[Federal Register Volume 84, Number 140 (Monday, July 22, 2019)]
[Proposed Rules]
[Page 35054]
[FR Doc No: 2019-15371]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 170

[EPA-HQ-OPP-2017-0543; FRL-9994-33]
RIN 2070-AK49

Notification of Submission to the Secretary of Agriculture;
Pesticides; Agricultural Worker Protection Standard; Revision of the
Application Exclusion Zone Requirements

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notification of submission to the Secretary of Agriculture.

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SUMMARY: This document notifies the public as required by the Federal
Insecticide, Fungicide, and Rodenticide Act (FIFRA) that the EPA
Administrator has forwarded to the Secretary of the United States
Department of Agriculture (USDA) a draft regulatory document concerning
``Pesticides; Agricultural Worker Protection Standard; Revision of the
Application Exclusion Zone Requirements.'' The draft regulatory
document is not available to the public until after it has been signed
and made available by EPA.

DATES: See Unit I. under SUPPLEMENTARY INFORMATION.

ADDRESSES: The docket for this action, identified by docket
identification (ID) number EPA-HQ-OPP-2017-0543, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory
Docket (OPP Docket) in the Environmental Protection Agency Docket
Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301
Constitution Ave. NW, Washington, DC 20460-0001. The Public Reading
Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding legal holidays. The telephone number for the Public Reading
Room is<PHONE_NUMBER>, and the telephone number for the OPP Docket is
(703) 305-5805. Please review the visitor instructions and additional
information about the docket available at http://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: Jackie Mosby, Field and External
Affairs Division (7506P), Office of Pesticide Programs, Environmental
Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460;
telephone number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. What action is EPA taking?

    Section 25(a)(2)(A) of FIFRA requires the EPA Administrator to
provide the Secretary of USDA with a copy of any draft proposed rule at
least 60 days before signing it in proposed form for publication in the
Federal Register. The draft proposed rule is not available to the
public until after it has been signed by EPA. If the Secretary of USDA
comments in writing regarding the draft proposed rule within 30 days
after receiving it, the EPA Administrator shall include the comments of
the Secretary of USDA and the EPA Administrator's response to those
comments with the proposed rule that publishes in the Federal Register.
If the Secretary of USDA does not comment in writing within 30 days
after receiving the draft proposed rule, the EPA Administrator may sign
the proposed rule for publication in the Federal Register any time
after the 30-day period.

II. Do any Statutory and Executive Order reviews apply to this
notification?

    No. This document is merely a notification of submission to the
Secretary of USDA. As such, none of the regulatory assessment
requirements apply to this document.

List of Subjects in 40 CFR Part 170

    Agricultural worker, Employer, Environmental protection, Farms,
Forests, Greenhouses pesticides, Nurseries, Pesticide handler, Worker
protection standard.

    Dated: July 12, 2019.
Edward Messina,
Acting Director, Office of Pesticide Programs.
[FR Doc. 2019-15371 Filed 7-19-19; 8:45 am]
 BILLING CODE 6560-50-P


[Federal Register Volume 82, Number 225 (Friday, November 24, 2017)]
[Notices]
[Pages 55905-55912]
[FR Doc No: 2017-25354]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82109; File Nos. SR-LCH SA-2017-006; SR-LCH SA-2017-
007]

Self-Regulatory Organizations; LCH SA; Order Approving Proposed
Rule Changes To Add Rules Related to the Clearing of Options on Index
Credit Default Swaps

November 17, 2017.

I. Introduction

    On August 1, 2017 and August 18, 2017, Banque Centrale de
Compensation, which conducts business under the name LCH SA (``LCH
SA''), filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\
proposed rule changes (SR-LCH SA-2017-007 and SR-LCH SA-2017-006,
respectively) to amend LCH SA's (1) CDS Clearing Rule Book (the ``Rule
Book''); (2) CDS Clearing Supplement (the ``Clearing Supplement''); (3)
CDS Clearing Procedures (the ``CDS Clearing Procedures''); (4) CDS
Dispute Resolution Protocol (the ``Dispute Resolution Protocol); (5)
Reference Guide: CDS Margin Framework

(``CDSClear Margin Framework''); and (6) CDSClear Default Fund
Methodology (``Default Fund Methodology'' together ``LCH SA Rules''))
in order to permit LCH SA to clear options on index credit default
swaps (``CDS Options'').\3\ The proposed rule changes were published in
the Federal Register on August 21, 2017 and August 31, 2017.\4\ On
October 4, 2017, the Commission extended the time period in which to
approve, disapprove, or institute proceedings to determine whether to
disapprove the proposed rule changes to November 19, 2017 for proposed
rule change SR-LCH SA-2017-007,\5\ and to November 29, 2017 for
proposed rule change SR-LCH SA-2017-006.\6\ The Commission received no
comment letters regarding the proposed changes. For the reasons
discussed below, the Commission is approving the proposed rule changes.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ All capitalized terms used but not defined in this Order
have the same meaning as in the LCH SA Rules.
    \4\ Securities Exchange Act Release No. 34-81399 (Aug. 15,
2017), 82 FR 39622 (Aug. 21, 2017) (SR-LCH SA-2017-007) (``Notice
007''); and Securities Exchange Act Release No. 34-81487 (Aug. 25,
2017), 82 FR 41438 (Aug. 31, 2017) (SR-LCH SA-2017-006) (``Notice
006'' and jointly, the ``Notices'').
    \5\ Securities Exchange Act Release No. 34-81818 (October 4,
2017), 82 FR 47277 (Oct. 11, 2017).
    \6\ Securities Exchange Act Release No. 34-81819 (October 4,
2017) 82 FR 47257 (October 11, 2017).
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II. Description of the Proposed Rule Changes

    LCH SA proposed to offer clearing services for certain options on
index credit default swaps. A CDS Option is a contract that provides
the buyer of the option the right, but not the obligation, to either
buy or sell protection on the underlying index CDS, with the seller of
the CDS Option standing as the counterparty, at a predefined exercise
price on a specified exercise date. LCH SA proposed to clear CDS
Options for which the underlying is a European index CDS that is
currently cleared by LCH SA through its CDSClear service. Specifically,
LCH SA represented that it would offer clearing services only for CDS
Options for those contracts whose underlying index CDS is either the
on-the-run or on-the-run minus one Markit iTraxx Europe Index or the
Markit iTraxx Europe Crossover Index with 5-year tenors, and which will
have expiries of one, two, or three months.\7\
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    \7\ See generally, Notice 006, 82 FR at 41438. LCH SA
represented that extension of the CDS Clearing Service to clear CDS
Options that reference indices other than the Markit Itraxx Europe
Index would require amendments to the CDS Clearing Supplement, and
potentially to the Rule Book and certain risk methodology
documentation, and would therefore likely be subject to regulatory
review and approval. See Notice 006, 82 FR at 41438-39.
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    In order to effectuate this initiative, LCH SA has proposed rule
changes to its Rule Book, Clearing Supplement, CDS Clearing Procedures,
Dispute Resolution Protocol, CDSClear Margin Framework, and Default
Fund Methodology.

A. Changes to CDS Clearing Rule Book

    As discussed in greater detail in the Notices, LCH SA proposed to
amend its Rule Book to adopt several new terms defining, and related
to, CDS Options. In addition, LCH SA proposed to modify the substance
of certain existing defined terms to account for the clearing of CDS
Options, and also proposed certain conforming and clarifying edits to
terms and provisions throughout the Rule Book. Furthermore, LHC SA
proposed additional edits to clarify the cross-border application of
its operations, and to correct inconsistencies, or make clarifications,
related to certain defined terms unrelated to the clearing of CDS
Options.\8\ The most significant changes to the Rule Book concern end-
of-day pricing procedures for CDS Options, the default management of
CDS positions, including CDS Options, and changes relating to the
mechanics of clearing CDS Options. Each of these changes is further
described below.
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    \8\ Notice 006, 82 FR at 41439-41440.
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    LCH SA proposed to add new processes for calculating end of day
prices for CDS Options, which will be used for related risk
calculations, valuing open positions, and calculating a Clearing
Member's margin requirement in connection with CDS Options. LCH SA also
proposed to amend its Rule Book to permit Clearing Members to make use
of the LCH SA settlement prices with respect to CDS Options in the same
way that Clearing Members are permitted to use the settlement prices
for CDS.\9\
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    \9\ Notice 006, 82 FR at 41440-41.
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    LCH SA's proposed rule changes also set forth amendments to its
Default Management Process, as set forth in Appendix 1 of its Rule
Book. In addition to proposing various conforming edits and amendments
to existing terms, as described in greater detail in the Notices, LCH
SA proposed to amend its Default Management Process to provide that
Clearing Members that are not registered for the CDS Option Clearing
Service would not be required to participate in the bidding process for
any Auction Package that contains cleared CDS Options. However, to the
extent that a Clearing Member that is not registered to clear CDS
Options submits winning bids for an Auction Package containing cleared
CDS Options, LCH SA proposed to establish a process for automatic
registration of that Clearing Member for the CDS Option clearing
service and an update to such Clearing Member's Product Family
Forms.\10\
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    \10\ Notice 006, 82 FR at 41441-42.
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    Finally, LCH SA proposed a number of operational changes with
respect to clearing CDS Options. For example, with respect to
membership, LCH SA proposed to add, among other things, a new article
setting forth the procedures for registration for LCH SA's CDS Option
clearing service. With respect to the clearing of CDS Options, LCH SA
proposed rule changes regarding the novation of contracts that would
provide that a cleared CDS Option would be replaced by two cleared
transactions, and also proposed edits to clarify that LCH SA would
calculate Clearing Member open positions by netting such cleared
transactions. Moreover, LCH SA proposed amending its Rule Book to
clarify that following a restructuring credit event or during other
specified periods, LCH SA is permitted to compress cleared CDS Option
transactions, and that premiums for such cleared transactions will be
netted.\11\
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    \11\ Notice 006, 82 FR at 41440.
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B. Changes to Clearing Supplement

