[Federal Register: August 11, 2009 (Volume 74, Number 153)]
[Notices]
[Page 40259-40264]
[DOCID:fr11au09-135]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60429; File No. SR-NYSE-2009-71]

Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by New York Stock Exchange LLC Amending NYSE Rule 1000 To Allow
Exchange Systems To Access CCS Interest To Partially Fill an Incoming
Limit Order

August 4, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on July 20, 2009, New York Stock Exchange LLC (``NYSE'' or
the ``Exchange'') 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\ 15 U.S.C. 78a.
    \3\ 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 NYSE Rule 1000 to allow Exchange
systems to access CCS interest to partially fill an incoming limit
order. The text of the proposed rule change is available at the
Exchange, the Commission's Public Reference Room, and http://
www.nyse.com.

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 self-regulatory organization
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 those 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
    New York Stock Exchange LLC (``NYSE'' or the ``Exchange'') proposes
to amend NYSE Rule 1000 to make available additional liquidity to
partially fill an incoming limit order.
    The Exchange notes that parallel changes are proposed to be made to
the rules of NYSE Amex LLC (formerly the American Stock Exchange).\4\
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    \4\ See SR-NYSE Amex-2009-46.
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a. Background
    The NYSE implemented sweeping changes to its market rules and
execution technology designed to improve execution quality on the
Exchange. Among the elements of the enhanced Exchange market model, the
NYSE eliminated the function of specialists on the Exchange creating a
new category of market participant, the Designated Market Maker or DMM.
The DMM, like specialists, have affirmative obligations to make an
orderly market, including continuous quoting requirements and
obligations to re-enter the market when reaching across to execute
against trading interest. The NYSE also recognized that in view of the
NYSE's electronic execution functionality, the DMM, unlike the
specialist, would no longer be deemed the agent for every incoming
order. The NYSE also responded to customer demand to create additional
undisplayed reserve interest.
    In another enhancement to the Exchange's market model, designed to
encourage DMMs to add liquidity, the Exchange implemented a system
change that allowed DMMs to create a schedule of additional non-
displayed liquidity at various price points where the DMM is willing to
interact with interest and provide price improvement to orders in the
Exchange's system. This schedule is known as the DMM Capital Commitment
Schedule (``CCS'').\5\ CCS provides the Display Book[supreg] \6\ with
the amount of shares that the DMM is willing to trade at price points
outside, at and inside the Exchange BBO. CCS interest is separate and
distinct from other DMM interest in that it serves as the interest of
last resort.
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    \5\ The provisions of NYSE Rule 1000 relating to CCS are in
effect pursuant to a pilot that commenced on October 2008 and is
scheduled to end on October 1, 2009.
    \6\ The Display Book[supreg] system is an order management and
execution facility. The Display Book system receives and displays
orders to the DMMs, contains the order information, and provides a
mechanism to execute and report transactions and publish the results
to the Consolidated Tape. The Display Book system is connected to a
number of other Exchange systems for the purposes of comparison,
surveillance, and reporting information to customers and other
market data and national market systems.
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    When an order is entered for an amount of shares that exceeds the
liquidity available at the Exchange BBO, Exchange systems review all
the liquidity available on the Display Book including CCS interest to
determine the final price point at which the order can be fully
executed (the ``completion price''). Exchange systems determine the
completion price by calculating the unfilled volume of the incoming
order (i.e., the volume of the incoming order that exceeds the volume
available to execute against it that is then present in the Exchange
bid or offer) and reviewing the additional displayed and non-displayed
interest available in the Display Book, which may be at more than one
price point, including the CCS interest submitted by the DMM unit that
is available at the completion price if the CCS interest were to
participate at the completion price. Exchange systems also review any
protected bids or offers on markets other than the Exchange (``away
interest'') and determines the price at which the remaining volume of
the contra side order can be executed in full.
    Exchange systems then review the amount of liquidity offered by CCS
to determine if the number of shares provided via the DMM's CCS at the
completion price is less than the number of CCS shares provided at the
next different price that has interest that is one minimum price
variation (``MPV'') (as that term is defined in Exchange Rule 62 \7\)
or more higher (in the case of an order to sell) or at the next
different price that has interest that is one MPV or more lower (in the
case of an order to buy) (hereinafter collectively referred to as
``better price'').
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    \7\ See NYSE Rule 62, Supplementary Material .10, which provides
that the minimum price variation (MPV) for quoting and entry of
orders in equity securities admitted to dealings on the Exchange
shall be as stated in the table above.

------------------------------------------------------------------------
                                                               Minimum
                 Price of order or interest                     price
                                                              variation
------------------------------------------------------------------------
Less Than $1.00............................................       $.0001
$1.00 to 99,999.99.........................................        .01
$100,000 or greater........................................        .10
------------------------------------------------------------------------

If the volume of CCS interest that would be accessed is the same at the
completion price and the better price, Exchange systems access CCS
interest at the completion price with CCS interest yielding to any
other interest in Exchange systems at the completion price.
    If the number of shares that would be allocated to the CCS interest
at the better price is more than the number of shares that would be
allocated to the DMM's CCS interest at the completion price, then
Exchange systems will access the CCS liquidity available at the better
price with CCS interest yielding to any other interest in Exchange
systems (both displayed and undisplayed reserve interest) at the better
price. Any remaining balance of the incoming order is executed at the
completion price against displayable and non-displayable interest
pursuant to NYSE Rule 72 (``Priority of Bids and Offers and Allocation
of Executions'').\8\
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    \8\ Pursuant to NYSE Rule 72 round-lot executions on the
Exchange are allocated on an equal basis, i.e. parity, among market
participants at a price point unless one of the participants has
established priority. Priority is established when the participant
is the only interest displayed at the price point when such price is
or becomes the best bid or offer published by the Exchange. A
participant that establishes priority for the displayed portion of
his or her order is allocated the first 15% of any execution (a
minimum of one round lot). Any DMM non-CCS interest included in the
displayed quantity and non-displayed quantity is also executed
pursuant to NYSE Rule 72.
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    Exchange systems can access CCS interest only once to participate
in the execution of an incoming order. As such, CCS interest that may
exist at the completion price is inaccessible to Exchange systems to
trade with any remaining balance of the incoming order if Exchange
systems included the DMM's CCS interest in the execution of any portion
of such order at the better price. Moreover, Exchange systems will only
access CCS interest to participate in the execution of an incoming
order where the incoming order will be executed in full.
b. Proposed Amendment to NYSE Rule 1000
    The Exchange proposes to allow Exchange systems to access CCS
interest to participate in executions where the incoming order will
only be partially executed. The purpose of this change is to provide
additional liquidity to the incoming order.
    As illustrated in the example below, because Exchange systems are
permitted to access CCS interest only where an incoming order would be
executed in full, there are times when the incoming order exhausts the
displayed and reserve interest on the Display Book at various price
points and the remaining

shares of the order are quoted. In these instances Exchange systems
cannot access the CCS interest available at the price point where the
remaining shares of the order will be quoted to partially fill the
incoming limit order.
Example of Current CCS Operation
    The Exchange Market is 200 shares bid at the price of $20.05 and
200 shares offered at a price of $20.10. At the price points of $20.04,
$20.03, $20.02, $20.01 and $20.00 there are 100 shares bid. The CCS
interest file is willing to provide 200 shares of additional bid
liquidity at each of those price points as well. A customer sends the
Exchange a sell order for 1200 shares with a limit price of $20.00.
Given the current operation of CCS, the order will execute against the
200 shares at the Exchange bid price of $20.05 and all the shares
indicated in italic typeface at each price point down to the orders
limit price of $20.00 will be executed against the order for a total
execution of 700 shares. The remaining 500 shares of the order will be
filed in Display Book at its limit price of $20.00.

