Commission-jurisdictional services at rates, terms and conditions
that are just and reasonable, as described in the Final Rule in
Docket No. RM10-23-000. The regional transmission planning process
shall be described in an attachment to the Transmission Provider's
Tariff.
    The Transmission Provider's regional transmission planning
process shall satisfy the following seven principles, as set out and
explained in the Final Rule in Docket No. RM05-25-000: coordination,
openness, transparency, information exchange, comparability, dispute
resolution, and economic planning studies. The regional transmission
planning process shall also include the procedures and mechanisms
for evaluating transmission projects proposed to achieve public
policy requirements established by State or Federal laws or
regulations consistent with the Final Rule in Docket No. RM10-23-
000. The regional transmission planning process shall provide a
mechanism for the recovery and allocation of planning costs
consistent with the Final Rule in Docket No. RM05-25-000.
    Nothing in the regional transmission planning process shall
include an unduly discriminatory process for transmission project
submission and selection. The regional transmission planning process
shall provide on a not unduly discriminatory basis for the sponsor
of a facility that is selected through the regional transmission
planning process for inclusion in the regional transmission plan to
have a right, consistent with State or local laws or regulations, to
construct and own that facility and to recover the cost of that
facility through the applicable regional cost allocation method.
    The description of the regional transmission planning process
must include sufficient detail to enable Transmission Customers to
understand:
    (i) The process for consulting with customers;
    (ii) The notice procedures and anticipated frequency of
meetings;
    (iii) The methodology, criteria, and processes used to develop a
transmission plan;
    (iv) The method of disclosure of criteria, assumptions and data
underlying transmission plan;
    (v) The obligations of and methods for transmission customers to
submit data;
    (vi) The dispute resolution process;
    (vii) The study procedures for economic upgrades to address
congestion or the integration of new resources;
    (viii) The procedures and mechanisms for evaluating transmission
projects proposed to achieve public policy requirements established
by State or Federal laws or regulations; and
    (ix) The relevant cost allocation method or methods.
    The regional transmission planning process must include a cost
allocation method or methods that satisfy the six principles set
forth in the final rule in Docket No. RM10-23-000.

Interregional Transmission Planning

    The Transmission Provider, through its regional transmission
planning process, must coordinate with the public utility
transmission providers in each neighboring transmission planning
region within its interconnection to address transmission planning
issues related to interregional transmission facilities. This
coordination between each pair of transmission planning regions must
be reflected in an interregional transmission planning agreement
filed with the Commission. The interregional transmission planning
agreement must include a detailed description of the process for
coordination between public utility transmission providers in
neighboring transmission planning regions (i) With respect to each
interregional transmission facility that is proposed to be located
in both transmission planning regions and (ii) to identify possible
interregional transmission facilities that could address
transmission needs more efficiently than separate intraregional
transmission facilities.
    The Transmission Provider must ensure that the following
elements are included in any interregional transmission planning
agreement in which it participates:
    (1) A commitment to coordinate and share the results of each
transmission planning region's regional transmission plans to
identify possible interregional facilities that could address
transmission needs more efficiently than separate intraregional
facilities;
    (2) An agreement to exchange at least annually planning data and
information;
    (3) A formal procedure to identify and jointly evaluate
transmission facilities that are proposed to be located in both
transmission planning regions; and
    (4) A commitment to maintain a website or e-mail list for the
communication of information related to the coordinated planning
process.
    The Transmission Provider must work with transmission providers
located in neighboring transmission planning regions to develop a
mutually agreeable method or methods for allocating between the two
transmission planning regions the costs of a new interregional
transmission facility that is located within both transmission
planning regions. Such cost allocation method or methods must
satisfy the six principles set forth in the final rule in Docket No.
RM10-23-000.

United States of America Federal Energy Regulatory Commission

Transmission Planning and Cost Allocation by Transmission Owning and
Operating Public Utilities

Docket No. RM10-23-000

Issued June 17, 2010.
    MOELLER, Commissioner, concurring:
    As I have repeatedly stressed in my years on this Commission,
promoting investment in our nation's transmission infrastructure has
been my top policy priority.\1\ Robust electric transmission
infrastructure is the ultimate ``enabling'' energy technology, as it
can provide a more efficient electric system, enhanced reliability,
increased access to less expensive and often cleaner resources, and
the ability to harness location-constrained renewable resources.
Conversely, the lack of adequate transmission investments often
disproportionately raises consumer rates due to congestion,
threatens the reliability of the nation's bulk power system, and
increases reliance on older and dirtier generating resources.
---------------------------------------------------------------------------

    \1\ NSTAR Elec. Co., 125 FERC ] 61,313 (2008) (Moeller, Comm'r,
dissenting in part) (``* * * the Commission should do what it can to
encourage capital investment in needed transmission infrastructure
projects.''); Commonwealth Edison Co. and Commonwealth Edison Co. of
Indiana, 125 FERC ] 61,250 (2008) (Moeller, Comm'r, dissenting) (``*
* * now is not the time for this Commission to discourage investment
in needed transmission infrastructure.''); New York Indep. Sys.
Operator, Inc., 129 FERC ] 61,045 (2009) (Moeller, Comm'r,
dissenting) (``The main issue here is whether needed transmission is
being built * * * I have encouraged investment in transmission
infrastructure * * *''); Southern California Edison Co., 129 FERC ]
61,013 (2009) (Moeller, Comm'r, dissenting in part) (``The
transmission that is needed in this nation will not be built unless
the companies that build it can attract adequate investment
dollars.'')
---------------------------------------------------------------------------

    While I am not certain that every policy in this proposed rule
will ultimately be adopted, I am certain that building needed
transmission lines is often the lowest-cost way to improve the
delivery of electricity service. Although the Commission could have
addressed regional cost allocation several years ago when it first
became apparent that the organized markets were not reaching
consensus on the issue, that wait is over and the Commission is now
considering specific proposals to resolve cost allocation.
    Given that the U.S. Congress is examining cost allocation at
this time, our issuance of this proposed rule comes at a potentially
sensitive time. While Congress is now considering several measures
that deal directly with issues addressed in this proposed rule, I
expect that this Commission will defer to the legislative branch as
we move forward in our deliberations. This proposed rule, and the
comments to follow, will provide the Congress with the

framework of the issues that we consider relevant and the
opportunity for Congress to provide further guidance to us. Thus,
our action today is not intended to interfere with that process, but
rather to add helpful information and evidence that will be useful
in the formation of Federal legislation.
    Also controversial will be the question of whether incumbent
utilities should retain rights of first refusal that were created
under the Commission's jurisdiction. Alas, the question of whether
transmission developers can compete on par with an incumbent
transmission-owning utility is no longer theoretical. In recent
cases, the Commission has been confronted with particular situations
where competitors could be discouraged (or altogether blocked) from
building a transmission project if the incumbent utility retains the
right of first refusal.\2\ While initial rulings have been rendered
in these cases, the generic issue is ready for further discussion in
this rulemaking.
---------------------------------------------------------------------------

    \2\ Primary Power, LLC, 131 FERC ] 61,015 (2010) (reh'g pending)
and Cent. Transmission, LLC v. PJM Interconnection L.L.C., 131 FERC
] 61,243 (2010).
---------------------------------------------------------------------------

    Resolving controversial issues is rarely easy and I expect
today's proposed rule to be both lauded and criticized. The changes
proposed here are significant, but the future success of the
organized markets and the nation's electric transmission system
depend on resolving these long-debated and controversial issues.
    Staff's efforts here have resulted in a proposal that will lead
to a much needed conversation on how to best encourage needed
capital investment. This will not be an easy matter to address when
it comes before the Commission for a vote on the final rule, and for
that reason this Commission should carefully consider the comments
that we will receive. I will do my part to ensure that this
Commission does not lose sight of the ultimate goal: A final rule
that results in needed capital investment.

