[Federal Register Volume 79, Number 56 (Monday, March 24, 2014)]
[Notices]
[Page 15996]
[FR Doc No: 2014-06349]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OA-2014-0112; FRL-9908-61-OD]

National and Governmental Advisory Committees to the U.S.
Representative to the Commission for Environmental Cooperation

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of Advisory Committee Meeting.

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SUMMARY: Under the Federal Advisory Committee Act, Public Law 92-463,
Environmental Protection Agency (EPA) gives notice of a meeting of the
National Advisory Committee (NAC) and Governmental Advisory Committee
(GAC) to the U.S. Representative to the North American Commission for
Environmental Cooperation (CEC). The National and Governmental Advisory
Committees advise the EPA Administrator in her capacity as the U.S.
Representative to the CEC Council. The committees are authorized under
Articles 17 and 18 of the North American Agreement on Environmental
Cooperation (NAAEC), North American Free Trade Agreement Implementation
Act, Public Law 103-182, and as directed by Executive Order 12915,
entitled ``Federal Implementation of the North American Agreement on
Environmental Cooperation.'' The NAC is composed of 15 members
representing academia, environmental non-governmental organizations,
and private industry. The GAC consists of 14 members representing
state, local, and Tribal governments. The committees are responsible
for providing advice to the U.S. Representative on a wide range of
strategic, scientific, technological, regulatory, and economic issues
related to implementation and further elaboration of the NAAEC.
    The purpose of the meeting is to provide advice on issues related
to the 20th Anniversary of the North American Agreement on
Environmental Cooperation and discuss other trade and environment
issues. The meeting will also include a public comment session. The
agenda and meeting materials will be available at http://www.regulations.gov under Docket ID: EPA-HQ-OA-2014-0112. General
information about NAC and GAC can be found at http://www.epa.gov/ofacmo/nacgac-page.htm.

DATES: The National and Governmental Advisory Committees will hold an
open meeting on Thursday, April 10, 2014, from 9:00 a.m. to 5:00 p.m.,
and Friday, April 11, 2014, from 9:00 a.m. until 3:00 p.m.

ADDRESSES: The meeting will be held at the U.S. EPA, Conference Room
2138, located in the William Jefferson Clinton South Building, 1201
Constitution Ave. NW., Washington, DC 20004. Telephone:<PHONE_NUMBER>.
The meeting is open to the public, with limited seating on a first-
come, first-served basis.

FOR FURTHER INFORMATION CONTACT: Oscar Carrillo, Designated Federal
Officer<EMAIL_ADDRESS>202-564-0347, U.S. EPA, Office of
Diversity, Advisory Committee Management and Outreach (1601-M), 1200
Pennsylvania Avenue NW., Washington, DC 20460.

SUPPLEMENTARY INFORMATION: Requests to make oral comments, or provide
written comments to the committees, should be sent to Oscar Carrillo,
Designated Federal Officer, at the contact information above. If you
plan to attend, please register with Ms. Stephanie McCoy, by April 4th
by calling<PHONE_NUMBER> or via email at<EMAIL_ADDRESS>Please
provide your name, organization, address and telephone number.
    Meeting Access: For information on access or services for
individuals with disabilities, or to request accommodation of a
disability, please contact Oscar Carrillo, at least 10 days prior to
the meeting to give EPA as much time as possible to process your
request.

    Dated: March 12, 2014.
Oscar Carrillo,
Designated Federal Officer.
[FR Doc. 2014-06349 Filed 3-21-14; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register: April 11, 2006 (Volume 71, Number 69)]
[Notices]
[Page 18395-18401]
[DOCID:fr11ap06-149]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53598; File No. SR-NASD-2005-080]

Self-Regulatory Organizations: National Association of Securities
Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment
Nos. 1, 2 and 3 thereto to Establish New NASD Rule 2290 Regarding
Fairness Opinions

April 4, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 24, 2005, the National Association of Securities Dealers, Inc.
(``NASD'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by NASD. On November
30, 2005, NASD filed Amendment No. 1 to the proposed rule change.\3\ On
January 25, 2006, NASD filed Amendment No. 2 to the proposed rule
change.\4\ On March 1, 2006, NASD filed Amendment No. 3 to the proposed
rule change.\5\ The Commission is publishing this notice to solicit
comments on the proposed rule change, as amended, from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, which supplemented the original filing,
NASD modified the scope of the proposed rule change and made certain
clarifications to the rule text following discussions with
Commission staff.
    \4\ In Amendment No. 2, NASD added clarifying language to the
rule text following discussions with Commission staff.
    \5\ Amendment No. 3 was a technical amendment and replaced and
superseded the original filing, as amended, in its entirety.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    NASD is proposing to establish new NASD Rule 2290 to address
disclosures and procedures concerning the issuance of fairness
opinions. Below is the text of the proposed rule change. Proposed new
language is in italics; proposed deletions are in brackets.
* * * * *

2200. COMMUNICATIONS WITH CUSTOMERS AND THE PUBLIC

* * * * *

2290. Fairness Opinions

(a) Disclosures

    Any member issuing a fairness opinion that may be provided, or
described, or otherwise referenced to public shareholders must
disclose, to the extent not otherwise required, in such fairness
opinion:
    (1) whether such member has acted as a financial advisor to any
transaction that is the subject of the fairness opinion, and, if
applicable, that it will receive compensation for:
    (A) rendering the fairness opinion that is contingent upon the
successful completion of the transaction;
    (B) serving as an advisor that is contingent upon the successful
completion of the transaction;
    (2) whether such member will receive any other payment or
compensation contingent upon the successful completion of the
transaction;
    (3) whether there is any material relationship that existed during
the past two years or is mutually understood to be contemplated in
which any compensation was received or is intended to be received as a
result of the relationship between the member and the companies that
are involved in the transaction that is the subject of the fairness
opinion;
    (4) the categories of information that formed a substantial basis
for the fairness opinion that was supplied to the member by the company
requesting the opinion concerning the companies involved in the
transaction and whether any such information in each such category has
been independently verified by the member; and
    (5) whether the fairness opinion was approved or issued by a
fairness committee.

(b) Procedures

    Any member issuing a fairness opinion must have procedures that
address the process by which a fairness opinion is approved by a firm,
including:
    (1) the types of transactions and the circumstances in which the
member will use a fairness committee to approve or issue a fairness
opinion, and in such transactions where it uses a fairness committee:
    (A) the process for selecting personnel to be on the fairness
committee;
    (B) the necessary qualifications of persons serving on the fairness
committee; and
    (C) the process to promote a balanced review by the fairness
committee, including review and approval by persons who do not serve on
or advise the ``deal team'' to the transaction;
    (2) the process to determine whether the valuation analyses used in
the fairness opinion are appropriate, and the procedures should state
the extent to which the appropriateness of the use of such valuation
analyses is determined by the type of company or transaction that is
the subject of the fairness opinion; and
    (3) the process to evaluate whether the amount and nature of the
compensation from the transaction underlying the fairness opinion
benefiting any individual officers, directors or employees, or class of
such persons, relative to the benefits to shareholders of the company,
is a factor in reaching a fairness determination.
* * * * *

