sections 22a-226e, Recycling of Source-Separated Organic Materials.
http://cga.ct.gov/2014/sup/chap_446d.htm#sec_22a-226e
    \87\ Code of Massachusetts Regulations, title 310 CMR 19.000.
January 2014 amendments. http://www.mass.gov/eea/docs/dep/service/regulations/wbreg14.pdf
    \88\ City of Portland Administrative Rules, Business Solid
Waste, Recycling and Composting, ENN-2.06 http://www.portlandonline.com/auditor/?c=27430&a=294923.
    \89\ Administrative Code of the city of New York. Title 16,
chapter 3, subchapter 2, section 1 (16-306.1). http://legistar.council.nyc.gov/LegislationDetail.aspx?ID=1482542&GUID=DDD94082-C0E5-4BF9-976B-BBE0CD858F8F.
    \90\ San Francisco Environment Code. Chapter 19, sections 1901-
1912. Mandatory Recycling and Composting Ordinance. http://www.sfenvironment.org/sites/default/files/policy/sfe_zw_sf_mandatory_recycling_composting_ord_100-09.pdf.
    \91\ Seattle Municipal Code. Chapters 21.40 and 21.76. http://www.seattle.gov/util/MyServices/FoodYard/BldgOwnersManagers_FoodYard/index.htm.

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

    In the 1996 Landfills NSPS Background Information Document (page 1-
25) the EPA ``decided not to include materials separation requirements
within the final rules because the EPA continues to believe RCRA and
local regulations are the most appropriate vehicle to address wide-
ranging issues associated with solid waste management for landfills.''
    Although the EPA is not requesting input on mandating source
separation under the upcoming emission guidelines review, the EPA is
soliciting input and ideas for encouraging organic waste diversion
under the revised emission guidelines, including the specific
mechanisms described below and in section IV.E of this document or
other ideas in general.
    One method to encourage organic waste diversion under the revised
emission guidelines is to provide rule exemptions for landfills
diverting 100 percent of organic wastes. The emission threshold
determination provisions currently in 40 CFR part 60, subpart WWW allow
non-degradable wastes to be excluded from the total waste mass when
computing the NMOC emission rate. If only non-degradable wastes were
accepted, then the waste inputs for the model would be zero, the
emission thresholds would not be exceeded, and thus GCCS would not be
required. The EPA solicits input on the methane emission reductions
from organic and inorganic waste diversion and whether adjustments
should be made to the annual NMOC reporting requirements for landfills
not accepting organic materials.
4. Encouraging New Technologies and Practices
    The EPA understands that the technologies, BMPs, and source
separation practices discussed above can achieve reductions in
emissions from landfills. The EPA is seeking input on whether the use
of any of the technologies or practices discussed in this section in
conjunction with a well-designed and well-operated GCCS should be
considered as the EPA reviews the emission guidelines.
    Section IV.E of this document discusses other mechanisms to
encourage wider use of these technologies and practices such as
emission threshold determination flexibilities.
5. Gas Control System Technology
    Subpart WWW of 40 CFR part 60 currently requires all control
devices other than enclosed combustion devices to demonstrate 98-
percent reduction by weight of NMOC. Enclosed combustion devices have
the option of reducing emissions to 20 ppm, dry volume of NMOC, as
hexane. Both enclosed and non-enclosed flares as well as a suite of
other energy recovery devices are used to meet the control requirements
under the current regulatory framework.
    Non-enclosed flares used at landfills meeting the criteria in 40
CFR 60.18(b) are thought to have destruction efficiencies similar to
enclosed flares and incinerators, and devices that burn LFG to recover
energy, such as boilers, turbines and internal combustion engines.
    However, in April 2012 the EPA conducted an external peer review on
flaring efficiency and made available to the public a draft technical
report, ``Parameters for Properly Designed and Operated Flares.'' \92\
In the draft report, the EPA evaluated test data and identified a
variety of parameters that may affect flare performance and that could
be monitored to help assure good combustion efficiency. None of the
flare performance data used in the report comes from flares used at MSW
landfills, however, and the report does not provide any new test data
on non-assisted flare types, which to our knowledge, are the only non-
enclosed flare type found in this source category. Thus, while we have
no new information to suggest that flares at MSW landfills complying
with 40 CFR 60.18(b) will not achieve at least 98-percent destruction,
we solicit input and additional information on flare performance
specifically for this source category. Examples of information
requested for this source category include: Prevalence of flaring;
number and types of flares used; waste gas characteristics such as flow
rate, composition and heat content; use of flare gas recovery and other
flare minimization practices; and existing flare monitoring systems.
---------------------------------------------------------------------------