    LCH SA also proposed amendments to its Clearing Supplement. Under
these proposed amendments, LCH SA would add a new Part C to the
Clearing Supplement to establish the economic terms specific to cleared
CDS Options transactions. Proposed Section 1 of Part C would generally
set forth definitions for terms contained in Part C of the Clearing
Supplement. Proposed Section 2 of Part C would set forth provisions for
the creation of cleared CDS Options, as well as for the creation of
cleared CDS Options transactions involving restructuring events, and
transactions resulting from the exercise of the option. In particular,
this section would provide the specific terms under which LCH SA and
the Clearing Member enter into such transactions upon their creation
and provides for the particulars of the confirmations of such
transactions, as well as the procedures for compression exercises for
cleared CDS Options transactions.\12\ Section 3 of proposed Part C
would establish relevant payment obligations for LCH SA and Clearing
Members in connection with CDS Options.
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    \12\ Notice 006, 82 FR at 41442.
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    Other provisions of proposed Part C of the Clearing Supplement
would flesh out terms relating to restructuring,

exercise and assignment of CDS Options. For example, proposed Section 4
of Part C would set forth the procedures used following certain credit,
succession, or restructuring events. Section 5 of proposed Part C would
establish requirements and procedures for the creation of paired
transactions, triggering and partial triggering conditions for
transactions following a determination of certain credit, succession or
restructuring events, as well as notification requirements related
thereto. Section 6 of Part C would establish procedures regarding
creation of paired transactions for exercised CDS Options, the clearing
of the transactions resulting from exercise, and delivery procedures
for various related notices and reports. These proposed procedures
would require LCH SA to notify the relevant matched buyers and sellers
with the identity of the buyer or seller, as applicable, following the
creation of each paired transaction by LCH SA resulting from an
exercised CDS Option. The proposed changes also provide, among other
things, that upon notification of exercise, the original CDS Option
transaction will be deemed terminated and a new exercised transaction
will be deemed to be created between the Clearing Members and LCH
SA.\13\
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    \13\ Notice 006, 82 FR at 41442-43.
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    The remaining provisions in proposed Part C of the Clearing
Supplement address settlement and other miscellaneous provisions. For
example Section 7 of proposed Part C of the Clearing Supplement would
provide that following exercise of a CDS Option, a new cleared index
CDS transaction will be entered into between the relevant Clearing
Members and LCH SA.\14\ Section 8 of Part C would set forth general
rules related notices, including provisions regarding timing and
delivery methods. Section 9 of proposed Part C would set forth
procedures regarding the creation of paired transactions via an
algorithm, address the registration of certain transactions resulting
from restructuring events, address the resetting of trade dates, set
forth mechanics for certain notices, and provide for the exercise of
CDS Options by CDS Option buyers and sellers that are matched by LCH
SA.\15\
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    \14\ Id.
    \15\ Id.
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C. Changes to CDS Clearing Procedures

    LCH SA also proposed changes to the CDS Clearing Procedures that
would amend provisions regarding membership, margin and price alignment
interest, collateral and cash payment, eligibility requirements, and
CDS Option clearing operations. Regarding the membership provisions,
LCH SA proposed amendments that would clarify that Applicants would be
required to identify operational personnel that have knowledge of CDS
Options as part of its registration, and would also describe procedures
by which LCH SA will communicate approval of an application for
registration for the CDS Option clearing service to an applicant, as
well as procedures and conditions for withdrawal of registration from
the service.\16\
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    \16\ Notice 006, 82 FR at 41444.
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    Regarding margin, LCH SA proposed to modify Section 2.7 of its
Clearing Procedures to clarify that initial margin would cover the
costs associated with a default of a Clearing Member, as well as a
``double event of default,'' i.e., where the Clearing Member is the
seller of protection on the underlying CDS index. Further modifications
to Section 2.7 would include clarification that spread margin will be
calculated using spread and volatility variations, and that short
charge margin would be imposed in instances where a Clearing Member
acts as a protection seller with respect to a CDS Option, a single name
CDS transaction, or the CDS index underlying the CDS Option. Other
proposed amendments affecting margin include clarifying that self-
referencing protection margin would be imposed where a Clearing Member
acts as a protection seller with respect to the index CDS underlying a
CDS Option for which such member is, or becomes, a reference entity.
For Clearing Members acting as protection buyers with respect to the
index CDS underlying a CDS Option, LCH SA proposed to require that such
Clearing Members pay accrued fixed amount liquidation risk margin where
the exercise of that CDS Option falls in the margin calculation time
horizon. This margin add-on is designed to cover risks associated with
an event of default when certain accrued fixed amount payments are due
under the terms of the CDS Option during the period that the relevant
transactions are liquidated under LCH SA's Default Management
Process.\17\ LCH SA would also modify provisions relating to credit
event margin to specify that where a credit event occurs regarding a
reference entity that is the subject of a cleared transaction, each
Clearing Member will be required to pay credit event margin to cover
the risk of adverse changes in the estimated recovery rate arising in
the event of non-payment of variation margin on the part of the CDS
Option seller or CDS Option buyer with respect to a CDS Option
transaction. LCH SA also proposed to clarify that variation margin will
cover the change in market value of a CDS Option.\18\ Finally, LCH SA
proposed to amend its CDS Clearing Procedures to state that Clearing
Members are required to pay premiums to satisfy payment obligations
with respect to a CDS option position.
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    \17\ Id.
    \18\ Id.
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    LCH SA also proposed various amendments related to member and
product eligibility requirements. With respect to provisions regarding
Clearing Member eligibility requirements, LCH SA proposed to amend
Section 4.1 of the CDS Clearing Procedures to require that a Clearing
Member be registered for the CDS Option clearing service in order to
clear such products, and to set forth eligibility requirements related
thereto. Regarding product eligibility requirements, LCH SA proposed to
add new Section 4.4 to the CDS Clearing Procedures that would set forth
criteria that LCH SA, in consultation with relevant internal
committees, would consider with respect to which CDS Options will be
eligible for clearing, as well as procedures for Clearing Members to
submit a CDS Option for clearing in certain circumstances where the
transaction is a risk reducing transaction, even if the relevant
eligibility criteria are not satisfied. The proposed amendments would
also require LCH SA to publish a list of clearing eligible CDS
Options.\19\
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    \19\ Id.
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    LCH SA also proposed to amend Section 5 of the CDS Clearing
Procedures, which addresses LCH SA's CDS clearing operations, to
provide a description of the trade compression process with respect to
CDS Options. Other proposed amendments to Section 5 include procedures
to ensure that cleared transactions are stored and replicated on LCH
SA's systems. Furthermore, the procedures describing the process for
calculating end-of-day prices using data contributed by Clearing
Members would be amended to account for CDS Options (as described more
fully in the Notices), including amendments providing for procedures to
effect cross trades where submitted prices from market participants do
not reflect quoted daily prices for a particular CDS Option, and for
calculating the variation margin requirement for CDS Options in the

event that necessary data is not received.\20\
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    \20\ Notice 006, 82 FR at 41444-45.
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    Additional changes relating to organization and numbering of
various Rule Book and/or policy and procedure provisions, as well as
certain conforming edits that were proposed are not discussed here, but
are described in detail in the Notices.

D. Changes to Dispute Resolution Protocol

    LCH SA also proposed amendments to its Dispute Resolution Protocol
that would specify that the Dispute Resolution Protocol would apply
where the parties to the arbitration include a seller or buyer of a CDS
Option, and where the dispute in question arises from cleared matched
transactions resulting from exercise of the CDS Option or from
restructuring events.\21\
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    \21\ Notice 006, 82 FR at 41445.
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E. Changes to CDSClear Margin Framework