 D. Moeller,
Commissioner.

[FR Doc. 2010-15735 Filed 6-29-10; 8:45 am]
BILLING CODE P


[Federal Register Volume 85, Number 55 (Friday, March 20, 2020)]
[Notices]
[Pages 16152-16157]
[FR Doc No: 2020-05935]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88393]

Order Granting Conditional Exemptive Relief, Pursuant to Section
36 and Rule 608(e) of the Securities Exchange Act of 1934, From Section
6.4(d)(ii)(C) and Appendix D Sections 4.1.6, 6.2, 8.1.1, 8.2, 9.1, 9.2,
9.4, 10.1, and 10.3 of the National Market System Plan Governing the
Consolidated Audit Trail

March 17, 2020.

I. Introduction

    By letter dated January 29, 2020,\1\ BOX Exchange LLC, Cboe BYX
Exchange, Inc., Cboe BZX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe
EDGX Exchange, Inc., Cboe C2 Exchange, Inc., Cboe Exchange, Inc.,
Financial Industry Regulatory Authority, Inc., Investors Exchange LLC,
Long Term Stock Exchange, Inc., Miami International Securities Exchange
LLC, MIAX Emerald, LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., Nasdaq GEMX,
LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, NASDAQ PHLX LLC, The NASDAQ
Stock Market LLC, New York Stock Exchange LLC, NYSE American LLC, NYSE
Arca, Inc., NYSE Chicago, Inc., and NYSE National, Inc. (collectively,
the ``Participants'') to the National Market System Plan Governing the
Consolidated Audit Trail (``CAT NMS Plan'' or ``Plan''),\2\ requested
that the Securities and Exchange Commission (``Commission'' or ``SEC'')
grant exemptive relief from certain requirements in the CAT NMS Plan
pursuant to Section 36 of the Securities Exchange Act (``Exchange
Act'') \3\ and Rule 608(e) of Regulation NMS.\4\ Specifically, the
Participants seek exemptive relief from Section 6.4(d)(ii)(C) and
Appendix D, Sections 4.1.6, 6.2, 8.1.1, 8.2, 9.1, 9.2, 9.4, 10.1, and
10.3 of the CAT NMS Plan (1) to allow for an alternative approach to
generating a CAT Customer ID (``CCID'') \5\ without requiring Industry
Members \6\ to report individual social security numbers or tax payer
identification numbers (collectively, ``SSNs'') to the consolidated
audit trail (``CAT'') (the ``CCID Alternative''); and (2) to allow for
an alternative approach which would exempt the reporting of dates of
birth and account numbers associated with natural person retail
Customers \7\ to the CAT (``Modified PII Approach''), and instead would
require Industry Members to report the year of birth associated with
natural person retail Customers and the Firm Designated ID \8\ for each
trading account associated with the Customers.\9\
---------------------------------------------------------------------------

    \1\ See letter from the Participants to Vanessa Countryman,
Secretary, Commission, dated January 29, 2020 (the ``January 29,
2020 Exemption Request'').
    \2\ The CAT NMS Plan was approved by the Commission, as
modified, on November 15, 2016. See Securities Exchange Act Release
No. 79318 (November 15, 2016), 81 FR 84696 (November 23, 2016).
    \3\ 15 U.S.C. 78mm(a)(1).
    \4\ 17 CFR 242.608(e).
    \5\ The ``Customer-ID'' means ``with respect to a customer, a
code that uniquely and consistently identifies such customer for
purposes of providing data to the central repository.'' See CAT NMS
Plan, Article I, Section 1.1, referring to Rule 613(j)(5). 17 CFR
242.613(j)(5). The Participants also use the term ``CCID'' to refer
to ``CAT Customer ID.'' See January 29, 2020 Exemption Request at 4-
5. For purposes of the January 29, 2020 Exemption Request, the term
``CCID'' and ``CAT Customer-ID'' means the ``Customer-ID'' under the
CAT NMS Plan.
    \6\ ``Industry Member'' means ``a member of a national
securities exchange or a member of a national securities
association.'' See CAT NMS Plan, Article I, Section 1.1.
    \7\ A ``Customer'' means ``the account holder(s) of the account
at a registered broker-dealer originating the order; and any person
from whom the broker-dealer is authorized to accept trading
instructions for such account, if different from the account
holder(s). See CAT NMS Plan, Article I, Section 1.1.
    \8\ ``Firm Designed ID'' means ``a unique identifier for each
trading account designated by Industry Members for purposes of
providing data to the Central Repository, where each such identifier
is unique among all identifiers from any given Industry Member for
each business date.'' See CAT NMS Plan, Article I, Section 1.1.
Article VI, Section 6.4(d)(ii)(C) of the CAT NMS Plan requires CAT
Reporters (as defined below) to report the Firm Designated ID to be
reported to the Central Repository.
    \9\ See January 29, 2020 Exemption Request. Unless otherwise
noted, capitalized terms are used as defined in the CAT NMS Plan.
---------------------------------------------------------------------------

    Section 36 of the Exchange Act grants the Commission the authority,
with certain limitations, to ``conditionally or unconditionally exempt
any person, security, or transaction . . . from any provision or
provisions of [the Exchange Act] or of any rule or regulation
thereunder, to the extent that such exemption is necessary or
appropriate in the public interest, and is consistent with the
protection of investors.'' \10\ Under Rule 608(e) of Regulation NMS,
the Commission may ``exempt from [Rule 608], either unconditionally or
on specified terms and conditions, any self-regulatory organization,
member thereof, or specified security, if the Commission determines
that such exemption is consistent with the public interest, the
protection of investors, the maintenance of fair and orderly markets
and the removal of impediments to, and perfection of the mechanism of,
a national market system.'' \11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78mm(a)(1).
    \11\ 17 CFR 242.608(e).
---------------------------------------------------------------------------

    For the reasons set forth below, this Order grants the
Participants' request for exemptions from specified provisions of the
CAT NMS Plan as set forth in January 29, 2020 Exemption Request,
subject to certain conditions.

II. Description

    As set forth in the January 29, 2020 Exemption Request regarding
the CCID Alternative, the Participants state that ``in light of
security concerns raised with regard to the maintenance of Customer
information in the CAT, the Participants request an exemption to
eliminate one of the most sensitive CAT data elements--SSNs--from the
CAT.'' \12\ In lieu of retaining such sensitive information in the CAT,
the Participants would use the CCID alternative, a strategy developed
by the Chief Information Security Officer for the CAT and the Chief
Information Security Officers from each of the Participants, in
consultation with security experts from member firms of Securities
Industry and Financial Markets Association.\13\ According to the
Participants, the CCID Alternative allows the Plan Processor \14\ to
generate a CCID without requiring the Plan Processor to receive SSNs or
store SSNs within the CAT.\15\ Under the CCID Alternative, according to
the Participants, the Plan Processor would generate a unique CCID using
a two-phase transformation process that avoids having SSNs reported to
or stored in the CAT.\16\ In the first transformation phase, a CAT
Reporter \17\ would transform the SSN to an interim value.\18\ The
Participants state that the Plan Processor would provide CAT Reporters
the tools and/or technology to transform SSNs into interim values.\19\
This transformed value, and not the SSN, would be submitted to a
separate system within the CAT (``CCID Subsystem'').\20\ The CCID
Subsystem

would then perform a second transformation to create the globally
unique CCID for each Customer that is unknown to, and not shared with,
the original CAT Reporter.\21\ According to the Participants, the CCID
would then be sent to the customer and account information system of
the CAT, where it would be linked with the other customer and account
information.\22\ The transformed value would be sent to the CAT
``separate and apart from the other customer and account information.''
\23\ The Participants state that the CCID may then be used by the
Participants' regulatory staff and the SEC in queries and analysis of
CAT Data.\24\
---------------------------------------------------------------------------