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   CCS Interest        Shares bid         Bid price         Offer price       Shares offered      CCS interest
----------------------------------------------------------------------------------------------------------------
                   .................  .................          $20.10                200                200
           200                200             $20.05
           200                100              20.04
           200                100              20.03
           200                100              20.02
           200                100              20.01
           200                100              20.00
----------------------------------------------------------------------------------------------------------------

    The Exchange proposes to modify the operation of CCS interest to
allow Exchange systems to access and execute CCS interest designated to
partially fill an incoming limit order. This will create an additional
processing action for Exchange systems. Exchange systems will continue
to review all the liquidity available on the Display Book and any away
market centers; however, once it determines that the order cannot be
executed in full, it will also review the DMM CCS interest file to
determine if any of the liquidity is eligible to partially fill the
incoming limit order at the price where any remaining shares of the
order would be quoted.
    In order for the DMM CCS interest to participate in a partial
execution of an incoming limit order that exceeds the liquidity
available at the Exchange BBO the DMM must designate interest available
in the CCS interest file eligible for partial execution by including a
``PF'' indicator on the shares provided at the price point. All
liquidity provided in the CCS interest file will continue to be
eligible to participate in executions of incoming limit orders in full.
Only DMM CCS interest containing the PF indicator will be available to
participate in an execution to provide a partial execution of an
incoming limit order that exceeds the liquidity available at the
Exchange BBO. In this way incoming limit orders will have another
opportunity to receive fuller executions prior to quoting.
Example of Proposed CCS Partial Fill at the Price the Remaining Shares
Will Be Quoted
    The Exchange Market is 200 shares bid at the price of $20.05 and
200 shares offered at a price of $20.10. At the price points of $20.04,
$20.03, $20.02, $20.01 and $20.00 there are 100 shares bid. The CCS
interest file is willing to provide 200 shares of additional bid
liquidity at each of those price points as well. The CCS interest at
$20.00 is designated for partial fill. A customer sends the Exchange a
sell order for 1200 shares with a limit price of $20.00. Enabling
Exchange systems to access CCS interest to partially fill the order,
the incoming limit order will execute against the 200 shares at the
Exchange bid price of $20.05. The order would then execute against all
the shares bid, indicated in italic typeface at each price point down
to the orders limit price of $20.00, Exchange systems would execute an
additional 200 shares of the order against the CCS interest at $20.00
designated for partial fill. The incoming limit order receives a total
execution of 900 shares and the remaining 300 shares of the order will
be filed in the Display Book at its limit price of $20.00.

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   CCS Interest        Shares bid         Bid price         Offer price      Shares  offered      CCS interest
----------------------------------------------------------------------------------------------------------------
                   .................  .................          $20.10                200                200
           200                200             $20.05
           200                100              20.04
           200                100              20.03
           200                100              20.02
           200                100              20.01
         200PF                100              20.00
----------------------------------------------------------------------------------------------------------------

    When Exchange systems access the CCS interest in order to provide a
partial execution of an incoming order, CCS interest will participate
at the price point where the remaining shares will be quoted as
illustrated in the example above. If, however, the incoming order
reaches a Liquidity Replenishment Point (``LRP'') \9\ prior to being
executed in full, then Exchange systems will execute the CCS interest
at the LRP price, as illustrated in the example below, and the
remaining shares of the order will be quoted thereafter at its limit
price. In the case of a market order it will be quoted at the LRP
price.
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    \9\ LRPs are pre-determined price points that temporarily
convert the automatic Exchange market to an auction market in order
to dampen volatility when the market is experiencing a large price
movement based on a security's typical trading characteristics or
market conditions over short periods of time during the trading day.
LRPs allow the DMM to solicit additional liquidity.
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Example of Proposed CCS Partial Fill at the LRP Price
CCS Partial Fill at the LRP 1
    The Exchange Market is 200 shares bid at the price of $20.10 and
200 shares offered at a price of $20.15. The price

point of $20.05 is a designated LRP. At the price points of $20.09 down
to $20.05 there are 100 shares bid. The CCS interest file is willing to
provide 200 shares of additional bid liquidity at the price points of
$20.09 down to $20.05.\10\ In addition, the CCS interest file indicates
that the interest at the prices $20.08, $20.07 and $20.05 is available
to provide a partial fill. A customer sends the Exchange a sell order
for 1200 shares with a limit price of $20.00. Enabling Exchange systems
to access CCS interest to partially fill the order, the incoming limit
order would execute against the 200 shares at the Exchange bid price of
$20.10. The order would then execute against all the shares bid
(indicated in italic typeface) at each price point down to the LRP
price of $20.05. Exchange systems would execute an additional 200
shares of the order against the CCS interest at the LRP price of $20.05
for a total 900 shares of the incoming limit order executed. The
original order will execute a total of 900 shares above its limit price
before the remaining 300 shares of the order is posted on the Display
Book at its limit price of $20.00.
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    \10\ A DMM cannot provide CCS interest past the LRPs because
that interest will not be executed. Pursuant to current NYSE Rules,
once an LRP is reached interest may not trade through the price
point.

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   CCS Interest        Shares bid         Bid price         Offer price      Shares  offered      CCS Interest
----------------------------------------------------------------------------------------------------------------
                   .................  .................          $20.15                200                200
           200                200             $20.10
           200                100              20.09
        200 PF                100              20.08
        200 PF                100              20.07
           200                100              20.06
        200 PF                100          20.05 LRP
             0                  0              20.04
             0                  0              20.03
             0                  0              20.02
             0                  0              20.01
             0                  0              20.00
----------------------------------------------------------------------------------------------------------------

CCS Partial Fill at the LRP  2
    The Exchange Market is 200 shares bid at the price of $20.10 and
200 shares offered at a price of $20.15. The price point of $20.05 is a
designated LRP. At the price points of $20.09 and $20.08 there are 100
shares bid. The CCS interest file is willing to provide 200 shares of
additional bid liquidity at the price points of $20.09 down to $20.05.
In addition, the CCS interest file indicates that the interest at the
prices $20.08, $20.07 and $20.05 is available to provide a partial
fill. A customer sends the Exchange a sell order for 700 \11\ shares
with a limit price of $20.00. Enabling Exchange systems to access CCS
interest to partially fill the order, the incoming limit order would
execute against the 200 shares at the Exchange bid price of $20.10. The
order would then execute 100 shares against the shares bid at $20.09
and $20.08. Exchange systems would execute an additional 200 shares of
the order against the CCS interest at the LRP price of $20.05 for a
total 600 shares of the incoming limit order executed. The remaining
100 shares of the order will be posted on the Display Book at its limit
price of $20.00.
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    \11\ If the order were for 600 shares Exchange systems would
have executed 200 shares at the bid price of $20.10, 100 shares at
the price of $20.09. The Exchange will execute the remaining 300
shares at the price of $20.08 against the 100 shares of ``Shares
Bid'' and CCS interest at the price point. However, because the 700
share order could not be completely filled at the price of $20.08
including CCS interest, it is executed based on the rules governing
partial executions and will thus be executed as illustrated in the
example.

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   CCS interest        Shares bid         Bid price         Offer  price     Shares  offered      CCS interest
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                   .................  .................           20.15                200                200
           200                200             $20.10     .................  .................  .................
           200                100              20.09     .................  .................  .................
         200PF                100              20.08     .................  .................  .................
         200PF                  0              20.07     .................  .................  .................
           200                  0              20.06     .................  .................  .................
         200PF                  0           20.05LRP     .................  .................  .................
             0                  0              20.04     .................  .................  .................
             0                  0              20.03     .................  .................  .................
             0                  0              20.02     .................  .................  .................
             0                  0              20.01     .................  .................  .................
             0                  0              20.00     .................  .................  .................
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    When accessing CCS interest to partially execute an order, Exchange
systems will not review the liquidity available at one minimum price
variation better than the execution price to determine if the number of
shares that CCS interest is willing to provide at the better price is
greater than the number of shares at the price point where the order
would execute and then post. The order will be executed against the CCS
interest where the remaining shares of the order will ultimately be
quoted or in the event an LRP is reached, at the LRP price.\12\
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    \12\ If the DMM did not designate the CCS interest eligible for
partial fill, then the CCS interest would not participate in the
execution and the remaining shares of the order would be quoted.
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    Whether the order is executed at the price where the remaining
shares will be quoted or at the LRP price, Exchange systems will not
access CCS interest designated PF until all other interest on