    As described in greater detail in the Notices, LCH SA proposed
several amendments to its CDSClear Margin Framework. These changes are
as follows:
1. Changes Regarding CDS Option Pricing
    In addition to providing a revised organizational structure for the
CDSClear Margin Framework, LCH SA proposed a new section describing the
methodology to price CDS Options. The proposed pricing section would
add a description of the methodology used to price CDS Options,
including a proposal to adopt a modified version of a market standard
model developed by Bloomberg that makes adjustments to the Black-
Scholes model (``Bloomberg Model''). LCH SA represented that this model
is commonly used by dealers and buy-side participants.\22\
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    \22\ Notice 007, 82 FR at 39623.
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    In conjunction with use of the modified Bloomberg Model, LCH SA
proposed to adopt provisions to account for implied volatility. In
particular, LCH SA proposed to use a stochastic volatility inspired
(``SVI'') model in constructing volatility surfaces, as well as to
price (or reprice) CDS Options and interpolate implied volatilities
derived from the modified Bloomberg Model.\23\ Regarding data required
to calculate historical implied volatilities, LCH SA would adopt a
section describing the database that would cover a 10-year look-back
period, as well as the data that LCH SA would use to construct
historical implied volatility in the case of missing at-the-money
volatility and SVI data points in the historical time series data. As
part of its end-of-day process for gathering price data from Clearing
Members, LCH SA proposed to implement a new price submission mechanism
for CDS Options that would, similar to the end-of-day price submission
process for CDS, require Clearing Members to contribute prices for CDS
Options where the members have at least one open position on one strike
for a particular expiry. These contributed prices, in turn, would be
used for marking the options book, if certain conditions are met. If
such conditions are not met, LCH SA proposed to fall back to Markit's
composite prices or use other pre-defined rules to fill in missing
data.\24\
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    \23\ Id.
    \24\ Notice 007, 82 FR at 39623-24.
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    The purpose of these proposed changes is to provide for a
methodology and model for pricing CDS Options, as well as to establish
a process of obtaining pricing information from Clearing Members in
order to allow LCH SA to accurately evaluate the value of the positions
that Clearing Members take, and thereby allow LCH SA to measure its
exposures to Clearing Members.
2. Changes to Total Initial Margin
    As described in greater detail in the Notices, LCH SA proposed to
revise its CDSClear Margin Framework to mitigate the risks associated
with clearing CDS Options. LCH SA's margin model is currently composed
of six components: (1) Self-referencing margin, (2) spread margin, (3)
short charge, (4) wrong-way risk margin, (5) interest rate risk margin,
and (6) recovery rate margin. LCH SA proposes to add a new seventh
margin component, vega margin, specifically to address volatility risk
posed by CDS Options.
a. Self-Referencing Margin
    Under its current CDSClear Margin Framework, LCH SA uses self-
referencing margin to capture the profit and loss (``P&L'') impact
resulting from a Clearing Member defaulting on a sold-protection
position in CDS referencing its own name with zero recovery. Currently,
LCH SA has established this self-referencing margin for CDS only. For
CDS Options, LCH SA proposed to implement a methodology to measure
spread margin that will calculate the P&L impact from a Clearing Member
defaulting on a sold-protection position in CDS referencing the
Clearing Member by taking the difference between the CDS Option's
current value and the value after incorporating a loss amount in the
underlying CDS index.\25\ The purpose of these proposed changes is to
ensure that LCH SA can appropriately account for the impact of Clearing
Members defaulting on sold-protection positions that underlie the CDS
Options LCH SA proposed to clear in a fashion similar to that which LCH
SA has in place for CDS.
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    \25\ Notice 007, 82 FR at 39624.
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b. Spread Margin
    Under the CDSClear Margin Framework, as currently constituted, LCH
SA calculates a spread margin component using a value-at-risk (``VaR'')
model to construct a distribution of potential losses based on
simulated scenarios using joint credit spread and volatility variations
taken from past observations and then calculates the expected shortfall
based on a quantile of the worst losses that could arise in those
scenarios. In order to adapt the spread margin component to account for
the clearing of CDS Options, LCH SA proposed to apply to CDS Options
the approach it currently uses for CDS with two adjustments. First, LCH
SA proposed to calculate simulated volatilities by defining a shifted
volatility curve for each option expiry date, in addition to the
simulated credit spreads currently used for CDS. LCH SA would then use
both simulated volatilities and simulated credit spreads to calculate
estimated CDS Option values which would, in turn, be used as an input
in the VaR model to establish an expected shortfall amount. Second, to
account for CDS Options that expire within the 5-day margin period of
risk, which is necessary to ensure that underlying indices can be
automatically cleared by LCH SA upon exercise, LCH SA proposed to add
spread margin provisions regarding whether a CDS Option would be
exercised upon expiry based on a consideration of the CDS Option's
present value on the date of expiry. Should LCH SA determine that a CDS
Option would be exercised, it would take the resulting index CDS
position into account as part of the expected shortfall
calculation.\26\
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    \26\ Id.
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c. Changes to the Short Charge
    For the short charge component of its initial margin, which is
designed to address jump-to-default risk, LCH SA currently uses the
greater of its (i) ``global short charge,'' which is derived from a
Clearing Member's largest net short exposure for CDS contracts and its
top net short exposure among the three riskiest reference entities
(with respect

to any entity type), and (ii) the ``high-yield short charge,'' which is
derived from a Clearing Member's top net short exposure (with respect
to high yield CDS) and its top two net short exposures among the three
riskiest reference entities in the high yield category. In order to
adapt the short charge margin for CDS Options, LCH SA proposed to
consider the P&L impact of a credit event experienced by a constituent
of an index CDS underlying the CDS Option to determine the short
exposure for CDS Options. LCH SA also proposed to adopt an
approximation approach to define changes in the CDS Option price
relative to the total loss in the underlying index instead of repricing
the CDS Option each day based on the spread level of the underlying and
at-the-money volatility.\27\
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    \27\ Notice 007, 82 FR at 39624-25.
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    LCH SA proposed additional adjustments to the short charge margin
component to accommodate the clearing of CDS Options. First, when
calculating total short exposure for a reference entity, instead of
using the current spread, which is LCH SA's approach for index CDS
initial margin, total short exposure would be calculated for each day
within the 5-day margin period of risk using simulated credit spread
and at-the-money volatility data for CDS and CDS Options. Second, to
address the non-linear nature of options, the total short exposure
would not be the sum of P&L impacts of each individual entity's default
where such entities are selected for calculating the global short
charge, HY short charge, and financial short charge. Instead, LCH SA
proposed to calculate each of these charges by considering the combined
P&L impacts of simultaneous defaults of selected entities. Third, LCH
SA proposed to compare three expected shortfall amounts to disaggregate
the total short exposure in a manner that permits separate calculation
of the short charge margin associated with the P&L impact of the jump-
to-default risk at the portfolio level and the spread margin that
reflects the P&L impact that associated with changes in spreads and at-
the-money volatility. LCH SA represented that these calculations
facilitate implementation of limits on portfolio margin required under
the European Market Infrastructure Regulation and the financial short
charge, among other things.\28\ Finally, LCH SA also proposed to
consider the impact of option expiry on the P&L as part of the short
charge calculation by considering cases in which the option exercise
decision occurs before the occurrence of two credit events, and cases
where the two credit events occur before option exercise. LCH SA
proposed to use the worst case of these scenarios as part of the short
charge calculation.\29\ LCH SA proposed these changes to ensure that it
adequately addresses the jump-to-default risk associated with clearing
CDS Options.
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    \28\ Notice 007, 82 FR at 39625.
    \29\ Notice 007, 82 FR at 39624-25.
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d. Changes to Interest Rate Risk Margin
    LCH SA also proposed modifications to interest rate risk margin.
Under its current CDSClear Margin Framework, LCH SA calculates its
interest rate risk margin by shifting interest rate curves and
repricing the CDS portfolio. To accommodate clearing of CDS Options,
LCH SA proposed to amend the methodology for calculating the interest
rate risk margin component by providing for a repricing of CDS Option
positions that uses the same ``bump'' parameters computed by taking the
99.7 percent quantile of the interest rate return using the same sample
of dates in the spread historical database.\30\ The changes proposed
regarding interest rate risk margin are designed to ensure that LCH SA
considers the risks to CDS Options associated with moves in interest
rates.
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    \30\ Notice 007, 82 FR at 39625.
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e. Addition of Vega Margin
    As described in greater detail in the Notices, LCH SA proposed to
add a new vega margin component to its initial margin framework. The
new vega margin would consider option premium changes when skew is
shifted by an extreme move, define shifts of the skew by multiplying a
standard deviation of returns of historical skews by a percentile for a
given probability threshold, and consider similar shocks on the
volatility of volatility.\31\ The vega margin is intended to capture
the risk of skew and volatility of volatility associated with the CDS
Options.
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    \31\ Notice 007, 82 FR at 39625-26.
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f. Liquidity Risk Margin
    LCH SA proposed changes to the liquidity risk margin to accommodate
portfolios that contain CDS Options. For CDS, under the current
Framework, LCH SA calculates the liquidity risk margin by estimating
the cost of liquidating a CDS portfolio. To calculate the liquidity
charge for portfolios that include CDS Options, LCH SA proposed to
consider the CDS Options separately from CDS, with the liquidity charge
of the CDS Options based on the likely cost of any vega hedging that
would be required in the event that a portfolio of CDS Options needs to
be liquidated. LCH SA would then compute the portfolio liquidity charge
as the sum of the liquidity charge for the CDS component of a portfolio
and the liquidity charge for the CDS Options component.\32\ The
proposed changes are intended to permit LCH SA to consider the cost of
liquidating portfolios that contain CDS Options.
---------------------------------------------------------------------------

    \32\ Notice 007, 82 FR at 39626.
---------------------------------------------------------------------------

g. Changes to Accrued Coupon Liquidation Risk Margin
    LCH SA proposed changes to its accrued coupon liquidation risk
margin to accommodate the clearing of CDS Options. Specifically, LCH SA
stated that with respect to CDS Options, it would be exposed to coupon
payment risk only if the option expiry falls within the 5-day
liquidation period and the option is exercised. Consequently, LCH SA
proposed to set the accrued coupon for CDS Options with an expiry of
more than five days at zero, and the accrued coupon for options
contracts with expiry falling within the 5-day liquidation period would
be the accrued coupon for five days, if the options are exercised.\33\
The proposed changes are intended to allow LCH SA to cover the risk of
additional coupon costs associated with CDS Options during the 5-day
liquidation period.
---------------------------------------------------------------------------

