THE NATIONAL OIL AND HAZARDOUS SUBSTANCES POLLUTION CONTINGENCY PLAN REGULATION, SUBPART J (40 CFR 300.900)

1.  IDENTIFICATION OF THE INFORMATION COLLECTION

      1(a)	Title of the Information Collection

      The National Oil and Hazardous Substances Pollution Contingency Plan Regulation, Subpart J (40 CFR 300.900) (Renewal).
      (EPA ICR # 1664.12, OMB # 2050-0141)

      1(b)	Short Characterization/Abstract

      This Information Collection Request (ICR) renewal supports activities to implement the National Oil and Hazardous Substances Pollution Contingency Plan (NCP), Subpart J (40 CFR 300.900, "Use of Dispersants and Other Chemicals").

      The use of bioremediation agents, dispersants, surface washing agents, surface collecting agents and miscellaneous oil spill control agents in response to oil spills in U.S. waters or adjoining shorelines is governed by Subpart J of the NCP regulation (40 CFR 300.900). Subpart J requirements include criteria for listing oil spill mitigating agents on the NCP Product Schedule, hereafter referred to as the Schedule. EPA's regulation, which is codified at 40 CFR 300.900, requires that EPA prepare a schedule of "dispersants, other chemicals, and other spill mitigating devices and substances, if any, that may be used in carrying out the NCP." The Schedule is required by section 311(d)(2)(G) of the Clean Water Act (CWA), as amended by the Oil Pollution Act of 1990. The Schedule is used by Federal On-Scene Coordinators (FOSCs), Regional Response Teams (RRTs), and Area Planners to identify spill mitigating agents in preparation and response to oil spills.

      Under 40 CFR 300.915, Subpart J requires manufacturers who wish to list a product on the Schedule to conduct specific toxicity and effectiveness tests and submit the corresponding technical product data, along with other detailed information, to the EPA Oil Program Center in the Office of Emergency Management, Office of Land and Emergency Management [formerly the Office of Solid Waste and Emergency Response (OSWER)]. For example, a dispersant must exceed the 50 percent (+-5 percent) efficacy threshold in order to be listed on the Schedule. EPA lists oil spill mitigating agents on the Schedule if all the required data are submitted, the product satisfies all requirements and meets or exceeds testing thresholds. The Schedule helps FOSCs, RRTs, and Area Committees select the most appropriate products to use in various spill scenarios.

      Products currently listed on the Schedule are divided into five basic categories: dispersants, surface washing agents, surface collecting agents, bioremediation agents, and miscellaneous oil spill control agents. As of November 2019, the Product Schedule included 105 manufacturers and 122 products (27 bioremediation agents, 19 dispersants, 17 miscellaneous oil spill control agents, two surface collecting agents, and 57 surface washing agents). EPA estimates that manufacturers will apply to list nine products on the Schedule each year, including two bioremediation agents, two dispersants, two miscellaneous oil spill control agents, one surface collecting agent, and two surface washing agents. Therefore, over the three-year period covered by this ICR renewal, EPA estimates an additional 27 products may be listed (six bioremediation agents, six dispersants, six miscellaneous oil spill control agents, three surface collecting agents, and six surface washing agents). Additionally, EPA estimates that approximately eight manufacturers will submit information to obtain sorbent certifications. EPA estimates the annual public reporting burden to be 310 hours. EPA estimates the total annual cost to manufacturers, including labor and non-labor costs, under Subpart J to be $95,400.

      On January 22, 2015, EPA published a proposed rule in the Federal Register (80 FR 3380) to amend Subpart J of the NCP. The proposed amendments are a major component of EPA's effort to inform the use of dispersants and other chemical or biological agents when responding to oil discharges. The proposed amendments incorporated lessons learned from the federal government's experiences in the Gulf. They also addressed recommendations specific to agent testing and use in response to oil discharges from the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling Report to the President. Key areas addressed in the proposed amendments include authorization of use requirements for chemical agents, toxicity and efficacy testing protocols for listing products on the Subpart J Product Schedule and proposed new monitoring requirements for subsea or prolonged surface application of dispersants. The Agency received more than 80,000 total public comment submissions from industry, academia, state/local governments, environmental groups and individuals. A copy of the Proposed Subpart J rule and accompanying ICR can be found in the EPA docket: EPA-HQ-OPA-2006-0090, where future Agency actions will be posted. The proposed rule has a separate ICR (ICR No. 1664.10, OMB No. 2050-0141) which covers the proposed amendments. This ICR renewal (ICR No. 1664.12) applies to the current existing Subpart J rule promulgated in 1994.

2.  NEED FOR AND USE OF THE COLLECTION

      2(a)	Need/Authority for the Collection

      Section 311(d)(2)(G) of the Clean Water Act (CWA) requires a Schedule identifying "dispersants, other chemicals, and other spill mitigating devices and substances, if any, that may be used in carrying out" the NCP. The authority of the President to implement the CWA is currently delegated to EPA by Executive Order 12777 (56 FR 54757, October 18, 1991). The use of dispersants, other chemical agents, and biological additives to respond to oil spills in U.S. waters is governed by Subpart J of the NCP (40 CFR 300.900).

      The Schedule is available for use by FOSCs, RRTs, and Area Committees to help them select the most appropriate products to use and identify those products whose use is prohibited in various spill scenarios. Under 40 CFR 300.910(a), RRTs and Area Committees are required to address the desirability of using the products on the Schedule in their Regional Contingency Plans (RCPs) and Area Contingency Plans (ACPs), respectively. The information and data manufacturers are required to submit to EPA enables the FOSCs, RRTs, and Area Committees to make informed decisions to safely employ chemical/biological countermeasures to control oil discharges. Correct product use is critical in emergency situations. Subpart J ensures that FOSCs, RRTs, and Area Committees have up-to-date data regarding the toxicity, effectiveness, and other characteristics of those products they could potentially use in the event of a spill.

      A manufacturer who wishes to have a product listed on the Schedule must conduct specific toxicity and effectiveness tests and submit the corresponding technical product data and other required information to the EPA Product Schedule Manager. EPA has established an effectiveness threshold for listing dispersants (40 CFR 300.920(a)(2)). Only those dispersants that meet or exceed the established threshold will be listed on the Schedule.

      At 40 CFR 300.915(d), EPA requires respondents to test bioremediation agents for effectiveness, using the testing protocol contained in Appendix C to part 300. The Bioremediation Agent Effectiveness Test is used to compare the effectiveness of different bioremediation agents. The test provides empirical laboratory evidence that evaluates a bioremediation agent's ability to enhance biodegradation as compared to the natural population.

      2(b)	Practical Utility/Users of the Data

      EPA places qualified oil spill mitigating agents on the Schedule if the manufacturer submits all the required data. The Schedule is available for use by FOSCs, RRTs, and Area Committees in determining the most appropriate products to use in various spill scenarios. Under 40 CFR 300.910(a), RRTs and Area Committees are required to address the desirability of using the products on the Schedule in their RCPs and ACPs, respectively. The information needed from the respondent so that the FOSCs, RRTs, and Area Committees can make informed decisions to safely employ chemical/biological countermeasures to control oil discharges. Correct product use is critical in emergency situations. Subpart J ensures that FOSCs, RRTs, and Area Committees have the necessary data regarding the toxicity, effectiveness, and other product characteristics so that they are able to select the most appropriate product to use under various spill scenarios.

 NON-DUPLICATION, CONSULTATIONS, AND OTHER COLLECTION CRITERIA

       3(a)	Non-duplication

       Manufacturers do not report this information to any other federal agency, and this is the only national level list of its kind; therefore, there is no duplication.