the Display Book up to the price point is executed in full. CCS
interest therefore, remains the interest of last resort because
Exchange systems will access CCS interest to provide a partial
execution to an incoming limit order only after all it has satisfied
protected interest on away market centers and all other interest on the
Display Book eligible to be executed against the order is executed in
full. In all instances where Exchange systems access CCS to provide a
partial execution of an order, the customer order is afforded the
ability for price improvement within the parameters of the rule.
    The Exchange therefore proposes to amend NYSE Rule 1000, to allow
Exchange systems to access available CCS interest in order to provide
an incoming order with a fuller execution. The Exchange proposes to
amend NYSE Rule 1000(e)(iii)(A)(4) to include this provision and
renumber former subparagraph (e)(iii)(A)(4) to (e)(iii)(A)(5).
    The Exchange believes that the instant proposal to maximize an
order's partial execution by allowing Exchange systems to access CCS
interest removes the current impediment from a limit order accessing
all the liquidity available on the Display Book. The proposed
modification increases the opportunities for executing a greater number
of shares of the incoming order and exposes it to additional
opportunity for price improvement. The Exchange believes that the
proposal therefore contributes to perfect the mechanism of a free and
open market and ultimately protects investors and the public interest.
Administrative Amendments to NYSE Rule 1000
    The Exchange further proposes to delete legacy references to ``ITS
Plan'' contained in NYSE Rule 1000 subparagraphs (e)(ii) and (e)(iii)
and replace the concept of ITS commitments with appropriate language
consistent with the current practice of routing orders to away market
centers.
    The Exchange also proposes to include references to its Do Not Ship
Order \13\ in NYSE Rule 1000 subparagraphs (e)(ii)(C) and
(e)(iii)(A)(5) to illustrate the additional order type that requires
the same execution handling as Reg. NMS-compliant IOC. NYSE Rule 1000
subparagraph (e)(ii)(D) is proposed for deletion because it restates
the information contained in subparagraph (e)(ii) above it.
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    \13\ See NYSE Rule 13.
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    Finally, the Exchange proposes to delete the rule language of NYSE
Rule 1000 Supplementary Material .10 that is no longer applicable, as
it relates to a former pilot operated by the Exchange between May 12,
2006 and October 31, 2006. The Exchange proposes to reserve this rule
section.
2. Statutory Basis
    The basis under the Securities Exchange Act of 1934 (the ``Act'')
\14\ for these proposed rule changes is the requirement under Section
6(b)(5) \15\ that an Exchange have rules that are designed 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.
The proposed rule change supports these principles in that it seeks to
protect the investor and the public interest by allowing an incoming
limit order to execute against all the liquidity available on the
Exchange.
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    \14\ 15 U.S.C. 78a.
    \15\ 15 U.S.C. 78f(b)(5).
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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.

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 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) By order approve 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. In addition, the Commission seeks
comment on whether the proposed handling of incoming orders receiving
partial fills that include CCS interest is consistent with the Act and,
in particular, whether the proposed rule changes are designed to
promote just and equitable principles of trade and, in general, to
protect investors and the public interest.
    Specifically, in certain situations, the Exchange's proposal would
allow the DMM's CCS interest to participate in partial fills at the
best possible price (from the DMM's perspective), even when this price
is inferior to all the non-CCS interest participating in the same
execution. Currently, NYSE's rules allow for CCS participation only
when the incoming order will be completely filled, and the DMM's CCS
interest may not participate in an execution at a price inferior to the
completion price.
    The Commission notes the fact pattern presented above under the
heading ``CCS Partial Fill at the LRP 2'' where, under NYSE's
current rules, an incoming order of 600 shares would be completed at
$20.08 (200, 100, and 100 shares of non-CCS interest at $20.10, $20.09,
and $20.08 respectively, and 200 shares of CCS interest also at
$20.08).\16\ In contrast, under the proposal, an incoming order of 700
shares that outsizes the available non-CCS interest would be partially
completed by CCS interest at the LRP price, and thus would receive an
execution of 200 shares against CCS interest at $20.05, rather than
$20.08, before the system quotes the residual 100 shares at $20.05, the
LRP.\17\
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    \16\ See supra note 11.
    \17\ See supra text accompanying note 11.
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    Absent the proposed rule change, a 700-share incoming order would
result in a partial fill without any CCS participation, with 300 shares
unexecuted and quoting at the LRP. Thus, the Commission notes that the
proposal may benefit the incoming order by immediately and
automatically executing additional shares at the order's limit price or
at the LRP price, as applicable. However, the Commission is interested
in commenters' views on the proposed expansion of DMMs' CCS
capabilities for partial fills and, in particular, on the proposed
execution of CCS interest at the limit price of the order or the LRP
price, as the case may be, even when no other interest resides at that
price. To illustrate, in the ``CCS Partial Fill at the LRP 2''
example above, the proposal would result in a CCS interest execution at
$20.05 (i.e., the LRP price). Is another price more

appropriate? For example, should such CCS interest be executed at
$20.08 (the last price at which there is non-CCS interest)? Another
price? Why or why not?
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number SR-NYSE-2009-71 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-NYSE-2009-71. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/
sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 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-NYSE-2009-71 and should be
submitted on or before September 1, 2009.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-19145 Filed 8-10-09; 8:45 am]

BILLING CODE 8010-01-P


                             SUPPPORTING STATEMENT
                                    PART A

1.	IDENTIFICATION OF THE INFORMATION COLLECTION

	1(a)	Title of the Information Collection

	Recordkeeping and Reporting Requirements Regarding the Sulfur Content of Motor Vehicle Gasoline, Gasoline Additives, Denatured Fuel Ethanol and Other Oxygenates, Certified Ethanol Denaturant, and Blender-Grade Pentane (40 CFR part 80, Subparts H and O); The current OMB Control Number is 2060-0437. The EPA number for this information collection request (ICR) renewal is 1907.07.

	1(b)	Short Characterization/Abstract

	The requirements covered under this ICR are included in the Tier 3 Final Rule (79 FR 23414, April 28, 2014) and the regulations specified at 40 CFR Part 80, Subparts H and O. In general, information collected under the Tier 3 national gasoline sulfur program is used to ensure that gasoline on average contains no more than 10.00 parts per million sulfur to ensure that motor vehicles continue to operate and meet applicable emissions standards throughout their full useful lives.

	The scope of the recordkeeping and reporting requirements for each party in the gasoline, gasoline additive, oxygenate, certified ethanol denaturant, and blender-grade pentane distribution systems, and therefore the cost to that party, reflects the party's opportunity to create, control or alter the product's sulfur content. As a result, parties that directly control the amount of sulfur in gasoline (i.e. petroleum refiners/importers, gasoline additive producers/importers, oxygenate producers/importers, certified ethanol denaturant producers/importers, and blender-grade pentane producers and importers) have more significant periodic reporting and recordkeeping requirements, which are necessary both for their own tracking and for EPA oversight. At the same time, parties with less control over the sulfur content of gasoline (i.e. downstream parties that simply transport or store fuel such as fuel distributors) have fewer reporting requirements and typically keep records to demonstrate that the downstream party did not alter the sulfur content of the gasoline that controlled.

	The recordkeeping and reporting requirements for refiners and importers of motor vehicle gasoline under the final Tier 3 program are the same requirements that have existed under the Tier 2 sulfur program for over 10 years.  Petroleum refiners/importers also use reported information to generate credits that can be traded between refiners/importers to allow these parties to more efficiently comply with the Tier 3 national gasoline sulfur standards. While the Tier 3 final rule contained new recordkeeping and reporting requirements that apply to gasoline additive manufacturers, oxygenate producers/importers, blender-grade pentane producers/importers, and producers/importers of certified ethanol denaturants that are used to produce denatured fuel ethanol, in large part these requirements are consistent with common business practices (CBP). Therefore, the costs associated with these requirements are expected to be small. The allowance for blender-grade pentane to be added gasoline downstream of the refinery will provide additional flexibility to industry.