    \33\ Id.
---------------------------------------------------------------------------

h. Credit Event Margin
    LCH SA also proposed to adjust its method for calculating credit
event margin to accommodate CDS Options. Currently, LCH SA addresses
risks associated with hard credit events due to uncertain recovery
rates prior to an auction by imposing a margin that would cover an
adverse 25 percent absolute recovery rate move from the credit event
determination date up to--and including--the auction date. As discussed
in greater detail in the Notices, to better capture the risk stemming
from clearing CDS Options, in cases where several credit events occur,
LCH SA proposed to calculate credit event margin for each affected CDS
and CDS Option contract by considering adverse recovery moves that
could be a combination of upward, downward, or flat for the various
entities in the portfolio instead of summing the credit event margin
covering 25 percent adverse recovery rate moves for each reference
entity. Under this proposed approach, the aggregate P&L at the level of
the CDS and CDS Options contract would be the credit event margin for
the portfolio. Additionally, for restructuring

events, LCH SA proposed to address each maturity separately instead of
netting positions with the same reference entity due to the fact that
different auctions may be held depending on the maturity of the
contracts. Finally, LCH SA proposed some revisions regarding
terminology for credit event margin, which is also described in greater
detail in the Notices. For restructuring events, because different
auctions may be held depending on the maturity of the contracts,
recovery rates could differ across all contracts with differing
maturity dates. Consequently, LCH SA proposed to consider each maturity
separately instead of netting all positions with the same reference
entity.\34\ The proposed changes are designed to allow LCH SA to cover
the risks associated with the occurrence of several credit events, and
to account for the effect of differing maturities.
---------------------------------------------------------------------------

    \34\ Id.
---------------------------------------------------------------------------

i. Changes To Streamline Descriptions and Improve Readability
    Finally, LCH SA proposed non-substantive changes that include
moving sections discussing cash flow exchanges, contingency variation
margin, and extraordinary margin to eliminate redundancy and improve
readability.\35\
---------------------------------------------------------------------------

    \35\ Notice 007, 82 FR at 39627.
---------------------------------------------------------------------------

F. Changes to the Default Fund Methodology

    LCH SA proposed several changes to its Default Fund Methodology to
accommodate the clearing of CDS Options. Under its current approach,
the primary component of LCH SA's Default Fund Methodology is the
identification of stress scenarios designed to impose market moves that
are considered extreme but plausible above those that are used in the
margin calculation in order to determine P&L impacts on Clearing Member
portfolios. The two largest stress testing losses over initial margin
(``STLOIM'') across all Clearing Member portfolios are then used by LCH
SA, plus a 10 percent buffer, to size LCH SA's default fund.\36\
---------------------------------------------------------------------------

    \36\ Id.
---------------------------------------------------------------------------

    To accommodate the clearing of CDS Options, LCH SA proposed to
amend the its Default Fund Methodology to take into account the new
vega margin by adding a stressed vega margin calculation to LCH SA's
stress test scenarios. In addition, LCH SA would add a new set of
scenarios (referred to as ``Volatility Scenarios'') that would consider
movements in the implied at-the-money volatilities of index families
for historical and theoretical stress scenarios. Further amendments
would result in a new method for calculating the stressed spread margin
component of the STLOIM. Under the proposed modifications, the new
calculation for stressed spread margin would take into account at-the-
money implied volatility moves for CDS Options and calculate the
stressed spread margin in two scenarios: (1) Historical scenarios
covering credit spread moves and at-the-money implied movements in
combination; and (2) theoretical scenarios covering credit spread
movements and at-the-money implied volatility moves independently.
Changes to the stressed short charge component of STLOIM would be made
to incorporate terms relevant to CDS Options, and the new stressed
short charge calculation would largely follow the approach used for the
short charge calculation as part of the initial margin framework to
consider the non-linear nature of CDS Options, except that the number
of entities assumed to be in default would be higher for the stressed
short charge.
    As noted above, LCH SA proposed to implement a new stressed vega
margin component to the STLOIM calculation. This new stressed vega
margin component would be calculated in the same manner as the vega
margin component, except that it would use a higher quantile.
Additionally, a new section entitled ``Exercise Management'' would be
added to the Default Fund Methodology that would take into account the
impact of CDS Options that expire within the 5-day liquidation period,
and another new section would be added that would set forth the P&L
scenarios that are considered part of the Default Fund Methodology,
including providing for a stressed spread margin calculation for
specific products.\37\ These proposed changes are designed to ensure
that LCH SA properly sizes the default fund to cover the two largest
STLOIMs across all Clearing Member portfolios while taking into account
that such portfolios may now include CDS Options.
---------------------------------------------------------------------------

    \37\ Id.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    Section 19(b)(2)(C) of the Act \38\ directs the Commission to
approve a proposed rule change of a self-regulatory organization if the
Commission finds that the proposed rule change is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to such self-regulatory organization. Section 17A(b)(3)(F)
of the Act \39\ requires, among other things, that the rules of a
registered clearing agency be designed to promote the prompt and
accurate clearance and settlement of securities transactions and, to
the extent applicable, derivative agreements, contracts, and
transactions, as well as to assure the safeguarding of securities and
funds which are in the custody or control of the clearing agency or for
which it is responsible, and to protect investors and the public
interest. Rule 17Ad-22(e)(1) \40\ requires a covered clearing agency to
establish, implement, maintain and enforce policies and procedures that
are reasonably designed to provide for a well-founded, clear,
transparent and enforceable legal basis for each aspect of its
activities in all relevant jurisdictions.
---------------------------------------------------------------------------

    \38\ 15 U.S.C. 78s(b)(2).
    \39\ 15 U.S.C. 78q-1(b)(3)(F).
    \40\ 17 CFR 240.17Ad-22(e)(1).
---------------------------------------------------------------------------

    Rule 17Ad-22(b)(2) \41\ requires, in relevant part, a registered
clearing agency that performs central counterparty services to
establish, implement, maintain and enforce written policies and
procedures reasonably designed to use margin requirements to limit its
credit exposures to participants under normal market conditions and use
risk-based models and parameters to set margin requirements. Rules
17Ad-22(e)(6)(i), (iv), and (v) \42\ require a covered clearing agency
that provides central counterparty services to establish, implement,
maintain and enforce written policies and procedures reasonably
designed to cover its credit exposures to its participants by
establishing a risk-based margin system that, at a minimum considers,
and produces margin levels commensurate with, the risks and particular
attributes of each relevant product, portfolio, and market, uses
reliable sources of timely price data, and uses procedures and sound
valuation models for addressing circumstances in which pricing data are
not readily available or reliable, and that uses an appropriate method
for measuring credit exposures that accounts for relevant product risk
factors and portfolio effects across products.
---------------------------------------------------------------------------

    \41\ 17 CFR 240.17Ad-22(b)(2).
    \42\ 17 CFR 240.17Ad-22(e)(6)(i), (iv), and (v).
---------------------------------------------------------------------------

    Rule 17Ad-22(b)(3) \43\ requires, in relevant part, a registered
clearing agency that performs central counterparty services to
establish, implement, maintain and enforce written policies and
procedures reasonably designed to maintain

additional financial resources sufficient to withstand, at a minimum, a
default by the two participant families to which it has the largest
exposures in extreme but plausible market conditions where such
registered clearing agency acts as a central counterparty for security-
based swaps. Rules 17Ad-22(e)(4)(i) and (ii) \44\ require a covered
clearing agency to establish, implement, maintain and enforce written
policies and procedures reasonably designed to effectively identify,
measure, monitor, and manage its credit exposures to participants and
those arising from its payment, clearing, and settlement processes,
including by maintaining sufficient financial resources to cover its
credit exposure to each participant fully with a high degree of
confidence and, for a covered clearing agency involved in activities
with a more complex risk profile,\45\ maintaining additional financial
resources at a minimum to enable it to cover a wide range of
foreseeable stress scenarios that include, but are not limited to, the
default of the two participant families that would potentially cause
the largest aggregate credit exposure for the covered clearing agency
in extreme but plausible market conditions.
---------------------------------------------------------------------------

    \43\ 17 CFR 240.17Ad-22(b)(3).
    \44\ 17 CFR 240.17Ad-22(e)(4)(i) and (ii).
    \45\ Rule 17Ad-22(a)(4)(i) defines a covered clearing agency
involved in activities with a more complex risk profile as a
clearing agency registered with the Commission under Section 17A of
the Act that provides central counterparty services for security-
based swaps. See 17 CFR 240.17Ad-22(a)(4)(i).
---------------------------------------------------------------------------

    For the reasons discussed below, after reviewing the proposed rule
changes as a whole, including the representation that LCH SA is
limiting its clearing services for CDS Options to the specific
underlying CDS indices, tenors and option expiries specified
herein,\46\ the Commission finds that the proposed rule changes, which
seek to amend LCH SA's Rule Book, Clearing Supplement, CDSClear
Procedures, Dispute Resolution Protocol, CDSClear Margin Framework, and
Default Fund Methodology to permit LCH SA to clear options on index
credit default swaps (``CDS Options''), are consistent with Section 17A
of the Act and the applicable provisions of Rule 17Ad-22 thereunder.
---------------------------------------------------------------------------

    \46\ See supra note 7 and accompanying text.
---------------------------------------------------------------------------

A. Changes to LCH SA's Rule Book, and Policies and Procedures

    The Commission finds that the proposed changes to LCH SA's Rule
Book and Policies and Procedures are consistent with the requirements
of Section 17A(b)(3)(F) regarding prompt and accurate clearance and
settlement, and Exchange Act Rule 17Ad-22(e)(1). LCH SA proposed to
modify its Rule Book, Clearing Supplement, CDSClear Procedures, and
Dispute Resolution Protocol to extend its established legal framework
to govern the clearing of CDS Options, to provide for managing defaults
associated with CDS Options, and to apply membership obligations to
Clearing Members seeking to register for the CDS Option clearing
service. Among other things, the proposed amendments provided for
definitions for various terms relevant to CDS Options, and amended
existing terms to accommodate clearing CDS Options. Further, the
proposed amendments would establish a process for applying for
membership in the CDS Option clearing service, thereby requiring
members to satisfy LCH SA's financial and operational requirements, as
well as contractual obligations regarding performance. These
obligations include those arising under LCH SA's default management
process, which would also be amended to accommodate the clearing of CDS
Options. Consequently, the Commission believes that by creating
registration and membership obligations for entities seeking to
participate in the CDS Option Clearing Service, and by adapting its
CDSClear Procedures and Clearing Supplement to address operational
aspects associated with clearing CDS Options, LCH SA has rules that are
designed to ensure that Clearing Members participating in the CDS
Option clearing service have the requisite ability to meet financial
and operational obligations associated with clearing CDS Options,
thereby ensuring the prompt and accurate clearance and settlement of
such transactions. Therefore, the Commission finds that the proposed
rule changes are consistent with Section 17A(b)(3)(F) of the Act.
    Additionally, based on these proposed changes, the Commission
believes that LCH SA will be able to provide for a well-founded and
enforceable legal basis for clearing CDS Options in jurisdictions in
which LCH SA operates, similar to that established for the clearing of
CDS. Moreover, because the documents that are the subject of the
proposed amendments are available on LCH SA's public internet site, or
provided to Clearing Members, the Commission believes that the policies
and procedures applicable to members of the CDS Option clearing service
are sufficiently clear and transparent. As a result, the Commission
finds that the proposed changes affecting LCH SA's Rule Book, and other
policies and procedures are consistent with the requirements of Rule
17Ad-22(e)(1).

