with the requirement that
a response identify the Auction to which it is being submitted and
consistent with current functionality. The proposed rule change is
merely adding this detail to the rule.
     The provision that states AIM responses will not be
visible to Auction participants or disseminated to OPRA moves from
current subparagraph (b)(1)(F) to proposed subparagraph (c)(5)(H).
     Current subparagraph (b)(1)(L) is deleted and replaced by
proposed subparagraph (c)(5)(B), which states AIM responses that cross
the Initial NBBO are capped at the Initial NBO on the same side as the
Agency Order and $0.01 better than the EDGX BBO on the same side as the
Agency Order if the EDGX BBO is represented by a Priority Customer on
the EDGX Options Book (unless the Agency Order is an AIM ISO or Sweep
and AIM). The System will execute AIM responses, if possible, at the
most aggressive permissible price not outside the NBBO. This is
consistent with current subparagraph (L), except clarifies that the
System does accept AIM responses that cross the Initial NBBO (the
current provision states responses cannot cross the NBBO, so the
proposed rule change clarifies such responses would not be rejected)
but capped and executed within the Initial NBBO (which is consistent
with the current provision that states these responses will execute at
the most aggressive permissible price).
     The provisions that state an AIM response is capped at the
size of the Agency Order moves from current subparagraph (b)(1)(H) and
(I) to proposed subparagraph (c)(5)(D).
     The provision that states AIM responses may be aggregated
clarifies that these are aggregated by User by EFID. This is consistent
with current functionality and is adding this detail to the Rule
regarding how the System aggregates this interest.
     The provision that states AIM responses may not be
designated as FOK or IOC moves form current subparagraph (b)(1)(K) to
proposed subparagraph (c)(5)(G).
     The provision that states AIM responses may be modified or
cancelled during an Auction moves from current subparagraph (b)(1)(J)
to proposed subparagraph (c)(5)(I).
     Pursuant to proposed subparagraph (e)(6), the System
cancels or rejects any unexecuted AIM response (or unexecuted portions)
at the conclusion of the AIM Auction. This is consistent with current
subparagraph (b)(5). However, currently, the System immediately rejects
AIM responses if they are not executable based on the price of the
Auction. The Exchange believes it is appropriate to cancel all
unexecuted AIM responses, regardless of whether they are marketable, at
the same time at the conclusion of the Auction. This has no impact on
the allocation of an AIM Auction, as responses that are not marketable
at the beginning of an AIM Auction will also be unmarketable at the
conclusion of an AIM Auction and be cancelled. The proposed rule change
merely changes the time at which these unmarketable responses are
cancelled.
     Proposed paragraph (c)(5) specifies when the System will
reject AIM responses if they do not meet the specified criteria and are
obviously wrong (such as being in the wrong increment or on the wrong
side). This is consistent with current functionality, and the proposed
rule change is adding this detail to the rule.
     Current subparagraph (b)(2)(B), which is proposed
subparagraph (d)(1)(B), is clarified to state that the Auction will
conclude upon receipt of a Priority Customer order on the same side as
the Agency Order if the price of the Priority Customer order is at or
better than the stop price. This is consistent with current
functionality, as in both cases it would otherwise cause a Priority
Customer Order to be posted on the EDGX Options Book with a price
better than the stop price. The proposed rule change is adding this
detail to the rule.
     The provisions regarding allocation when an Initiating
Member selects Last Priority moves from current subparagraph (b)(1)(B)
to proposed subparagraph (e)(5). Proposed paragraph (e) contains all
provisions related to the allocation of the Agency Order. The proposed
rule change makes no substantive changes to the application of Last
Priority. The proposed rule change deletes current subparagraph
(b)(1)(B)(ii), which states Last Priority will not be applied if both
the Initiating Order and the Agency Order are Priority Customer orders.
Because paired orders with a Priority Customer on both sides (Agency
and Initiating) are immediately crossed pursuant to current paragraph
(c) and proposed paragraph (f), Last Priority would never apply since
there is no allocation order for such immediate crosses. Therefore,
current subparagraph (b)(1)(B)(ii) is unnecessary.
     The proposed rule change moves all provisions regarding
allocation of the Agency Order (including from current subparagraphs
(b)(1)(A) and (B) and (b)(4)(B)) to proposed paragraph (e). The
proposed rule change sets forth the exact order in which the Agency
Order will be allocated to contra-side interest when there is no price
improvement, when there is price improvement with a single-price
submission, and when there is price improvement with auto-match. Except
as discussed above, the proposed rule change makes no substantive
changes to the order in which the Agency Order is allocated to contra-
side interest. The Exchange believes this clarifies the allocation and
priority provisions at the end of an AIM Auction.
     The proposed rule change adds detail regarding when the
nondisplayed portions of Reserve Orders will trade against the Agency
Order. Specifically, proposed subparagraphs (e)(2) and (3) provides
that the nondisplayed Reserve Quantity will trade against the Agency
Order at each price level better than the final auction price, after
all displayed quantity at each price level (and after the Initiating
Order if auto-match was selected). This is consistent with Rule
21.8(l), which provides that displayed