    \92\ U.S. EPA, Parameters for Properly Designed and Operated
Flares, Report for Flare Review Panel, April 2012.
---------------------------------------------------------------------------

D. Alternative Monitoring, Reporting, and Other Requirements

    In addition to the technologies, BMPs, and other approaches
discussed in section IV.C of this document, the EPA is considering
whether alternative monitoring and reporting requirements would be
appropriate for existing landfills. These alternative approaches
address concerns that have arisen in implementation of subpart WWW and
state and federal plans implementing subpart Cc and provide an
opportunity to increase the effectiveness of the regulation.
1. Wellhead Monitoring
    The EPA is requesting public input on alternative wellhead
monitoring requirements. Commenters have expressed concerns about the
ability to consistently meet these parameters. One alternative
monitoring provision could be in the form of an exclusion from the
temperature and oxygen/nitrogen monitoring requirements, or a reduction
in the frequency of monitoring. For example, the EPA could reduce the
frequency of wellhead monitoring for these three parameters
(temperature and oxygen/nitrogen) from monthly to a quarterly or semi-
annual schedule. Owners or operators would continue to monitor the
wellhead for negative pressure.
    The EPA is specifically requesting input on whether any such
adjustment should apply only to landfills that beneficially use LFG,
and if so whether there should be a threshold for the quantity of LFG
put to beneficial use above which sources would qualify for alternative
wellhead monitoring (and below which they would not), or whether the
beneficial use of any quantity of the recovered LFG should qualify for
alternative wellhead monitoring. Alternatively, the EPA is requesting
input on whether it would be more appropriate to require a certain
percentage of the overall recovered LFG to be beneficially used in
order to exempt landfills from or reduce the frequency of the wellhead
monitoring requirements.
    If EPA were to limit adjusted monitoring to landfills that
beneficially use LFG, these alternatives could encourage new landfills
to beneficially use LFG. Both of these alternative options (exclusion
or reduced monitoring frequency) would provide monitoring relief to
these landfills. Landfill owners and operators must continue to operate
their GCCS in a manner that collects the most LFG and minimizes losses
of LFG through the surface of the landfill. In addition, landfills
would still have to prepare and submit to the regulating authority a
gas collection design plan, prepared by a professional engineer.
    Subparts Cc and WWW of 40 CFR part 60 require landfill owners and
operators to operate each interior wellhead in the collection system
with a LFG temperature less than 55[deg]C and with either a nitrogen
level less than 20

percent or an oxygen level less than 5 percent. Compliance with these
requirements is demonstrated through monthly monitoring. Instead of
having the landfill owner or operator conduct monthly monitoring of
temperature and nitrogen/oxygen at the wellheads, the EPA is requesting
input on relying on landfill surface emission monitoring requirements
in combination with maintenance of negative pressure at wellheads to
indicate proper operation of the GCCS and minimization of surface
emissions. The potential removal of the temperature and nitrogen/oxygen
operational standards and associated wellhead monitoring requirements
for these three parameters would be complemented by the addition of the
surface monitoring provisions discussed in section IV.D.2 of this
document.
    Given recent technological advancements in data storage and
transmission, the EPA is also considering an alternative to automate
the wellhead monthly monitoring provisions. Automation could reduce
long-term burden on landfill owner/operators as well as state
authorities by allowing for more frequent, but less labor-intensive,
data collection through the use of a system consisting of remote
wellhead sensors (i.e., thermistors, electronic pressure transducers,
oxygen cells) and a centralized data logger.
    The use of continuous monitoring would allow more immediate
detection and repair. This would eliminate the time between when the
exceedance of the parameter occurs and when it is detected. It could
also improve enforceability of the rule by allowing inspectors to
review information on the data logger in real time during a site visit.
Another advantage to automating the monitoring is that it could provide
flexibility for incorporating additional parameters into the monitoring
program. The EPA is soliciting input on this alternative in general,
including: (1) The types of parameters that are best suited for an
automated monitoring alternative; (2) examples of successful automated
monitoring programs at MSW landfills and their associated costs; (3)
additional considerations for equipment calibration; and (4) input on
any averaging times that might be appropriate to determine when one or
more monitored parameters have been exceeded.
2. Surface Emissions Monitoring
    The EPA is requesting input on potential alternative approaches to
the surface emission monitoring specified in 40 CFR part 60, subpart
WWW. Subpart WWW collection and control requirements are intended for
landfills to maintain a tight cover that minimizes any emissions of LFG
through the surface. The surface emissions monitoring procedures in
subpart WWW require quarterly surface emissions monitoring to
demonstrate that the cover and gas collection system are working
properly. The operational requirements in subpart WWW (40 CFR
60.753(d)) specify that the landfill must ``. . . operate the
collection system so that the methane concentration is less than 500
parts per million above background at the surface of the landfill. To
determine if this level is exceeded, the owner or operator shall
conduct surface testing around the perimeter of the collection area and
along a pattern that traverses the landfill at 30 meter intervals and
where visual observations indicate elevated concentrations of LFG, such
as distressed vegetation and cracks or seeps in the cover.''
    Subpart WWW of 40 CFR part 60 includes provisions for increased
monitoring and corrective procedures if readings above 500 ppm are
detected. Instrumentation specifications, monitoring frequencies, and
monitoring patterns are structured to provide clear and straightforward
procedures that are the minimum necessary to assure compliance.
    We are requesting public input on potential alternatives to the
surface monitoring procedures in 40 CFR part 60, subparts Cc and WWW.
Potential alternatives could include provisions such as those in the
California landfill methane regulation \93\ and include changing the
walking pattern for inspecting the surface of the landfill, adding an
integrated methane concentration measurement, and allowing sampling
only when wind is below a certain speed.
---------------------------------------------------------------------------