    \12\ See January 29, 2020 Exemption Request at 4.
    \13\ See January 29, 2020 Exemption Request at 4.
    \14\ ``Plan Processor'' means ``the Initial Plan Processor or
any other Person selected by the Operating Committee pursuant to SEC
Rule 613 and Sections 4.3(b)(i) and 6.1, and with regard to the
Initial Plan Processor, the Selection Plan, to perform the CAT
processing functions required by SEC Rule 613 and set forth in this
Agreement.'' See CAT NMS Plan, Article I, Section 1.1.
    \15\ See January 29, 2020 Exemption Request at 4-5.
    \16\ See January 29, 2020 Exemption Request at 5.
    \17\ ``CAT Reporter'' means ``each national securities exchange,
national securities association and Industry Member that is required
to record and report information to the Central Repository pursuant
to SEC Rule 613(c).'' See CAT NMS Plan, Article I, Section 1.1. Only
Industry Members would be reporting an interim value.
    \18\ See January 29, 2020 Exemption Request at 5.
    \19\ See January 29, 2020 Exemption Request at 12.
    \20\ In the event that a Customer does not have an SSN, the
Participants represent that the CAT Reporter would not be required
to submit the transformed value to the CCID Subsystem. See January
29, 2020 Exemption Request at 5.
    \21\ See January 29, 2020 Exemption Request at 5.
    \22\ See January 29, 2020 Exemption Request at 5. The CAT NMS
Plan indicates that ``customer and account information'' is CAT Data
that ``includes PII.'' See generally CAT NMS Plan, Appendix D,
Section 6.2 at D-19. ``PII'' means ``personally identifiable
information, including a social security number or tax identifier
number or similar information; Customer Identifying Information and
Customer Account Information.'' See CAT NMS Plan, Article I, Section
1.1. ``Customer Identifying Information'' in turn is defined to mean
``information of sufficient detail to identify a Customer,
including, but not limited to, (a) with respect to individuals:
name, address, date of birth, individual tax payer identification
number (``ITIN'')/social security number (``SSN''), individual's
role in the account (e.g., primary holder, joint holder, guardian,
trustee, person with the power of attorney); and (b) with respect to
legal entities: Name, address, Employer Identification Number
(``EIN'')/Legal Entity Identifier (``LEI'') or other comparable
common entity identifier, if applicable; provided, however, that an
Industry Member that has an LEI for a Customer must submit the
Customer's LEI in addition to other information of sufficient detail
to identify a Customer.'' Id. ``Customer Account Information'' is
generally defined to ``include, but not be limited to, account
number, account type, customer type, date account opened, and large
trader identifier (if applicable). . . .'' For purposes of the
January 29, 2020 Exemption Request, the ``customer and account
information system of the CAT'' refers to the database that contains
PII, as defined in the Plan.
    \23\ See January 29, 2020 Exemption Request at 6.
    \24\ See January 29, 2020 Exemption Request at 5.
---------------------------------------------------------------------------

    The Participants state that there would be no cost imposed by the
Plan Processor or CATLLC \25\ on an Industry Member if it uses the CAT
Reporter Portal to transform an SSN prior to submission.\26\ For
Industry Members that perform the CCID transformation and submit it via
a machine-to-machine interface, the Participants state that there would
be ordinary costs associated with installing the transformation logic,
but that neither the Plan Processor nor CATLLC would impose any costs
on Industry Members.\27\ The Participants state that actual costs would
depend on the specific Industry Member's technology architecture, but
would not be anticipated to be significant.\28\
---------------------------------------------------------------------------

    \25\ ``CATLLC'' refers to the limited liability company, set
forth in the Limited Liability Company Agreement of Consolidated
Audit Trail, LLC, formed by the Participants to conduct the
activities related to CAT. See Securities Exchange Act Release No.
87149 (September 27, 2019); 84 FR 52905 (October 3, 2019).
    \26\ See January 29, 2020 Exemption Request at 5. The ``CAT
Reporter Portal'' is the ``Industry Member CAT Reporter Portal''
which is a web-based tool provided by the Plan Processor to CAT
Reporters that allows CAT Reporters to monitor and manage data
submissions to CAT. See ``Industry Member CAT Reporter Portal User
Guide'' dated November 4, 2019, v. 1.0. https://catnmsplan.com/sites/default/files/2020-02/IM-Reporter-Portal-User-Guide_11042019.pdf. According to the Participants, Industry Members
who use this CAT Reporter Portal to transform an SSN into the
interim value will incur no cost to perform the transformation.
    \27\ See January 29, 2020 Exemption Request at 5.
    \28\ See January 29, 2020 Exemption Request at 5.
---------------------------------------------------------------------------

    The Participants note that Industry Members would continue to store
individual customer \29\ SSNs outside the CAT, as they do currently,
and that if a Participant's regulatory staff or the SEC needs to obtain
a Customer's SSN during an investigation, such regulator would need to
request that information from the CAT Reporter (e.g., via a FINRA Rule
8210 request or the Electronic Blue Sheets).\30\ However, if a
Participant's regulatory staff or the SEC already has an SSN via means
other than the CAT, the Participants state that the regulator will have
the ability to use that SSN to query the CAT.\31\ The Participants
further state that similar to the process described above, the SSN
would be transformed into the CCID, which, in turn, may be used by the
Participant's regulatory staff and the SEC in queries and analysis of
CAT Data.\32\
---------------------------------------------------------------------------

    \29\ See January 29, 2020 Exemption Request at 5. Both
``customer'' and ``Customer'' are used by the Participants in the
January 29, 2020 Exemption Request. The Commission assumes, for
purposes of this Order, that the Participants intended the term
``Customer'' as defined in the CAT NMS Plan; however, in Section II
of this Order, the Commission reflects the terms used in the January
29, 2020 Exemption Request.
    \30\ Pursuant to the CCID Alternative, because SSNs would no
longer be reported to or collected by the CAT, regulatory staff
would only be able to obtain an individual's SSN associated with
a(n) CCID by submitting a request for such SSN to the CAT Reporter
that retains the SSN. Data provided via Electronic Blue Sheets, or
EBS data, is provided pursuant to Rule 17a-25 under the Act, and
includes certain detailed execution information, including the SSN
of a Customer. See 17 CFR 240.17a-25.
    \31\ See January 29, 2020 Exemption Request at 5.
    \32\ See January 29, 2020 Exemption Request at 5.
---------------------------------------------------------------------------

    The Participants state that the proposed CCID Alternative is
necessary and appropriate in the public interest, and is consistent
with the public interest, the protection of investors, the maintenance
of fair and orderly markets and the removal of impediments to, and
perfection of the mechanisms of, a national market system.\33\ The
Participants believe that, subject to accurate implementation by CAT
Reporters, the CCID Alternative will have the capability to create a
reliable and accurate CCID that is unique for each Customer, and that
regulators will be able to use a unique CCID to track orders from any
Customer throughout the order's lifecycle, regardless of what brokerage
account was used to enter the order.\34\ The Participants state that
the use of CCIDs would thus enhance the security of the Central
Repository while preserving regulatory benefits of the CAT.\35\ The
Participants state that because only CCIDs would be stored in the
Central Repository, rather than SSNs, the proposed relief would
eliminate the risk of having a comprehensive aggregated source for all
individual Customer SSNs (i.e., the potential use of illegally obtained
SSNs to facilitate identity theft or other fraud).\36\ The Participants
state that no SSNs would be collected or stored in the CAT, and that
instead, only Industry Members would continue to collect individual
Customer SSNs, as they do currently.\37\ The Participants state that
the process to create CCIDs using, in part, SSNs would be secure.\38\
The Participants also state that the significant reduction in the risk
that information in the CAT could be used to facilitate identity theft,
achieved by the use of CCIDs, does not compromise the regulatory
benefits of the CAT.\39\ The Participants state that the CCID