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

    In its filing with the Commission, NASD 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. NASD 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
    NASD notes that a fairness opinion addresses, from a financial
point of view, the fairness of the consideration in a transaction.
Fairness opinions are routinely used by directors of a company in
corporate control transactions to satisfy their fiduciary duties to act
with due care and in an

informed manner. Although not required by statute or regulation,
fairness opinions have become commonplace in corporate control
transactions following the 1985 Delaware Supreme Court case of Smith v.
Van Gorkom,\6\ in which a corporate board was held to have breached its
fiduciary duty of care by approving a merger without adequate
information on the transaction, including information on the value of
the company and the fairness of the offering price.
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    \6\ Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985).
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    NASD notes that, while a fairness opinion addresses the fairness,
from a financial point of view, of the consideration involved in a
transaction, it does not indicate whether the price of a particular
transaction is the best price that could be attained. Rather, it opines
on whether the price is ``fair'' or within an acceptable range of
values. A fairness opinion is prepared for a company's board of
directors; however, it is often provided to shareholders as part of
proxy materials. Inasmuch as a fairness opinion is not required by
regulation or statute, the board of directors determines whether to
obtain a fairness opinion, the scope of such opinion, and the party
preparing such opinion.
    NASD has been concerned that the disclosures provided in fairness
opinions may not sufficiently inform public shareholders about the
potential conflicts of interest that exist between the firm rendering
the fairness opinion and the issuer. Among these conflicts are fees
that the firm rendering the fairness opinion will receive upon the
successful completion of the transaction (either from advisory fees or
fees for the fairness opinion itself), as well as other material
relationships between the firm and the issuer (including, but not
limited to, serving as an underwriter, lender, market maker, asset
manager, or providing research coverage).
    NASD notes that, under the SEC's proxy rules, which apply to
issuers, certain disclosures about potential conflicts of interest are
provided to public shareholders. NASD believes that complementary rules
for disclosure aimed at broker-dealers rendering fairness opinions
would be beneficial. In addition, NASD believes that broker-dealers
should develop greater specificity in their written supervisory
procedures to guard against conflicts of interest in rendering fairness
opinions. To that end, NASD is proposing to identify specific
procedures that must be addressed by each firm that renders a fairness
opinion.
    Paragraph (a)(1) of the proposed rule change sets forth the
requirement for a member to disclose in any fairness opinion that may
be provided, or described, or otherwise referenced to public
shareholders, whether it has acted as a financial advisor to any
transaction that is the subject of the fairness opinion, and, if
applicable, that it will receive compensation for: (A) Rendering the
fairness opinion that is contingent upon the successful completion of
the transaction, or (B) serving as an advisor that is contingent upon
the successful completion of the transaction. Paragraph (a)(2) would
require disclosure of whether such member will receive any other
payment or compensation contingent upon the successful completion of
the transaction. Paragraph (a)(3) would require disclosure of whether
there is any material relationship that existed during the past two
years or is mutually understood to be contemplated, in which any
compensation was received or is intended to be received as a result of
the relationship between the member and the companies that are involved
in the transaction that is the subject of the fairness opinion.
    NASD intends that the disclosures contemplated by paragraphs
(a)(1)-(3) of the proposal be descriptive rather than quantitative. In
particular, paragraphs (a)(1) and (2) do not require firms to specify
the amount of compensation for rendering the fairness opinion, serving
as an advisor or otherwise, that is contingent upon the successful
completion of the transaction. For purposes of the proposed rule
change, NASD believes that it would be sufficient for investors to be
informed that such contingent compensation relationships exist.
Similarly, NASD intends that the disclosures in paragraph (a)(3)
pertaining to ``material relationships'' also be descriptive rather
than quantitative.
    Paragraph (a)(4) would require disclosure of the categories of
information that formed a substantial basis for the fairness opinion
that was supplied to the member by the company requesting the opinion
concerning the companies involved in the transaction and whether any
such information has been independently verified by the member.
According to NASD, such disclosure must inform investors about the
categories of information (such as projected earnings and revenues,
expected cost-savings and synergies, industry trends and growth rate)
that formed a substantial basis for the fairness opinion, and with
respect to each category, whether the member has independently verified
the information supplied by the company.
    Finally, paragraph (a)(5) would require disclosure of whether the
fairness opinion was approved or issued by a fairness committee and
informs investors of whether the fairness opinion was the product of a
fairness committee.
    Paragraph (b)(1) of the proposed rule change contains the
procedures members must follow in issuing a fairness opinion, including
the types of transactions and the circumstances in which the member
will use a fairness committee to approve or issue a fairness opinion,
and, in such transactions where it uses a fairness committee: (A) The
process for selecting personnel to be on the fairness committee; (B)
the necessary qualifications of persons serving on the fairness
committee; and (C) the process to promote a balanced review by the
fairness committee, including review and approval by persons who do not
serve on or advise the ``deal team'' to the transaction.
    The procedures in paragraph (b)(2) would require members to have a
process to determine whether the valuation analyses used in the
fairness opinion are appropriate. In addition, the member's procedures
should state the extent to which the appropriateness of the use of such
valuation analyses is determined by the type of company or transaction
that is the subject of the fairness opinion. Finally, paragraph (b)(3)
would require members to have a process to evaluate whether the amount
and nature of the compensation from the transaction underlying the
fairness opinion benefits any individual officers, directors or
employees, or class of such persons, relative to the benefits to
shareholders of the company, is a factor in reaching a fairness
determination.
    NASD intends to announce the effective date of the proposed rule
change in a Notice to Members to be published no later than 60 days
following Commission approval. The effective date will be 30 days
following publication of the Notice to Members announcing Commission
approval.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act, which requires, among other
things, that NASD rules must be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. NASD believes that investors and the public interest
will benefit from additional disclosure of potential conflicts of
interest in connection with fairness opinions rendered by broker-

dealers. NASD also believes that members should develop and adhere to
more detailed procedures to mitigate potential conflicts in rendering
fairness opinions.

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

    NASD does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.