 	3(b)	Public Notice Required Prior to ICR Submission to the Office of Management and Budget (OMB)

       A notice announcing a public comment period for the renewal of this ICR was published in the Federal Register (FR) on November 27, 2019 (84 FR 65386). The public comment period ended on January 27, 2020. The Agency received three comments. Two comments were submitted anonymously; one was not germane to the rule and the other had no text (e.g., was blank). A third comment was submitted by Little Traverse Bay Bands of Odawa Indians (LTBB) in Michigan. The LTBB expressed a desire to participate in EPA's decision-making process to add more oil spill mitigating agents to the Schedule, including decisions that affect tribal territories. The LTBB also would like tribes that are not part of their Regional Response Team (RRT) to have access to the Schedule so that they are informed about any of the agents that are used on or near their territories in the event of an oil spill. EPA's response is that while product listing is an EPA regulatory activity (inherent government duty) that includes required testing and submission of data requirements, the LTBB has the right to prohibit use of any products on lands or waters within their tribal jurisdiction. The decision to use products is made on the scene with input from the RRT. The LTBB also can be included in decisions (as part of unified command and or as responders) to use products when they have jurisdiction (treaty rights) over the water bodies or they have traditional/customary use of the water, such as fishing rights. In addition, the LTBB will have the opportunity to provide input on any future Subpart J rulemakings through the Tribal Consultation process.

       3(c)	Consultations

       In developing this NCP Subpart J renewal ICR, EPA consulted with other federal agencies; FOSCs, Schedule experts, state agencies, both international and domestic technical experts, and various commercial laboratories and product manufacturers. EPA made an extensive effort to contact three laboratories and five manufacturers; however, ultimately, EPA was able to obtain input from only a limited number of respondents. One laboratory responded to requests for feedback on costs of Subpart J testing services. Three manufacturers (two bioremediation agent manufacturers, and one manufacturer who produces a dispersant and two surface washing agents) provided input on labor hours expended for complying with Subpart J data requirements. Based on higher operation and maintenance (O&M) provided by the laboratory and respondent burden estimates provided by the manufacturers compared to the expiring ICR, EPA made changes to the supporting statement for this ICR renewal. Both bioremediation agent manufacturers confirmed the effectiveness test cost of $18,000. In addition, the three product manufacturers provided labor estimates that were higher than those in the expiring ICR; however, the respondents provided elapsed time periods (e.g., spent one week reading the rule) and not actual hours spent on the activities. In response to feedback received during the consultations, EPA is increasing labor hour estimates by 20 percent across the data collection activities for each product category.

       During the consultation process, respondents informed EPA that the majority of manufacturers do not conform to the standard distribution of labor (i.e., managerial, technical, and clerical division of activities) EPA traditionally uses in ICRs and do not use formal clerical hours to prepare and submit response form items. Instead, management and technical personnel perform clerical and administrative tasks. For example, firms may have the President/CEO develop and compile information and send out the applications. EPA redistributed the clerical hours in the expiring ICR to the managerial and technical categories to reflect this input.
       Tables 1 and 2 below provide a summary of results from lab and manufacturer consultations. Appendix B of this supporting statement includes the consultation scripts and Attachment A includes interview notes from the consultations.
                                    Table 1
                           Results of Calls to Labs
 Company
                                Position Title
                                   Comments
                                    Results
Southwest Research Institute
Customer Service
Lab has not performed Subpart J testing in many years, no recent documentation to base reasonableness of estimates.
No response to request for interview.
Bonner Analytical Testing Company
President
Lab conducts toxicity test, swirling flask effectiveness test, and outsources bioremediation agent effectiveness testing.
No response to request for interview.
Bio-Aquatics Testing, Inc.
Vice President
Lab conducts toxicity test, swirling flask effectiveness test (SFT), and outsources bioremediation agent effectiveness testing.
Toxicity Test: $4,000
SFT: $4,500
Bioremediation Effectiveness: $18,000.
ALTERNATE LAB:
New England Bioassay

Lab Director
Lab conducts toxicity tests; and analytical/physical properties testing.
No response to request for interview.

                                    Table 2
                       Results of Calls to Manufacturers
                                    Company
                                Position Title
                                   Comments
                                    Results
Dispersants
COREXIT Environmental Solutions LLC
Product Manager
None.
No response to request for interview.
Alternate Dispersant: AGS Solutions, Inc.

President
Manufacturer provided burden hours in excess of EPA estimates.
Assessed the total burden as five months from time of reading Subpart J to receipt of listing letter.
Surface Washing Agents
X4 Environmental Inc.
Product Manager
None.
No response to request for interview.
Petro-Green, Inc.
Owner
None.
No response to request for interview.
Alternate SWA: Natural Soap Formulas, Inc.
Owner
None.
No response to request for interview.
Bioremediation Agents
Green Earth Naturally, L.L.C.
Environmental Specialist and Business Development Manager
Manufacturer provided burden hours in excess of EPA estimates.
Cited bioremediation effectiveness test costs of $18,000; and burden expended over 18 months from time of testing to receipt of listing letter.
JACOR, LLC
CEO/Inventor
Manufacturer provided burden hours in excess of EPA estimates.
Cited testing costs as nearly $20,000; and burden expended over 18 months from time of testing to receipt of listing letter
       3(d)	Effects of Less Frequent Collection

      A respondent must submit information only when it applies to list a new product on the Schedule, or when the composition, formulation, application, or contact information of a product currently listed on the Schedule has changed. Because collection is not periodic, less frequent collection is not possible.

       3(e)	General Guidelines

       The information collection activities discussed in this renewal ICR comply with all regulatory guidelines under 5 CFR 1320.5(d)(2).

       3(f)	Confidentiality

       Under 40 CFR 300.920(c), respondents may claim certain information in the technical product data submissions as confidential business information (CBI). EPA will handle CBI claims pursuant to the provisions in 40 CFR Part 2, Subpart B. Information claimed as CBI must be submitted separately from non-confidential information, clearly identified, and clearly marked "Confidential Business Information." If the applicant fails to make such a claim at the time of submittal, EPA may make the information available to the public without further notice.

 	3(g)	Sensitive Questions

       The information collection activities discussed in this document do not involve any sensitive questions.

 4.	RESPONDENTS AND THE INFORMATION REQUESTED

       4(a)	Respondents/SIC and NAICS Codes

       Respondents include, but are not limited to, manufacturers of bioremediation agents, dispersants, surface collecting agents, surface washing agents and other chemical agents and biological additives used as countermeasures against oil spills. While testing laboratories are not respondents to this ICR, they are affected by the information collection request and play an active role in the listing process.

        EPA expects respondents to fall within the following industrial classifications:

 Manufacturers of industrial inorganic chemicals (SIC 281/NAICS 325188),
 Manufacturers of industrial organic chemicals (SIC 286/NAICS 325199), and
 Manufacturers of miscellaneous chemical products (SIC 289/NAICS 325988).

       4(b)	Information Requested

       (i)	Data Items

       Under Subpart J, manufacturers who wish to list a product on the Schedule must report the following data items listed in Table 3 to EPA. No specific recordkeeping activities are required.

       Respondent Activities

       With the exceptions of effectiveness and toxicity testing, the data items discussed in section 4(b)(i) should be available to respondents through customary business practices (i.e., normal research and development activities). Effectiveness and toxicity tests, where applicable, require manufacturers to send products to a laboratory for testing. While laboratories must have previous experience conducting Subpart J testing under 40 CFR 300.915(a)(12), they are not considered to be respondents to the ICR as they are hired to provide a service to the manufacturers. EPA assumes that labs will include qualifications of their testing and staff experience within the data results package sent to EPA Processing, compiling, and reviewing the information required under Subpart J requires the following respondent activities:

Inserting simple information, such as product name, manufacturer address or
Drafting short answers, which EPA assumes requires minimal research and no testing;
Drafting narrative answers, which EPA assumes requires summarizing scientific data or test results, and preparing backup documentation;
Providing technical support; and,
Conducting a managerial review.

       Under Subpart J, the respondent must also notify EPA of any changes in the composition, formulation, or application of the dispersant, surface washing agent, surface collecting agent, bioremediation agent, or miscellaneous oil spill control agent. If the change is likely to alter the effectiveness or toxicity of the product, EPA may require retesting. If EPA decides that retesting is necessary, the respondent must have the product retested.