    \93\ California Code of Regulations, title 17, subchapter 10,
article 4, subarticle 6, sections 95460 to 95476, Methane Emissions
from Municipal Solid Waste Landfills.
---------------------------------------------------------------------------

    We are requesting input on reducing the interval for the walking
pattern that traverses the landfill from 30 meters (98 ft.) to 25 ft.
We are also requesting input on the addition of an average methane
concentration limit of 25 ppm as determined by integrated surface
emissions monitoring. This would be in addition to the 500 ppm emission
concentration as determined by instantaneous surface emissions
monitoring. Integrated surface emissions monitoring provides an average
surface emission concentration across a specified area. For integrated
surface emissions monitoring, the specified area would be individually
identified 50,000 square foot grids. A tighter walking pattern and the
addition of an integrated methane concentration would more thoroughly
ensure that the collection system is being operated properly, that the
landfill cover and cover material are adequate, and that methane
emissions from the landfill surface are minimized. As part of these
potential changes, the EPA is also requesting input on not allowing
surface monitoring when the average wind speed exceeds 5 miles per hour
or the instantaneous wind speed exceeds 10 miles per hour because air
movement can affect whether the monitor is accurately reading the
methane concentration during surface monitoring. We are considering
this change because measurements during windy periods are usually not
representative of emissions.
    We are also soliciting information and associated data on the cost
and assumptions for conducting enhanced surface monitoring as described
here. Several factors contribute to the cost of enhanced surface
monitoring. Monitoring along a traverse with a 25 ft. interval would
increase monitoring time, and, thus, the labor costs, compared to
monitoring along a 30 meter (98 ft.) interval. Monitoring along the
tighter traverse pattern would take approximately four times as long,
because the distance is approximately four times when covering a 50,000
square foot grid. For a landfill to conduct the integrated surface
emissions monitoring, the EPA assumes the landfill would rent a
handheld portable vapor analyzer with a data logger. The data logger
would be necessary to obtain an integrated reading over a single 50,000
square foot grid. However, the EPA does not expect that requiring an
integrated methane concentration would add significant cost because
landfills could use the same instrument that they currently use for the
instantaneous readings. These instruments can be programmed to provide
an integrated value as well as an instantaneous value.
    The EPA recognizes that while these provisions could minimize
surface emissions, the actual reduction in emissions is difficult to
quantify. Surface monitoring is a labor intensive process and
tightening the grid pattern would increase costs. Thus, the EPA is
soliciting input on techniques and data to estimate the reductions
associated with enhanced surface monitoring.
    The EPA is also requesting input on allowing the use of alternative
remote measurement and monitoring techniques for landfills that exceed
the surface monitoring concentrations in 40 CFR part 60, subpart Cc.
The EPA