Subsystem is subject to the security provisions of the CAT NMS
Plan.\40\
---------------------------------------------------------------------------

    \33\ See January 29, 2020 Exemption Request at 5.
    \34\ See January 29, 2020 Exemption Request at 5-6. The
Participants state that if the Commission grants this request for
exemptive relief, each Participant will propose to amend its
Compliance Rules consistent with the exemptive relief. See January
29, 2020 Exemption Request at 6, n.17. Each Participant is obligated
to enforce compliance by its members with such Compliance Rules,
including rules related to implementation of the CCID Alternative.
Id. ``Compliance Rule'' means ``with respect to a Participant, the
rule(s) promulgated by such Participant as contemplated by Section
3.11.'' See CATNMS Plan, Article I, Section 1.1. Section 3.11 of the
Plan states that ``[e]ach Participant shall comply with and enforce
compliance, as required by SEC Rule 608(c), by its Industry Members
with the provisions of SEC Rule 613 and of this Agreement, as
applicable, to the Participant and its Industry Members. The
Participants shall endeavor to promulgate consistent rules (after
taking into account circumstances and considerations that may impact
Participants differently) requiring compliance by their respective
Industry Members with the provisions of SEC Rule 613 and this
Agreement.'' Id. at Article III, Section 3.11.
    \35\ See January 29, 2020 Exemption Request at 6.
    \36\ See January 29, 2020 Exemption Request at 6.
    \37\ See January 29, 2020 Exemption Request at 6.
    \38\ See January 29, 2020 Exemption Request at 6.
    \39\ See January 29, 2020 Exemption Request at 6.
    \40\ See January 29, 2020 Exemption Request at 12.
---------------------------------------------------------------------------

    The Participants believe that eliminating the retention of SSNs in
the CAT would not have an adverse impact on the effective operation of
the CAT.\41\ The Participants recognize, however, that the elimination
of the collection of SSNs would cause CAT Reporters to assume a
critical role in the accurate generation of CCIDs.\42\ The Participants
state that to mitigate the potential risk to the integrity of the CCID
values ultimately assigned to Customer records in the CAT, the
Participants, working with the Plan Processor, will consider methods
for detecting errors in the transformed values submitted by CAT
Reporters, such as through validation processes and/or testing of
accounts, as well as methods that may be identified by functionality
supporting the Error Resolution for the Customer Data requirement in
Section 9.4 of Appendix D of the CAT NMS Plan.\43\ The Participants
represent that the Plan Processor is currently exploring potential
validation checks that could be performed upon submission by an
Industry Member of an initial CCID, such as ensuring the value
submitted is within an expected range of values.\44\ The Participants
state that such a validation check would help identify transformation
errors (e.g., transformation resulted in an invalid or malformed SSN),
but it would not ensure that the correct SSN for a specific customer
was used for the transformation.\45\ The Participants state that, in
consultation with the working group of industry members that developed
the CCID Alternative, they believe that the value of eliminating the
need for CAT Reporters to transmit SSNs to the CAT exceeds the
potential increased risk to the integrity of CCID assignments.\46\
---------------------------------------------------------------------------

    \41\ See January 29, 2020 Exemption Request at 6.
    \42\ See January 29, 2020 Exemption Request at 6.
    \43\ See January 29, 2020 Exemption Request at 6. The Plan does
not define ``Customer Data''; however, Appendix D, Section 9.4
references various data elements related to the PII reported and
collected by the CAT. The Commission assumes for purposes of the
January, 29, 2020 Exemption Request that ``Customer Data'' refers to
such PII.
    \44\ See January 29, 2020 Exemption Request at 6.
    \45\ See January 29, 2020 Exemption Request at 6.
    \46\ See January 29, 2020 Exemption Request at 6.
---------------------------------------------------------------------------

    As set forth in the January 29, 2020 Exemption Request, the
Participants also state that in light of security concerns raised with
regard to the maintenance of Customer information in the CAT, the
Participants also propose to eliminate dates of birth and account
numbers for individuals from the CAT. Under this proposal, or the
Modified PII Approach, dates of birth and account numbers for natural
persons would not be reported to the CAT and therefore would not be
stored in the CAT.\47\ The Participants state that similar to SSNs,
this information is particularly sensitive from a security perspective
and should not be included in the CAT (i.e., the Participants believe
that such information, if illegally obtained, could be used to
facilitate identity theft or other fraud).\48\ The Participants
represent that the Modified PII Approach has been discussed with the
Advisory Committee.\49\
---------------------------------------------------------------------------

    \47\ See January 29, 2020 Exemption Request at 7.
    \48\ See January 29, 2020 Exemption Request at 7.
    \49\ See January 29, 2020 Exemption Request at 7. According to
the CAT NMS Plan, the Advisory Committee ``shall advise the
Participants on the implementation, operation, and administration of
the Central Repository, including possible expansion of the Central
Repository to other securities and other types of transactions.''
See CAT NMS Plan, Article IV, Section 4.13(d).
---------------------------------------------------------------------------

    The Participants believe that the Modified PII Approach is
necessary and appropriate in the public interest, and is consistent
with the public interest, the protection of investors, the maintenance
of fair and orderly markets and the removal of impediments to, and
perfection of the mechanisms of, a national market system.\50\ The
Participants believe that by eliminating dates of birth and account
numbers from the CAT, the proposed relief would significantly reduce
the risk profile of data collected and stored in the CAT by eliminating
the PII data elements that would support attempted identity theft.\51\
In addition, the Participants state that the elimination of dates of
birth and account numbers for individuals would not compromise the
regulatory benefits of the CAT, including the ability of regulators to
identify Customers and their related trading activity.\52\ The
Participants state that instead of reporting dates of birth and account
numbers for individuals, CAT Reporters would report to the CAT year of
birth and Firm Designated IDs for accounts for individuals.\53\
---------------------------------------------------------------------------

    \50\ See January 29, 2020 Exemption Request at 7.
    \51\ See January 29, 2020 Exemption Request at 7.
    \52\ See January 29, 2020 Exemption Request at 7.
    \53\ See January 29, 2020 Exemption Request at 7. The Commission
assumes for purposes of this Order that the January 29, 2020
Exemption Request seeks relief from the requirement to report all
account numbers, not limited to account numbers individuals.
---------------------------------------------------------------------------

    The Participants state that the Participants, Industry Members, and
others have raised concerns regarding the security risk of having
personally identifying Customer information in the CAT for individual
Customers of every securities brokerage account involving Eligible
Securities \54\ in the U.S. securities markets in the CAT.\55\ The
Participants noted the statements made by Chairman Clayton, members of
Congress and the broker-dealer community regarding the importance of
evaluating the collection of information into the CAT.\56\ The
Participants state that the Operating Committee of the CAT shares these
security concerns and noted that they formed a PII Working Group \57\
to research and recommend potential alternatives regarding the handling
of PII, including SSNs.\58\ After considering various alternatives, the
PII Working Group ultimately recommended the CCID Alternative to the
Operating Committee of the CAT.\59\
---------------------------------------------------------------------------