 5.	AGENCY ACTIVITIES, COLLECTION METHODOLOGY, AND INFORMATION MANAGEMENT

       5(a)	Agency Activities

       Under Subpart J, EPA will perform activities when a manufacturer applies to have a product listed on the Schedule. Once a manufacturer submits the required technical product data, EPA must perform the following activities:

Receive and process the technical product data;
Review the data for completeness and procedural accuracy;

                                    Table 3
                    Data Items Required Under NCP Subpart J

                              RESPONSE FORM ITEMS
                              RESPONDENT ACTIVITY
                                  BURDEN HOURS
                           OIL SPILL MITIGATING AGENT

                                       BA
                                       D
                                       MA
                                      SCA
                                      SWA
 Name, brand, or trademark, if any, under which the product is sold
                               Simple Information
                                   0.3 to 0.6

                                       X
                                       X
                                       X
                                       X
                                       X
 Name, address, and telephone number of the manufacturer, importer or vendor

                                       X
                                       X
                                       X
                                       X
                                       X
 Name, address and telephone number of primary distributors or sales outlets

                                       X
                                       X
                                       X
                                       X
                                       X
 Special handling information and worker precautions for storage and field application, including maximum and minimum storage temperatures
                                  Short Answer
                                   0.6 to 1.2

                                       X
                                       X
                                       X
                                       X
                                       X
 Shelf life information
                               Simple Information
                                   0.3 to 0.6

                                       X
                                       X
                                       X
                                       X
                                       X
 Recommended application procedures, concentrations, and conditions for use
                                Narrative Answer
                                   0.6 to 1.2

                                       X
                                       X
                                       X
                                       X
                                       X
 Results of the effectiveness test set forth in Appendix C of the NCP
                                Narrative Answer
                                   2.4 to 6.0

                                       X
                                       X
                                       NR
                                       NR
                                       NR
 Result of the toxicity test set forth in Appendix C of the NCP
                                Narrative Answer
                                   2.4 to 6.0

                                       NR
                                       X
                                       X
                                       X
                                       X
 Physical properties covered by the American Society for Testing and Materials (ASTM) reference standards
                                  Short Answer
                                   0.6 to 1.2

                                       NR
                                       X
                                       X
                                       X
                                       X
 Test results for distinguishing surface collecting agents from other chemical agents
                                  Short Answer
                                   0.6 to 1.2

                                       NR
                                       NR
                                       NR
                                       X
                                       NR
 List of product components
                                Narrative Answer
                                   2.4 to 6.0

                                       X
                                       X
                                       X
                                       X
                                       X
 The concentrations or upper limits of any heavy metals, cyanide, and chlorinated hydrocarbons
                                  Short Answer
                                   0.6 to 1.2

                                       NR
                                       X
                                       X
                                       X
                                       X
 Information on microbiological cultures, enzyme additives, and nutrient additives
                                Narrative Answer
                                   2.4 to 6.0

                                       X
                                       NR
                                       X
                                       NR
                                       NR
 Identity of laboratory performing tests, the qualifications of the laboratory staff, and laboratory experience with similar tests
                                Narrative Answer
                                   2.4 to 6.0

                                       X
                                       X
                                       X
                                       X
                                       X
 [KEY:  BA = Bioremediation Agent, D = Dispersant, MA = Miscellaneous Agent, SCA= Surface Collecting Agent, and SWA = Surface Washing Agent][; and NR = Not Required]

Notify the respondent of the Agency's decision on listing the product on the Schedule; and
If approved, the EPA Product Schedule Manager lists the product on the Schedule and stores the data.
EPA's decision to list a product on the Schedule is based on the completeness of the information presented. EPA will not evaluate a submitted product beyond the revised effectiveness threshold for the dispersants.

       5(b)	Collection Methodology and Management

       Respondents submit the required data to EPA in hard copy. If EPA accepts the product data following its review, the data are entered electronically on the Schedule. The data are then made available to FOSCs through three media: (1) hard copy; (2) EPA Internet Web page; and (3) electronic mail. The three options ensure that FOSCs can obtain the information as efficiently as possible.

       5(c) Small Entity Flexibility

       Under Subpart J, small entities must follow the same collection procedures as other respondents. FOSCs need the required information to choose products that safely and effectively control oil discharges. The requirements of acceptability criterion for dispersant effectiveness and effectiveness testing for bioremediation agents are not anticipated to result in a significant adverse impact on a substantial number of small businesses.

       5(d)	Collection Schedule

       EPA requires information to be collected when a manufacturer wishes to list a new product on the Schedule; or when a product currently listed on the Schedule changes in composition, formulation, or application method; the manufacturer needs to retest the product and resubmit new information to EPA for review.

 6.	ESTIMATING BURDEN AND COST

       6(a) 	Estimating Respondent Burden

       EPA expects that over the three-year period covered by this ICR renewal, an additional 27 products may be listed (six bioremediation agents, six dispersants, six miscellaneous oil spill control agents, three surface collecting agents, and six surface washing agents). A respondent's burden for preparing a product for listing on the Schedule is the same regardless of whether EPA lists the product. Therefore, burden is calculated for all manufacturers applying to list a product on the Schedule, rather than just for those who receive approval from EPA. Additionally, EPA estimates that approximately eight manufacturers will submit information to EPA to obtain a sorbent certification letter to confirm that the sorbent meets EPA's definition of a sorbent product (although sorbent products are not listed on the Schedule). Sorbent manufacturers incur a lower burden because they are not required to have their products tested by a laboratory nor do they need to provide all of the product data requirements in Subpart J.
       .
        Table 3 and Table A-1 in Appendix A contain estimates of the burden hours required to respond to each data item covered by this ICR.

 	6(b) Estimating Respondent Costs

 	To estimate the labor cost for manufacturers per product, the burden estimates for reading and understanding NCP Subpart J and preparing and submitting the necessary data to EPA are multiplied by the appropriate hourly wage rate category. For a detailed breakdown of respondent costs, please see Table A-2 in Appendix A.

 	6(c) Estimating Agency Burden and Costs

 	EPA incurs costs associated with the maintenance of the Schedule and evaluation of data requirements for listing products in accordance with 40 CFR 300.915. This section presents the estimated unit burden and unit cost to EPA for maintaining the Schedule. Burden estimates are based on EPA's experience with listing products on the Schedule under Subpart J. Table 4 shows the labor burden to EPA for each activity under Subpart J. The Agency activities were discussed previously in section 5(a). EPA's burden is estimated to be 20 hours per listing.

 	EPA labor costs are based on the January 2020 General Schedule (GS) pay schedule. EPA assumed that a staff person at the GS-13 Step 1 level would be required to maintain the Schedule. Based on the pay schedule, EPA derived an hourly rate of $78.97 by dividing the GS-13 Step 1 annual salary ($102,663) by 2,080 (the number of hours worked by a full-time EPA employee) and multiplied by the standard government overhead factor (1.6). The adjusted wage rate is multiplied by the hours in Table 4 to obtain the EPA labor burden cost. The cost of labor per product application, or unit burden, is therefore $1,579.

                                    Table 4
                     Estimated Unit Burden and Cost to EPA
                        INFORMATION COLLECTION ACTIVITY
                            Burden Hours ($78.97)[a]
                              Cost Per Product[b]
 Process submitted data
                                       7
                                                                           $553
 Review data for approval
                                       6
                                                                           $474
 Notify respondent of decision
                                       4
                                                                           $316
 Store data
                                       3
                                                                           $237
 UNIT BURDEN
                                       20
                                                                         $1,579
 [a]EPA assumes burden hours for each information collection activity will be the same for each oil spill mitigation agent type.
 [b]Cost per product costs are rounded.

 	The annual costs to EPA under Subpart J are presented in Table 5.