would like information to determine whether to allow these alternative
techniques to be used to demonstrate that surface emissions are below
the specified methane surface concentrations. Alternative remote
measurement and monitoring techniques may include radial plume mapping
(RPM), optical remote sensing, Fourier Transform Infrared (FTIR)
spectroscopy, cavity ringdown spectroscopy (CRDS), tunable diode laser
(TDL), tracer correlation, micrometeorological eddy-covariance, static
flux chamber or differential absorption. The EPA is also seeking input
on the frequency of testing and the format of the standard if we allow
the use of these technologies as an alternative to average surface
concentrations as measured by Method 21. Incorporation of these
technologies would require a change in format of the standard to be
consistent with the technology.
3. Alternative Monitoring Provisions for LFG Treatment
    The EPA is requesting input on defining treatment system as a
system that filters, dewaters and compresses LFG. This alternative
approach would be consistent with public commenters on previous
landfills documents (67 FR 36475, May 23, 2002; 71 FR 53271, September
8, 2006). It is also consistent with input from participants in
governmental outreach, who stated that the extent of filtration, de-
watering and compression can be site dependent, and that different
sites require different levels of gas treatment to protect the
combustion devices that use treated LFG as a fuel and ensure good
combustion. The alternative definition of treatment system would allow
the level of treatment to be tailored to the type and design of the
specific combustion equipment in which the LFG is used. If treatment
system was defined in this manner, owners/operators would need to
identify monitoring parameters and keep records that demonstrate that
such parameters effectively monitor filtration, de-watering or
compression system performance necessary for the end use of the treated
LFG.
    Owners/operators would also need to develop a site-specific
treatment system monitoring plan that would not only accommodate site-
specific and end-use specific treatment requirements for different
energy recovery technologies, but would also ensure environmental
protection. Preparing the monitoring plan would document procedures
that landfills are likely already following to ensure that the LFG has
been adequately treated for its intended use.
    The plan would be required to include monitoring parameters
addressing all three elements of treatment (filtration, de-watering,
and compression) to ensure the treatment system is operating properly
for the intended end use of the treated LFG. The plan would be required
to include monitoring methods, frequencies and operating ranges for
each monitored operating parameter based on manufacturer's
recommendations or engineering analysis for the intended end use of the
treated LFG. Documentation of the monitoring methods and ranges, along
with justification for their use, would need to be included in the
site-specific monitoring plan. In the plan, the owner/operator would
also need to identify who is responsible (by job title) for data
collection, explain the processes and methods used to collect the
necessary data, and describe the procedures and methods that are used
for quality assurance, maintenance, and repair of all continuous
monitoring systems.
    The owner or operator would be required to revise the monitoring
plan to reflect changes in processes, monitoring instrumentation and
quality assurance procedures; or to improve procedures for the
maintenance and repair of monitoring systems to reduce the frequency of
monitoring equipment downtime. The EPA requests input on the definition
of treatment system and the creation of site-specific treatment system
monitoring plans.
4. Monitoring and Reporting Flexibility
    Regulatory agencies and landfill owners and operators have
expressed concerns about the burden and response time of agencies
responsible for reviewing and approving design plans, Alternative
Compliance Timeline (ACT) requests, alternative remedies and higher
operating value (HOV) requests.
    One way to minimize the need for such reviews would be to provide
more flexibility in wellhead monitoring provisions, as described in
section IV.D.1 of this document.
    The EPA also solicits input on other ways to streamline the
monitoring, reporting and notification provisions as part of its review
of the emission guidelines. For example, currently the subparts Cc and
WWW of 40 CFR part 60 require site-specific design plan review and
approval procedures, recognizing the unique site-specific topography,
climate and other factors affecting the design of a GCCS. However, the
EPA solicits input on ways to streamline the design plan submission and
approval procedures as part of its review of the emissions guidelines.
Examples of streamlining may include the potential development of a
process by which approved alternative operating parameters could be
automatically linked to updates of design plans or development of a
process by which alternative operating parameters and updated design
plans could be approved on a similar schedule.
    The EPA is also seeking input on the possibility of establishing a
third-party design plan certification program. The third-party program
would supplement or replace the current approach of requiring the EPA
or state review and approval of site-specific design plans and plan
revisions with a program by which independent third parties would
review the design plans, determine whether they conform to applicable
regulatory criteria, and report their findings to the approved state
programs or the EPA (for states without approved programs). The program
would be designed to ensure that the third-party reviewers are
competent, independent, and accredited, apply clear and objective
criteria to their design plan reviews, and report appropriate
information to regulators. Additionally, there would need to be
mechanisms to ensure regular and effective oversight of third-party
reviewers by the EPA and/or states that may include public disclosure
of information concerning the third parties and their performance and
determinations. Utilizing a third-party certification program could
help to standardize and expedite design plan reviews, and reduce the
burden on state regulators. The EPA is considering a broad range of
possible design features for such a program. Such features include
those discussed or included in several articles,94 95 96
rules 97 98 99 and programs.100 101
---------------------------------------------------------------------------