B. Changes to CDSClear Margin Framework and Default Fund Methodology

    The Commission finds that the proposed rule changes regarding LCH
SA's CDSClear Margin Framework and Default Fund Methodology are
consistent with the requirements of Section 17A(b)(3)(F) and Rules
17Ad-22(b)(2), (b)(3), (e)(4)(i) and (ii), and (e)(6)(i), (iv) and (v).
1. CDSClear Margin Framework
    LCH SA proposed to amend its CDSClear Margin Framework to add a
pricing methodology for CDS Options, based on a modified Bloomberg
Model, and to add a process for obtaining pricing inputs from Clearing
Members. By implementing a pricing methodology and process for
obtaining pricing information from Clearing Members, the Commission
believes that LCH SA will be able to adequately and consistently
determine the value of the CDS Options it clears, and will also be able
to appropriately mark the positions on a daily basis. As a result, the
Commission finds that the proposed rule changes regarding LCH SA's
pricing model and mechanism promote the prompt and accurate clearance
and settlement of CDS Options and are consistent with the requirements
of Section 17A(b)(3)(F) of the Act. Furthermore, because LCH SA
proposed changes that would result in LCH SA relying on the Markit
Composite or using other pre-defined rules to fill in missing data and
complete the marking process, the Commission believes that the proposed
rule changes provide that LCH SA has policies and procedures that are
reasonably designed to ensure that LCH SA uses reliable sources of
timely price data and uses procedures and sound valuation models for
addressing circumstances in which pricing data are not readily
available or reliable. Therefore, the Commission finds that the
proposed rule changes are consistent with the requirements of Rule
17Ad-22(e)(6)(iv).
    In addition, LCH SA proposed to amend its CDSClear Margin Framework
to account for clearing CDS Options. Among other things, LCH SA
proposed amending its self-referencing margin to calculate the P&L
impact on a CDS Option based on losses in the underlying index CDS. In
addition, LCH SA proposed to amend its spread margin to incorporate
simulated volatilities that complement simulated credit spreads in the
value-at-risk model LCH SA uses. Moreover, LCH SA

proposed to amend its short charge to account for the P&L impact of a
credit event on the reference obligations of a constituent of the
underlying index CDS has on a CDS Option. Furthermore, LCH SA also
proposed other amendments, described in greater detail in section
II.e.2, above and in the Notices, to incorporate at-the-money
volatility data, account for the non-linearity of CDS Options by
considering the combined P&L impacts of simultaneous defaults, and to
consider the impact of option expiry. LCH SA also proposed to amend its
interest rate margin to calculate the P&L impact on CDS Options due to
changes in interest rates, and proposed to introduce a new margin
component, vega margin, to capture the risks associated with skew and
volatility of volatility that specifically affect CDS Options.
Similarly, LCH SA proposed amendments to its liquidity risk margin to
account for the costs associated with vega hedging a portfolio of CDS
Options, proposed changes to the accrued coupon liquidation risk margin
to account for exposures to CDS Options during the 5-day liquidation
period, and proposed changes to its credit event margin to account for
different maturities separately and to consider combinations of upward,
downward or flat recovery rate moves.
    Based on these proposed changes, the Commission believes that LCH
SA will have rules that are designed to collect and maintain financial
resources intended to cover the risks to which LCH SA is exposed in
connection with offering clearing services for CDS Options. As a
result, the Commission believes that LCH SA will be able to minimize
the risk that the losses associated with the default of a participant
(or participants) in the clearing service for CDS Options will extend
to other participants in the service or negatively affect the U.S.
financial system as a whole. Consequently, the Commission believes that
the proposed rule changes will provide for rules that permit LCH SA to
be able to safeguard the securities and funds which are in its custody
or control or for which it is responsible, and to be able to protect
investors and the public interest. Accordingly, the Commission finds
that the proposed rule changes are consistent with the requirements of
Section 17A(b)(3)(F).
    Moreover, considering these proposed changes as a whole, the
Commission believes that the proposed rule changes will ensure that LCH
SA uses margin requirements to limit its credit exposures to Clearing
Members participating in the CDS Option clearing service. The
Commission also believes that by changing its margin framework to add
the new vega margin and revise existing individual margin components as
described above, LCH SA reasonably considers the risks specific to CDS
Options (including consideration of risks associated with skew and
volatility of volatility, among others), and establishes an appropriate
method for measuring its credit exposures to Clearing Members
participating in the CDS Option clearing service. As a result, the
Commission finds that the proposed rule changes are consistent with the
requirements of Rules 17Ad-22(b)(2) and (e)(6)(i) and (v).
2. Default Fund Methodology
    LCH SA also proposed to amend its existing Default Fund Methodology
to address the additional risks associated with clearing CDS Options.
As described above, the Default Fund Methodology is designed to
identify stress scenarios that impose extreme but plausible market
moves in order to calculate stress losses in excess of margin. These
losses are then used to size LCH SA's Default Fund. Among other things,
LCH SA proposed to amend its Default Fund Methodology to take into
account the new vega margin by adding a stressed vega margin, new
Volatility Scenarios, and adopt a new method for calculating the
stressed spread margin that would take into account at-the-money
implied volatility moves for CDS Options in the stress scenarios used
to size the CDSClear default fund. Based on these amendments, the
Commission believes that LCH SA appropriately extends its existing
Default Fund Methodology to address the clearing of CDS Options, and as
a result will be able to maintain financial resources adequate to cover
the risks associated with clearing CDS Options, including sufficient
resources to enable LCH SA cover its credit exposure to each
participant fully with a high degree of confidence and to cover the
default of the two participant families to which LCH SA has exposures
in extreme but plausible market conditions. Accordingly, the Commission
finds that the proposed rule changes amending LCH SA's Default Fund
Methodology are consistent with the requirements of Rule 17Ad-22(b)(3)
and (e)(4)(i) and (ii).

IV. Conclusion

    It is therefore ordered pursuant to Section 19(b)(2) of the Act
that the proposed rule changes (SR-LCH SA-2017-006 and SR-LCH SA-2017-
007) be, and hereby are, approved.\47\
---------------------------------------------------------------------------

    \47\ In approving the proposed rule changes, the Commission
considered the proposals' impact on efficiency, competition, and
capital formation. 15 U.S.C. 78c(f).

    For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\48\
---------------------------------------------------------------------------

    \48\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-25354 Filed 11-22-17; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 88, Number 142 (Wednesday, July 26, 2023)]
[Notices]
[Pages 48243-48244]
[FR Doc No: 2023-15831]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 1744-054]

PacifiCorp; Notice of Application Accepted for Filing and
Soliciting Comments, Motions To Intervene, and Protests

    Take notice that the following hydroelectric application has been
filed with the Commission and is available for public inspection:
    a. Application Type: Application for Non-Capacity Amendment of
License.
    b. Project No: 1744-054.
    c. Date Filed: April 18, 2023, supplemented June 23, 2023.
    d. Applicant: PacifiCorp (licensee).
    e. Name of Project: Weber Hydroelectric Project.
    f. Location: The project is located on the Weber River in Davis,
Morgan and Weber counties, Utah.
    g. Filed Pursuant to: Federal Power Act, 16 U.S.C. 791a-825r.
    h. Applicant Contact: Eve Davies, Weber License Project Manager;
PacifiCorp; 1407 West North Temple Suite 210; Salt Lake City, UT 84116;
Phone:<PHONE_NUMBER>.
    i. FERC Contact: Jeffrey V. Ojala,<PHONE_NUMBER>,
[email protected].
    j. Deadline for filing comments, motions to intervene, and
protests: August 21, 2023.
    The Commission strongly encourages electronic filing. Please file
comments, motions to intervene, and protests using the Commission's
eFiling system at http://www.ferc.gov/docs-filing/efiling.asp.
Commenters can submit brief comments up to 6,000 characters, without
prior registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact
information at the end of your comments. For assistance, please contact
FERC Online Support at [email protected],<PHONE_NUMBER> (toll
free), or<PHONE_NUMBER> (TTY). In lieu of electronic filing, you may
submit a paper copy. Submissions