                                    Table 5
                    Estimated Annual Burden and Cost to EPA
                           Oil Spill Mitigation Agent
                                  Burden Hours
                                Cost Per Product
                                   (rounded)
                          Number of Products Per Year
                           Total Annual Burden Hours
                               Total Annual Cost
                                   (rounded)
 Bioremediation Agents
                                       20
                                                                         $1,579
                                       2
                                       40
                                                                         $3,159
 Dispersants
                                       20
                                                                         $1,579
                                       2
                                      40
                                                                         $3,159
 Miscellaneous Oil Spill Control Agents
                                       20
                                                                         $1,579
                                       2
                                       40
                                                                         $3,159
 Surface Collecting Agents
                                       20
                                                                         $1,579
                                       1
                                       20
                                                                         $3,159
 Surface Washing Agents
                                       20
                                                                         $1,579
                                       2
                                       40
                                                                         $3,159
 Sorbent Reviews and Certification
                                       3
                                                                           $237
                                       8
                                       24
                                                                         $1,895
 TOTAL
                                       17
                                      204
                                                                        $16,110
  	6(d)   	Estimating the Respondent Universe and Total Burden and Costs

 	EPA estimates an average of 17 respondents will submit information to list a total of 17 products each year for the next three years of this ICR as shown in Table 6. This section describes the universe of manufacturers that will apply for listing on the Schedule. EPA estimates that manufacturers will apply to list two bioremediation agents, two dispersants, two miscellaneous oil spill control agents, one surface collecting agent, and two surface washing agents each year of the renewal ICR period. Sorbent review and certification of eight products a year is also part of the EPA burden, although sorbents are not listed on the Schedule. Consequently, EPA estimates that manufacturers will apply to list an average of nine total chemical countermeasure products and eight sorbents for review and certification each year of the ICR period. Therefore, the total number of respondents is 17 and the number of responses is estimated to be 17. For a detailed breakdown of average annual burden and costs for all respondents, please see Table A-4 in Appendix A.

       The annual burden and cost to EPA under Subpart J are presented at the bottom of Tables 4 and 5, respectively.

       6(e)	Bottom Line Burden Hours and Cost Tables

       The total annual burden and costs for each of the three years of the renewal ICR period are illustrated in Table 6. For the renewal ICR period, the burden hours for respondents are 930 hours (310 hours/year x 3 years). The labor cost represents the average hourly burden multiplied by the appropriate wage category (management or technical). O&M (laboratory testing) costs vary depending on product type and the test(s) required. Based on Table A-4 of Appendix A, the annual O&M costs for respondents are [($18,000) (2 bioremediation agents/year) + ($4,500 + $4,000) (2 dispersants/year) + ($4,000) (2 miscellaneous oil spill control agents/year) + ($4,000) (1 surface collecting agent/year) + ($4,000) (2 surface washing agents/year)]. Therefore, the total O&M costs for respondents for the three-year renewal ICR period are $219,000.

       The annual respondent labor cost for oil spill mitigating agents and substances excluding sorbents is $20,704, which is based on Table A-4 of Appendix A and the following equation:

 ([{$2,292}/2] x 2/year) + ([{$2,446}/2] x 2/year) + ([{$2,446}/2] x 2/year) + ([{2,163}/2] x 1/year) + ([{$2,086}/2] x 2/year) = $20,704

       The annual respondent labor cost of a sorbent is $1,723 ($215 x 8 respondents). Therefore, the total annual labor cost for respondents is $22,427, and the total labor costs for respondents for the three-year ICR period will be $67,281 ($22,427 x 3 years). Accordingly, the bottom-line cost for respondents for the three-year renewal ICR period is $286,281 ($219,000 + $67,281) as shown in Table 6. No capital/start-up costs are associated with this renewal ICR.

                                    Table 6

               Estimated Total Burden and Costs under Subpart J

                                     Year
                                  RESPONDENTS
                                      EPA

                                Burden (hours)

                                  Labor Costs

                                 O&M Costs

                                   Total Cost
                                Burden (hours)
                                 Labor Costs
                                  Total Cost

                                      One
                                      310

                                    $22,427

                                    $73,000

                                    $95,427
                                      204

                                    $16,110

                                    $16,110

                                      Two
                                      310
                                    $22,427

                                    $73,000

   $95,427
                                      204

                                    $16,110

                                    $16,110

                                     Three
                                      310

                                    $22,427
                                    $73,000

                                    $95,427
                                      204

                                    $16,110

                                    $16,110

                               Three-Year Total
                                      930

                                    $67,281

                                   $219,000

                                   $286,281

                                      612

                                    $48,330

                                    $48,330

      As shown in Table 6, the Subpart J annual burden for EPA is 204 hours. Therefore, the total burden hours for EPA during the three-year renewal ICR period are 612. The total annual labor costs for EPA are $16,110, and the total labor costs for EPA over the three-year renewal ICR period are $48,330 ($16,110 x 3 years).

      6(f)	Reasons for the Change in Burden

      EPA anticipates changes in the annual burden hours under this ICR renewal (see Table 7). EPA increased the respondent burden hours by 20 percent in response to manufacturer feedback obtained during the consultation process that the ICR underestimated respondent burden hours. However, because EPA estimates that fewer respondents (nine annually in this renewal period vs. 11 in the previous renewal period) will submit information to EPA to have a product listed on the schedule, in addition to fewer sorbent manufacturers submitting fewer products for certification (eight in this renewal period vs. 10 in the previous renewal), the overall annual burden estimate has decreased for this ICR renewal period. The lower estimated numbers of submittals are based on the number of submittals EPA received during the previous three years. In addition, EPA received feedback during the consultation process that product manufacturers do not use clerical labor to conduct the activities in this ICR. EPA thus redistributed the clerical hours in the previous ICR renewal to the managerial and technical labor categories to more accurately reflect by whom the work is performed. The increase in the cost estimates are attributable to updates to the wage rates associated with respondent and EPA activities. In addition, consultations with laboratories indicated that testing service costs have increased; thus, O&M costs for toxicity and effectiveness testing have increased. However, these increases largely were offset by EPA's estimate that fewer products will be tested. Thus, O&M costs for toxicity and effectiveness testing have increased only slightly.

                                    Table 7
                   Total Estimated Annual Burden Comparison

                                Total Requested
                              Currently Approved
                         Change Due to EPA Discretion
                              Due to EPA Estimate
Annual Hour Burden
                                                                            310
                                                                            315
                                                                              0
                                                                            (5)
Annual Cost
(rounded)
                                                                        $73,000
                                                                        $72,450
                                                                             $0
                                                                           $550
       6(g)	Burden Statement

       The collection of information required to prepare and submit material for listing a product on the Schedule is estimated to have a public reporting burden of 18 to 47 hours per response in the first year and subsequent years, depending on the type of product to be listed, with an average of 32.5 hours per response. Written certification for sorbents is estimated to have a public reporting burden of 3 hours per product. There is no required recordkeeping burden associated with listing a product on the Schedule.

      The annual public reporting and recordkeeping burden for this collection of information is estimated to average 32.5 hours per response for oil spill mitigation agent manufacturers and 3 hours per response for sorbent manufacturers. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.

      To comment on the Agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden, including the use of automated collection techniques, EPA has established a public docket for this ICR under Docket ID Number EPA-HQ-OPA-2007-0042, which is available for online viewing at www.regulations.gov, or in person viewing at the Superfund Docket in the EPA Docket Center (EPA/DC), EPA West, Room 3334, 1301 Constitution Avenue, NW, Washington, D.C. The EPA Docket Center 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 Reading Room is<PHONE_NUMBER>, and the telephone number for the Superfund Docket is<PHONE_NUMBER>. An electronic version of the public docket is available at www.regulations.gov. This site can be used to submit or view public comments, access the index listing of the contents of the public docket, and to access those documents in the public docket that are available electronically. When in the system, select "search," then key in the Docket ID Number identified above. Also, you can send comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW, Washington, D.C. 20503, Attention: Desk Officer for EPA. Please include the EPA Docket ID Number EPA-HQ-OPA-2007-0042 and OMB Control Number 2050-0141 in any correspondence.