    \94\ McAllister, Lesley K., Third-Party Programs to Assess
Regulatory Compliance, Presented at the Administrative Conference of
the United States, October 22, 2012.
    \95\ Esther Duflo, et al., Truth-Telling By Third-Party Auditors
and the Response of Polluting Firms: Experimental Evidence From
India, 128 Quarterly Journal of Economics 4 at 1499-1545 (2013).
    \96\ First Annual Oversight Report of the Decentralized Gateway
Vehicle Inspection Program, Missouri Department of Natural Resources
and the Missouri State Highway Patrol, 2008. http://www.dnr.mo.gov/gatewayvip/docs/enforcementrpt.pdf.
    \97\ Renewable Fuel Standard program. http://www.epa.gov/OTAQ/fuels/renewablefuels/.
    \98\ Wood Heater Compliance Monitoring Program. http://www.epa.gov/compliance/monitoring/programs/caa/woodheaters.html.
    \99\ Mandatory Greenhouse Gas Emissions Reporting, California
Environmental Protection Agency. http://www.arb.ca.gov/cc/reporting/ghg-rep/ghg-rep.htm.
    \100\ Massachusetts Department of Environmental Protection,
Third-Party Underground Storage Tank Inspection Program. http://www.mass.gov/eea/agencies/massdep/toxics/ust/third-party-ust-inspection-program.html.
    \101\ Massachusetts Licensed Hazardous Waste Site Cleanup
Professional Program, http://www.mass.gov/eea/agencies/massdep/cleanup/licensed-site-professionals.html.

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

    We are considering the possibility of requiring sources to make
design plans (including revisions) available online and easily
accessible to the public as well as any impediment to doing so. We are
also seeking input on what constitutes a reasonable time period for
sources to make the design plans available online.
    In addition to electronic storage of design plans, the EPA also
plans to include electronic reporting in the forthcoming proposal that
could amend subparts Cc and WWW of 40 CFR part 60 as a result of this
review.

E. Alternative Emission Threshold Determination Techniques

    The EPA is considering adjusting the emission threshold
determinations that dictate when a GCCS must be installed, including
variations in the modeling parameters as well as adding site-specific
emission threshold determination. These alternatives may provide
additional reporting and compliance flexibilities for owners and
operators of affected landfills, including those that use new
technologies to increase oxidation of emissions, employ BMPs to
increase the effectiveness of GCCS, or increase organics diversion and
source separation practices.
1. Modeling Adjustments
    An affected landfill currently has three different options (tiers)
for estimating whether the landfill exceeds the NMOC emission threshold
of 50 Mg per year. The simplest of these, the Tier 1 calculation
method, uses default values for the potential methane generation
capacity (L0) and methane generation rate (k) to determine
when the landfill exceeds the 50 Mg NMOC per year emission threshold.
The default L0 is 170 m\3\ per Mg of waste (equal to 5,458
cubic feet methane per ton of waste) and the k values are 0.05 per year
for areas receiving 25 inches or more of rainfall per year and 0.02 per
year for areas receiving less than 25 inches of rainfall. The Tier 1
default NMOC concentration is 4,000 parts per million by volume (ppmv)
as hexane. If the Tier 1 calculated NMOC exceeds 50 Mg per year, the
landfill must install controls or demonstrate, using more complex Tier
2 or 3 procedures, that NMOC emissions are less than 50 Mg per year.
    A revised rule could allow for alternative Tier 1 default values
and modeling techniques based on the amount of organics in the waste.
For example, the L0 is a function of the moisture content
and organic content of the waste and L0 decreases as the
amount of organic matter decreases. Recent studies have shown that
average U.S. landfill L0 values have decreased 22 percent
between 1990 and 2012 (from 102.6 m\3\ per Mg of waste to 79.8 m\3\ per
Mg of waste) due to increased recovery of organic materials.\102\ A
revised rule could allow for landfill-specific L0 values to
be calculated based on the amount of degradable organic carbon (DOC),
similar to components of Equation HH-1 in the GHGRP for MSW landfills
(40 CFR part 98, subpart HH).
---------------------------------------------------------------------------

    \102\ Stege, Alex. The Effects of Organic Waste Diversion on LFG
Generation and Recovery from U.S. Landfills. SWANA's 37th Annual
Landfill Gas Symposium. 2014.
---------------------------------------------------------------------------

    Subpart HH of the GHGRP also provides separate k-values for
different types of materials, which could be used as alternate Tier 1
default values in revised emission guidelines. Sewage sludge and food
waste have the highest k values, followed by garden waste, diapers,
paper, textiles and wood and straw.\11\
    The IPCC model employs a modeling method to accommodate separate k
and DOC modeling parameters as well as separate calculations for six
different categories of organic wastes.\103\
---------------------------------------------------------------------------