sent via the U.S. Postal Service must be addressed to: Kimberly D.
Bose, Secretary, Federal Energy Regulatory Commission, 888 First Street
NE, Room 1A, Washington, DC 20426. Submissions sent via any other
carrier must be addressed to: Kimberly D. Bose, Secretary, Federal
Energy Regulatory Commission, 12225 Wilkins Avenue, Rockville, Maryland
20852. The first page of any filing should include the docket number P-
1744-054. Comments emailed to Commission staff are not considered part
of the Commission record.
    The Commission's Rules of Practice and Procedure require all
intervenors filing documents with the Commission to serve a copy of
that document on each person whose name appears on the official service
list for the project. Further, if an intervenor files comments or
documents with the Commission relating to the merits of an issue that
may affect the responsibilities of a particular resource agency, they
must also serve a copy of the document on that resource agency.
    k. Description of Request: The licensee proposes to amend its
license to modernize intake components at the Weber Dam. Additionally,
the licensee proposes the construction of three new auxiliary spillways
sections to accommodate recently recalculated 100-year flood flows. The
new intake and spillway equipment would require the destruction and
replacement of the current gatehouse and the original, non-functional,
fish ladder to accommodate new screens/trashracks. All components will
be installed on previously disturbed ground, within the project
boundary. Staging for the proposed actions would be partially located
on lands administered by the U.S. Department of Agriculture's Forest
Service. The proposed action would require temporary closure of some
recreational facilities, closest to the work area, during the
construction.
    l. Location of the Application: The Commission provides all
interested persons an opportunity to view and/or print the contents of
this document via the internet through the Commission's website at
http://www.ferc.gov/docs-filing/elibrary.asp. Enter the docket number
excluding the last three digits in the docket number field to access
the document. You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and
issuances related to this or other pending projects. Agencies may
obtain copies of the application directly from the applicant. For
assistance, contact the Federal Energy Regulatory Commission at
[email protected] or call toll free,<PHONE_NUMBER> or TTY,
(202) 502-8659.
    m. Individuals desiring to be included on the Commission's mailing
list should so indicate by writing to the Secretary of the Commission.
    n. Comments, Protests, or Motions to Intervene: Anyone may submit
comments, a protest, or a motion to intervene in accordance with the
requirements of Rules of Practice and Procedure, 18 CFR 385.210, .211,
.214, respectively. In determining the appropriate action to take, the
Commission will consider all protests or other comments filed, but only
those who file a motion to intervene in accordance with the
Commission's Rules may become a party to the proceeding. Any comments,
protests, or motions to intervene must be received on or before the
specified comment date for the particular application.
    o. Filing and Service of Documents: Any filing must (1) bear in all
capital letters the title ``COMMENTS'', ``PROTEST'', or ``MOTION TO
INTERVENE'' as applicable; (2) set forth in the heading the name of the
applicant and the project number of the application to which the filing
responds; (3) furnish the name, address, and telephone number of the
person commenting, protesting or intervening; and (4) otherwise comply
with the requirements of 18 CFR 385.2001 through 385.2005. All
comments, motions to intervene, or protests must set forth their
evidentiary basis. Any filing made by an intervenor must be accompanied
by proof of service on all persons listed in the service list prepared
by the Commission in this proceeding, in accordance with 18 CFR
385.2010.

    Dated: July 20, 2023.
Debbie-Anne A. Reese,
Deputy Secretary.
[FR Doc. 2023-15831 Filed 7-25-23; 8:45 am]
BILLING CODE 6717-01-P


                 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                                  REGION III
	1650 Arch Street
	Philadelphia, Pennsylvania  19103

DATE:

SUBJECT:	Technical Support Document for the Update of the Motor Vehicle Emissions Budgets and General Conformity Budgets for the Scranton/Wilkes-Barre 1997 8-Hour Ozone National Ambient Air Quality Standard Maintenance Area

FROM:	Asrah Khadr, Environmental Engineer, EIT
            Office of Air Program Planning

TO:	File

THRU: 	Cristina Fernandez, Associate Director
            Office of Air Program Planning

A.  BACKGROUND

On May 28, 2014, the Pennsylvania Department of Environmental Protection (PADEP) submitted revisions to the Commonwealth of Pennsylvania's (Pennsylvania) State Implementation Plan (SIP).  The SIP revisions consists of updated motor vehicle emissions budgets (MVEBs) for nitrogen oxides (NOx) for the 1997 8-Hour Ozone National Ambient Air Quality Standard (NAAQS) as well as a NOx general conformity budget for the construction of the Bell Bend Nuclear Power Plant.  The updated budgets were calculated using the Environmental Protection Agency's (EPA) Motor Vehicle Emission Simulator model (MOVES2010a).  The intention of the revised SIP is to replace the approved MOBILE6.2-based MVEBs with budgets based on MOVES2010a and to ensure that the SIP revisions still provide for attainment of the 1997 8-Hour Ozone NAAQS.

On July 18, 1997 (62 FR 38856), EPA established the 1997 8-Hour Ozone NAAQS.  On April 30, 2004 (69 FR 23858), Lackawanna, Luzerne, Wyoming, and Monroe Counties were designated as nonattainment for the 1997 8-Hour Ozone NAAQS as the Scranton/Wilkes-Barre 1997 8-Hour Ozone NAAQS Nonattainment Area.  On June 12, 2007, PADEP submitted a SIP revision which consists of a maintenance plan, a 2002 base year inventory, and MVEBs for transportation conformity purposes.  On November 19, 2007 (72 FR 64948), EPA approved the SIP revision as well as the redesignation request made by PADEP.  At that time, the Scranton/Wilkes-Barre 1997 8-Hour Ozone NAAQS Nonattainment Area was redesignated as the Scranton/Wilkes-Barre 1997 8-Hour Ozone NAAQS Maintenance Area (Scranton/Wilkes-Barre Maintenance Area).

The MVEBs are a mobile source inventory to which an area's transportation improvement program (TIP) and long range transportation plan must conform.  Conformity to MVEBs in a SIP means that transportation activities will not produce new air quality violations, worsen existing violations, or delay timely attainment of the NAAQS or any required interim milestones.  This submittal provides updated MVEBs for NOx.  The budgets were developed utilizing MOVES2010a.  On March 2, 2010 (75 FR 9411), EPA published a notice of availability for the MOVES2010 model for use in SIP submissions and started a two year grace period for the use of MOVES2010 for transportation conformity purposes.  The two year grace period was scheduled to end on March 2, 2012.  On February 27, 2012 (77 FR 11394), EPA published a final rule extending the grace period another year to March 2, 2013 to ensure adequate time for affected parties to adopt the model.  On September 8, 2010, EPA released MOVES2010a, which is a minor update to MOVES2010.  Pennsylvania utilized MOVES2010a in its May 28, 2014 SIP revision.  MOVES2010a was used in order to ensure that the nonattainment area can demonstrate transportation conformity using MOVES2010a once the 3-year conformity grace period expires.  Pennsylvania updated their SIP-approved MVEBs with the use of MOVES2010a.  The budgets were previously developed with the use of the Highway Mobile Source Emission Factor Model (MOBILE6.2).

MOBILE6.2 is a motor vehicle emissions factor model that was utilized for SIPs and transportation conformity.  MOBILE6.2 was made available for use in SIPs and transportation conformity purposes on May 19, 2004 (69 FR 28830).  MOBILE6.2 was merely an update to MOBILE6 that added the ability for the program to estimate direct exhaust and brake and tire wear particulate matter emission factors as well as exhaust emission factors for particulate matter precursors.

MOVES2010 improves upon MOBILE6.2 in many aspects.  MOVES2010 utilizes a plethora of vehicle data that has been made available since the release of MOBILE6.2; this vehicle data includes emissions data for different kinds of vehicles.  The new data has allowed EPA to better understand on-road mobile source emissions and their contribution to emissions inventories as well as how effective different control strategies are.  The MOVES2010 model offers more flexibility because the program has a database design that allows easier organization of input and output files and data.  The database design of the MOVES2010 model allows much easier update of input data upon the release of new data.  MOVES2010 also accounts for temperature and speed variations and allows the model to run at a higher resolution which allows for the input of more activity data.

Under section 176(c) of the Clean Air Act (CAA), any federal action is required to conform to the applicable SIP.  A part of this requirement for conformity is transportation conformity.  Transportation conformity requires that any federally funded transportation plan, program or project conform to the applicable SIP for the transportation-related criteria pollutants (ozone, carbon monoxide, fine particulate matter (PM2.5), coarse particulate matter (PM10), and nitrogen dioxide).  The transportation conformity rules can be found at 40 CFR 93, Subpart A.  One of the requirements found under 40 CFR 93, Subpart A is that any transportation plan, TIP or project not in a conforming TIP must conform to the MVEBs in the applicable SIP.  In order for the MVEBs in a SIP to be used to determine conformity of a transportation plan, TIP or project, the MVEBs must be either approved or deemed adequate.  In this case, the budgets must be approved because these SIP revisions are revising already approved budgets.  However, in reviewing such a submitted SIP it remains useful to apply the criteria used to make an adequacy finding.  The requirements for adequacy are set forth in 40 CFR 93.118(e)(4)(i)-(vi).  The criteria for adequacy and how they are met by the Pennsylvania submittal are found below in Table 1.

Table 1.  Adequacy Criteria for the Scranton/Wilkes/Barre Maintenance Area
                                   Criterion
                                   Submittal

(i) The submitted control strategy implementation plan revision or maintenance plan was endorsed by the Governor (or his or her designee) and was subject to a State public hearing;
   * Letter addressed to Shawn M. Garvin, Regional Administrator, EPA Region III from E. Christopher Abruzzo, Secretary, Pennsylvania DEP.
   * Public hearing documents were submitted.