	The information under this ICR will be used by the EPA's Compliance Division, within the Office of Transportation and Air Quality, Office of Air and Radiation, and by the EPA's Air Enforcement Division, within the Office of Civil Enforcement, Office of Enforcement and Compliance Assurance. The information collected will be used by the EPA to evaluate compliance with the fuel quality requirements under the Tier 3 final rule. This oversight by the EPA is necessary to ensure attainment of the air quality goals of the Tier 3 program. Proprietary information may be submitted by regulated parties for demonstrating compliance with the Tier 3 standards. Confidentiality will be handled in accordance with EPA regulations at 40 CFR Part 2 and established Agency procedures.

	Parties that must report information to EPA must register through EPA's Central Data Exchange (CDX) and submit annual reports on the sulfur content of gasoline and its constituents (oxygenates, gasoline additives, etc.) through CDX. Refiners/importers must use EPA's Moderated Transaction System (EMTS) to generate, trade, and use sulfur credits.

2.	NEED FOR AND USE OF THE COLLECTION

	2(a)	Need/Authority for the Collection

	 The Tier 3 gasoline sulfur requirements were established under the authority granted by Section 211(c)(1) of the Clean Air Act (CAA).2  Under Section 211(c)(1), the EPA may adopt a fuel control if at least one of the following two criteria is met: (1) the emission products of the fuel cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare, or (2) the emission products of the fuel will significantly impair emissions control systems in general use or which will be in general use were the fuel control to be adopted. The Tier 3 final rule was based on both of these criteria.

	This supporting statement describes the recordkeeping and reporting requirements and the associated costs to various regulated parties (e.g., gasoline refiners/importers, oxygenate producers/importers, gasoline additive producers/importers, certified ethanol denaturant producers/importers, blender-grade pentane producers/importers, fuel distributors, and retailers of gasoline). These requirements will be necessary to enable the Administrator to:

	(1) Identify the sources of gasoline, gasoline additives, denatured fuel ethanol and other oxygenates, certified ethanol denaturant, and gasoline blendstocks; and

	(2) Ensure that these sources comply with the standards and limitations of the Tier 3 final rule.

	An effective oversight scheme is necessary to ensure that the environmental goals of the Tier 3 final rule are met, and that those complying with the requirements in good faith are not disadvantaged by non-complying parties. The Tier 3 final rule's requirements create a significant economic incentive for noncompliance. Without the accompanying recordkeeping and reporting requirements, Congressional intent to improve air quality through the Tier 3 program will be thwarted because neither the EPA nor industry will have sufficient information to monitor compliance. Non-complying gasoline, gasoline blendstocks, gasoline additives, certified ethanol denaturants, denatured fuel ethanol and other oxygenate will likely be introduced into commerce on a widespread basis but for requirements that make it possible for the EPA to cross-check records of various entities in order to determine compliance.

	Sections 114 and 208 of the CAA, 42 U.S.C. §§ 7414 and 7542, authorize the EPA to require recordkeeping and reporting regarding enforcement of the provisions of Title II of the CAA. The current regulations applicable to motor vehicle gasoline, including the regulations associated with this information collection, can be found in 40 CFR Part 80, Regulation of Fuels and Fuel Additives.

	2(b)	Practical Utility/Users of the Data

	The EPA uses the information and test results (e.g., sulfur content and volume of each batch of gasoline) contained in the annual compliance reports to evaluate the compliance of regulated parties involved in the production and importation of gasoline, gasoline blendstocks, denatured fuel ethanol and other oxygenates with the Tier 3 gasoline sulfur control requirements. These reports will also be used by the EPA to target compliance investigations. Product transfer documents maintained by parties in the gasoline distribution system and records related to gasoline blending will be used to evaluate the compliance of regulated parties that maintain the records, and to help evaluate upstream compliance.

3.	NONDUPLICATION, CONSULTATIONS, AND OTHER COLLECTION CRITERIA

	3(a)	Non-duplication

	Efforts have been made to eliminate duplication in this information collection. Provisions included in the Tier 3 final rule will allow parties to consolidate reporting requirements and/or provide abbreviated reports where appropriate. For example, to reduce the reporting burden, reports specific to compliance with the gasoline sulfur standards and reports related to the gasoline sulfur averaging, banking, and trading program are included in the annual reports already required to be submitted under the RFG program. Where possible, information requirements from various organizations within the Agency have been combined to minimize the submittal of duplicate information in different formats. The information in this collection is not available from another source.

	Additionally, since California's state gasoline sulfur requirements are as stringent as those under the Tier 3 sulfur program for most of the remainder of the nation's gasoline, and since California has its own compliance and enforcement provisions, California gasoline is exempt from most of the requirements of the gasoline sulfur program.

	3(b)	Public Notice Prior to Submission to OMB

      EPA is seeking public comment on reporting requirements via Federal Register Notice. EPA will also docket a copy of this draft ICR supporting statement for public comment. EPA will address public comments received during the public comment period.

	3(c)	Consultations

      The Tier 3 regulations, including the cost analysis that is reflected in this ICR, were developed based on experience implementing the Tier 2 gasoline sulfur program and in close consultation with the affected industries.

      EPA has made a concerted effort to seek industry comment on this ICR. EPA contacted Don Gilstrap of Chevron Products Company who can be contacted at<PHONE_NUMBER> and by email at<EMAIL_ADDRESS>EPA also contacted Vance Kopp of Weaver Associates who can be contacted at<PHONE_NUMBER> and by email at<EMAIL_ADDRESS>Both Mr. Gilstrap and Mr. Kopp reviewed EPA's burden analysis and did not object to EPA's calculated adjusted burden.

	3(d)	Effect of Less Frequent Collection

	The Tier 3 gasoline sulfur program requires gasoline refiners and importers and oxygenate producers and importers to submit annual reports to the Agency which demonstrate compliance with the applicable sulfur standards by the information contained within. The information contained in such reports includes information regarding the sulfur content and volume of a refinery's or importer's gasoline or denatured fuel ethanol or other oxygenate. Less frequent submittal of such reports will severely hinder EPA's ability to monitor compliance and make it impossible to administer the sulfur ABT program since credits are generated and used on an annual basis, which would make it much more expensive for industry to comply. Additionally, requiring less than every-batch sampling and testing, where applicable, would make the sulfur cap requirement (i.e., the per gallon maximum sulfur content) meaningless, and would likely lead to extreme excursions in gasoline sulfur content which could, in turn, damage emission control systems leading to increased emissions and costly repairs for consumers. This would be an unacceptable outcome given that the final Tier 3 sulfur program is intended to lead to reduced emissions in part by compatible vehicle and fuel interaction.

	3(e)	General Guidelines

      This information collection activity complies with 5 CFR 1320.6, except that respondents must keep certain records for longer than three years. Specifically, all parties will be required to keep PTDs and records of quality assurance programs for five years, and refiners and importers as well as denatured fuel ethanol and other oxygenate producers and importers will be required to keep their compliance records for five years. Records related to the gasoline sulfur ABT program must also be retained for five years. The information required to be retained will facilitate EPA's identification of the source of any gasoline found to be in violation of the gasoline sulfur standards. Much of the information required under the Tier 3 final rule has been required under the current Tier 2 program and other EPA fuels programs for decades resulting in the 5-year retention period being the industry standard.  Therefore, the recordkeeping requirements under the Tier 3 final rule impose little additional burden. Five years is the applicable statute of limitations for the Tier 2 gasoline sulfur and other fuel programs. See 28 U.S.C. 2462.

	Gasoline refiners/importers and oxygenate producers/importers must submit a limited amount of proprietary information, such as batch volume and sulfur content in their annual reports. EPA believes that requiring annual reports provides an appropriate and effective means of monitoring compliance with the standards under the sulfur program. This type of information has been collected in the past and will be safeguarded in the same manner as data required by other EPA directives. Pertinent information, whether kept by the respondent or by a contractor, is subject to auditing by EPA. Consequently, EPA officials will require voluntary entry and access to facilities.

	3(f)	Confidentiality

	As discussed in 3(e) above, proprietary information may be submitted by gasoline refiners/importers and oxygenate producers/importers for demonstrating compliance with the sulfur standards. Such information is protected in accordance with the EPA regulations at 40 CFR Part 2 and established Agency procedures.