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

    The proposed rule change was published for comment in NASD Notice
to Members 04-83 (November 2004). Twenty comment letters were received
in response to the Notice.\7\ Of the twenty comment letters received,
twelve were in favor of the proposed rule change, seven were opposed,
and one expressed no opinion.
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    \7\ Letter from Lerner College of Business and Economics,
University of Delaware dated Nov. 24, 2004; Letter from Ohio Public
Employees Retirement System dated Nov. 30, 2004; Letter from Ohio
Retirement Systems dated Dec. 9, 2004; Letter from Charles M. Elson,
Arthur H. Rosenbloom, and Drew G.L. Chapman dated Dec. 21, 2004;
Letter from The Canadian Institute of Chartered Business Valuators
dated Jan. 6, 2005; Letter from American Federation of Labor and
Congress of Industrial Organizations (``AFL-CIO'') dated Jan. 10,
2005; Letter from Kane & Company, Inc. (``Kane'') dated Jan. 10,
2005; Letter from Standard & Poor's Corporate Value Consulting
(``S&P'') dated Jan. 10, 2005; Letter from Council of Institutional
Investors dated Jan. 12, 2005; Letter from The Committee on
Securities Regulation of the Business Law Section of the New York
State Bar Association dated Jan. 26, 2005; Letter from Cravath,
Swaine & Moore LLP dated Jan. 31, 2005; Letter from HFBE Capital,
L.P. dated Jan. 31, 2005; Letter from Signal Hill Capital Group LLC
dated Jan. 31, 2005; Letter from Sutter Securities Incorporated
dated Jan. 31, 2005; Letter from California Public Employees'
Retirement System (``CalPERS'') dated Feb. 1, 2005; Letter from
Davis Polk & Wardwell (``David Polk'') dated Feb. 1, 2005; Letter
from Dewey Ballantine LLP dated Feb. 1, 2005; Letter from Houlihan
Lokey Howard & Zukin (``Houlihan Lokey'') dated Feb. 1, 2005; Letter
from Securities Industry Association dated Feb. 1, 2005; and Letter
from The Special Committee on Mergers, Acquisitions and Corporate
Control Contests of the Association of the Bar of the City of New
York dated Feb. 1, 2005.
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    In Notice to Members 04-83, NASD solicited comment on whether to
propose a new rule that would require disclosures and procedures in
connection with conflicts of interest when members provide fairness
opinions in corporate control transactions. Although Notice to Members
04-83 did not contain specific rule text, it proposed the following:
    1. Any fairness opinion rendered by a member and contained in a
proxy statement shall describe a clear and complete description of the
material conflicts of interests in issuing the opinion, including the
nature of any contingent compensation that the member would receive
upon successful completion of the transaction.
    2. The member would be required to disclose in the fairness opinion
the extent upon which it either relied on the information supplied by
the company or independently verified such information.
    3. The member would need to maintain written policies and
procedures that, with respect to the issuance of fairness opinions,
address:
     the approval process by the member; if the member uses a
fairness committee, then the level of experience for committee members,
how balanced approval is undertaken and whether steps have been taken
to require review by persons whose compensation is not directly related
to the transaction;
     the manner by which it will be determined that the
appropriate valuation process will be used in light of the nature of
the transaction and the types of companies that are involved; and
     whether, in a particular transaction, the relative
compensation to company insiders versus shareholders is a factor in
reaching a fairness determination.
    One of the central elements of Notice to Members 04-83 was that any
fairness opinion rendered by a member and contained in a proxy
statement describe a clear and complete description of the significant
potential conflicts of interests in issuing the opinion, including the
nature of any contingent compensation that the member would receive
upon successful completion of the transaction.

A. What Constitutes a Conflict of Interest?

    Many commenters recognized the need for disclosure of potential
conflicts of interest, although several commenters took issue with the
term ``conflict of interest'' and instead preferred the term ``material
relationships'' as used in SEC's Regulation M-A. Notice to Members 04-
83 focused on potential conflicts arising from serving as advisor to
the transaction, such as receiving a contingency fee for a completed
transaction. Many commenters believed that a success fee, either for
the fairness opinion or the transaction in question, should be
disclosed. One commenter noted that potential conflicts of interest may
arise under many other circumstances, including serving as an
underwriter, lender, market maker, asset manager, or providing research
coverage.
    Several commenters noted that existing rules of the SEC and common
law currently require extensive disclosure in connection with fairness
opinions and urged NASD to make sure its rules were consistent with
these existing requirements. There was some support for a rule that
``complements'' existing disclosure requirements. NASD believes that
the proposed rule change is consistent with existing SEC requirements.
In the proposed rule change, NASD would require disclosure of ``whether
there is any material relationship that existed during the past two
years or is mutually understood to be contemplated in which any
compensation was received or is intended to be received as a result of
the relationship between the member and the companies that are involved
in the transaction that is the subject of the fairness opinion.'' This
disclosure is based on the requirements in Item 1015(b)(4) of SEC's
Regulation M-A.\8\ NASD has not sought to require firms to identify
``any significant conflicts of interest'' as originally proposed in
Notice to Members 04-83.
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    \8\ 17 CFR 229.1015(b)(4).
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    While the rule text of paragraph (a)(3) of the proposed rule change
was modeled after Item 1015(b)(4), NASD does not intend to construe
this section to require quantitative disclosures of the compensation
from each material relationship. For purposes of the proposed rule
change, NASD believes it will be sufficient for investors to be
informed about the material relationships that exist.
    NASD also notes that the proposed rule change differs slightly from
Item 1015(b)(4) in that the proposed rule change applies to a material
relationship between ``the member and the companies'' involved in the
transaction, whereas Item 1015(b)(4) applies only to the member (and
its affiliates) and the company (and its affiliates) for which the
member is rendering the fairness opinion. NASD believes that investors
should be informed of material relationships between the firm authoring
the fairness opinion and the companies involved on both sides of the
transaction. Moreover, given the narrative (i.e., non-quantitative)
focus of this paragraph, NASD believes the additional disclosures are
not likely to be burdensome on firms or confusing to investors. NASD
notes, however, that unlike Item 1015, Rule 2290 does not reach to
affiliates of such companies. NASD intends to review the comment
letters received by the SEC before determining whether to amend
paragraph (a)(3) to include affiliates.

    Several commenters asked NASD to ``take stronger measures'' to
address conflicts in connection with fairness opinions, including
requiring ``independent'' fairness opinions rendered by outside experts
that are not connected to the transaction. One commenter recommended
prohibiting investment banks from receiving success fees for
transactions in which they issue fairness opinions. And another
commenter urged an outright ban on arrangements in which part of an
investment bank's fee for rendering a fairness opinion is contingent on
the transaction closing.
    NASD has considered carefully those comments urging stronger
measures such as an independent fairness opinion or a prohibition on
success fees. As a starting point to its analysis, NASD notes that
fairness opinions are not required by regulation or statute; a board of
directors determines whether to obtain a fairness opinion, and if so,
what the scope of a fairness opinion shall be and who shall prepare
such opinion. In addition, NASD believes that, to the extent that a
board of directors wants a fairness opinion from a firm not serving as
an advisor to the transaction, or to structure payments without a
contingency fee, it can do so.
    NASD notes that arguments that independent fairness opinions or
those without a success fee component offer advantages may be well-
founded. However, it is NASD's view that such matters are more
appropriately situated within the purview of the board of directors and
state corporation law. NASD believes that disclosure and procedures
constitute the appropriate course in mitigating potential conflicts of
interest in the rendering of fairness opinions, not otherwise limited
under applicable law, by NASD members.
    Moreover, NASD believes that the lack of consensus among those
commenters urging NASD to take stronger measures supports the more
uniform course of disclosure and procedures. Whereas CalPERS asked NASD
to prohibit ``investment banks from receiving `success' fees for
transactions in which they issue fairness opinions,'' \9\ the AFL-CIO
sought only to prohibit ``arrangements in which part of an investment
bank's fee for rendering its opinion is contingent on the transaction
closing.'' \10\ Some commenters, such as Kane, want to forbid firms
with a certain threshold amount of securities business with a company
from rendering a fairness opinion, whereas AFL-CIO ``do[es] not believe
the mere existence of a business relationship with a company should
disqualify an investment bank from providing a fairness opinion.'' \11\
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    \9\ CalPERS, at 2.
    \10\ AFL-CIO, at 3.
    \11\ Id., at 1.
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    As NASD noted above, fairness opinions are obtained by boards of
directors to satisfy their fiduciary duties to act with due care and in
an informed manner. NASD further notes that a fairness opinion is not
an automatic defense to a claim that a board breached its fiduciary
duties. Courts regularly examine the circumstances surrounding a
fairness opinion to determine whether it can be relied upon by the
board in satisfaction of its fiduciary duties. Thus, NASD notes that
boards of directors must today take into account whether an issuer's
relationship with an investment bank compromises the purposes for which
the fairness opinion is sought. NASD believes that the disclosure
standards in these proposed rules would be an important aid to an
issuer's board in making that determination.