orders have priority over nondisplayed orders, and that customer
nondisplayed orders trade ahead of non-customer nondisplayed orders (if
the Customer Overlay has been applied). This is consistent with current
priority principles and functionality, and the proposed rule change is
adding this detail to the Rules. The Exchange believes this is
appropriate, as it ensures all interest (including nondisplayed
interest) at a better price than the final auction price will trade
against the Agency order (and thus provide maximum opportunity for
price improvement), while encouraging the submission of displayed
orders, as nondisplayed interest at the final auction price will not
trade, as remaining interest at the final auction price will trade
against the Initiating Order. The one exception to this is, as provided
in proposed subparagraph (e)(5), if the Initiating Member selects last
priority, any nondisplayed interest at the final auction price will
trade ahead of the Initiating Order, which is consistent with the
Initiating Member's intentions by submitting the request for last
priority.
    The proposed rule change makes certain rule language plain English,
updates cross-references as necessary, and inserts defined terms as
appropriate.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\17\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \18\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, 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. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \19\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ Id.
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    In particular, the proposed rule change to permit the Initiating
Order to be comprised of multiple contra-party orders will benefit
investors, because it may increase the opportunity for customers to
have orders participate in an AIM auction. As a result, this would
increase opportunities for price improvement, because this will
increase the liquidity available for the Initiating Order, which is
consistent with the purpose of AIM Auctions. The Exchange believes that
this will be beneficial to participants because allowing multiple
contra-parties should foster competition for filling the Initiating
Order and thereby result in potentially better prices, as opposed to
only allowing one contra-party and, thereby requiring that contra-party
to do a larger size order which could result in a worse price for the
trade. The proposed rule change is also based on rules of other options
exchanges.\20\
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    \20\ See, e.g., Cboe Options Rule 6.74A and Regulatory Circular
RG17-074 (May 19, 2017); and ISE Rule 723(b).
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    The proposed Sweep and AIM order type is similar to current AIM ISO
functionality, except the Exchange will route the ISO orders on behalf
of the Initiating Member rather than require the Initiating Member to
separately route ISO orders. This will benefit investors and remove
impediments to and perfect the mechanism of a free and open market and
a national market system, as it will provide Users with an additional,
efficient method to initiate an AIM while preventing trade-throughs.
The proposed rule change is also based on the rules of another options
exchange.\21\
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    \21\ See, e.g., Cboe Options Rule 6.53(r).
---------------------------------------------------------------------------