    \54\ ``Eligible Securities'' means ``(a) all NMS Securities and
(b) all OTC Equity Securities.'' See CAT NMS Plan, Article I,
Section 1.1. ``NMS Securities'' is defined as ``any security or
class of securities for which transaction reports are collected,
processed, and made available pursuant to an effective transaction
reporting plan, or an effective national market system plan for
reporting transactions in Listed Options.'' Id. ``OTC Equity
Securities'' is defined as ``any equity security, other than an NMS
Security, subject to prompt last sale reporting rules of a
registered national securities association and reported to one of
such association's equity trade reporting facilities.'' Id.
    \55\ See January 29, 2020 Exemption Request at 3.
    \56\ See January 29, 2020 Exemption Request at 3 and 4.
    \57\ The Participants formed the PII Working Group to analyze
whether it might be possible to meet the goals of the CAT while
capturing less PII than Rule 613 currently requires. The PII Working
Group was composed of representatives from the Participants and the
Advisory Committee.
    \58\ See January 29, 2020 Exemption Request at 4.
    \59\ See January 29, 2020 Exemption Request at 4.
---------------------------------------------------------------------------

III. Request for Relief

    In order to implement the CCID Alternative and Modified PII
Approach, the Participants request that the Commission grant exemptive
relief from the following sections of the CAT NMS Plan as set forth
below:
     Section 6.4(d)(ii)(C) of the CAT NMS Plan which requires
Industry Members, through the SRO CAT compliance rules, to record and
report to the Central Repository for the original receipt of an order,
SSNs, dates of birth, and account numbers for individuals. The
Participants request relief from the requirement in Section
6.4(d)(ii)(C) that Industry Members, through their Compliance Rules
record and report to the Central Repository for the original receipt of
an order, SSNs, dates of birth, and account numbers for individuals. In
place of reporting SSNs, dates of birth, and account numbers, the
Participants will require Industry Members, through their Compliance
Rules, to report to the Central Repository a transformed value for the
SSN, year of birth, and the Firm

Designated ID for accounts for individuals.\60\
---------------------------------------------------------------------------

    \60\ See January 29, 2020 Exemption Request at 9.
---------------------------------------------------------------------------

     Section 9.1 of Appendix D which requires the CAT to
capture and store Customer and Customer Account Information in a secure
database physically separated from the transactional database and that
requires the following attributes, at a minimum, to be captured: SSN or
ITIN and date of birth. Section 9.1 of Appendix D also requires the
Plan Processor to maintain valid Customer and Customer Account
Information for each trading day. The Participants request relief from
these requirements in Section 9.1 of Appendix D that the CAT capture
and store SSNs, dates of birth, and account numbers in the CAT.\61\ In
place of SSNs, dates of birth and account numbers, Industry Members
will report to the Central Repository a transformed value for the SSN,
year of birth and the Firm Designated ID for accounts of individuals.
---------------------------------------------------------------------------

    \61\ See January 29, 2020 Exemption Request at 8-9.
---------------------------------------------------------------------------

     Section 9.1 of Appendix D which requires the Plan
Processor ``provide a method for Participants' regulatory staff and the
SEC to easily obtain historical changes to [Customer and Customer
Account] information.'' If the Commission grants the requested
exemptions, SSNs, dates of birth, and account numbers for individuals
would not be stored within the CAT and, thus, Participants' regulatory
staff and the Commission staff would not be able to obtain historical
changes to SSNs, dates of birth and account numbers for individuals.
The Participants request exemptive relief from the requirement in
Section 9.1 of Appendix D that the Plan Processor provide a method for
Participants' regulatory staff and Commission staff to obtain
historical changes to SSNs, dates of birth and account numbers.
Instead, the Participants state that the Plan Processor will manage
changes to CCIDs, years of birth and Firm Designated IDs to provide a
history of such data over time.\62\
---------------------------------------------------------------------------

    \62\ See January 29, 2020 Exemption Request at 9. The Commission
assumes for purposes of this Order that the requirement that the
Plan Processor will ``manage changes to CCIDs, years of birth and
Firm Designated IDs to provide a history of such data over time''
means that Plan Processor will provide a method for Participants'
regulatory staff and Commission staff to easily obtain historical
changes to CCIDs, years of birth and Firm Designated IDs in the same
manner as required by the CAT NMS Plan for Customer and Customer
Account information. See CAT NMS Plan, Appendix D, Section 9.1 at D-
33.
---------------------------------------------------------------------------

     Section 9.1 of Appendix D which states that the Plan
Processor ``will design and implement a robust data validation process
for submitted Firm Designated ID, Customer Account Information and
Customer Identifying Information, and must continue to process orders
while investigating Customer information mismatches,'' and that
``[v]alidations should: . . .Confirm the number of digits on a SSN,
Confirm [sic] dates of birth, and Accommodate [sic] the situation where
a single SSN is used by more than one individual.'' If the Commission
grants the requested exemption from the requirement that SSNs, dates of
birth, and account numbers for individuals be submitted to the CAT, no
validation process would be necessary for these elements. The
Participants request exemptive relief from the requirement in Section
9.1 of Appendix D for the Plan Processor to design and implement a
robust data validation process with regard to SSNs, dates of birth, and
account numbers. In place of validation of SSNs and dates of birth, the
Participants state that the Plan Processor will implement a validation
process for transformed values submitted by CAT Reporters to the Plan
Processor. The Participants state that both the Plan Processor and the
Participants believe the validations in the CAT NMS Plan that require
the identification and handling of inconsistencies in Customer
information can still be performed as envisioned using a CCID rather
than an SSN. This would include things such as validating that there
are not duplicate CCIDs and significantly different names, and
duplicate CCIDs and different year of births.\63\
---------------------------------------------------------------------------

    \63\ See January 29, 2020 Exemption Request at 9.
---------------------------------------------------------------------------

     Section 9.2 of Appendix D which requires the Central
Repository to accept ``[a]t a minimum, the following Customer
information data attributes. . . . : Account Tax Identifier (SSN, TIN,
ITIN).'' If the Commission grants the requested exemptions, SSNs would
not be submitted to the CAT.\64\ The Participants request exemptive
relief from the requirement in Section 9.1 of Appendix D for the
Central Repository to accept SSNs. Instead, the Central Repository will
accept a transformed value for SSNs.\65\
---------------------------------------------------------------------------

    \64\ See January 29, 2020 Exemption Request at 10.
    \65\ See January 29, 2020 Exemption Request at 10.
---------------------------------------------------------------------------

     Section 9.4 of Appendix D which requires the Plan
Processor to design and implement procedures and mechanisms to handle
both ``minor and material inconsistencies in Customer information.''
For example, ``[m]aterial inconsistencies such as two different people
with the same SSN must be communicated to the submitting CAT Reporters
and resolved within the established error correction timeframe as
detailed in Section 8.'' Section 9.4 of Appendix D also states that the
Central Repository must have an audit trail showing the resolution of
all errors. The required audit trail must, at a minimum, include a
variety of items including ``duplicate SSN, significantly different
Name'' and ``duplicate SSN, different DOB.'' The Participants request
exemptive relief from these error resolution requirements with regard
to SSNs, dates of birth and account numbers of individuals. Instead,
the Plan Processor will be required to design and implement an error
resolution process for CCIDs and years of birth.\66\
---------------------------------------------------------------------------

    \66\ See January 29, 2020 Exemption Request at 10.
---------------------------------------------------------------------------

     Section 4.1.6 of Appendix D requires that PII data not be
included in the result set(s) from online or direct query tools,
reports or bulk data extraction, and further requires that ``[i]nstead,
results will display existing non-PII unique identifiers (e.g.,
Customer-ID or Firm Designated ID).'' \67\ In addition, Sections 4.1.6,
8.1.1 and 8.2 of Appendix D further state that the ``PII corresponding
to these identifiers can be gathered using the PII workflow described
in Appendix D, Data Security, PII Data Requirements.'' The PII
corresponding to the identifiers referenced in this requirement
includes SSNs, dates of birth, and account numbers for individuals. The
Participants request exemptive relief from the requirements in Section
4.1.6, 8.1.1 and 8.2 to provide regulators with the ability to gather
SSNs, dates of birth, and account numbers that correspond with CCIDs
and Firm Designed IDs. The Participants state that regulators will have
the ability to gather years of birth that correspond with CCIDs.\68\
---------------------------------------------------------------------------