B. To Whom Should Disclosure be Made?

    Some commenters believe that the proposed rule change should only
require disclosure of potential conflicts by the member to the board of
directors, citing concerns about breach of confidentiality if
relationships between the member firm authoring the fairness opinion
and its issuer client were publicly disclosed. Others believe that
disclosure should be made more broadly, including in the fairness
opinion itself, so that any reader of the fairness opinion can assess
the conflicts associated with such opinion. NASD believes that, in
general, a board of directors already is in a position to become
informed about the potential conflicts with an investment bank that it
chooses to render a fairness opinion. NASD notes, however, that
investor-shareholders typically do not occupy the same such position.
As stated in Notice to Members 04-83, NASD's concern is that investors
may not be sufficiently informed ``about the subjective nature of some
opinions and their potential biases.'' Accordingly, the proposed rule
change requires disclosures by any member issuing a fairness opinion
that may be provided, or described, or otherwise referenced to public
shareholders. The requirements attach to any such fairness opinion
issued by a member, regardless of whether it is included in proxy
materials.

C. Verification

    As NASD noted above, the proposal in Notice to Members 04-83 would
require a firm to disclose in a fairness opinion the extent upon which
it either relied on the information supplied by the company or
independently verified such information. Nearly every party commenting
on this provision stated that firms as a matter of course already
disclose in the fairness opinion that they do not independently verify
information provided by the issuer. While most commenters did not
believe that there was any need for an NASD rule given current
practices, the commenters did not oppose NASD rulemaking so long as it
did not create a requirement for firms to verify information before
rendering a fairness opinion. Many commenters stated that the terms of
engagement for rendering a fairness opinion do not call for independent
verification of information provided by management, and that other
entities, such as forensic accountants, would be better skilled to
verify data. S&P suggested that fairness opinions include disclosure of
the information provided by management upon which the opinion is based,
and could take the form of a ``List of Documents Relied Upon,'' similar
to that which accompanies an expert's report in commercial
litigation.\12\
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    \12\ S&P, at 2-3.
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    The proposed rule change would not require a member to
independently verify data provided by the issuer. NASD agrees with
commenters that the scope of a firm's obligations in rendering a
fairness opinion is set forth in the terms of engagement with the
client, and it is not required that such terms call for independent
verification. NASD believes, however, that, to the extent categories of
information (such as projected earnings and revenues, expected cost-
savings and synergies, industry trends and growth rate) that were
supplied by the company requesting the opinion formed a substantial
basis for the fairness opinion, and information in each such category
was not independently verified, readers of the fairness opinion should
be apprised of this fact. Accordingly, the proposed rule change
requires members to identify categories of information that formed a
substantial basis for the fairness opinion and with respect to such
information, whether any such information in each such category has
been independently verified by the member. NASD notes that the proposed
rule change goes beyond current practices in which firms

state, for example, ``[w]e have not independently verified the accuracy
and completeness of the information supplied to us with respect to the
[client] and do not assume any responsibility with respect to it.''
\13\ According to NASD, blanket statements that members have not
verified information will not by themselves comply with the proposed
rule change; members must identify information that formed a
substantial basis for the fairness opinions and disclose whether such
information was independently verified.
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    \13\ Houlihan Lokey, at 4.
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D. Written Policies and Procedures

1. Fairness Opinion Committee
    NASD solicited comment on whether to require written procedures
governing the approval process by the member, including whether it uses
a fairness committee, the level of experience for fairness committee
members, how balanced approval is undertaken and whether steps have
been taken to require review by persons whose compensation is not
directly related to the transaction. Most commenters believed that
firms already had procedures in place governing fairness opinions.
Notwithstanding this fact, several commenters supported a well-tailored
rule in this area. Commenters believed that NASD rulemaking should,
however, provide the flexibility to allow each firm to determine the
best manner of implementing effective and efficient procedures for
reviewing and approving fairness opinions. Several commenters opposed
any rule in which NASD would mandate specific procedures that must be
followed. These commenters believed that the firms themselves--and not
NASD--should determine what policies and procedures should be followed
in rendering a fairness opinion.
    NASD believes that the proposed rule change is both well-tailored
and flexible enough to allow firms to determine how to best implement
effective and efficient procedures for reviewing and approving fairness
opinions. The specific requirements were discussed in Item II.A.1
above.
2. Valuation
    NASD also solicited comment on whether to require written policies
and procedures on the manner by which it will be determined that the
appropriate valuation process will be used in light of the nature of
the transaction and the types of companies that are involved. The
commenters generally were concerned about any NASD rule that would
interfere with the selection of the best methodology for a transaction.
    NASD does not believe the requirement in the proposed rule change
to have written polices and procedures concerning the process to
determine whether the valuation analyses used in the fairness opinion
are appropriate, nor the requirement that procedures should state the
extent to which the appropriateness of the use of such valuation
analyses is determined by the type of company or transaction that is
the subject of the fairness opinion, will interfere with a firm's
ability to select the most appropriate methodology for a transaction.
NASD believes that the procedures developed by the firm should be
designed to allow the firm to identify and use the correct valuation
methodology. In addition, NASD believes that the procedures should
prevent the use of a particular valuation methodology at the behest of
an interested party when such methodology is inappropriate.
3. Relative Compensation
    Finally, NASD solicited comment on a requirement for broker-dealers
to have a process to evaluate whether the relative compensation to
corporate insiders versus other shareholders in a contemplated
transaction is a factor in reaching a fairness opinion.
    On the one hand, certain commenters felt the proposal did not go
far enough. There was a view that change of control provisions that are
a part of any transaction should be disclosed to shareholders as a
material factor to be considered as part of the proxy process because
often times such payments may be ambiguous or may not be expressly set
out in the deal terms of a transaction.
    With respect to these commenters, NASD believes the purpose of the
proposed requirement in this area is misunderstood. According to NASD,
the proposed rulemaking, as it pertains to dealing with the factor of
relative compensation in the fairness opinion process, is driven by the
regulatory goal of ameliorating this potential conflict through
procedures reasonably designed to consider whether in fact such
conflict exists and to what extent it may bear on the determination
that a transaction is fair. NASD states that it is not intended to
fashion additional substantive legal requirements more appropriately
addressed, in NASD's view, by state corporation law and the federal law
and rules concerning proxies. It is NASD's view that subjecting this
potential conflict to the rigor of appropriately and reasonably
designed procedures is an appropriate prophylactic with respect to a
factor that may or may not weigh on the determination that a
transaction is fair.
    On the other hand, other commenters felt that management's
interests in change of control transactions were not an applicable part
of the fairness opinion process because the appropriateness of
management compensation was beyond the scope of the fairness opinions,
was difficult or impossible to quantify, in many cases rested upon
arrangements that preceded the transaction, and required an expertise
in executive compensation that is beyond the competency of those
issuing fairness opinions.
    Again, NASD believes that these comments evidence a
misunderstanding of the proposed requirement. NASD does not believe
that broker-dealers issuing fairness opinions should review the
propriety of preexisting compensation arrangements as such matters
would be like any other preexisting fixed or contingent liability of
the corporation that cannot be altered by the terms of any change of
control transaction. According to the NASD, the intent of the proposed
requirement is that firms consider the extent to which the differential
in remuneration between management and other shareholders accruing from
the deal proceeds, for which there was no prior contractual commitment,
is a factor in determining the fairness of the transaction to
shareholders. NASD notes that the proposed requirement does not reach
the implicit conclusion that such differential payments are a factor as
to whether a transaction is fair but, in NASD's view, it would be
equally wrong to conclude that such differential payments are
inappropriately placed among the factors and indicia that one should
consider in rendering a fairness opinion. NASD believes it is true that
a fairness opinion merely states that the transaction is fair and does
not necessarily represent the best price. However, NASD also believes
it is true that the considerations surrounding the issuance of a
fairness opinion are artificially truncated when the total amount that
a buyer is willing to pay and how such payment is allocated is never an
appropriate factor in a change of control transaction.