	3(g)	Sensitive Questions

	No questions of a sensitive nature are asked in this information collection.

4.	THE RESPONDENTS AND THE INFORMATION COLLECTED

	4(a)	Respondents/SIC Codes

	The respondents to this information collection will be:
      -	Refiners (both domestic and foreign refiners who manufacture gasoline for use in the U.S.)
      -	Importers of gasoline into the U. S.
      -	Gasoline distributors, carriers, wholesale purchaser-consumers, and retailers
      -	Users of research and development (R&D) gasoline (testing laboratories)
      -	Producers of gasoline additives
      -	Importers of gasoline additives into the U.S.
      -	Bulk distributors and blenders of gasoline additives
      -	Oxygenate producers
      -	Importers of oxygenate into the U.S.
      -	Oxygenate distributors and blenders
      -	Certified ethanol denaturant producers
      -	Importers of certified ethanol denaturant into the U.S.
      -	Certified ethanol denaturant distributors
      - 	Producers of blender-grade pentane
      - 	Importers of blender-grade pentane into the U.S.
      -	Distributors of blender-grade pentane

Table 4(a).1: Respondent Industry Classification Codes
                               Industry Category
                                 NAICS[1] Code
                                   SIC2 Code
Petroleum refineries (including importers and butane/pentane blenders)
                                    324110
                                     2911
Butane and pentane manufacturers
                                    325110
                                     2869
Ethyl alcohol and other oxygenate manufacturing
                                    325193
                                     2869
Natural gas liquids extraction and fractionation
                                    211112
                                     1321
Other basic organic chemical manufacturing
                                    325199
                                     2869
Natural gas liquids pipelines, refined petroleum products pipelines.
                                    486910
                                     4613
Chemical and allied products merchant wholesalers
                                    424690
                                     5169
Manufacturers of gasoline additives
                                    325199
                                     2869
Petroleum bulk stations and terminals.
                                    424710
                                     5171
Other warehousing and storage-bulk petroleum storage
                                    493190
                                     4226
Gasoline Retailers and
Wholesale Purchaser-Consumers
                                     44711
                                     44719
                                     5541
Testing Laboratories
                                     54138
                                     8734
1) North American Industry Classification System
2) Standard Industrial Classification system

	4(b)	Information Requested

	The recordkeeping and reporting requirements applicable to the regulated parties vary depending on their position in the gasoline production, blending and distribution stream and their potential to influence the sulfur content of gasoline. The regulated parties are divided into groups (and sub-groups) as indicated in the list below, based on the applicable recordkeeping and reporting requirements.

-	Gasoline refiners and importers
      -	Additional and/or alternative requirements exist if:
            -	Refiner qualifies and opts to use the small-refiner provisions
            -	Refiner or importer participates in the gasoline sulfur ABT program
		-	Refiner (including parties who blend gasoline at a terminal facility) produces gasoline by blending pentane or other blendstocks into previously certified gasoline
-	Users of R&D gasoline (testing laboratories)
-	Denatured fuel ethanol and other oxygenate producers and importers
-	Gasoline additive manufacturers
-	Distributors of gasoline, gasoline blendstocks, gasoline additives, oxygenates, and certified ethanol denaturants (gasoline terminals, pipelines, rail carriers, and truckers)
-	Gasoline retailers and wholesale purchaser-consumers (WPC)
      -	Additional requirements exist for retailers and WPCs of exempted R&D gasoline

	(i)	Data items, including recordkeeping requirements

	The information collection requirements are categorized in the following lists according to which regulated parties they apply. Certain requirements, such as the PTD requirements, are broadly applicable to most parties who transfer gasoline, gasoline blendstocks, gasoline additives, oxygenates, and certified ethanol denaturants. These more generally applicable requirements are discussed separately from the requirements that apply only to specific groups of regulated parties. Additional and/or alternative requirements applicable to subgroups of respondents are also discussed separately. Where a regulated party is not specifically mentioned, only the most broadly applicable requirements apply.

	(A)	Broadly-Applicable Requirements

 	The following requirements apply broadly to all of the regulated parties listed above. The responsibilities of fuel distributors (gasoline terminals, pipelines, and carriers) and gasoline retailers and WPCs are primarily related to compliance with the following broadly applicable requirements. Some terminal or other facility operators produce gasoline by blending butane, pentane or other blendstocks into previously certified gasoline. These gasoline producers are considered refiners under the sulfur program, and are discussed under the requirements for refiners. Unless specifically noted, the PTD requirements listed below do not result in any new activities for fuel distributors, retailers, and WPCs.

 -  	Product transfer documents (PTDs). The Tier 3 final rule requires persons who manufacture, import, sell, offer for sale, dispense, distribute, supply, offer for supply, store, or transport gasoline, gasoline blendstocks, gasoline additives, oxygenates, or certified ethanol denaturants to provide a PTDs to accompany each transfer of the product.

 -	Sampling and testing. Under the Tier 3 final rule, any party that is required to conduct sampling and testing for sulfur content must retain records regarding:
       -	The location, date, time, tank or storage tank identification for each sample collected;
       -	The name and title of the person who collected the sample and the person who performed the testing; and
       -	The results of the test as originally printed or recorded, and any record which contains a result that is not identical to the originally printed or recorded test.

 -	Affirmative defenses. For purposes of establishing an affirmative defense to a violation, parties other than retailers or wholesale purchaser-consumers will be required to provide business records documenting the following:
 	-	A periodic sampling and testing program designed to ensure that the gasoline meets the applicable sulfur standard; and
 	-	On each occasion that the gasoline is found not to be in compliance with the applicable sulfur standard, the actions taken to stop the sale or distribution of any gasoline found not to be in compliance, and the actions taken to remedy the violation and the factors that caused the violation (such as removing the non-complying gasoline from the distribution system and taking steps to prevent future violations).

 -	Record retention period. Records will be required to be maintained for five years from the date they were create with one exception. Records related to ABT credits will be required to be kept for five years from the date of generation, except where credits are transferred. In such cases, records will be required to be kept by the transferor for five years from the date of transfer, and by the transferee for five years from the date of transfer, use or termination, whichever is later. As a result, in certain circumstances, records related to credits may be required to be maintained for longer than five years from the date of origination. This potentially longer retention time is necessary to enable the Agency to determine the legitimacy of credit transfers in the context of an enforcement action.

	(B)	Requirements Specific to Gasoline Refiners and Importers

 	The following requirements apply to all refiners and importers:

 -	Registration. Register with the EPA by December 1, 2016 or at least 30 days in advance of producing or importing gasoline meeting the Tier 3 standards and/or participating in the ABT credit program. (40 CFR 80.1650(b)).
 -	Annual sulfur average calculation. Calculate the annual average sulfur level for each refinery's gasoline production or all imported gasoline. (40 CFR 80.1603(c)).
 -	Annual compliance reporting. Submit annual sulfur averaging report to the EPA for each refinery and importer by March 31 for the previous calendar year's averaging period. The annual compliance reports include the following information (40 CFR 80.1652(a)):
 	-	EPA refiner and refinery facility, or importer registration numbers
 	-	Applicable annual average standard;
 	-	Total volume of gasoline produced at the refinery or imported;
 	-	Annual average gasoline sulfur content produced at the refinery or imported;
 	-	Annual average sulfur level after inclusion of any credits; and
 	-	For each batch of gasoline produced or imported during the averaging period, the assigned batch number, the date the batch was produced, the volume of the batch, and the sulfur content of the batch.

 -	Annual attest engagements. Arrange to have an attest engagement report submitted to EPA by June 1 for the previous year's annual averaging period (40 CFR 80.1667).
 	-	The attest engagement is required to be performed on the underlying documentation that forms the basis of required reports.
 	-	The attest engagement is required to be prepared in accordance with established procedures.
 	-	The attest engagement will be required to be performed by an independent certified public accountant (CPA).
 	-	Internal auditors may assist the CPA pursuant to the Standards for Attestation Engagements.
 Refiners/importers submit the reports prepared by the CPA.
 The attest engagement report lists any discrepancies identified by the CPA.