[Federal Register Volume 76, Number 181 (Monday, September 19, 2011)]
[Notices]
[Page 58028]
[FR Doc No: 2011-23910]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Internal Agency Docket No. FEMA-4025-DR; Docket ID FEMA-2011-0001]

Pennsylvania; Amendment No. 1 to Notice of a Major Disaster
Declaration

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

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

SUMMARY: This notice amends the notice of a major disaster declaration
for the Commonwealth of Pennsylvania (FEMA-4025-DR), dated September 3,
2011, and related determinations.

DATES: Effective Date: September 12, 2011.

FOR FURTHER INFORMATION CONTACT: Peggy Miller, Office of Response and
Recovery, Federal Emergency Management Agency, 500 C Street, SW.,
Washington, DC 20472,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration
for the Commonwealth of Pennsylvania is hereby amended to include the
Individual Assistance program for the following areas among those areas
determined to have been adversely affected by the event declared a
major disaster by the President in his declaration of September 3,
2011.

    Bucks, Delaware, Lehigh, Luzerne, Monroe, Montgomery, and
Philadelphia Counties for Individual Assistance.
    Chester, Northampton, Sullivan, and Wyoming Counties for
Individual Assistance (already designated for Public Assistance,
including direct Federal assistance).

    The following Catalog of Federal Domestic Assistance Numbers
(CFDA) are to be used for reporting and drawing funds: 97.030,
Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis
Counseling; 97.033, Disaster Legal Services; 97.034, Disaster
Unemployment Assistance (DUA); 97.046, Fire Management Assistance
Grant; 97.048, Disaster Housing Assistance to Individuals and
Households in Presidentially Declared Disaster Areas; 97.049,
Presidentially Declared Disaster Assistance--Disaster Housing
Operations for Individuals and Households; 97.050, Presidentially
Declared Disaster Assistance to Individuals and Households--Other
Needs; 97.036, Disaster Grants--Public Assistance (Presidentially
Declared Disasters); 97.039, Hazard Mitigation Grant.

    Dated: September 12, 2011.
W. Craig Fugate,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2011-23910 Filed 9-16-11; 8:45 am]
BILLING CODE 9111-23-P


[Federal Register Volume 78, Number 175 (Tuesday, September 10, 2013)]
[Notices]
[Pages 55312-55316]
[FR Doc No: 2013-21928]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70317; File No. SR-NYSEArca-2013-42]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of a Proposed Rule Change Amending Rule 6.72 To Make Permanent the
Penny Trading Program for Options

September 4, 2013.

    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 20, 2013, NYSE Arca, Inc. (the ``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend Rule 6.72 to make permanent the
penny trading program for options. The text of the proposed rule change
is available on the Exchange's Web site at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.

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

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

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

1. Purpose
    The purpose of this filing is to amend Rule 6.72 to make permanent
the penny trading program in options (the ``Program''), which was
approved on a limited pilot basis on January 23, 2007 (the ``Penny
Pilot'' or, the ``Pilot''), and has been expanded and extended numerous
times since.\3\
---------------------------------------------------------------------------

    \3\ Exchange Act Release No. 55156 (January 23, 2007) 72 FR 4759
(February 1, 2007) (NYSEArca-2006-73); Release No. 56150 (July 26,
2007) 72 FR 42460 (August 2, 2007) (NYSEArca-2007-56); Release No.
56568 (September 27, 2007) 72 FR 56422 (October 3, 2007) (NYSEArca-
2007-88); Release No. 59628 (March 26, 2009) 74 FR 15025 (NYSEArca-
2009-26); Release No. 60224 (July 1, 2009) 74 FR 32991 (July 9,
2009) (NYSEArca-2009-61); Release No. 60711 (September 23, 2009) 74
FR 49419 (September 28, 2009) (NYSEArca-2009-44); Release No. 61061
(November 24, 2009) 74 FR 62857 (December 1, 2009) (NYSEArca-2009-
44); Release No. 63376 (November 24, 2010) 75 FR 75527 (December 3,
2010) (NYSEArca-2010-104); Release No. 65977 (December 15, 2011) 76
FR 79234 (NYSEArca-2011-93); Release No. 67307 (June 28, 2012) 77 FR
40110 (July 6, 2012) (NYSEArca-2012-65); Release No. 68426 (December
13, 2012) 77 FR 75224 (December 19, 2012) (NYSEArca-2012-135);
Release No. 69106 (March 11, 2013) 78 FR 16552 (March 15, 2013)
(NYSEArca-2013-22); Release No. 69790 (June 18, 2013) 78 FR 37853
(June 24, 2013) (NYSE Arca-2013-59).
---------------------------------------------------------------------------

    NYSE Arca, having demonstrated the benefits of options trading in
pennies for customers through numerous studies, proposes to make the
Program permanent, but on a reduced level. NYSE Arca proposes that the
Program be limited to the 150 most active multiply listed options
classes.
Analysis of the Current Program
    Under the Penny Pilot, the Program is currently available for 363
listed options classes. NYSE Arca conducted an analysis of penny
trading in options to determine the effectiveness of the Penny Pilot
within the full range of the Pilot issues. Since the Pilot was expanded
over the time period of November 2009 to August 2010, the Exchange
reviewed data from the last two full calendar years.
    The Exchange determined that, while the overall Pilot was of great
benefit to Customers and provide [sic] greater opportunities to all
market participants, the benefits have been concentrated in the 150
most active Penny Pilot issues (the ``Top 150''), and that the Pilot
issues outside of the Top 150 (the ``Bottom 203'') \4\ not only failed
to reap a benefit from penny trading, but resulted in more technology
overhead costs to provide for capacity and speed for quote activity,
and lagged the overall market in volume and in various performance
statistics. As part of its analysis, the Exchange reviewed quote-to-
volume ratios for the Top 150, the Bottom 203, and the Top 200 non-
Penny Pilot issues.\5\
---------------------------------------------------------------------------

    \4\ For purposes of consistency, the study was conducted on
issues that were in the Penny Pilot as of the end of 2012 and added
to the Pilot no later than January 2011, thus excluding 9 issues.
One other issue was excluded due to extenuating circumstances of the
underlying. The total number of issues studied was 353. For a more
detailed discussion on methodology, see NYSE U.S. Options Report on
Penny Trading in Options 2012, attached as Exhibit 3 to the
proposing Rule change.
    \5\ Study period was January through October, 2012. The time
frame was chosen to allow for a year over year comparison period in
which the Penny Pilot was completely rolled out to 363 issues.
---------------------------------------------------------------------------

    The Exchange found the following:

                          Quote to Volume Ratio
                        [January to October 2012]
------------------------------------------------------------------------
                  Segment                           Quote/Contract
------------------------------------------------------------------------
Top 50 Penny Pilot Issues..................  176 to 1.
Top 150 Penny Pilot Issues.................  216 to 1.
Top 200 Non Penny Issues...................  514 to 1.
Bottom 203.................................  589 to 1.
------------------------------------------------------------------------

    The Exchange believes that the quote-to-volume ratios demonstrate
that the

reduced minimum price variation (``MPV'') applicable to issues in the
Penny Pilot provides significant efficiencies in the most active names,
but provides a great deal of unnecessary quote traffic in the less
active issues. Indeed, the non-Penny Pilot issues studied were 12.7%
more efficient than the Bottom 203.
    The Exchange also found that trading volume in Penny Pilot issues
is almost all concentrated in the Top 150. In 2011, 89.1% of Penny
Pilot volume was in the Top 150, and continued at a rate of 90.8% for
2012.
    From 2011 to 2012, trading volumes in the Top 150 declined 11.6%,
whereas the Bottom 203 declined 26.9%. Given a year-over-year decline
in options industry volume of 12.2%, the Bottom 203 underperformed the
industry by 14.7%.
    The Exchange anticipates that there may be some investor concern
regarding a widening of the minimum price variation in some issues. But
the Exchange believes that such concerns are offset by the significant
widths and lack of liquidity of market spreads in lower tier Penny
Pilot issues as well as the availability of mechanisms for price
improvement in today's modern options industry. First, notwithstanding
the smaller MPV for Penny Pilot issues, it has not contributed to
market spreads less than $0.05 in most Penny Pilot issues. For example,
in April 2012, the average NBBO spread in the Top 10 most active Penny
Pilot issues was $0.25, while the spread in the 20 least active Penny
Pilot issues was $0.60. And, despite the wider spread, the average size
at the NBBO in the less active names is often less than 25 contracts.
The Exchange believes that an MPV of $0.05 or higher for an issue with
a $0.60 spread is not an unreasonable ratio.
    Second, if a market participant is interested in an execution in a
penny increment, such opportunities are available with certain price
improvement mechanisms. For example, the Price Improvement Period
(``PIP'') \6\ of the BOX Options Exchange LLC (``BOX'') auction process
provides an opportunity for penny incremented price improvement for
series with a $0.05 MPV. From December 2012 to February 2013, 69.2% of
the contracts submitted to the PIP in series with a $0.05 MPV received
price improvement, while only 17.4% of the contracts submitted to the
PIP in $0.01 series were price improved.\7\ With a number of exchanges
now offering auction price improvement mechanisms, Customers wishing to
trade an order within the NBBO in an increment finer than $0.05 and for
size greater than the average NBBO may do so through competitive
mechanisms.
---------------------------------------------------------------------------