    \67\ See CAT NMS Plan, Appendix D, Section 4.1.6 at D-14.
    \68\ See January 29, 2020 Exemption Request at 10.
---------------------------------------------------------------------------

     Section 6.2 of Appendix D which requires that ``Customer
information that includes PII data be available to regulators
immediately upon receipt of initial data and corrected data, pursuant
to security policies for retrieving PII.'' PII under the Plan includes
SSNs, dates of birth, and account numbers as defined in Section 1.1 of
the CAT NMS Plan. The Participants request exemptive relief from the
requirement in Section 6.2 of Appendix D to provide regulators with
SSNs, dates of birth and account numbers. In place of SSNs, dates of
birth and account numbers the Participants state that years of birth
will be available to regulators immediately upon receipt of initial
data and

corrected data, pursuant to security policies.\69\
---------------------------------------------------------------------------

    \69\ See January 29, 2020 Exemption Request at 11.
---------------------------------------------------------------------------

     Section 10.1 of Appendix D which requires the ``Plan
Processor to provide technical, operational, and business support to
CAT Reporters for all aspects of reporting. Such support will include,
at a minimum: . . . [Managing] Customer and Customer Account
Information.'' The Participants request exemptive relief from Section
10.1 of Appendix D that requires the Plan Process to provide technical,
operation and business support to CAT Reporter with regard to SSNs,
dates of birth and account numbers of individuals. In place of such
support requirements with regard to SSNs, dates of birth and account
numbers of individuals, the Participants state that the Plan Processor
will provide technical specifications and help desk support to CAT
Reporters with respect to the implementation of the CCID Alternative
and the reporting of years of birth.\70\
---------------------------------------------------------------------------

    \70\ See January 29, 2020 Exemption Request at 11.
---------------------------------------------------------------------------

     Section 10.3 of Appendix D which requires that ``CAT Help
Desk support functions must include: . . . . Supporting CAT Reporters
with data submissions and data corrections, including submission of
Customer and Customer Account Information.'' The Participants request
exemptive relief from the requirements of Section 10.3 of Appendix D
regarding CAT Help Desk support function requirements with regard to
SSNs, dates of birth, and account numbers of individuals. In place of
such CAT Help Desk support functions, the Participants state that the
CAT Help Desk will provide support to CAT Reporters with respect to the
implementation of the CCID Alternative and the reporting of years of
birth.\71\
---------------------------------------------------------------------------

    \71\ See January 29, 2020 Exemption Request at 11.
---------------------------------------------------------------------------

IV. Discussion

    The Commission shares the concerns raised by market participants,
industry representatives and the Participants about the importance of
only requiring the necessary Customer and Customer account information
sufficient to achieve regulatory objectives. Since the inception of the
CAT, the Commission has been focused on the security and treatment of
PII, which is defined in the CAT NMS Plan.\72\ Additionally, the Plan
itself focuses on the security and confidentiality of PII. For example,
the Plan requires that PII be stored separately from transaction CAT
Data, and contains restrictions for accessing PII such that that
regulators entitled to query transaction CAT Data are not automatically
authorized for PII access under the Plan.\73\ The Plan explicitly
requires that the process by which a person becomes entitled for PII
access, and how they then go about accessing PII data, must be
documented by the Plan Processor.\74\ According to the Plan, access to
PII is based on a Role Based Access Control model, and follows the
``least privileged'' practice of limiting access as much as possible,
and limits access to PII to a ``need-to-know'' basis.\75\ In addition,
the Plan requires that all PII data, as with transaction CAT Data, must
be encrypted both at-rest and in-flight, including archival data
storage methods such as tape backup, and prohibits the storage of
unencrypted PII data.\76\ The Plan Processor also must describe how PII
encryption is performed and the key management strategy (e.g., AES-256,
3DES).\77\ While all of these safeguards in the CAT NMS Plan combine to
create robust security protections around PII that is reported to and
retained by the CAT, the most secure approach to addressing any piece
of sensitive retail Customer PII would be to eliminate its collection
altogether.
---------------------------------------------------------------------------

    \72\ For example, Rule 613(e)(4)(i)(A) requires policies and
procedures to ensure the security and confidentiality of all
information reported to the central repository by requiring that the
Participants and their employees agree to use appropriate safeguards
to ensure the confidentiality of such data and agree not to use such
data for any purpose other than surveillance and regulatory
purposes. Rule 613(e)(4)(i)(B) requires the Participants adopt and
enforce rules that require information barriers between regulatory
staff and non-regulatory staff with regard to access and use of data
in the central repository and permit only persons designated by plan
sponsors to have access to the data in the central repository. Rule
613(e)(4)(i)(C) also requires that the Plan Processor develop and
maintain a comprehensive information security program for the
central repository, with dedicated staff, that is subject to regular
reviews by the Chief Compliance Officer; have a mechanism to confirm
the identity of all persons permitted to access the data; and
maintain a record of all instances where such persons access the
data.
    \73\ See CAT NMS Plan at Appendix D, Section 4.1.6.
    \74\ See CAT NMS Plan at Appendix D, Section 4.1.6.
    \75\ See CAT NMS Plan at Appendix D, Section 4.1.6; see also CAT
NMS Plan at Appendix C, C-35.
    \76\ See CAT NMS Plan, Appendix D, Section 4.1.2.
    \77\ See CAT NMS Plan, Appendix D, Section 4.1.2.
---------------------------------------------------------------------------

    The Commission believes that exemptive relief pursuant to Section
36 to allow for the CCID Alternative and the Modified PII approach is
appropriate in the public interest, and is consistent with the
protection of investors and additionally that, pursuant to Rule 608(e),
such relief is consistent with the public interest, the protection of
investors, the maintenance of fair and orderly markets and the removal
of impediments to, and perfection of the mechanisms of, a national
market system. The CCID Alternative minimizes the risk of theft of
SSNs--the most sensitive piece of PII--by allowing the elimination of
SSNs from the CAT, while still facilitating the creation of a reliable
and accurate Customer-ID.\78\ Thus, the CCID Alternative preserves the
regulatory benefit of being able to track a specific order of a
Customer through its entire lifecycle, as originally contemplated by
the Plan, without requiring the reporting of SSNs by Industry Members
and the retention of SSNs by the Plan Processor. SSNs are considered
among the most sensitive PII that can be exposed in a data breach.\79\
Thus, the elimination of SSNs from the CAT may reduce both the risk of
attracting bad actors and the impact on retail investors in the event
of an incident.
---------------------------------------------------------------------------

    \78\ The ability to efficiently and accurately identify
individual Customers will allow regulators to establish those that
might be responsible for illegal conduct, or to identify those that
might be the victim of fraudulent activity. Indeed, one of the
hallmarks of the CAT is the ability to provide customer attribution
of order and trade activity even if such trading activity spans
multiple broker-dealers. Pursuant to the Plan, the identification of
Customers is achieved by the creation and use of the Customer-ID, a
code that uniquely and consistently identifies every Customer. The
Commission continues to believe, as it did when it approved the
Plan, that the ability to link the full life cycle of every order as
that order travels across broker-dealers and market centers to a
specific Customer through the use of a Customer-ID will greatly
facilitate the regulatory and surveillance efforts of regulators.
For the Commission in particular, this ability to identify a
Customer through the use of a CCID will also facilitate the
Commission's efforts in the areas of market reconstruction, market
analysis and rule-making support. Indeed, in the Commission's view,
without the Customer-ID, the value and usefulness of the CAT would
be significantly diminished.
    \79\ See Identify Theft Resource Center 2018 End of Year Breach
Report, pg. 13, https://www.idtheftcenter.org/wp-content/uploads/2019/02/ITRC_2018-End-of-Year-Aftermath_FINAL_V2_combinedWEB.pdf.
---------------------------------------------------------------------------