      (C)	Additional and/or Alternate Requirements for Refiners and Importers that        Participate in the ABT Credit Trading Program

 	The following recordkeeping and reporting requirements apply to refiners and importers who utilize the ABT credit trading provisions under the sulfur program:

 -	Calculate ABT credits generated (40 CFR 80.1615(b))
 -	Include in the refinery or importer annual sulfur compliance report (in addition to the information required for all refiners and importers) the number of credits: (40 CFR 80.1652(a))
       -	Carried over from the prior averaging period;
 	-	Generated;
 	-	Used;
 	-	Obtained from or transferred to another party, and the name and EPA refiner or importer registration number of the other party to the transaction;
 	-	Expired at the end of the averaging period; and
 	-	Carried over to the subsequent averaging period.
 -	Retain the following records (in addition to records required to be kept by all refiners and importers), separately by year of creation and pertaining to the number of credits: (40 CFR 80.1653 (b))
 	-	Carried over from the prior averaging period;
 	-	Generated;
 	-	Used;
 	-	Obtained from or transferred to another party, and the name and EPA registration number of the other party to the transaction; and
 	-	Expired at the end of the averaging period.
 -	Retain records related to credits for five years from the date of generation; if transferred, the transferor must retain records for five years from the date of transfer and the transferee must retain records for five years from the date of transfer, use or termination, whichever is later.

      (D)	Alternative Requirements for Importers Who Import Gasoline by Truck (40 CFR 80.1641)

 - 	Importers who import gasoline into the U. S. by truck may use the test results from the foreign terminal to satisfy the sampling and testing requirements that are otherwise required if the importer fulfills the following alternative requirements:
       -	Obtain records from the foreign terminal at which the gasoline was loaded for importation into the U.S. which shows the sulfur content of each truck load of gasoline imported into the U.S.
       -	Conduct a QA program for each truck loading terminal. QA samples will be required to be taken from the truck-loading terminal for testing by the importer, or as an alternative, by an independent laboratory, to determine the sulfur content. The sampling and testing will be required to be performed using the regulatory methods. The frequency of the sampling and testing will be required to be at least one sample for each 50 of an importer's trucks that are loaded at the terminal, or one sample per month, whichever is more frequent.
       -	Treat each truck load of imported gasoline as a separate batch for purposes of assigning batch numbers, maintaining records, and reporting.

       (E)      	Alternative Requirements for Refiners, Pipelines, and Terminals that Produce       Gasoline by Blending Butane, Pentane or Other Blendstocks into Previously Certified Gasoline (PCG) (40 CFR 80.1640)

 -	As an alternative to the by batch sampling and testing requirements, refiners who blend butane into PCG to make a new batch of gasoline may meet the sampling and testing requirements by using sulfur test results from the butane supplier provided that the refiner:
       -	Obtains a copy of the test results from the butane supplier which shows that the sulfur content of each load of butane in the storage tank from which the blendstock was drawn does not exceed the applicable per-gallon standard and that the tests were performed using the regulatory method.
       -	Treats the butane as a batch (re: sulfur content and volume) for the purpose of calculating compliance with the applicable sulfur averaging standard.
       -	Conducts a quality assurance program including sampling and testing from each butane supplier to demonstrate that butane sulfur content is below the applicable per-gallon standard. The frequency of butane sampling and testing from each supplier will be required to be one sample for every 500,000 gallons of butane received, or one sample every three months, which ever results in more frequent sampling
 -	As an alternative to by batch sampling and testing requirements, refiners who blend pentane into PCG to make a new batch of gasoline may meet the sampling and testing requirements by using sulfur test results from the butane supplier provided that the refiner-blender: (40 CFR 80.85).
       -	Obtains a copy of the test results from the pentane supplier which shows that the sulfur content of each load of butane in the storage tank from which the blendstock was drawn does not exceed the applicable per-gallon standard and that the tests were performed using the regulatory method.
       -	Treats the pentane as a batch (re: sulfur content and volume) for the purpose of calculating compliance with the applicable sulfur averaging standard.
       -	Conducts a quality assurance program including sampling and testing from each pentane supplier to demonstrate that pentane sulfur content is below the applicable per-gallon standard. For commercial-grade pentane, the frequency sampling and testing from each supplier will be required to be one sample for every 350,000 gallons of pentane received, or one sample every three months, which ever results in more frequent sampling. For non-commercial-grade pentane, the frequency sampling and testing from each supplier will be required to be one sample for every 250,000 gallons of pentane received, or one sample every three months, which ever results in more frequent sampling.
       -	Enters into a contract with all parties who transport or store pentane for use by the refiner to assure that an adequate quality assurance program is implemented to ensure that such pentane will not be contaminated in transit to the refinery.
 -	As an alternative to the by batch sampling testing requirements, refiners who blend other blendstocks into PCG may: (40 CFR 1640(b))
 	-	Sample and test the PCG for sulfur content prior to blending; and calculate the volume and sulfur content of the blendstock by subtracting the volume and sulfur content of the PCG from the volume and sulfur content of the gasoline subsequent to blending, or
 	-	If every batch of blendstock used during an averaging period has a sulfur content that is equal to or less then the applicable per-gallon standard, sample and test each batch of blendstock for volume and sulfur content when received and treat each blendstock receipt as a separate batch for purposes of compliance calculations.

 	(F)		Requirements for Gasoline Retailers and Wholesale Purchaser-Consumers: (40 CFR 80.1656 (d))

 -	If R&D gasoline is to be stored by a retailer or wholesale purchaser-consumer (WPC), records will be required to be kept to demonstrate that the retailer or WPC is associated with the facility that will be using the R&D gasoline. Documents associated with R&D gasoline are required to be retained for five years.

       (G)		Requirements for Users of R&D Gasoline. (40 CFR 80.1656)

 -	Users of R&D gasoline must submit an application to EPA prior to initial use of the R&D gasoline. The application must contain the following:
       -	Statement of purpose
 	-	Description of the R&D program, including the sulfur level of the gasoline expected to be used
       -	Expected start and completion dates of the R&D program
       -	Estimation of the number of vehicles or engines in which the fuel will be used and mileage to be accumulated
       -	Locations where gasoline will be stored and used
       -	Volume of gasoline to be used.
       -	Identification of the gasoline distributor or other source of the R&D gasoline
       -	Explanation of why sulfur-compliant gasoline cannot be used
 	-	Provisions to ensure EPA monitoring capability
 -	R&D gasoline will be required to be identified on PTDs as gasoline to be used only for this purpose.

	(H)		Requirements for Gasoline Additive Manufacturers (40 CFR 80.1613)

-	PTDs that state the maximum registered concentration for the additive and the corresponding maximum allowed treatment rate.
-	Additive production quality control records to demonstrate that the sulfur content of each production batch is consistent with the maximum allowed treatment rate.

 	(I)		Requirements for Denatured Fuel Ethanol and Other Oxygenate Producers and Importers.

 -	Register with EPA prior to November 1, 2016, or at least 60 days prior to producing or importing oxygenate subject to the final Tier 3 program 10 ppm sulfur cap (40 CFR 80.1650(b)(2))
 -	Submit annual report to EPA for each oxygenate production and import facility by March 31 for the previous calendar year. (40 CFR 80.1652(d))
 -	Include the following information in the oxygenate producer or importer's annual report: (40 CFR 80.1652(c))
       -	EPA oxygenate producer and oxygenate production facility, or oxygenate importer registration numbers.
-	Total volume of each type of oxygenate produced or imported
-	Annual average gasoline sulfur content produced at the refinery or imported
      -	For each batch of oxygenate produced or imported during the calendar year, the assigned batch number, the date the batch was produced, and the volume and sulfur content of the batch.
      -	For oxygenates other than denatured fuel ethanol, the identification of the test method used to determine the sulfur content of the batch.
      -	For denatured fuel ethanol, either the identification of the test method used to determine the sulfur content of the batch, or the information used to calculate the sulfur content.