    \6\ See BOX Rule 7150 Price Improvement Period (``PIP).
    \7\ See http://boxexchange.com/regulatory-circulars/pilot-reports/.
---------------------------------------------------------------------------

    The Exchange considers that given the existing quote width in most
Penny Pilot series, a change in MPV resulting from reducing the number
of issues available for penny trading will be unlikely to have any
material impact on spread widths.
Proposal for a Permanent Program
    NYSE Arca proposes the Penny Pilot for Options be approved as a
permanent program, but on a smaller scale. The Exchange proposes
reducing the number of issues in the Program to the 150 most active
issues currently in the Program effective the monthly expiration three
months following approval of this filing. The Exchange does not propose
to change any aspects of the structure of the Program other than the
number of underlying issues in the Program and certain details
regarding the processes for adding and removing options on certain
issues that are subject to the Program. All options contracts in QQQ
(PowerShares QQQ TrustSM, Series 1), SPY (SPDR S&P 500 ETF) and IWM
(iShares Russell 2000 Index Fund) will continue to quote in $0.01
increments; all other options contracts in the Program trading under $3
will continue to quote in $0.01 increments, and all other option
contracts in the Program trading at or above $3 will trade in $0.05
increments. NYSE Arca makes this proposal for a reduced Program based
on the numerous previously published studies of the Pilot. Through
these studies, the options industry has extensive understanding of the
benefits to Customers of the Pilot and the burdens on quote traffic and
capacity caused by the Pilot. Over the life of the Pilot, the Exchange
has studied quote traffic with an expectation that quote traffic would
increase because of more quoting price points, but also with the
expectation that the increased quote traffic would provide increased
trading activity. The Exchange believes that the Pilot, as a whole, has
largely met these expectations. However, our study has shown that the
anticipated benefits have been concentrated in the Top 150 issues.
Further, our study shows that quote traffic in the lower tier issues
has increased significantly without a corresponding increase in volume.
Previous Pilot reports did not identify the disparity as they did not
examine the Quote to Trade ratio at various volume levels and tiers.
While the Exchange proposes permanent approval on terms different from
the Pilot, it does so after analysis of the Pilot (as outlined in the
Report) following the increase in issues in the Pilot starting in the
fall of 2009.
    NYSE Arca notes that a reduced program does not need to be
continued as a Pilot, as the various markets and market participants
have already studied the Program at roughly that level on a Pilot basis
in 2009 and 2010 during expansion of the Pilot. The Exchange and other
markets all studied the Pilot at various levels throughout the Pilot,
and consistently found that as an overall program, the Pilot was of
benefit to Customers and had a minimal impact on the industry. Further
study of the program on a Pilot basis would not reveal anything not
already available. While the Quote to Trade ratio was not studied under
the original Pilot Reports, the recent NYSE U.S. Options Report looked
closely at the Quote to Trade ratio by volume group; a Pilot study of
the Top 150 would retrace what was already studied in the Report. The
previous Reports looked at quote traffic from an overall perspective,
with the expectation that quote traffic would increase but be offset by
a benefit to the investing public because of narrowed spreads and more
price points. Overall, that is still true. The attached Report,
however, is the first to look at the benefit of the added quote traffic
by comparing the number of quotes per trade. The study found a robust
volume of trades for a given quote level in the most active issues, but
an exorbitant number of quotes per trade in the lower volume Pilot
issues, indeed at a rate far higher than in non-Pilot issues.
    In adopting a reduction to the Program, the Exchange does not
believe further statistical analysis is needed and, accordingly, does
not feel that a reduced Program should continue on a pilot basis. An
additional pilot with a reduced number of issues would not reveal
additional information or nuance. The attached Report looked at quote
traffic over a significant time period, and found consistent behavior
over time. Upon approval of this filing, an issue would remain in the
Program if it qualified based on volume even if the price was over $200
per share, but, consistent with current practice under the Pilot, an
issue must be trading under $200 per share to be added to the Program.
An issue would not be removed from the Program based on price, but only
on failure to stay in the

150 most actively traded issues. Issues to be removed following
approval will convert back to trading in standard increments of $0.05
and $0.10, but effective on the Monday following the third monthly
expiration following approval, to give investors and traders time to
prepare for the larger quoting increment.
    Starting in January 2014, the Exchange also proposes an annual
review of issues that are in the Program, so that the Program generally
includes the 150 most active options issues. After each annual review,
issues that are no longer in the 150 most active issues but are still
among the 200 most active will continue in the Program, while issues
that are removed will be replaced by issues that have become among the
150 most active and also priced below $200 per share. The replacement
issues will be ranked based on trading activity in the preceding six
full calendar months,\8\ and added, based on ranking and available
space in the Program, on the first business day following January
expiration. The reason for the limited removal from the Program is to
reduce confusion if an issue is still active but is no longer in the
150 most active issues. The Program will thus have no more than 150
issues except for the period when issues to be removed are still
trading in a penny increment. By remaining in the program, investors
and traders will experience a continuity in trading practices. Issues
that fall below the 200 most actives will be converted back to trading
in standard increments of $0.05 and $0.10, but not until the first
business day after April expiration, to give investors and traders time
to prepare for the larger quoting increment. The Exchange finds it
necessary to have these steps to insure an orderly transition of an
issue out of the program. Announcements of issues to be added and to be
phased out will be made at the end of the first full week of each year
via Trader Update bulletin.\9\
---------------------------------------------------------------------------

    \8\ The preceding six full calendar months for the annual review
will be July 1 through December 31.
    \9\ As under the current Rule, the Exchange will continue to
publish such bulletins on its Web site.
---------------------------------------------------------------------------

    An Exchange review of the most actively traded options issues over
the last three years shows that approximately 30 issues each year fall
out of the 150 most actives, with approximately 10 of those 30 falling
out of the 200 most active. Of the issues that fall in the range of
151st to 200th most active, there is a meaningful chance that they will
again be in the 150 most active.\10\ By reducing the movement out of
the Program for issues which are still relatively active, investor
confusion will be reduced.
---------------------------------------------------------------------------

    \10\ In 2011, 10 issues previously in the top 150 in 2010 fell
into the 151-200th segment. Of these 10 issues, 6 were ranked in the
top 150 symbols in 2012, 3 fell past the 200th rank and would be
removed from the Program, and 1 remained in the 151-200th segment.
In 2012, 12 issues previously in the top 150 in 2011 fell into the
151-200th segment. Of these 12 issues, 6 were ranked in the top 150
in 2013, 5 fell below the 200th rank, and 1 remained in the 151-
200th segment.
---------------------------------------------------------------------------