E. Other

    S&P suggested greater transparency in fairness opinion pricing.
Insofar as the price of many fairness opinions is bundled with other
advisory services, S&P believed that corporate boards of directors are
often less willing to procure an independent fairness opinion. S&P
believed that full

disclosure of the fairness opinion fee, and in some instances, an
actual indication of the financial advisor's effort, could be
meaningful disclosure.\14\ NASD does not believe it should mandate
disclosure of the price or effort expended in preparing the fairness
opinion. With respect to price, it is NASD's view that if a board of
directors believes it would benefit from more detailed information
about prices, it is in a position to obtain that information from the
firm as a condition of engaging the firm to perform advisory and
fairness opinion services. With respect to effort, this seems to NASD a
potentially misleading metric upon which any reliance would be placed.
NASD believes that efforts, great or small, expended upon poorly
conceived procedures are of dubious value. Consequently, NASD believes
that the appropriate regulatory response is to require members to
employ processes framed by appropriately and reasonably designed
procedures.
---------------------------------------------------------------------------

    \14\ S&P, at 2.
---------------------------------------------------------------------------

    Davis Polk was concerned that NASD rules concerning fairness
opinions would discriminate against member firms, since fairness
opinions can be provided by non-broker-dealers.\15\ NASD recognizes
that firms not subject to NASD's jurisdiction are able to render
fairness opinions; however, NASD believes that this is not a
justification for failing to address actual or perceived conflicts of
interest in the brokerage industry or inadequacies in disclosure by
such firms.
---------------------------------------------------------------------------

    \15\ Davis Polk, at 3-4.
---------------------------------------------------------------------------

    Finally, several commenters suggested that existing judicial
precedent and oversight are more effective controls over the fairness
opinion process than would be a new NASD rule, and one commenter
suggested that NASD rulemaking may interfere with standards for
fairness opinions under corporate law. NASD recognizes and appreciates
the role of corporate law on the fairness opinion process. As NASD has
noted above, a fairness opinion must comply with corporate law to serve
its intended purpose--to satisfy their fiduciary duties to act with due
care and in an informed manner. While NASD understands its rules
operate in conjunction with judicial precedent, it does not believe
that judicial review should exclude NASD rulemaking. NASD notes that
many aspects of the securities laws are subject to extensive judicial
review, but that would be an illogical and novel barrier to SEC and SRO
rulemaking.

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    A. by order approve such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    The Commission notes that the NASD's proposal would not require
firms to quantify in the fairness opinion the amount of compensation
received that is contingent upon the successful completion of the
transaction or to be received as a result of any material relationship
between the member firm and any party to the transaction. The
Commission requests comment regarding whether the disclosures that
would be required by proposed Rule 2290(a)(1), (2), and (3) should be
quantified. Further, we request comment as to whether it would be more
informative to investors for firms to specifically state that a
conflict may exist and describe the impact of such conflict rather than
to merely state that compensation is contingent.
    The Commission further notes that the proposed disclosure of
material relationships does not extend to relationships with affiliates
of the member firm. The Commission requests comment regarding whether
the proposed disclosure obligation should cover material relationships
between the parties to the transaction and affiliates of the member
firm providing the fairness opinion.
    In addition, the Commission requests comment as to whether member
firms should be required to describe what type of verification they
undertook with respect to information that was supplied by the company
requesting the opinion that formed a substantial basis for the opinion.
Further, the Commission requests comment on whether members should be
required to obtain independent verification of such information.
    We also note that the proposed rule does not require disclosure of
the procedures utilized by the member firm. We request comment as to
whether member firms should disclose these procedures in the fairness
opinion or elsewhere.
    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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NASD-2005-080 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-NASD-2005-080. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
).

    Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room, 100 F Street, NE., Washington, DC
20549. Copies of such filing also will be available for inspection and
copying at the principal office of NASD.
    All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly. All submissions should refer to the File Number SR-NASD-2005-
080 and should be submitted on or before May 2, 2006.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
[FR Doc. E6-5237 Filed 4-10-06; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 85, Number 195 (Wednesday, October 7, 2020)]
[Notices]
[Pages 63352-63353]
[FR Doc No: 2020-22205]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[Docket Number FRA-2020-0081]