 -	PTDs with the applicable statement for either denatured fuel ethanol or oxygenates other than denatured fuel ethanol. (40 CFR 80.1651)

 	(J)		Producers and Importers of Certified Ethanol Denaturants

 -	Register with EPA prior to November 1, 2016, or at least 60 days prior to producing or importing certified ethanol denaturant. (40 CFR 80.1650(b)(4))
 -	Generate PTDs for each batch of certified ethanol denaturant. (40 CFR 80.1651(d))
 -	Sample and test each batch of certified ethanol denaturant for sulfur content
 -	Maintain the per-batch sulfur test records for a period of 5 years. (40 CFR 80.1653(d))

 	(K)		Producers and Importers of Blender-Grade Pentane (40 CFR 80.86)

 -	Register with EPA at least 30 days prior to producing or importing blender-grade pentane.
 -	Sample and test each batch of pentane for sulfur, olefins, aromatics, and benzene content.
 -	Maintain the per-batch sulfur test records on the sulfur, olefin, aromatics, and benzene content.
 -	For blender-commercial-grade pentane, maintain any test results on the purity of the pentane.
 -	Generate PTDs for each batch of pentane to be used to produce gasoline by blending with PCG.

	(ii)	Respondent Activities

 	As noted above, much of the information needed for compliance with the recordkeeping requirements under the Tier 3 final rule is already being retained either to comply with the requirements of other 40 CFR Part 80 fuel programs or as a customary business practice. To the extent possible, information collected and reported under other 40 CFR Part 80 fuel programs such as the RFG program may also be used to demonstrate compliance with the final Tier 3 sulfur program without necessitating additional activities by the regulated parties. Only in cases where it is essential to ensure the realization of the projected benefits of the sulfur program, is the EPA requiring additional testing, recordkeeping, and reporting.

 	The activities arising out of the testing, recordkeeping, and reporting requirements outlined in the preceding section are listed below according to the respondent class to which they apply. Activities that apply to a broad class of respondents (such as refiners and importers) are also applicable to respondent subclasses (such as small refiners) unless otherwise noted.

 	The burdens and costs included in this ICR are those which are expected to be incurred during the next three years, the period of time covered by this ICR.

 	The following lists detail the activities of the various regulated parties:
       (A)      Activities of Gasoline Refiners and Importers

 -	Test each batch of gasoline for its sulfur content, retain samples from the most recent 20 samples collected or for each sample collected during the most recent 21-day period, whichever is greater, and retain records of the testing for five years. (40 CFR 80.1630 and 80.1631)
 	-	Conduct a QA periodic sampling and testing program for sulfur content for defense purposes. (40 CFR 80.1663(d))
 -	Calculate the average annual sulfur level of each refinery, or all imported gasoline, using batch test reports. (40 CFR 80.1603)
 -	Submit refinery and importer annual averaging reports to EPA by the March 31 of the year following the prior year's averaging period. (40 CFR 80.1652(a))
 -	Arrange to have an independent third party submit to EPA an attest engagement report by June 1 of each year for the prior calendar year averaging period. (40 CFR 80.1667)

 	(B)      Activities of Gasoline Refiners That Utilize the Small Refiner and Small Volume        		    Refinery Provisions: (40 CFR 80.1622)
 -	Notify the EPA if the small refiner or small volume refinery fails to meet the qualifying criteria.

 	(C)		Activities of Refiners and Importers Who are Exempt from Requirements for Extreme Hardship

 -	Submit annual sulfur averaging reports to the EPA under the terms of the hardship application.

       (D)		Activities of Refiners and Importers Who Participate in the ABT Credit Trading Program

 -	Include in the annual sulfur report to EPA. (40 CFR 80.1652(a))
       -	The credits carried over from prior averaging period, generated, used, terminated, transferred or carried over to the next averaging period.
       -	The identity of the refiners/refineries and importers (including EPA registration numbers) involved in credit transactions.
 -	Retain records related to ABT credit activity.(40 CFR 80.1653(b)(2))

       (E)      Alternate Activities for Importers that Import Gasoline by Truck (40 CFR 80.1641)

 -	Use the following alternative requirements to satisfy the requirement to sample and test every batch of gasoline:
 	-	Obtain test results from the foreign terminal at which the gasoline was loaded which shows the sulfur content of each truck load of gasoline imported into the U.S.
       -	Satisfy the program requirement for each truck loading terminal

 	(F)		Alternative Activities for Refiners, Terminals, and Pipelines That Produce Gasoline by Blending Butane or Other Blendstocks into Previously Certified Gasoline

 -	For butane blenders, use the test results from the butane supplier to satisfy the requirement to sample and test each batch of gasoline provided that: (40 CFR 80.1640)
       -	The butane blender obtains a copy of the test results from the butane supplier which shows that the butane in the storage tank from which the butane was drawn does not exceed the applicable per-gallon standard.
       -	The butane is treated as a batch regarding sulfur content and volume for the purpose of calculating compliance with the applicable sulfur averaging standard.
       -	The refiner conducts a QA program including sampling and testing from each butane supplier to demonstrate that butane sulfur content does not exceed the applicable per-gallon standard. The frequency of butane sampling and testing from each supplier will be required to be one sample for every 500,000 gallons of butane received, or one sample every three months, which ever results in more frequent sampling.
 -	For pentane blenders, use the test results from the pentane supplier to satisfy the requirement to sample and test each batch of gasoline provided that: (40 CFR 80.85)
       -	The butane blender obtains a copy of the test results from the butane supplier which shows that the butane in the storage tank from which the butane was drawn does not exceed the applicable per-gallon standard.
       -	The pentane is treated as a batch regarding sulfur content and volume for the purpose of calculating compliance with the applicable sulfur averaging standard
       -	The refiner conducts a quality assurance program including sampling and testing from each pentane supplier to demonstrate that pentane sulfur content is below the applicable per-gallon standard. For commercial-grade pentane, the frequency sampling and testing from each supplier will be required to be one sample for every 350,000 gallons of pentane received, or one sample every three months, which ever results in more frequent sampling. For non-commercial-grade pentane, the frequency sampling and testing from each supplier will be required to be one sample for every 250,000 gallons of pentane received, or one sample every three months, which ever results in more frequent sampling.
       -	Enters into a contract with all parties who transport or store pentane for use by the refiner to assure that an adequate quality assurance program is implemented to ensure that such pentane will not be contaminated in transit to the refinery.
 -	For blenders who blend other blendstocks into PCG, calculate the volume and sulfur content of the blendstock by subtracting the volume and sulfur content of the PCG from the volume and sulfur content of the finished blend, or (40 CFR 1640(b))
 	-	If every batch of blendstock used during the averaging period has a sulfur content that is equal to, or less than, the applicable per-gallon cap standard, sample and test each batch of blendstock received and treat each receipt as a separate batch for purposes of compliance calculations

 	(G)		Activities of Pipelines and Terminals

 -	Conduct periodic QA assurance testing for sulfur content for defense purposes. (40 CFR 80.1663(d))

 	(H)		Activities of Users of R&D Gasoline:

 -	Prior to initial use of R&D gasoline, submit an application to EPA (40 CFR 80.1656)

       (I)      Activities of Distributors, Retailers, and WPCs

 -	WPCs identify and keep records of any R&D gasoline. (40 CFR 80.1656(d))

 	Activities of Gasoline Additive Manufacturers (40 CFR 80.1653(h))

 -	Maintain records of its additive production quality control activities and make records available upon request.

 	(J)		Activities of Denatured Fuel Ethanol and Other Oxygenate Producers.

-	Test each batch of denatured fuel ethanol or other oxygenate for its sulfur content, retain samples from the most recent 20 samples collected or for each sample collected during the most recent 21-day period, whichever is greater, and retain records of the testing for five years. For DFE, as an alternative to per-batch sulfur testing, the sulfur content of each batch may be calculated using PTD(s) from the denaturant(s) used, quality control records for the neat (un-denatured) ethanol used, and blend records. (40 CFR 80.1631(a))
 -	Conduct a QA periodic sampling and testing program for sulfur content for defense purposes. (40 CFR 80.1663(d))
 -	For DFE producers, conduct a periodic QA program to assure the accuracy of the denaturant blending equipment for defense purposes.
 -	Submit annual reports to EPA by March 31 of the year following the prior calendar year. (40 CFR 80.1652(c))

 	(K)		Activities of Producers of Certified Ethanol Denaturants.