    Under the Pilot, issues that were no longer trading or where the
options class had been delisted were only replaced once all existing
series had expired or been delisted. This often had the effect of a
defunct issue taking a slot in the program for an extended period of
time because of LEAP series. For instance, an issue that went bankrupt
in the Fall of 2008, just shortly after the listing of January 2011
LEAPs, remained in the program for over two years (until the January
2011 LEAP expired). With the proposed changes to the administration of
a permanent program, and with the ability to remove issues from the
Program, the Exchange proposes that issues that will not be adding any
more series be removed from the active list of Program issues, so that
they may be replaced with options issues that have become among the
most active, and thus are available for trading in the finer increment.
    NYSE Arca proposes that issues that are no longer available for
listing new series because of delisting of the options class, or
because they have been identified by OCC as no longer eligible for
opening customer transactions will be removed from the list of active
issues under the Program, and will be replaced in the Program at the
beginning of the next quarter. Under certain circumstances, OCC
notifies the exchanges that it will no longer permit new positions to
be opened. NYSE Arca proposes this standard because when these events
occur, the issues are set to prohibit Customer transactions that open a
position. As a result, the activity level decreases such that it would
be incapable of remaining in the Top 150 due to volume. However, any
remaining series will continue to trade under the Program until they
expire.
    When adding new issues to replace an options class participating in
the Program being removed because of being delisted or because they
have been identified by OCC as ineligible for opening Customer
transactions, the Exchange will use trading activity for the previous
six full calendar months to determine the Top 150 issues based on
trading volume.\11\ Replacement issues for issues that have been
disqualified will be placed in the Program on the first business day
following the first monthly expiration of each calendar quarter.
Because the new issues are added at least ten business days into the
month, rather than the second day of the month as is done under the
Pilot, the Exchange will use the most recent six full calendar months.
The new issues will be announced in a Trader Update bulletin that is
disseminated no later than the Friday before Expiration week. Any
series in the issues that are being replaced (because of delisting or
because they are ineligible for opening Customer transactions) will
continue to trade under the Program until they expire. When an issue is
being delisted or identified as ineligible for opening Customer
transactions, the Exchange does not add any new series, and the
existing series are generally set to ``closing only'', that is, set to
not permit a Customer to open or extend a position.
---------------------------------------------------------------------------

    \11\ For instance, a quarterly review in October would use the
preceding six full calendar months from April 1 through September
30.
---------------------------------------------------------------------------

    For issues that are no longer active enough to remain in the
Program (i.e., no longer in the 200 most active following annual
review), they will trade in nickel and dime increments effective after
three monthly expirations, and the Exchange will announce via Trader
Update bulletin at least one month in advance if orders for such issues
in the Consolidated Book will be cancelled or if they will be converted
to Price Improving Orders as described in Rule 6.62(s). Thus the
Program may have more than 150 issues, and for those being removed from
the Program, there will be sufficient notice to market participants
that series in an issue will convert to nickel and dime quoting.
    Lastly, the Program will also apply to any option classes that are
selected by other securities exchanges that employ a similar program
that provides for quoting and trading in penny increments under their
respective rules.
    The Rule will be effective the first business day after monthly
expiration three months following approval.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act''),\12\ in
general, and furthers the objectives of Section 6(b)(5) of the Act,\13\
in particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in

general, to protect investors and the public interest. In particular,
the proposed rule change would provide OTP Holders and market
participants with a permanent program for penny trading in options that
will provide the greatest benefit to investors while minimizing the
burden that a finer trading increment places on quote traffic.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Further, NYSE Arca notes that trading in penny increments has been
demonstrated to remove impediments to trading in the national market
system by providing a smaller pricing increment, but only in the Top
150 issues. The various reports, especially the NYSE U.S. Options
Report on Penny Trading in Options 2012, show that the benefits to
investors are overwhelmingly in the Top 150 issues, and that little
additional benefit accrues in the Bottom 200. Because of this
differential in benefit because of activity level, the Exchange
believes that initially limiting the Program to 150 issues, and in
subsequent years by not removing an issue that is still among the 200
most active multiply listed, the Program will be the appropriate size.
    By providing sufficient notice of the changes to the Program,
investor confusion will be greatly reduced. Those issues that will be
delisted or because of the underlying security no longer being a
covered security, will continue to trade under the Program until all
the series have expired. Those issues that no longer qualify as being
in the 150 most active issues (or the 200 most active issues after the
annual review) will not convert to nickel and dime increment quoting
until three monthly expirations have passed, to give investors
sufficient time to prepare. These transition times and the provision to
not oust issues that are no longer in the 150 most active but still
actively traded will reduce investor confusion.
    NYSE Arca believes the Commission now has an opportunity to perfect
the mechanism of a free and open market by making the Program
permanent.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Since the proposal will
reduce industry quote traffic, it promotes price and quote size
competition while easing the burden of repeated quote updates that
provide little economic benefit.
    There would be an extreme burden placed on the competitiveness of
NYSE Arca if the proposed rule change is approved while other exchanges
do not reduce the number of issues trading in penny increments. The
Program, therefore, will also apply to any option classes that are
selected by other securities exchanges that employ a similar penny
trading program under their respective rules.
    The Exchange would, however, recommend to the Commission, at the
time of other exchange's filings to extend their Pilot or to make the
program permanent, to have other markets demonstrate the benefit of not
reducing the Program to 150 issues, given the burden on quote traffic
by a broader program and the lack of market quality demonstrated by the
widened spreads and lack of liquidity in the current Pilot. While the
Exchange found the level of quote traffic acceptable in previous
studies, it was only under the new study that the Exchange looked at
the Quote to Trade ratio of differing volume tranches. It was only on
doing so that it was revealed that the anticipated benefits of the
Pilot were not being realized consistently in lower volume issues.

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

    No written comments were solicited or received with respect to the
proposed rule change.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. The Commission requests comments, in
particular, on the following aspects of the proposed rule change:
    1. The Commission has previously noted that allowing market
participants to quote in smaller increments has been shown to reduce
spreads in options classes included in the Penny Pilot Program, thereby
lowering costs to investors.\14\ The Commission has also recognized
that the options exchanges have previously shown in their pilot reports
that there has been a reduction in the displayed size available in the
Pilot classes.\15\ The current Penny Pilot Program allows penny quoting
and trading in 363 options classes. What are the benefits or harms to
investors that might result from reducing the number of options classes
to a number less than the current 363 options classes in a permanent
penny program? Specifically, what are the benefits or harms to
investors that might result from reducing the number of options classes
in a permanent penny program to the 150 most actively traded multiply
listed options classes, as proposed?
---------------------------------------------------------------------------

    \14\ See Securities Exchange Act Release No. 60711 (September
23, 2009) 74 FR 49419, 49421 (September 28, 2009) (NYSEArca-2009-
44).
    \15\ Id. at 49422.
---------------------------------------------------------------------------

    2. What are commenters' views on NYSE Arca's proposal to limit the
proposed permanent penny program to the 150 most actively traded
multiply listed options classes based on trading activity in the
previous six months? Please explain.
    a. If you agree with basing inclusion on the most actively traded
multiply listed options classes, what are your views on NYSE Arca's
proposal to include the 150 most actively traded multiply listed
options classes? Please explain.
    b. If you believe that inclusion of options classes in the proposed
permanent penny program should be based on different criteria, what
criteria, and why?
    3. What are commenters' views on NYSE Arca's proposal to use the
previous six months of trading activity to determine the 150 most
actively traded multiply listed options classes? Please explain. Should
this timeframe be extended or shortened? Why or why not? If so, by how
many days or months, and why?
    4. NYSE Arca proposes that once an issue is in the proposed
permanent penny program, the issue will remain in the proposed
permanent penny program until it is no longer among the 200 most
actively traded issues based on an annual review. Upon falling below
the 200 most actively traded issues, an issue will be removed from the
proposed permanent penny program. What are commenters' views on the
proposal's process to remove an options class from the proposed
permanent penny program that falls below the 200 most actively traded
issues? Please explain.