Petition for Waiver of Compliance

    Under part 211 of title 49 Code of Federal Regulations (CFR), this
document provides the public notice that on September 23, 2020,
Canadian National Railway Company (CN) petitioned the Federal Railroad
Administration (FRA) for a waiver of compliance from certain provisions
of the Federal railroad safety regulations contained at 49 CFR part
232, Brake System Safety Standards for Freight and Other Non-Passenger
Trains and Equipment; End-of-Train Devices. FRA assigned the petition
Docket Number FRA-2020-0081.
    CN seeks relief from the requirements of 49 CFR 232.219 regarding
the Class III airbrake test for helper locomotives equipped with the
``Helperlink'' system. Specifically, CN requests relief on trains with
one or more distributed power (DP) locomotives on the rear in helper
operations without cutting in the brake pipe to the helper locomotive.
    CN explains that the operation of trains over Steelton Hill, and
intermittently on Hawthorne Hill, near Superior, Wisconsin, as well as
Byron Hill, near Fond-Du-Lac, Wisconsin, require the use of helper
locomotives. CN currently shoves with conventional helper locomotives
and cannot utilize the ``Helperlink'' technology due to a lack of an
End-of-Train Telemetry Device on many trains with DP at the rear the
train. The number of trains with this configuration, particularly in
the bulk product category, has been steadily increasing over the past
few years.
    CN contends ``Helperlink'' technology will help to eliminate
unnecessary risks to transportation employees in helper service, as CN
helper service employees could couple and uncouple from trains being
assisted over grade from the rear without cutting in train-line air,
eliminating going between rolling equipment twice per train assisted.
The waiver would reduce (1) the amount of mounting and dismounting
equipment an employee does during their shift, and (2) related slip/
trip/fall incidents from occurring. Additionally, CN states relieving
train crews from stopping their trains at the top of mountain grades to
cut away helpers will improve the overall train handling scenario and
reduce the potential for in-train mechanical failures related to having
to start and stop trains on varying degrees of grade.
    A copy of the petition, as well as any written communications
concerning the petition, is available for review online at
www.regulations.gov.
    Interested parties are invited to participate in these proceedings
by submitting written views, data, or comments. FRA does not anticipate
scheduling a public hearing in connection with these proceedings since
the facts do not appear to warrant a hearing. If any interested parties
desire an opportunity for oral comment and a public hearing, they
should notify FRA, in writing, before the end of the comment period and
specify the basis for their request.
    All communications concerning these proceedings should identify the
appropriate docket number and may be submitted by any of the following
methods:
     Website: http://www.regulations.gov. Follow the online
instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: Docket Operations Facility, U.S. Department of
Transportation (DOT), 1200 New Jersey Ave. SE, W12-140, Washington, DC
20590.
     Hand Delivery: 1200 New Jersey Ave. SE, Room W12-140,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal Holidays.
    Communications received by November 23, 2020 will be considered by
FRA before final action is taken. Comments received after that date
will be considered if practicable.
    Anyone can search the electronic form of any written communications
and comments received into any of our dockets by the name of the
individual submitting the comment (or signing the document, if
submitted on behalf of an association, business, labor union, etc.).
Under 5 U.S.C. 553(c), DOT solicits comments from the public to better
inform its processes. DOT posts these comments, without edit, including
any personal information the commenter provides, to
www.regulations.gov, as described in the system of records

notice (DOT/ALL-14 FDMS), which can be reviewed at https://www.transportation.gov/privacy. See also https://www.regulations.gov/privacyNotice for the privacy notice of regulations.gov.

    Issued in Washington, DC.
John Karl Alexy,
Associate Administrator for Railroad Safety, Chief Safety Officer.
[FR Doc. 2020-22205 Filed 10-6-20; 8:45 am]
BILLING CODE 4910-06-P


[Federal Register: August 17, 2009 (Volume 74, Number 157)]
[Notices]
[Page 41416]
[DOCID:fr17au09-52]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 13404-000]

Clean River Power MR-3, LLC; Notice of Preliminary Permit
Application Accepted for Filing and Soliciting Comments, Motions To
Intervene, and Competing Applications

August 6, 2009.
    On March 25, 2009, Clean River Power MR-3, LLC filed an
application, pursuant to section 4(f) of the Federal Power Act,
proposing to study the feasibility of the Beverly Lock and Dam Water
Power Project, to be located at the State of Ohio's Beverly lock and
dam on the Muskingum River in Washington County, Ohio.
    The proposed Beverly Lock and Dam Project would consist of: (1) The
existing 17.0-foot-high, 535-foot-long concrete dam; (2) the existing
490-acre reservoir with a 3,345 acre-foot storage capacity; (3) a new
175-foot-long, 100-foot-wide intake structure; (4) a 120-foot-long,
100-foot-wide power canal; (5) a new powerhouse containing four
proposed generating units with a total installed capacity of 4.8
megawatts; (6) a new 250-foot-long tailrace; (7) a new switchyard
containing a single three-phase step-up transformer; and (8) a new
1,000-foot-long, 34.5-kilovolt overhead transmission line. The project
would have an estimated average annual generation of 19,300 megawatt-
hours.
    Applicant Contact: Mr. Alan Skelly, 8425 Beechmont Avenue,
Cincinnati, OH 45255, phone<PHONE_NUMBER>.
    FERC Contact: Michael Spencer,<PHONE_NUMBER>.
    Deadline for filing comments, motions to intervene, competing
applications (without notices of intent), or notices of intent to file
competing applications: 60 days from the issuance of this notice.
Comments, motions to intervene, notices of intent, and competing
applications may be filed electronically via the Internet. See 18 CFR
385.2001(a)(1)(iii) and the instructions on the Commission's Web site
under the ``e-Filing'' link. If unable to be filed electronically,
documents may be paper-filed. To paper-file, an original and eight
copies should be mailed to: Kimberly D. Bose, Secretary, Federal Energy
Regulatory Commission, 888 First Street, NE., Washington, DC 20426. For
more information on how to submit these types of filings please go to
the Commission's Web site located at http://www.ferc.gov/filing-
comments.asp. More information about this project can be viewed or
printed on the ``eLibrary'' link of Commission's Web site at http://
www.ferc.gov/docs-filing/elibrary.asp. Enter the docket number (P-
13404) in the docket number field to access the document. For
assistance, call toll-free 1-866-208-3372.

Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. E9-19603 Filed 8-14-09; 8:45 am]


[Federal Register: December 10, 2009 (Volume 74, Number 236)]
[Rules and Regulations]
[Page 65446-65449]
[DOCID:fr10de09-14]

=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R03-OAR-2009-0370; FRL-9090-2]

Approval and Promulgation of Air Quality Implementation Plans;
Pennsylvania; Clean Air Interstate Rule; NOX SIP Call Rule; Amendments
to NOX Control Rules

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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

SUMMARY: EPA is approving a State Implementation Plan (SIP) revision
submitted by the Commonwealth of Pennsylvania. The revision addresses
the requirements of EPA's Clean Air Interstate Rule (CAIR) and modifies
other requirements in Pennsylvania's SIP that interact with CAIR
including: The termination of Pennsylvania's NOX Budget
Trading Program; statewide provisions for large, stationary internal
combustion engines; statewide provisions for large cement kilns;
provisions for small sources of NOX in the Pennsylvania
portion of the Philadelphia 8-hour ozone nonattainment area; and
emission reduction credits. EPA is determining that the SIP revision
fully implements the CAIR requirements for Pennsylvania. Although the
D.C. Circuit found CAIR to be flawed, the rule was remanded without
vacatur and thus remains in place. Thus, EPA is continuing to take
action on CAIR SIPs as appropriate. CAIR, as promulgated, requires
States to reduce emissions of SO2 and NOX that
significantly contribute to, or interfere with maintenance of, the
national ambient air quality standards (NAAQS) for fine particulates
and/or ozone in any downwind state. CAIR establishes budgets for
SO2 and NOX for States that contribute
significantly to nonattainment in downwind States and requires the
significantly contributing States to submit SIP revisions that
implement these budgets. States have the flexibility to choose which
control measures to adopt to achieve the budgets, including
participation in EPA-administered cap-and-trade programs addressing
SO2, NOX annual, and NOX ozone season
emissions. In the SIP revision that EPA is approving, Pennsylvania will
meet CAIR requirements by participating in these cap-and-trade
programs. EPA is approving the SIP revision, with the exceptions noted,
as fully implementing the CAIR requirements for Pennsylvania.
Consequently, this action will also cause the CAIR Federal
Implementation Plans (CAIR FIPs) concerning SO2,
NOX annual, and NOX ozone season emissions by
Pennsylvania sources to be automatically withdrawn.