 -	Register with EPA by November 1, 2016, or 60 days prior to producing certified ethanol denaturant. (40 CFR 80.1650(e))
-	Test each batch of certified ethanol denaturant for its sulfur content, retain samples from the most recent 20 samples collected or for each sample collected during the most recent 21-day period, whichever is greater, and retain records of the testing for five years. (40 CFR 80.1630(a)(2))
 -	Conduct a QA periodic sampling and testing program for sulfur content for defense purposes. (40 CFR 80.1663(d))

 	(L)		Activities of Producers of Blender-Grade Pentane.

 -	Register with EPA 30 days prior to producing blender-grade pentane. (40 CFR 80.86)
 -	Test each batch of blender-grade for its sulfur, olefin, aromatics, and benzene content. Test blender-commercial-grade retain samples from the most recent 20 samples collected or for each sample collected during the most recent 21 day period, whichever is greater, and retain records of the testing for five years. (40 CFR 80.1631(a))
 -	Conduct a QA periodic sampling and testing program for sulfur content for defense purposes. (40 CFR 80.1663(d))

5.	THE INFORMATION COLLECTED--AGENCY ACTIVITIES, COLLECTION METHODOLOGY, AND INFORMATION MANAGEMENT

      5(a)	Agency Activities

 	Agency activities associated with the annual reporting requirements of this information collection consist of the following:

       1) Review submitted reports (includes associated Agency inspections and investigations);
       2) Analyze requests for confidentiality and provide appropriate protection;
       3) Store the data and archive according to a record retention schedule conforming to EPA policy.

 	Agency activities associated with the attest engagement requirements of this information collection consist of the following:

       1) Review submitted reports (includes associated Agency inspections and investigations);
       2) Store the report and archive according to a record retention schedule conforming to EPA policy.

      5(b)	Collection Methodology and Management

 	The collection methodology and management of the information collected is similar to the process used for other 40 CFR Part 80 fuel programs. The information should be reported electronically via a format specified by the Administrator.

 	When the submittal is received, EPA will review it for completeness EPA may also review respondents' records as a part of its enforcement effort to ensure the accuracy and validity of the data submitted. Non-confidential data will be made available to the public upon request.

      5(c)	Small Refiner/Small Volume Refinery and Temporary Relief Flexibilities

 	As part of its effort to comply with the Small Business Regulatory Enforcement Fairness Act (SBREFA) requirements during the Tier 3 rulemaking process, EPA met several times with small entity representatives. Additionally, EPA convened an intergovernmental panel, in accordance with the SBREFA, which also met with small entity representatives and which then made specific recommendations to EPA regarding the impact of sulfur control on small businesses. A copy of the panel's report is available in the docket for this regulatory action. The report contains a list of the fuel industry's participating small entity representatives, and provides a summary of their comments.

 	The panel's recommendations were carefully considered by EPA in developing the Tier 3 final rule and the specific provisions for small refiners. The panel did not recommend a wholesale exemption for small refiners and small volume refineries, but rather that they be provided additional time to comply. As a result, the gasoline sulfur rule provides for less stringent sulfur standards for qualifying small refiners until 2020. Several refiners and refineries have taken advantage of these temporary relief flexibilities and the EPA anticipates that they will continue to do so until they phase out in 2020.

 	In addition, the gasoline sulfur rule provided temporary relief from the sulfur requirements for refiners who demonstrated that extreme hardship will result in the absence of such relief.

      5(d)	Collection Schedule

      The collection schedule of the sulfur program reporting requirements is shown in Table 5(d).

Table 5(d). Collection Schedule

                                      Item
                                    Due Date
 Gasoline refinery and importer annual averaging reports, including ABT information
 March 31 following the previous year's averaging period
 Gasoline refiner and importer attest reports
 June 1 following the previous year's averaging period
 Blender-grade pentane producer and importer annual batch reports
 March 31 following the previous calendar year
 Oxygenate producer and importer annual batch reports
 March 31 following the previous calendar year

6.	ESTIMATING THE ANNUAL BURDEN AND COST OF THE COLLECTION

	6(a)	Estimating Respondent Universe

      Drawing upon experience with the Tier 3 program, the actual number of registered respondents as of December 2017, and respondent-specific assumptions as detailed in Tables I-VII, we have estimated the following respondent universe, as summarized in Table 6(a).

Table 6(a). Estimating Respondent Universe
                               Type of Respondent
                        Estimated Number of Respondents
 Refiners
                                      886
 Oxygenate Producers
                                     1,717
 Oxygenate Blenders
                                      856
 R&D Applicants
                                       1
 Additive Manufacturers
                                       20
 CED Producers
                                      267
 Pentane Producers
                                      206

      6(b)	Estimating Respondent Burden and Cost

      Detailed estimates, described as registration, recordkeeping, and reporting activities are provided in Tables I-VII for each type of respondent. These tables provided citations to the appropriate sections in 40 CFR Part 80 and reference each form or reporting template, as appropriate. In order to ensure parties may review all information relevant to this collection, we have docketed all forms and templates.  We have assumed an industry standard mix, based upon available Bureau of Labor Statistics estimates. Table 6(b) summarizes the total estimated burden by type of respondent.

Table 6(b). Estimating Respondent Burden and Cost

                               Type of Respondent
                            Total Responses per Year
                              Total Hours per Year
                              Total Cost per Year
 Refiners
                                     92,730
                                     10,493
                                   $1,063,641
 Oxygenate Producers
                                    390,217
                                     39,109
                                   $2,857,091
 Oxygenate Blenders
                                      856
                                      428
                                    $39,804
 R&D Applicants
                                       1
                                       8
                                      $744
 Additive Manufacturers
                                      880
                                      196
                                    $11,028
 CED Producers
                                     29,967
                                     4,204
                                    $311,726
 Pentane Producers
                                     5,366
                                     1,219
                                    $70,167

      6(c)	Estimating Agency Burden and Cost

      Gasoline sulfur reports are handled as part of other 40 CFR Part 80 fuels reporting, including items accounted for in the reformulated gasoline (RFG) and anti-dumping ICR. This estimate is restricted only to the reporting of sulfur values to EPA. The Agency burden consists of 0.10 of a GS-13 technical worker ($202,000 including overhead), or $20,200; and 0.10 of a GS-7 clerical worker ($96,000 including overhead), or $9,600, for a total of $29,800.

      6(d)	Bottom Line Burden Hours and Cost

      Per Tables I-VII, we estimate the following totals:

TOTAL NO. OF RESPONDENTS:       	       		3,953
TOTAL NO. OF RESPONSES: 				520,017
TOTAL BURDEN HOURS:           				55,656
TOTAL COST TO RESPONDENTS:   		         $ 4,354,200

      6(e) 	Reason for Change in Burden

      The cost burden has remained nearly unchanged since the previous renewal of this ICR. The slight increase from $4.30 million to $4.35 million in cost burden is likely associated with more accurate industry wage data. There is an increase from approximately 60,000 responses to approximately 520,000 due to a better understanding of the size of the oxygenate industry. When this ICR was developed for the first time in 2015, oxygenate producers/importers, oxygenate blenders, and certified denaturant producers/importers, were not required to be registered under any EPA fuels program. They were not required to register under the Tier 3 program until December 2016 and therefore when the original version of this ICR was developed in 2015, there was no comprehensive list to base estimates of the size of the industry upon. The total burden hours decreased from 65,000 to 56,000 due to experience gained in implementing the Tier 3 program.

      Agency cost burden increased from $23,700 per year to approximately $29,800 per year due to changes in Federal Employee salaries and wages. Agency burden hours remain unchanged.

      6(f)	Burden Statement

 	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's 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-OAR-2011-0135, which is available for online viewing at www.regulations.gov, or in person viewing at the Air and Radiation Docket and Information Center 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 Air and Radiation Docket and Information Center 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-OAR-2011-0135 and OMB Control Number 2060-0437 in any correspondence.

7. 	APPENDIX  -  Detailed Burden Estimates, Excel Tables I-VII