(ii) Before the control strategy implementation plan or maintenance plan was submitted to EPA, consultation among federal, State, and local agencies occurred; full implementation plan documentation was provided to EPA; and EPA's stated concerns, if any, were addressed;
   * Not applicable (N/A), these revisions do not accompany a control strategy implementation plan or maintenance plan.

(iii) The motor vehicle emissions budget(s) is clearly identified and precisely quantified;
   * Appendix C-2 of the submittal provides detailed emission summary tables.

(iv) The motor vehicle emissions budget(s), when considered together with all other emissions sources, is consistent with applicable requirements for reasonable further progress, attainment, or maintenance (whichever is relevant to the given implementation plan submission);
   * Maintenance plan was already approved on November 19, 2007 (72 FR 64948), no changes to nonroad emissions, point and area source emissions were updated.
   * Scranton/Wilkes-Barre Maintenance Area continues to attain the 1997 Ozone NAAQS as shown by the design value obtained from 2010-2012 data.
   * Update of point and area source emissions still shows that maintenance of the 1997 Ozone NAAQS will be continued.

(v) The motor vehicle emissions budget(s) is consistent with and clearly related to the emissions inventory and the control measures in the submitted control strategy implementation plan revision or maintenance plan; and
   * The SIP revisions show no change in any control measures in the previously submitted maintenance plan.

(vi) Revisions to previously submitted control strategy implementation plans or maintenance plans explain and document any changes to previously submitted budgets and control measures; impacts on point and area source emissions; any changes to established safety margins (see § 93.101 for definition); and reasons for the changes (including the basis for any changes related to emission factors or estimates of vehicle miles traveled).
   * Changes in MVEBs are clearly documented and explained in the submittal.  The higher emissions are due to the use of MOVES2010a which is a more accurate emissions model and is based on more recent data on vehicle emissions than MOBILE6.2.  Update of point source emissions and addition of small safety margin are well explained.

B.  STATE SUBMITTAL

On May 28, 2014, PADEP submitted a SIP revision which included an update to the MVEBs for NOx for the years 2009 (interim year) and 2018 (maintenance year).  The updated MVEBs were produced using the MOVES2010a model. The MVEBs were developed with guidance from the following EPA guidance documents:  Policy Guidance on the Use of MOVES2010 for SIP Development, Transportation Conformity, and Other Purposes and Technical Guidance on the Use of MOVES2010 for Emission Inventory Preparation in State Implementation Plans and Transportation Conformity.  The submittal also included an update to the point source emissions inventory.

I.  Methodology for Developing Data for Use in MOVES2010a

PADEP utilized MOVES2010a to provide emissions rates for emissions of NOx.  PPSUITE is a program that was utilized for the processing of highway information and to provide input files that are usable by the MOVES2010a model.  PPSUITE was run utilizing CENTRAL; CENTRAL is a program that provides a process for the proper function of PPSUITE and MOVES2010a.  The MVEBs were developed for NOx since NOx is a precursor of ozone.  The MVEBs for volatile organic compounds (VOCs) were not updated in these SIP revisions.

In PPSUITE, the Pennsylvania Department of Transportation (PennDOT) Roadway Management System (RMS) data among other data was utilized to produce vehicle miles traveled (VMT) estimates.  The VMT produced via PPSUITE was then imported into the county data manager (CDM) in MOVES2010a.  Since VOCs and NOx emissions differ with respect to travel speed, travel speed is utilized as an input in MOVES2010a. To develop an array of travel speeds, PPSUITE was utilized to develop vehicle hours of travel (VHT) by speed bin file which allows for the distribution of speeds across links into MOVES2010a speed bins.  The travel speed calculations were completed with guidance from Technical Guidance on the Use of MOVES2010 for Emission Inventory Preparation in State Implementation Plans and Transportation Conformity.

Road type distribution was another traffic input for MOVES2010a.  Road type distribution was developed with the use of PPSUITE.  The five different road types utilized by MOVES2010a are off network, rural restricted access, rural unrestricted access, urban restricted access and urban unrestricted access.  In addition, ramps are not included in road type distribution so it is assumed that 8% of the roadway VHT is ramp VHT.  This traffic input assumption is consistent with EPA's technical guidance.

Before RMS data is utilized by PPSUITE to develop various traffic inputs, several adjustments must be made.  The RMS VMT is adjusted to meet the Highway Performance Monitoring System (HPMS) VMT totals.  HPMS VMT utilizes snapshots of RMS VMT to satisfy reporting requirements established by the Federal Highway Administration (FHWA).  To make this adjustment, adjustment factors were calculated and utilized.

Adjustments to average annual daily traffic (AADT) were completed because calculations for ozone precursors are based on a summer weekday, since that is when ozone formation tends to be the greatest.  The RMS AADT volumes are adjusted by the use of a seasonal factor that was developed by PennDOT's Bureau of Planning and Research (BPR) to produce July traffic volumes.  The RMS data was also adjusted for differences in hourly traffic volumes.  The 24-hour pattern data provided to PPSUITE allowed PPSUITE to provide roadway segment volumes by the hour.  The 24-hour pattern data was obtained from PennDOT's PBR.

Traffic volume forecasts had to be applied to estimate future emissions from vehicles.  The growth rates utilized for these forecasts are the PennDOT PBR growth rate forecasting system, the regional travel model and any applicable Marcellus Shale related activity growth.  Additionally, county specific growth rates were utilized from a 2005 PennDOT report titled Statistical Evaluation of Projected Traffic Growth, Traffic Growth Forecasting System: Final Report, March 14, 2005.

MOVES2010a utilizes 13 vehicle source types.  Since HPMS utilizes different categories for vehicle types, the RMS traffic volumes were disaggregated to the 13 vehicle source types which were then combined into the 6 HPMS vehicle classes.  Vehicle type data input into PPSUITE is used to divide the roadway segment volumes with respect to the MOVES2010a source types.  The source types are split into percentages among the 24-hours of the day.  The vehicle source type percentages are then utilized to adjust vehicle speeds in response to trucks.

Vehicle population is also another important input for MOVES2010a.  Vehicle population is input into MOVES2010a with respect to the 13 vehicle source types utilized by the model. County level vehicle registration data is utilized for light duty vehicles and school buses. Transit bus data is obtained from PennDOT's National Transit Database (NTD); it is utilized to estimate county level transit bus counts.  Heavy duty vehicle population data is estimated by utilizing source type VMT and vehicle source and pattern data are utilized.  Vehicle age is input into the model as well.  The vehicle age is input into the model as a percentage of vehicles of the fleet between ages 0 and 31.

Outside of vehicle and roadway data, environmental variables are utilized as inputs since evaporative emissions are dependent on the surrounding temperatures.  The environmental variables used included hourly temperatures and humidity values. The temperatures were retrieved by Weather Bank, Inc.  Humidity values were produced according to EPA's technical guidance.  Minimum and maximum monthly temperatures were converted to hourly temperatures using EPA converters in the MOVES2010a model.

Fuel parameters were also input since different fuels produce different emissions.  The MOVES2010a default fuel formulation and supply data was utilized and updated with local volumetric fuel property data.  Gasohol market penetration and RVP values were updated at the county level.

Refueling emissions were not included as an input because Pennsylvania provides the refueling emissions in its area source inventory; hence it is not required for the production of MVEBs.  Additionally, MOVES2010a also includes input parameters for inspection and maintenance (I/M) programs.  The inputs for the I/M program include: program start year, stringency level, first and last model years subject to the program, waiver rates, compliance rates, program type and effectiveness, frequency of inspection, vehicle type coverage and test type.  The defaults for an I/M program in MOVES2010a were modified to accurately represent the I/M program for each county.

II.  Running MOVES2010a

As stated in Section I, the data utilized to run MOVES2010a is a mixture of local and national data.  Local data is utilized for all inputs that have significant impact on the emissions rates that are calculated by MOVES2010a.  The local data utilized as inputs for MOVES2010a is categorized into five categories which include: traffic data, vehicle descriptions, fuel parameters, I/M programs, and environmental variables.  The inputs for traffic data include vehicle type VMT, vehicle population, VMT fractions, road type distribution, and ramp fractions.  The inputs for vehicle descriptions include vehicle type mix, vehicle age distribution, average speeds and hourly distributions of different vehicles.  The inputs for fuel parameters include RVP, sulfur level and ethanol volume.  The inputs for I/M programs include start and model years, the frequency of tests, test standards, source types, stringency of tests, the waiver rate, and compliance rates.  The inputs for environmental variables include hourly temperatures and humidity.

MOVES2010a inputs that were prepared by PPSUITE included vehicle type VMT, vehicle population, VMT fractions, average speed distributions, road type distribution and ramp fractions.  These files were input into the MOVES2010a county data importer.  Additional non-PPSUITE inputs included fuel and vehicle ages, as well as temperatures and I/M programs.  The county data importer was run in batch mode.  Running the county data importer converts input files into a MYSQL format which is accepted by MOVES2010a.  Afterwards, a MOVES run specification file (.mrs) was created.  This file includes options and different data locations for the execution of the model.  MOVES2010a can be executed to provide an emissions rate or an emissions inventory.  In this submittal, MOVES2010a was executed to provide an emissions inventory.  The emissions estimates of NOx produced for the years 2004, 2009 and 2018 by MOVES2010a are provided in tons per summer day (tpsd) in Table 2.  Summary of Motor Vehicle Emissions in tpsd; also provided in Table 2 is the comparison between the emissions produced by MOBILE6.2 and MOVES2010a.  No new emissions estimates were produced for VOCs therefore their inclusion into the MOVES estimates portion in the table below is not applicable (N/A).  After reviewing this submittal, EPA concurs with Pennsylvania that even though the emissions results produced by MOVES2010a are greater than those previously calculated using MOBILE6.2.  EPA's review of the SIP revisions indicate these higher emissions result from improvements in the MOVES model rather than from unanticipated growth or changes in control measures.  The MOVES results are more accurate estimates of the emissions that actually occurred in 2004 and 2009, rather than an indication that emissions are increasing.  More importantly, the Scranton/Wilkes-Barre Maintenance Area attained the 1997 8-Hour Ozone NAAQS and was redesignated to a maintenance area on November 19, 2007 (72 FR 64948).  The Scranton/Wilkes-Barre Maintenance Area continues to attain the 1997 8-Hour Ozone NAAQS as shown by its 2010-2012 design values.  The highest monitored 2010-2012 design value for the Scranton/Wilkes-Barre Maintenance Area is 72 parts per billion (ppb).  After reviewing this submittal, EPA finds this update to the MVEBs does not interfere with the Scranton/Wilkes-Barre Maintenance Area's ability to maintain its attainment of the1997 8-Hour Ozone NAAQS.