DATES: Effective Date: The final rule is effective on December 10,
2009.

ADDRESSES: EPA has established a docket for this action under Docket ID
Number EPA-R03-OAR-2009-0370. All documents in the docket are listed in
the http://www.regulations.gov Web site. Although listed in the
electronic docket, some information is not publicly available, i.e.,
confidential business information (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 through http://
www.regulations.gov or in hard copy for public inspection during normal
business hours at the Air Protection Division, U.S. Environmental
Protection Agency, Region III, 1650 Arch Street, Philadelphia,
Pennsylvania 19103. Copies of the State submittal are available at the
Pennsylvania Department of Environmental Protection, Bureau of Air
Quality Control, P.O. Box 8468, 400 Market Street, Harrisburg,
Pennsylvania 17105.

FOR FURTHER INFORMATION CONTACT: Marilyn Powers,<PHONE_NUMBER>, or by
e-mail at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document, whenever ``we,''
``us,'' or ``our'' is used, we mean EPA.

Table of Contents

I. What Action Did EPA Propose?
II. Summary of Pennsylvania SIP Revision
III. What Is the Final Action?
IV. What Is the Effective Date?
V. Statutory and Executive Order Reviews

I. What Action Did EPA Propose?

    On September 24, 2009 (74 FR 48695), EPA published a notice of
proposed rulemaking (NPR) for the Commonwealth of Pennsylvania. The NPR
proposed approval of a revision to the Pennsylvania SIP that addresses
EPA's CAIR requirements and modifies other requirements in
Pennsylvania's SIP that interact with CAIR including: The termination
of Pennsylvania's NOX Budget Trading Program; statewide
provisions for large, stationary internal combustion engines; statewide
provisions for large cement kilns; provisions for small sources of
NOX in the Pennsylvania portion of the Philadelphia 8-hour
ozone nonattainment area; and emission reduction credits.

II. Summary of Pennsylvania SIP Revision

    On May 23, 2008, the Pennsylvania Department of Environmental
Protection (PADEP) submitted a full CAIR SIP revision to meet the
requirements of CAIR, which was promulgated on May 12, 2005 (70 FR
25162), and subsequently revised on April 28, 2006, and December 13,
2006. The SIP revision consisted of amendments to Pennsylvania
regulations codified at 25 Pa. Code Chapters 121, 129, and 145. The SIP
revision addresses all the requirements of the 40 CFR part 96 model
rules set forth in the May 12, 2005 CAIR rulemaking. In addition, the
SIP revision modifies other requirements in Pennsylvania's SIP that
interact with CAIR. A detailed discussion of the CAIR requirements, the
CAIR history (including the CAIR remand), Pennsylvania's CAIR
submittal, the other modifications in the SIP revision that interact
with CAIR, and EPA's rationale for approval of the Pennsylvania SIP
revision may be found in the NPR and will not be repeated here. No
comments were received.
    EPA notes that, in North Carolina, 531 F.3d at 916-21, the Court
determined, among other things, that the State SO2 and
NOX budgets established in CAIR were arbitrary and
capricious.\1\ However, as discussed above, the Court also decided to
remand CAIR but to leave the rule in place in order to ``temporarily
preserve the environmental values covered by CAIR'' pending EPA's
development and promulgation of a replacement rule that remedies CAIR's
flaws. North Carolina, 550 F.3d at 1178. EPA had indicated to the Court
that development and promulgation of a replacement rule would take
about two years. Reply in Support of Petition for Rehearing or
Rehearing en Banc at 5 (filed Nov. 17, 2008 in North Carolina v. EPA,
Case No. 05-1224, D.C. Cir.). The process at EPA of developing a
proposal that will undergo notice and comment and result in a final
replacement rule is ongoing. In the meantime, consistent with the

Court's orders, EPA is implementing CAIR by approving State SIP
revisions that are consistent with CAIR (such as the provisions setting
State SO2 and NOX budgets for the CAIR trading
programs) in order to ``temporarily preserve'' the environmental
benefits achievable under the CAIR trading programs.
---------------------------------------------------------------------------

    \1\ The Court also determined that the CAIR trading programs
were unlawful (id. at 906-8) and that the treatment of title IV
allowances in CAIR was unlawful (id. at 921-23). For the same
reasons that EPA is approving the provisions of Pennsylvania's SIP
revision that use the SO2 and NOX budgets set
in CAIR, EPA is also approving, as discussed below, Pennsylvania's
SIP revision to the extent the SIP revision adopts the CAIR trading
programs, including the provisions, addressing applicability,
allowance allocations, and use of title IV allowances.
---------------------------------------------------------------------------

III. What Is the Final Action?

    EPA is approving the Pennsylvania CAIR SIP revision submitted on
July 23, 2008. Under the SIP revision, Pennsylvania will participate in
the EPA-administered cap-and-trade programs for NOX annual,
NOX ozone season, and SO2 annual emissions. The
SIP revision meets the applicable requirements in 40 CFR 51.123(o) and
(aa), with regard to NOX annual and NOX ozone
season emissions, and 40 CFR 51.124(o), with regard to SO2
emissions. As a consequence of the SIP approval, the CAIR FIPs for
Pennsylvania are automatically withdrawn, in accordance with the
automatic withdrawal provisions of EPA's November 2, 2007 rulemaking
(72 FR 62338). The automatic withdrawal is reflected in the rule text
that accompanies this notice and deletes and reserves the provisions in
Part 52 that establish the CAIR FIPs for Pennsylvania sources.
    The SIP revision also modifies other requirements in Pennsylvania's
SIP that interact with CAIR including: The termination of
Pennsylvania's NOX Budget Trading Program; statewide
provisions for large, stationary internal combustion engines; statewide
provisions for large cement kilns; provisions for small sources of
NOX in the Pennsylvania portion of the Philadelphia 8-hour
ozone nonattainment area; and emission reduction credits.

IV. What Is the Effective Date?

    EPA finds that there is good cause for this approval to become
effective upon publication because a delayed effective date is
unnecessary due to the nature of the approval, which allows the
Commonwealth, as indicated in the NPR for this rulemaking, to use its
own methodology for distribution and timing of NOX
allowances. The expedited effective date for this action is authorized
under both 5 U.S.C. 553(d)(1), which provides that rule actions may
become effective less than 30 days after publication if the rule
``grants or recognizes an exemption or relieves a restriction'' and
section 5 U.S.C. 553(d)(3), which allows an effective date less than 30
days after publication ``as otherwise provided by the agency for good
cause found and published with the rule.''
    CAIR SIP approvals relieve states and CAIR sources within states
from being subject to provisions in the CAIR FIPs that otherwise would
apply to them, allowing states to implement CAIR based on their SIP-
approved state rule. The relief from these obligations is sufficient
reason to allow an expedited effective date of this rule under 5 U.S.C.
553(d)(1). In addition, Pennsylvania's relief from these obligations
provides good cause to make this rule effective immediately upon
publication, pursuant to 5 U.S.C. 553(d)(3). The purpose of the 30-day
waiting period prescribed in 5 U.S.C. 553(d) is to give affected
parties a reasonable time to adjust their behavior and prepare before
the final rule takes effect. Where, as here, the final rule relieves
obligations rather than imposes obligations, affected parties, such as
the Commonwealth of Pennsylvania and CAIR sources within the
Commonwealth, do not need time to adjust and prepare before the rule
takes effect.