    \103\ Intergovernmental Panel on Climate Change (IPCC), IPCC
Guidelines for National Greenhouse Gas Inventories. Volume 5
(Waste), Chapter 3 (Solid Waste Disposal). 2006.
---------------------------------------------------------------------------

    If the EPA pursues incorporating alternative Tier 1 modeling values
in any revised emission guidelines, the EPA would also need to allow
for an alternative first-order decay model structure to compute a total
methane generation rate for the landfill based on the sum of the
methane generated from each separate waste stream. This alternative
model may incorporate material-specific k and L0 values,
instead of a single pair of k and L0 values applied to bulk
MSW. The EPA requests input on whether the alternative modeling
parameters and model structure in subpart HH of 40 CFR part 98, or
other default parameters or modeling procedures would be appropriate to
use for emission threshold determinations in revised emission
guidelines.
    The EPA also requests input on whether such an alternative modeling
procedure would be limited to only those landfills that are employing
organic diversion or source separation.
2. Site-Specific Measurements
    As indicated above, under the current emission guidelines, there
are three different tiers available to an affected landfill to estimate
whether the landfill exceeds the NMOC emission threshold of 50 Mg/yr.
If an affected landfill fails a Tier 2 test (i.e., the calculated NMOC
emissions are greater than 50 Mg/yr), then the landfill must conduct
Tier 3 testing or install and operate an active GCCS.
    The EPA received input recommending the addition of a new Tier 4
surface emission monitoring (SEM) demonstration to allow increased
flexibility for landfills that exceed modeled NMOC emission rates if
they can demonstrate that site-specific methane emissions are actually
low. This SEM demonstration would be conducted using procedures similar
to those currently in 40 CFR part 60, subpart WWW (see 40 CFR
60.755(d)). If the monitoring finds that methane emissions are below a
level that the EPA adopts in the revised emission guidelines, then
installation of a GCCS could be delayed.
    As an example, the California Air Resources Board (ARB) adopted the
Methane Emissions from MSW Landfills regulation in 2009.\104\ Under
this rule, if a landfill exceeds the waste-in-place and heat input
thresholds, the landfill may conduct an SEM demonstration prior to
being required to install a GCCS. If the measured surface methane
emissions exceed 200 ppm, the landfill must install a GCCS. This SEM
demonstration is similar to the Tier 4 option being considered by EPA.
---------------------------------------------------------------------------

    \104\ California Code of Regulations, title 17, subchapter 10,
article 4, subarticle 6, section 95463, Methane Emissions from
Municipal Solid Waste Landfills.
---------------------------------------------------------------------------

    The EPA is soliciting input about this new Tier 4 option or other
ideas for more flexible emission threshold determination ``Tiers'' and
what implementation procedures may be appropriate for each
determination. As the EPA takes this new Tier 4 option under
consideration, there are some implementation procedures that would need
to be established. The EPA requests input on all aspects of
implementing a new Tier 4 option, including the following specific
items: (1) Which areas of the landfill would be subject to SEM
requirements because these areas would no longer be limited to areas
with GCCS installed; (2) what number of exceedances over a specified
time period would require GCCS installation (40 CFR part 60, subpart
WWW specifies a new well must be installed at three or more exceedances

in a quarter); (3) what frequency of SEM demonstration (e.g., quarterly
monitoring for landfills accepting waste, annual monitoring for closed
landfills) is appropriate; (4) what exceedance level is appropriate for
determining if a GCCS must be installed (200 ppm or some other level);
and (5) whether the Tier 4 option would apply to all landfills that
could demonstrate surface emissions less than the determined exceedance
level, regardless of how this level was achieved; or, whether this
option would be made available to only those landfills employing and
maintaining oxidative cover practices, utilizing biofiltration cells,
or implementing other established best practices or organics diversion
programs as discussed later in this section.

F. Considerations for Implementation at Closed vs. Active Landfills

    The landfills included as part of this review include landfills
that have accepted waste since November 8, 1987, and that commenced
construction, reconstruction or modification before July 17, 2014.
Table 3 of this document summarizes the closure patterns of the
approximately 1,800 landfills potentially affected by 40 CFR part 60,
subparts Cc and WWW.\105\
---------------------------------------------------------------------------

    \105\ See Docketed Memorandum ``Summary of Landfill Dataset Used
in the Cost and Emission Reduction Analysis of Landfills
Regulations. 2014.''