    The Modified PII Approach removes two additional pieces of
sensitive PII--account numbers and dates of birth--both of which can
also be used perpetrate identify theft against retail investors.
Reduction of these additional sensitive PII data elements in the CAT is
expected to further reduce both the attractiveness of the database as a
target for hackers and reduce the impact on retail investors in the
event of an incident of unauthorized access and use. However, certain
limited retail customer information will remain in the CAT;
specifically, name, address, and birth year. Having such customer
information remain in the CAT will allow regulators to identify bad
actors who are using retail trading accounts to perform illegal
activity. Finally, requiring that the birth year of retail investor
continue to be reported to the

CAT will also permit regulators to use CAT data to protect senior
investors and identify other types of fraudulent activity that may
target certain age demographics.
    Based on the foregoing, the Commission is granting conditional
exemptive relief from Section 6.4(d)(ii)(C) and Appendix D, Sections
4.1.6, 6.2, 8.1.1, 8.2, 9.1, 9.2, 9.4, 10.1, and 10.3 of the CAT NMS
Plan (1) related to SSNs to allow for the implementation of the CCID
Alternative; and (2) related to dates of birth and account numbers to
allow for the implementation of the Modified PII Approach.
    This order granting Exemptive Relief is conditioned upon the
implementation of the CCID Alternative and the Modified PII Approach in
a manner consistent with the January 29, 2020 Exemption Request,
including each of the representations made and conditions included in
the January 29, 2020 Exemption Request with regard to the CCID
Alternative and the Modified PII Approach.
    This order granting Exemptive Relief also is conditioned upon the
following:
    (1) The Process described in the January 29, 2020 Exemption
Request, Section D.9(5) will support the efficient and accurate
conversion of multiple SSNs at the same time into their corresponding
CCIDs. The Commission believes this condition is appropriate in order
to promote efficiency when a regulator obtains multiple SSNs from other
sources;
    (2) The Participants shall ensure the timeliness, accuracy,
completeness, and integrity of the interim value, and shall ensure the
accuracy and overall performance of the CCID Alternative process and
the CCID Subsystem to support the creation of a global Customer-ID that
uniquely identifies each Customer; and
    (3) The Participants must assess the overall performance and design
of the CCID Alternative process and the CCID Subsystem as part of each
annual Regular Written Assessment of the Plan Processor, as required by
Article VI, Section 6.6(b)(i)(A).
    Accordingly, it is hereby ordered, pursuant to Section 36 and Rule
608(e) of the Exchange Act,\80\ that the Commission grants the
Participants' request for exemptive relief, as set forth in the January
29, 2020 Exemption Request, from Section 6.4(d)(ii)(C) and Appendix D,
Sections 4.1.6, 6.2, 8.1.1, 8.2, 9.1, 9.2, 9.4, 10.1, and 10.3 of the
CAT NMS Plan, subject to the conditions set forth above.
---------------------------------------------------------------------------

    \80\ 17 CFR 242.608(e).

    By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-05935 Filed 3-19-20; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 165 (Friday, August 24, 2018)]
[Rules and Regulations]
[Pages 42778-42780]
[FR Doc No: 2018-18389]

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

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket Number USCG-2018-0700]
RIN 1625-AA87

Security Zone; Ohio River, Olmsted, IL

AGENCY: Coast Guard, DHS.

ACTION: Temporary final rule.

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

SUMMARY: The Coast Guard is establishing a temporary security zone for
the navigable waters within a half mile radius of Olmsted Lock and Dam
located at mile marker 964.5 on the Ohio River. The security zone is
needed to protect dignitaries, vessels, and waterfront facilities from
destruction, loss, or injury from sabotage or other subversive acts,
accidents, or other causes of a similar nature during a dignitary
visit. Entry of vessels or persons into this zone is prohibited unless
specifically authorized by the Captain of the Port Ohio Valley or a
designated representative.

DATES: This rule is effective from 6 a.m. through 5 p.m. on August 30,
2018.

ADDRESSES: To view documents mentioned in this preamble as being
available in the docket, go to http://www.regulations.gov, type USCG-
2018-0700 in the ``SEARCH'' box and click ``SEARCH.'' Click on Open
Docket Folder on the line associated with this rule.

FOR FURTHER INFORMATION CONTACT: If you have questions on this rule,
call or email Chief Petty Officer, Gary Heflin, Marine Safety Unit
Paducah Waterways Management, U.S. Coast Guard; telephone<PHONE_NUMBER>,
email [email protected].

SUPPLEMENTARY INFORMATION:

I. Table of Abbreviations

CFR Code of Federal Regulations
COTP Captain of the Port Sector Ohio Valley
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of proposed rulemaking
Sec.  Section
U.S.C. United States Code

II. Background Information and Regulatory History

    The Coast Guard is issuing this temporary rule without prior notice
and opportunity to comment pursuant to authority under section 4(a) of
the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This
provision authorizes an agency to issue a rule without prior notice and
opportunity to comment when the agency for good cause finds that those
procedures are ``impracticable, unnecessary, or contrary to the public
interest.'' Under 5 U.S.C. 553(b)(3)(B), the Coast Guard finds that
good cause exists for not publishing a notice of proposed rulemaking
(NPRM) with respect to this rule because it is impracticable and
contrary to the public interest. It is impracticable because we must
establish this security zone by August 30, 2018 and lack sufficient
time to provide a reasonable comment period and then consider those
comments before issuing the rule. The Coast Guard received minimal
notice regarding the dignitary visit, which is customary for security
purposes. The Coast Guard has determined that the security zone is
needed to protect the visiting dignitaries, persons, and property.
Providing notice would be contrary to the public interest as it would
delay establishment of the security zone until after the dignitary
visit and jeopardize the safety of the dignitaries, vessels, and
waterfront facilities.
    Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause
exists for making this rule effective less than 30 days after
publication in the Federal Register because it is contrary to the
public interest. Immediate action is needed to provide waterside
security and protection for the dignitary visit.

III. Legal Authority and Need for Rule

    The Coast Guard is issuing this rule under authority in 33 U.S.C.
1231. The Captain of the Port Sector Ohio Valley (COTP) has determined
that potential hazards associated with a dignitary visit on August 30,
2018, will be a security concern for the dignitaries, vessels, and
waterfront facilities on the Ohio River near the Olmsted Lock and Dam.
This rule is needed to protect the dignitaries, vessels, and waterfront
facilities from destruction, loss, or injury from sabotage or other
subversive acts, accidents, or other causes of a similar nature during
the dignitary visit.