    The proposed rule change to provide that the Initiating Order will
be allocated the greater of one contract or the specified percentage
will ensure that the Initiating Order will receive at least a partial
execution in an AIM Auction of a small order. This will incentive
Options Members to continue submit customer orders into AIM auctions
for potential price improvement, which ultimately benefits investors.
This proposed change is the same as other options exchanges.\22\
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    \22\ See, e.g., Cboe Options Rule 6.74A(b)(3)(F); and MIAX Rule
515A(a)(2)(iii)(H).
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    The proposed rule change to provide that the Initiating Order's
percentage allocation will be based on the number of contracts
remaining after the Agency Order executes against Public Customer
orders will promote just and equitable principles of trade, as it
ensures the size used to determine the allocation percentage for the
Initiating Order will be based on the same number of contracts that
would otherwise be available to other contra-side interest. It is also
the same as other options exchanges.\23\
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    \23\ See, e.g., ISE Rule 723(d)(2); and MIAX Rule 515A,
Interpretation and Policy .11. While this functionality is not
specified in Cboe Options Rule 6.74A, it is the Exchange's
understanding this proposed rule change is consistent with Cboe
Options functionality.
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    The proposed rule change to not immediately cross a pair of orders
for customer accounts at the same price as any Priority Customer order
resting on the EDGX Options Book, and to cancel an Agency Order if
there is a Priority Customer order resting on the opposite side of the
market at the same price (as currently occurs if there is a Priority
Customer order resting on the same side of the market at the same
price), will protect customer orders that enter the EDGX Options Book.
This proposed rule change is the same as the rules of another options
exchange.\24\ The Exchange believes it promotes just and equitable
principles of trade to limit immediate crosses without auctions only
when there are no Priority Customer orders resting on the Book, as that
is consistent will protect Priority Customer orders on the book, which
may then have opportunities to trade against Agency Orders. The
Exchange similarly believes it will protect investors by rejecting
Sweep and AIM orders with pairs of orders for customer accounts, as
this will ensure customers will receive better prices at least as good
as the Initial NBBO and not oversubscribe the Agency Order. The
Exchange does believes there is minimal demand for use of Sweep and AIM
orders for pairs of Priority Customer orders.
---------------------------------------------------------------------------

    \24\ See Cboe Options Rule 6.74A, Interpretation and Policy .08.
---------------------------------------------------------------------------

    The proposed clarifications and nonsubstantive changes will benefit
investors, as they provide additional detail and transparency to the
rules regarding the AIM Auction process, including the AIM eligibility
requirements, AIM response parameters, and allocation of the Agency
Order following an AIM Auction. This includes the proposed
clarification that an Initiating Member may not designate an Agency
Order or Initiating Order as Post Only. This clarification protects
investors, because provides transparency regarding functionality that
is not available on BAM today. The Exchange believes this is
appropriate, as the purpose of a Post Only order is to not execute upon
entry and instead rest in the EDGX Options Book, while the