                                 Table 3--Age Distribution of Existing Landfills
----------------------------------------------------------------------------------------------------------------
                                                        All landfills            Landfills with design capacity
                                             ----------------------------------   of 2.5 million Mg or greater
                                                                               ---------------------------------
   When did landfill stop accepting waste?       Number of    Cumulative waste-                 Cumulative waste-
                                                 landfills     in-place (tons)     Number of     in-place (tons)
                                                                   in 2014         landfills         in 2014
----------------------------------------------------------------------------------------------------------------
Before 1990 \a\.............................              33        84,300,000              10        63,200,000
Between 1990 and 1995.......................             335       662,300,000              62       465,500,000
Between 1995 and 2000.......................             242       583,300,000              56       429,500,000
Between 2000 and 2005.......................              97       402,300,000              29       343,000,000
Between 2005 and 2010.......................              82       310,900,000              27       250,500,000
Between 2010 and 2013.......................              77       469,800,000              31       408,400,000
N/A. Active as of 2014 \b\..................             966     6,695,300,000             739     6,493,000,000
                                             -------------------------------------------------------------------
    Total...................................           1,832     9,208,200,000             954     8,453,100,000
----------------------------------------------------------------------------------------------------------------
\a\ But accepted waste after November 8, 1987.
\b\ Excludes model landfills that began operating in 2014 and are expected to be subject to the proposed subpart
  XXX NSPS for MSW Landfills.

    The EPA recognizes that existing landfills represent a wide range
of points in the life cycle of a typical landfill. Approximately 39
percent of the existing landfills (707/1,832) closed prior to 2005 and
those landfills collectively account for approximately 19 percent of
the total waste disposed through 2014. Because these wastes were
disposed of between 10 and 25 years ago, the LFG emission rates from
these older sites are decreasing and have a significantly smaller
contribution to emissions from this source category.
    Given the wide range of points within a lifecycle that are
represented by potentially affected existing landfills, and recognizing
that some of the affected sites have not disposed of waste in over 25
years, the EPA believes that the implementation of any adjustments to
the current framework or incorporation of alternative control
frameworks or monitoring requirements may affect active landfills
differently than inactive landfills. Therefore, the EPA requests input
on how adjusting the current framework, selecting an alternative
framework or modifying the monitoring requirements should be evaluated
in terms of practicality, cost and emission reductions as these
adjustments affect landfills of various ages and activity levels.

G. Implementation Issues

    Since the landfills emission guidelines were promulgated in 1996,
the EPA has become aware of a number of implementation issues for which
landfill owners and operators, as well as regulators, need
clarification. This section presents those issues and requests input on
those clarifications and potential resolutions.
1. LFG Treatment
    In this document, the EPA is soliciting input on what constitutes
sufficient LFG treatment. In the Federal Register document proposing a
new subpart resulting from its review of the landfills NSPS (40 CFR
part 60, subpart XXX), the EPA refined a numeric definition of LFG
treatment and solicited input on a non-numeric definition that required
compression, dewatering, and filtration of LFG, as well as the creation
of a site-specific monitoring plan. The EPA requests input on whether a
non-numeric or numeric treatment requirement is appropriate for
landfills subject to the emission guidelines. Further, the EPA requests
input on whether previously proposed definitions of LFG treatment
should be adopted or if other approaches to LFG treatment should be
explored. We are also requesting input on expanding the use of treated
LFG fuel for a stationary combustion device, as some people have
previously interpreted this compliance option, but also include other
uses such as the production of vehicle fuel, production of high-Btu gas
for pipeline injection, or use as a raw material in a chemical
manufacturing process.
2. Closed Areas
    To determine whether NMOC emissions from nonproductive areas of a
landfill are less than 1 percent of the total landfill NMOC emissions
(and hence controls are not required), the landfills regulations (40
CFR part 60, subparts Cc and WWW) rely on