V. Statutory and Executive Order Reviews

A. General Requirements

    Under the Clean Air Act, 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 Clean Air Act.
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 Clean Air Act; 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.

B. Submission to Congress and the Comptroller General

    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).

C. Petitions for Judicial Review

    Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by February 8, 2010. 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.
    This action to approve the Pennsylvania SIP revision to meet the
requirements of CAIR and modify associated provisions that interact
with CAIR may not be challenged later in proceedings to enforce its
requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Nitrogen dioxide, Ozone, Particulate matter, Reporting and
recordkeeping requirements, Sulfur oxides.

    Dated: November 25, 2009.
Shawn M. Garvin,
Regional Administrator, Region III.

0
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 NN--Pennsylvania

0
2. In Sec.  52.2020, the table in paragraph (c)(1) is amended by:
0
a. Revising entries for Title 25, Chapter 121, Section 121.1, Chapter
129, Sections 129.201, 129.202, and 129.204; Subchapter B, Section
145.113, and Subchapter C, Section 145.143.
0
b. Adding, in order of Section number, entries for Title 25, Chapter
145, Subchapter A, Section 145.8; Subchapter D, Sections 145.201
through 145.205, Sections 145.211 through 145.213, and Sections 145.221
through 145.223.
    The amendments read as follows:

Sec.  52.2020  Identification of plan.

* * * * *
    (c) * * *
    (1) * * *

----------------------------------------------------------------------------------------------------------------
                                                                                Additional
         State citation              Title/subject          State        EPA approval date     explanation/Sec.
                                                       effective date                          52.2063 citation
----------------------------------------------------------------------------------------------------------------
                          TITLE 25. ENVIRONMENTAL PROTECTION ARTICLE III. AIR RESOURCES
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                                         CHAPTER 121. GENERAL PROVISIONS
----------------------------------------------------------------------------------------------------------------
Section 121.1..................  Definitions.........         4/12/08  12/10/09 [Insert      Add definition for
                                                                        page number where     ``vintage or
                                                                        the document          vintage year.''
                                                                        begins].

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                         CHAPTER 129. STANDARDS FOR SOURCES ADDITIONAL NOX REQUIREMENTS
----------------------------------------------------------------------------------------------------------------
Section 129.201................  Boilers.............         4/12/08  12/10/09 [Insert      Revised section.
                                                                        page number where
                                                                        the document
                                                                        begins].
Section 129.202................  Stationary                   4/12/08  12/10/09 [Insert      Revised section.
                                  combustion turbines.                  page number where
                                                                        the document
                                                                        begins].

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
Section 129.204................  Emission                     4/12/08  12/10/09 [Insert      Revised section.
                                  accountability.                       page number where
                                                                        the document
                                                                        begins].

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                              CHAPTER 145. INTERSTATE POLLUTION TRANSPORT REDUCTION
                           Subchapter A. NOX Budget Trading Program General Provisions
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Section 145.8..................  Transition to CAIR           4/12/08  12/10/09 [Insert      New section.
                                  NOX Trading                           page number where
                                  Programs.                             the document
                                                                        begins].

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------
                   Subchapter B. Emissions of NOX From Stationary Internal Combustion Engines
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Section 145.113................  Standard                     4/12/08  12/10/09 [Insert      New subsection d.
                                  requirements.                         page number where
                                                                        the document
                                                                        begins].
----------------------------------------------------------------------------------------------------------------
                            Subchapter C. Emissions of NOX From Cement Manufacturing
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Section 145.143................  Standard                     4/12/08  12/10/09 [Insert      ...................
                                  requirements.                         page number where
                                                                        the document
                                                                        begins].
----------------------------------------------------------------------------------------------------------------
                       Subchapter D. CAIR NOX and SO2 Trading Programs--General Provisions
----------------------------------------------------------------------------------------------------------------
Section 145.201................  Purpose.............         4/12/08  12/10/09 [Insert      ...................
                                                                        page number where
                                                                        the document
                                                                        begins].

Section 145.202................  Definitions.........         4/12/08  12/10/09 [Insert      ...................
                                                                        page number where
                                                                        the document
                                                                        begins].
Section 145.203................  Applicability.......         4/12/08  12/10/09 [Insert      ...................
                                                                        page number where
                                                                        the document
                                                                        begins].
Section 145.204................  Incorporation of             4/12/08  12/10/09 [Insert      ...................
                                  Federal regulations                   page number where
                                  by reference.                         the document
                                                                        begins].
----------------------------------------------------------------------------------------------------------------
                  ADDITIONAL REQUIREMENTS FOR CHAPTER 127 EMISSION REDUCTION CREDIT PROVISIONS
----------------------------------------------------------------------------------------------------------------
Section 145.205................  Emission reduction           4/12/08  12/10/09 [Insert      ...................
                                  credit provisions.                    page number where
                                                                        the document
                                                                        begins].
----------------------------------------------------------------------------------------------------------------
                           ADDITIONAL REQUIREMENTS FOR CAIR NOX ANNUAL TRADING PROGRAM
----------------------------------------------------------------------------------------------------------------
Section 145.211................  Timing Requirements          4/12/08  12/10/09 [Insert      ...................
                                  for CAIR NOX                          page number where
                                  allowance                             the document
                                  allocations.                          begins].
Section 145.212................  CAIR NOX allowance           4/12/08  12/10/09 [Insert      ...................
                                  allocations.                          page number where
                                                                        the document
                                                                        begins].
Section 145.213................  Supplemental                 4/12/08  12/10/09 [Insert      ...................
                                  monitoring,                           page number where
                                  recordkeeping and                     the document
                                  reporting                             begins].
                                  requirements for
                                  gross electrical
                                  output and useful
                                  thermal energy for
                                  units subject to 40
                                  CFR 96.170-96.175.
----------------------------------------------------------------------------------------------------------------
                        ADDITIONAL REQUIREMENTS FOR CAIR NOX OZONE SEASON TRADING PROGRAM
----------------------------------------------------------------------------------------------------------------
Section 145.221................  Timing requirements          4/12/08  12/10/09 [Insert      ...................
                                  for CAIR NOX ozone                    page number where
                                  season allowance                      the document
                                  allocations.                          begins].
Section 145.222................  CAIR NOX Ozone               4/12/08  12/10/09 [Insert      ...................
                                  Season allowance                      page number where
                                  allocations.                          the document
                                                                        begins].
Section 145.223................  Supplemental                 4/12/08  12/10/09 [Insert      ...................
                                  monitoring,                           page number where
                                  recordkeeping and                     the document
                                  reporting                             begins].
                                  requirements for
                                  gross electrical
                                  output and useful
                                  thermal energy for
                                  units subject to 40
                                  CFR 96.370-96.375.

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

* * * * *

Sec.  52.2040  [Removed and Reserved]

0
3. Section 52.2040 is removed and reserved.

Sec.  52.2041  [Removed and Reserved]

0
4. Section 52.2041 is removed and reserved.

[FR Doc. E9-29216 Filed 12-9-09; 8:45 am]

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