    5. Do commenters have any concerns about how an option class might
trade between the time notice has been given that the option class will
be removed from the proposed permanent penny program and the time
options in that class begin trading in standard increments? Please
explain.
    6. What are commenters' views on NYSE Arca's proposal to conduct a
review on an annual basis? Please explain. Should such a review
interval be more or less frequent? Please explain.
    7. Do commenters believe that the use of the two proposed market
activity levels (150 most actively traded listed options classes and
200 most actively traded issues) would cause confusion among market
participants? Why or why not? Do you believe the use of the two
proposed market activity levels would provide an appropriate mechanism
to transition options classes in and out of the proposed permanent
penny program? Why or why not?
    8. NYSE Arca proposes to replace any options classes participating
in the Program that have been delisted, or are identified by OCC as
ineligible for opening Customer transactions, with the next most
actively traded multiply listed options classes that are not yet
included in the Program, based on trading activity in the previous six
full calendar months. NYSE Arca proposes that any series in a class
overlying the issues that are being replaced would continue to trade
under the proposed permanent penny program until they expire. The
replacement issue would be added to the proposed permanent penny
program at the beginning of the next quarter. What are commenters'
views on NYSE Arca's process to replace options classes that have been
delisted or are identified by OCC as ineligible for opening Customer
transactions? Please explain.
    9. What are commenters' views on whether the minimum quoting
increment should be the same or different across all exchanges trading
the same option? What are the advantages and disadvantages to adopting
a uniform permanent penny program as compared to exchange specific
permanent penny programs? Please be specific.
    10. Commenters are requested to provide empirical data and other
factual support for their views, if possible.
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca-2013-42 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2013-42. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEArca-2013-42 and should
be submitted on or before October 1, 2013.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-21928 Filed 9-9-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 79, Number 71 (Monday, April 14, 2014)]
[Notices]
[Pages 20945-20946]
[FR Doc No: 2014-08282]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71899; File No. SR-CBOE-2014-031]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Amend the Fees Schedule

April 8, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 28, 2014, Chicago Board Options Exchange, Incorporated
(the ``Exchange'' or ``CBOE'') filed with the Securities and Exchange
Commission (the ``Commission'') the proposed rule change as described
in Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend its Fees Schedule. The text of the
proposed rule change is available on the Exchange's Web site (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's
Office of the Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its Fees Schedule. First, the
Exchange proposes to adopt a fee of $50 per month per login ID for
PULSe Workstation users that elect to access a COB Feed.\3\ The COB
Feed provides data (which has already been otherwise-available to PULSe
Workstation users) on a data feed that specifically provides COB data.
In order to improve the provision of this COB data, the Exchange has
recently contracted an outside vendor to provide the COB Feed. The
Exchange proposes to assess the new COB Feed Fee in order to recoup
costs associated with the provision of the COB Feed. The Exchange does
not propose to assess the COB Feed Fee to PULSe Workstation users on
the Exchange trading floor. On-floor PULSe Workstation users must use
PULSe Workstations using Exchange-provided hardware, for which such
users pay a fee. Off-floor PULSe Workstation users, in contrast, are
able to use PULSe Workstations using their own hardware (for which they
do not pay the Exchange). Further, for off-floor PULSe Workstation
users, the Exchange must expend resources in order to permission their
IP addresses to access PULSe servers (which requires the Exchange to
modify its firewall each time an off-floor PULSe user is permissioned),
and off-floor PULSe Workstation users are not assessed a fee for this
process. The Exchange also would like to encourage on-floor trading
activity, as the Exchange believes that the features of a trading floor
provide benefits (such as price improvement) to investors and the
market as a whole. Due to the differences between on-floor and off-
floor PULSe users and the Exchange's valid desire to encourage on-floor
trading, the Exchange proposes to state that the COB Feed Fee will not
be assessed to PULSe Workstation users on the Exchange trading floor.
---------------------------------------------------------------------------

    \3\ ``COB'' stands for the Exchange's Complex Order Book. For a
more detailed description of the PULSe workstation and its
functionality, see, e.g., Securities Exchange Act Release Nos. 62286
(June 11, 2010), 75 FR 34799 (June 18, 2010) (SR-CBOE-2010-051),
63244 (November 4, 2010), 75 FR 69148 (November 10, 2010) (SR-CBOE-
2010-100), 63721 (January 14, 2011), 76 FR 3929 (January 21, 2011)
(SR-CBOE-2011-011), 65280 (September 7, 2011), 76 FR 56838
(September 14, 2011), 65491 (October 6, 2011), 76 FR 63680 (October
13, 2011) (SR-CBOE-2011-092), 69990 (July 16, 2013), 78 FR 43953
(July 22, 2013) (SR-CBOE-2013-062), and 71285 (January 10, 2014), 79
FR 2916 (January 16, 2014) (SR-CBOE-2014-130).
---------------------------------------------------------------------------

    The Exchange always strives for clarity in its rules and Fees
Schedule, so that market participants may best understand how rules and
fees apply. As such, the Exchange proposes to clarify its Fees
Schedule. Currently, the ``Exception'' section of the Exchange's
``Linkage Fees'' table states: ``CBOE will not pass through or
otherwise charge customer orders (of any size) routed to other
exchanges that were originally transmitted to the Exchange from the
trading floor through an Exchange-sponsored terminal (e.g. a Floor
Broker Workstation).'' The Exchange proposes to add the phrase ``or
PULSe Workstation'' into the parenthetical to clarify that CBOE will
not pass through or otherwise charge customer orders routed to other
exchanges that were originally transmitted to the Exchange from a PULSe
Workstation (which, like a Floor Broker Workstation, is an Exchange-
sponsored terminal on the trading floor).
    The proposed changes are to take effect on April 1, 2014.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of Section 6(b) of the
Act.\4\ Specifically, the Exchange believes the proposed rule change is
consistent with Section 6(b)(4) of the Act,\5\ which requires that
Exchange rules provide for the equitable allocation of reasonable dues,
fees, and other charges among its Trading Permit Holders and other
persons using its facilities.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the COB Feed Fee is reasonable because,
in order to improve the provision of this COB data, the Exchange has
recently contracted an outside vendor to provide the COB Feed, and the
new COB Feed Fee will help serve to recoup costs associated with the
provision of the COB Feed. The Exchange believes it is equitable and
not unfairly discriminatory to assess the COB Feed Fee only to off-
floor PULSe Workstation users because of the differences between on-
floor and off-floor PULSe Workstation users, and the Exchange's desire
to encourage on-floor trading. On-

floor PULSe Workstation users must use PULSe Workstations using
Exchange-provided hardware, for which such users pay a fee. Off-floor
PULSe Workstation users, in contrast, are able to use PULSe
Workstations using their own hardware (for which they do not pay the
Exchange). Further, for off-floor PULSe Workstation users, the Exchange
must expend resources in order to permission their IP addresses to
access PULSe servers (which requires the Exchange to modify its
firewall each time an off-floor PULSe user is permissioned), and off-
floor PULSe Workstation users are not assessed a fee for this process.
The Exchange also would like to encourage on-floor trading activity, as
the Exchange believes that the features of a trading floor provide
benefits (such as price improvement) to investors and the market as a
whole. The COB Feed Fee would be assessed equally to all off-floor
PULSe Workstation users that request the COB Feed.
    The Exchange believes that the clarification of the Fees Schedule
will alleviate potential confusion. The alleviation of potential
confusion will remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general,
protect investors and the public interest.

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

    CBOE does not believe that the proposed rule change will impose any
burden on intramarket competition that is not necessary or appropriate
in furtherance of the purposes of the Act because the COB Feed fee will
be assessed to all PULSe Workstation users who request the COB Feed
(except on-floor PULSe Workstation users, for the reasons described
above). CBOE does not believe that the proposed rule change will impose
any burden on intermarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act because the COB
Feed Fee only provides CBOE COB data and the proposed change only
applies to CBOE. The proposed change to alleviate confusion is not
intended for competitive reasons and only applies to CBOE.

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

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

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \6\ and paragraph (f) of Rule 19b-4 \7\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(f).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2014-031 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2014-031. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CBOE-2014-031 and should be
submitted on or before May 5, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
---------------------------------------------------------------------------

    \8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-08282 Filed 4-11-14; 8:45 am]
BILLING CODE 8011-01-P