Table 2.  Summary of Motor Vehicle Emissions in tpsd for the Scranton/Wilkes-Barre Maintenance Area
Model
                                   MOBILE6.2
                                  MOVES2010a
Year
                                                                           2004
                                                                           2009
                                                                           2018
                                                                           2004
                                                                           2009
                                                                           2018
VOCs
31.6
23.3
14.3
N/A
N/A
N/A
NOx
66.1
46.9
21.6
77.0
57.3
28.5

III.  Review of MOVES Modeling

To run the MOVES2010a model, a run specification (hereafter referred to as "RunSpec") must be created so the appropriate parameters are selected for the modeling run.  The RunSpecs were reviewed against the following EPA document:  Technical Guidance on the use of MOVES2010 for Emission Inventory Preparation in State Implementation Plans and Transportation Conformity.  This guidance document provides guidance on the use of the MOVES model to develop inventories for SIPs as well as analysis of emissions for transportation conformity determinations.  MVEBs were submitted for the years 2009 and 2018 for the 1997 Ozone NAAQS which are consistent with the rest of the emissions inventory in the maintenance plan.  The submitted RunSpecs, input files and output files were reviewed and found to have followed the applicable EPA guidance provided in the Technical Guidance on the use of MOVES2010 for Emission Inventory Preparation in State Implementation Plans and Transportation Conformity.  Table 3 presents the RunSpec parameters that were reviewed and each parameter's respective component in the submittal.

Table 3.  RunSpec Reviews for the 1997 Ozone NAAQS for Years 2009 and 2018 for Lackawanna, Luzerne, Wyoming, and Monroe Counties
Domain/Scale
County scale was selected.  Selection of county scale is acceptable for this air quality analysis.
Calculation Type
Inventory was selected which is acceptable for this analysis.
Time Aggregation Level
Hourly time aggregation was selected.  Selection of hourly time aggregation level is acceptable for this analysis.
Calendar Year Of Evaluation
The appropriate calendar year was selected for each RunSpec; each RunSpec has 2009 or 2018 as the selected calendar year.  MOVES2010a can model years 1990 and 1999-2050.
Month of Evaluation
July was selected to be the month of evaluation.  This is acceptable for ozone precursor analysis.
Type of Day of Evaluation
Weekdays were selected, which is appropriate for the evaluation of pollutant emissions related to ozone.
Hours of Evaluation
Starting and ending hours create a whole day (from 0-24 hours).
Geographic Bounds
The appropriate county was selected for each RunSpec.  The four counties modeled were Lackawanna, Luzerne, Monroe, and Wyoming Counties.
Vehicles/Equipment: On-Road Vehicle Equipment
Appropriate combinations of fuels and source use types were made.
Road Type
Selection included all necessary road types.
Pollutants and Processes
NOx, total gaseous hydrocarbons, non-methane hydrocarbons, and VOCs were selected.
On-Road Retrofits
N/A
ROP
N/A
Output Database/Unit Selection
Mass units selected to be grams; energy units selected to be million British Thermal Unit (BTU); distance units selected to be miles.
Output Emission Detail in Emission Rate Calculations
Emission detail was selected via user preference.  The output emissions detail does not affect the results of the modeling runs, therefore user preference is acceptable.
Advanced Performance Features
N/A

IV.  Safety Margins, Allotment of MVEBs for each Planning Organization, and General Conformity Budget for the Construction of the Bell Bend Nuclear Power Plant

Since there is a significant difference between the projected emissions for the maintenance year and the attainment year a small portion of that difference was made into a safety margin.  In other terms, the emissions for the attainment year are much greater than the emissions for the interim (2009) and maintenance (2018) years, which allows for a portion of those excess emissions to become a safety margin.  A two tpsd safety margin was added for NOx emissions for the 2009 and 2018 MVEBs.  The MVEBs are presented below in Table 4.  The differences between the 2004 attainment year and the 2009 interim year and 2018 maintenance year for NOx are found below in Table 5.  NOx Emissions and Differences for Years 2004, 2009, and 2018 in tpsd.  Table 5 presents decreases in emissions which are significant in some categories between the attainment, interim and maintenance years.  Because the 2009 and 2018 emissions are less than the 2004 attainment year emissions, a small portion of the excess emissions can be allocated to safety margins while the area can continue to attain the 1997 8-Hour Ozone NAAQS.

Additionally, there are three metropolitan planning organizations (MPOs) and one regional planning organization (RPO) that serve the four counties that comprise the Scranton/Wilkes-Barre Maintenance Area.  To simplify the transportation conformity process for these MPOs, separate budgets will be given to each MPO.  Table 6. MVEBs for Each MPO presents how the MVEBs will be allotted to each MPO.

A nuclear power plant will be constructed and will be known as the Bell Bend Nuclear Power Plant.  Building this nuclear power plant will cause a significant amount of NOx emissions because of all of the nonroad equipment used for construction.  These significant NOx emissions will trigger the general conformity requirements of 40 CFR 93(B).  The de minimus NOx threshold would be exceeded by the projected NOx emissions of this project; therefore this project is subject to the requirements of general conformity.  The maximum emissions are expected to occur during the second year of construction; the maximum emissions are expected to be 167.7 tons per year (tpy) of NOx.  The de minimus VOC emission threshold will not be exceeded by this project because the maximum VOC emissions that are expected to occur are 14.3 tpy which is much less than the de minimus emissions of 50 tpy.  These SIP revisions include a general conformity budget for NOx.  The general conformity budget is set for 1.0 tpsd.  This 1.0 tpsd budget is factored into all of the inventory totals found in Table 5. With the addition of MVEBs, safety margins, and the general conformity budget the total emissions for 2009 and 2018 are significantly less than the attainment year emissions.

Table 4.  Revised MVEBs in tpsd  for the Scranton/Wilkes/Barre Maintenance Area
Year
                                                                           2009
                                                                           2018
VOCs
                                      N/A
                                                                            N/A
NOx
                                                                           59.3
                                                                           30.5

Table 5.  NOx Emissions and Differences for Years 2004, 2009, and 2018 in tpsd for the Scranton/Wilkes/Barre Maintenance Area
Category
                                                                           2004
                                                                           2009
 2004-2009
                                                                           2018
    2004-2018
Point
                                                                            7.0
                                      7.7
                                                                            0.7
                                                                            5.8
                                                                           -1.2
Area
                                                                            4.0
                                                                            4.2
                                                                            0.2
                                                                            7.5
                                                                            3.5
Nonroad
                                                                           10.9
                                                                            8.9
                                                                           -2.0
                                                                            5.6
                                                                           -5.3
Mobile
                                                                           77.0
                                                                           59.3
                                                                          -17.7
                                                                           30.6
                                                                          -46.4
Total
                                                                           98.9
                                                                          81.1*
                                                                         -17.8*
                                                                          50.5*
                                                                         -48.4*
*Totals include the 1.0 tpsd general conformity budget for the construction of the Bell Bend Nuclear Power Plant

Table 6.  MVEBs for Each MPO in tpsd for the Scranton/Wilkes/Barre Maintenance Area
MPO
                           Scranton/Wilkes-Barre MPO
                                   NEPA MPO
                               Northern Tier RPO
Year
                                                                           2009
                                                                           2018
                                                                           2009
                                                                           2018
                                                                           2009
                                                                           2018
VOCs
                                                                          17.99
                                                                          11.80
                                                                           6.19
                                                                           4.64
                                                                           0.99
                                                                           0.54
 NOx
                                                                          42.67
                                                                          21.90
                                                                          14.10
                                                                           7.10
                                                                           2.50
                                                                           1.60

C.  EPA EVALUATION AND CONCLUSION

EPA thoroughly evaluated the submittal made by Pennsylvania through PADEP.  EPA's detailed review has led us to conclude that the development methodology of the MVEBs is consistent with applicable guidance documents intended to guide the development of on-road inventories and MVEBs.  EPA also reviewed the MVEBs using the adequacy criteria set forth in 40 CFR 93.118(e)(4)(i)-(vi), and as documented above we found that the budgets meet all of the adequacy criteria.  EPA also reviewed the general conformity budget that will be utilized for the construction of the Bell Bend Nuclear Power Plant and found it to be consistent with continued attainment of the 1997 Ozone NAAQS.  Based on the results of EPA's in depth review of the SIP revisions, the Scranton/Wilkes Barre Maintenance Area's continued attainment of the 1997 8-Hour Ozone NAAQS and the results of EPA's review of the MVEBs using the adequacy criteria in the transportation conformity rule, EPA is proposing to approve these SIP revisions.