IV. Discussion of the Rule

    This rule establishes a temporary security zone from 6 a.m. through
5 p.m. on August 30, 2018. The security zone will cover all navigable
waters within a half mile of Olmsted Lock and Dam, located at mile
marker 964.5 on the Ohio River in Olmsted, IL. The duration of the
security zone is intended to cover the period of the dignitary visit.
Entry of vessels or persons into this zone is prohibited unless granted
permission by the COTP or a designated representative. A designated
representative is a commissioned,

warrant, or petty officer of the U.S. Coast Guard assigned to units
under the operational control of USCG Sector Ohio Valley. They may be
contacted on VHF-FM Channel 13 or 16, or through Coast Guard Sector
Ohio Valley at 1-800-253-7465. A designated representative may be a
Patrol Commander (PATCOM). The PATCOM may be aboard either a Coast
Guard or Coast Guard Auxiliary vessel. The Patrol Commander may be
contacted on Channel 16 VHF-FM (156.8 MHz) by the call sign ``PATCOM''.
All persons and vessels shall comply with the instructions of the COTP
and a designated on-scene U.S. Coast Guard representative. The COTP or
a designated representative will inform the public through Broadcast
Notices to Mariners (BNMs) of the enforcement period for the temporary
security zone as well as any changes in the dates and times of
enforcement.

V. Regulatory Analyses

    We developed this rule after considering numerous statutes and
Executive orders related to rulemaking. Below we summarize our analyses
based on a number of these statutes and Executive orders, and we
discuss First Amendment rights of protestors.

A. Regulatory Planning and Review

    Executive Orders 13563 (``Improving Regulation and Regulatory
Review'') and 12866 (``Regulatory Planning and Review'') direct
agencies to assess the costs and benefits of available regulatory
alternatives and, if regulation is necessary, to select regulatory
approaches that maximize net benefits (including potential economic,
environmental, public health and safety effects, distributive impacts,
and equity). Executive Order 13563 emphasizes the importance of
quantifying both costs and benefits, of reducing costs, of harmonizing
rules, and of promoting flexibility. Executive Order 13771 (``Reducing
Regulation and Controlling Regulatory Costs'') directs agencies to
reduce regulation and control regulatory costs and provides that ``for
every one new regulation issued, at least two prior regulations be
identified for elimination, and that the cost of planned regulations be
prudently managed and controlled through a budgeting process.''
    The Office of Management and Budget (OMB) has not designated this
rule a ``significant regulatory action,'' under section 3(f) of
Executive Order 12866. Accordingly, OMB has not reviewed it. As this
rule is not a significant regulatory action, this rule is exempt from
the requirements of Executive Order 13771. See OMB's Memorandum
``Guidance Implementing Executive Order 13771, Titled `Reducing
Regulation and Controlling Regulatory Costs' '' (April 5, 2017).
    This regulatory action determination is based on the size,
location, and duration of the security zone. The security zone impacts
a half mile radius around the Olmsted Lock and Dam for eleven hours on
one afternoon. The Coast Guard will also issue Broadcast Notices to
Mariners via VHF-FM marine channel 16 about the zone and the rule
allows vessels to seek permission to enter the zone.

B. Impact on Small Entities

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as
amended, requires Federal agencies to consider the potential impact of
regulations on small entities during rulemaking. The term ``small
entities'' comprises small businesses, not-for-profit organizations
that are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations of less than
50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule
will not have a significant economic impact on a substantial number of
small entities.
    While some owners or operators of vessels intending to transit the
temporary security zone may be small entities, for the reasons stated
in section V.A above, this rule will not have a significant economic
impact on any vessel owner or operator.
    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Public Law 104-121), we want to assist small
entities in understanding this rule. If the rule would affect your
small business, organization, or governmental jurisdiction and you have
questions concerning its provisions or options for compliance, please
contact the person listed in the FOR FURTHER INFORMATION CONTACT
section.
    Small businesses may send comments on the actions of Federal
employees who enforce, or otherwise determine compliance with, Federal
regulations to the Small Business and Agriculture Regulatory
Enforcement Ombudsman and the Regional Small Business Regulatory
Fairness Boards. The Ombudsman evaluates these actions annually and
rates each agency's responsiveness to small business. If you wish to
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR
(1-888-734-3247). The Coast Guard will not retaliate against small
entities that question or complain about this rule or any policy or
action of the Coast Guard.

C. Collection of Information

    This rule will not call for a new collection of information under
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

D. Federalism and Indian Tribal Governments

    A rule has implications for federalism under Executive Order 13132,
Federalism, if it has a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. We have analyzed this rule under that Order and have
determined that it is consistent with the fundamental federalism
principles and preemption requirements described in Executive Order
13132.
    Also, this rule does not have tribal implications under Executive
Order 13175, Consultation and Coordination with Indian Tribal
Governments, because it does not have a substantial direct effect on
one or more Indian tribes, on the relationship between the Federal
Government and Indian tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes. If
you believe this rule has implications for federalism or Indian tribes,
please contact the person listed in the FOR FURTHER INFORMATION CONTACT
section above.

E. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Though this rule will not result in
such an expenditure, we do discuss the effects of this rule elsewhere
in this preamble.

F. Environment

    We have analyzed this rule under Department of Homeland Security
Directive 023-01 and Commandant Instruction M16475.1D, which guide the
Coast Guard in complying with the National Environmental Policy Act of
1969 (42 U.S.C. 4321-4370f), and have determined that this action is
one of a category of actions that do not individually or cumulatively
have a significant effect on the human environment. This rule involves

security zone lasting eleven hours that will prohibit entry within a
half mile radius of the Olmsted Lock and Dam, located at mile marker
964.5 on the Ohio River. It is categorically excluded from further
review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction
Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration
supporting this determination is available in the docket where
indicated under ADDRESSES.

G. Protest Activities

    The Coast Guard respects the First Amendment rights of protesters.
Protesters are asked to contact the person listed in the FOR FURTHER
INFORMATION CONTACT section to coordinate protest activities so that
your message can be received without jeopardizing the safety or
security of people, places, or vessels.

List of Subjects in 33 CFR Part 165

    Harbors, Marine safety, Navigation (water), Reporting and
recordkeeping requirements, Security measures, Waterways.

    For the reasons discussed in the preamble, the Coast Guard amends
33 CFR part 165 as follows:

PART 165--REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS.

0
1. The authority citation for part 165 continues to read as follows:

    Authority: 33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1,
6.04-6, and 160.5; Department of Homeland Security Delegation No.
0170.1.

0
2. Add Sec.  165.T08-0700 to read as follows:

Sec.  165.T08-0700  Security Zone; Ohio River, Olmsted, IL.

    (a) Location. The following area is a security zone: all navigable
waters within a half mile of Olmsted Lock and Dam, located at MM 964.5
on the Ohio River, Olmstead, IL.
    (b) Effective period. This section is effective from 6 a.m. through
5 p.m. on August 30, 2018.
    (c) Regulations. (1) Under the general security zone regulations in
subpart D of this part, you may not enter the security zone described
in paragraph (a) of this section unless authorized by the Captain of
the Port Sector Ohio Valley (COTP) or a designated representative. A
designated representative is a commissioned, warrant, or petty officer
of the U.S. Coast Guard assigned to units under the operational control
of USCG Sector Ohio Valley. A designated representative may be a Patrol
Commander (PATCOM). The PATCOM may be aboard either a Coast Guard or
Coast Guard Auxiliary vessel. The Patrol Commander may be contacted on
Channel 16 VHF-FM (156.8 MHz) by the call sign ``PATCOM''.
    (2) To seek permission to enter, contact the COTP or the COTP's
designated representative via VHF-FM Channel 16 or<PHONE_NUMBER>.
    (3) Those in the security zone must comply with all lawful orders
or directions given to them by the COTP or the COTP's designated
representative.
    (d) Informational broadcasts. The COTP or a designated
representative will inform the public through Broadcast Notices to
Mariners (BNMs) of the enforcement period for the temporary security
zone as well as any changes in the dates and times of enforcement.

    Dated: August 17, 2018.
M.B. Zamperini,
Captain, U.S. Coast Guard, Captain of the Port Sector Ohio Valley.
[FR Doc. 2018-18389 Filed 8-23-18; 8:45 am]
BILLING CODE 9110-04-P