purpose of submitting orders to an AIM Auction is to receive an
execution following the auction and not to have those orders enter the
EDGX Options Book. Pursuant to current and proposed Rule 21.19, an
Agency Order will fully execute against contra-side interest (possibly
including the Initiating Order, which must be for the same size as the
Agency Order, and thus there cannot be remaining contracts in an Agency
Order to enter the EDGX Options Book if there is an execution following
a BAM/AIM Auction). This proposed clarification is not changing current
functionality, and the Post Only designation is not available to any
Initiating Member for Agency Orders and Initiating Orders.
    The proposed clarification that provides an AIM response that
crosses the Initial NBBO is capped at the Initial NBBO on the same side
as the Agency Order and $0.01 better than the EDGX BBO on the same side
as the Agency Order if the EDGX BBO is represented by a Priority
Customer on the EDGX Options Book (unless the Agency Order is an AIM
ISO or Sweep and AIM), and that an AIM response will execute, if
possible, at the most aggressive permissible price not outside the
Initial NBBO protects investors, because it adds detail to the rules
regarding current functionality. Current Rule 21.19 may imply the
System may not accept responses that cross the Initial NBBO. However,
because responses are a source of liquidity and potential price
improvement, the Exchange believes it is appropriate to instead accept
these responses and cap them at the Initial NBBO. This promotes just
and equitable principles of trade, because it is consistent with the
requirement that the stop price (which is the minimum price at which
the Agency Order may execute) must be at or better than the Initial
NBBO, and will ensure the execution price does not cross the Initial
NBBO in accordance with linkage rules. This proposed clarification is
not changing current functionality, and this functionality applies in
the same manner to the responses of all Users.
    The proposed clarification to state that the stop price
requirements that apply to Agency Orders for less than 50 standard
option contracts and to Agency Orders for 50 standard option contracts
or more similarly apply to the corresponding number of mini-option
contracts (i.e., 500 mini-option contracts) protects investors, because
it is consistent with current functionality. Rule 19.6, Interpretation
and Policy .07 permits the listing of mini-options, which is an option
with a 10 share deliverable of the underlying security rather than 100
share deliverable of the underlying security (which is the standard
deliverable for a standard option contract). The proposed change to
state that 50 standard option contracts is consistent with 500 mini-
option contracts is consistent with this definition of mini-options.
This provides transparency to investors that AIM functionality and the
potential for price improvement is available to Agency Orders for mini-
options as well as standard options. The proposed clarification also
promotes fair and equitable principles of trade, because the volume
restrictions apply in the same manner to an equivalent number of
contracts in a standard option and a mini-option. This proposed
clarification does not impose any significant burden on competition, as
it applies in the same manner to all Agency Orders and is also the same
as Cboe Options Rule 6.74A(a)(3).
    Additionally, these proposed changes reorganize Rule 21.19 so that
all provisions related to the same part of the auction process and
located in the same part of the rule. These proposed changes have no
impact on how the AIM Auction will work, as they are consistent with
current functionality.
    The proposed rule change is generally intended to align system
functionality currently offered by the Exchange with Cboe Options
functionality in order to provide a consistent technology offering for
the Cboe Affiliated Exchanges. A consistent technology offering, in
turn, will simplify the technology implementation, changes, and
maintenance by Users of the Exchange that are also participants on Cboe
Affiliated Exchanges. The Exchange believes this consistency will
promote a fair and orderly national options market system. When Cboe
Options migrates to the same technology as that of the Exchange and
other Cboe Affiliated Exchanges, Users of the Exchange and other Cboe
Affiliated Exchanges will have access to similar functionality on all
Cboe Affiliated Exchanges. As such, the proposed rule change would
foster cooperation and coordination with persons engaged in
facilitating transactions in securities and would remove impediments to
and perfect the mechanism of a free and open market and a national
market system.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange does not
believe the proposed rule change will impose any burden on intramarket
competition, as the proposed rule change will apply in the same manner
to all orders submitted to an AIM Auction. With respect to the proposed
changes that limit the Immediate Customer-to-Customer AIM crosses,
those changes will apply in the same manner to all pairs of customer
orders submitted in those circumstances. The Exchange does not believe
the proposed rule change will impose any burden on intermarket
competition, because the proposed changes, as described above and
below, are based on rules for similar price improvement auction
mechanisms at other options exchanges.

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

    The Exchange neither solicited nor received comments on the
proposed rule change.

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

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \25\ and Rule 19b-
4(f)(6) thereunder.\26\
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    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \27\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \28\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has asked the Commission to waive the 30-day operative delay. The
Exchange states that waiver of the operative delay would allow the
Exchange to continue towards a complete technology integration of the
Cboe Affiliated Exchanges. According to the Exchange, a consistent
technology offering will simplify the technology implementation,
changes, and

maintenance by Options Members of the Exchange that are also
participants on Cboe Affiliated Exchanges. The Exchange notes that it
intends to implement the proposed rule change on March 21, 2019. The
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Therefore, the Commission hereby waives the operative delay and
designates the proposal as operative upon filing.\29\
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    \27\ 17 CFR 240.19b-4(f)(6).
    \28\ 17 CFR 240.19b-4(f)(6)(iii).
    \29\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CboeEDGX-2019-007 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CboeEDGX-2019-007. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10 a.m. and 3 p.m.
Copies of such filing also will be available for inspection and copying
at the principal office of the Exchange. All comments received will be
posted without change. Persons submitting comments are cautioned that
we do not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-
CboeEDGX-2019-007, and should be submitted on or before April 3, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-04561 Filed 3-12-19; 8:45 am]
BILLING CODE 8011-01-P