modeled NMOC rates. To refine the measurements of these nonproductive
areas, the EPA is requesting input on allowing landfill owners or
operators to use either the measured or modeled flow of LFG to
determine if an area is nonproductive. The EPA is also requesting input
on what criteria and procedures would be considered acceptable for
making these estimates. The provisions would apply to physically
separated, closed areas of landfills.
3. Submitting Corrective Action Timeline Requests
    If a landfill exceeds a wellhead operating parameter, the landfill
owner or operator must initiate corrective action within 5 days and
follow the timeline in 40 CFR part 60, subpart WWW for correcting the
exceedance. During implementation of subpart WWW, the question has been
raised whether a landfill needs agency approval of corrective action
timelines that exceed 15 calendar days but are less than the 120 days
allowed for installing a GCCS.
    The EPA is seeking input on whether a specific schedule for
submitting these requests for alternative corrective action timelines
is appropriate because investigating and determining the appropriate
corrective action, as well as the schedule for implementing the
corrective action, will be site specific and depend on the reason for
the exceedance. We also solicit input on whether any clarifications
should be included in the revised emission guidelines to expedite the
submission of any alternative time line requests (i.e., as soon as they
know that they would not be able to correct the exceedance in 15 days
or expand the system in 120 days) to avoid being in violation of the
rule.
    To address implementation concerns associated with the time allowed
for corrective action, the EPA requests input on an approach that
extends the requirement for notification from 15 days to as soon as
practicable, but no later than 60 days. Many requests for an
alternative compliance timeline express the need for additional time to
make necessary repairs to a well that requires significant construction
activities. Extending the time period to as soon as practicable but no
later than 60 days may reduce the burden and ensure sufficient time for
correction. If the EPA were to extend the time period, then the EPA
also would consider removing the requirement to submit an alternative
timeline for correcting the exceedance. Thus, by no later than day 60,
the landfill would have to either have completed the adjustments and
repairs necessary to correct the exceedance, or be prepared to have the
system expansion completed by day 120. The EPA is also requesting input
on whether 60 days is the appropriate amount of time that would allow
owners or operators to make the necessary a repairs.

V. Statutory and Executive Order Reviews

    Under Executive Order 12866, titled Regulatory Planning and Review
(58 FR 51735, October 4, 1993), this is a ``significant regulatory
action'' because the action raises novel legal or policy issues.
Accordingly, the EPA submitted this action to the Office of Management
and Budget (OMB) for review under Executive Order 12866 and any changes
made in response to OMB recommendations have been documented in the
docket for this action. Because this action does not propose or impose
any requirements, other statutory and Executive Order reviews that
apply to rulemaking do not apply. Should the EPA subsequently determine
to pursue a rulemaking, the EPA will address the statues and Executive
Orders as applicable to that rulemaking.
    Nevertheless, the EPA welcomes input and/or information that would
help the EPA to assess any of the following: The potential impact of a
rule on small entities pursuant to the Regulatory Flexibility Act (RFA)
(5 U.S.C. 601 et seq.); potential impacts on federal, state, or local
governments pursuant to the Unfunded Mandates Reform Act ((UMRA) (2
U.S.C. 1531-1538); federalism implications pursuant to Executive Order
13132, titled Federalism (64 FR 43255, November 2, 1999); availability
of voluntary consensus standards pursuant to section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (NTTAA),
Public Law 104-113; tribal implications pursuant to Executive Order
13175, titled Consultation and Coordination with Indian Tribal
Governments (65 FR 67249, November 6, 2000); environmental health or
safety effects on children pursuant to Executive Order 13045, titled
Protection of Children from Environmental Health Risks and Safety Risks
(62 FR 19885, April 23, 1997); energy effects pursuant to Executive
Order 13211, titled Actions Concerning Regulations that Significantly
Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22,2001);
paperwork burdens pursuant to the Paperwork Reduction Act (PRA) (44
U.S.C. Sec.  3501); or human health or environmental effects on
minority or low-income populations pursuant to Executive Order 12898,
titled Federal Actions to Address Environmental Justice in Minority
Populations and Low-Income Populations (59 FR 7629, February 16, 1994).
The EPA will consider such comments during the development of any
subsequent rulemaking.

List of Subjects in 40 CFR Part 60

    Environmental protection, Administrative practice and procedure,
Air pollution control, Reporting and recordkeeping requirements.

    Dated: June 30, 2014.
Gina McCarthy,
Administrator.
[FR Doc. 2014-16404 Filed 7-16-14; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 83, Number 10 (Tuesday, January 16, 2018)]
[Notices]
[Pages 2261-2265]
[FR Doc No: 2018-00524]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82467; File No. SR-NASDAQ-2017-134]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Exchange Rule 7037

January 9, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 26, 2017, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by 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 Exchange Rule 7037 to reflect
substantial enhancements to the data feeds underlying FilterView since
the current fees were set in 2006. Specifically, the Exchange proposes
to modify the monthly subscription fee for FilterView from $500 to $750
per month per subset of data. The proposal is described further below.
    While these amendments are effective upon filing, the Exchange has
designated the proposed amendments to be operative on January 1, 2018.
    The text of the proposed rule change is available on the Exchange's
website at http://nasdaq.cchwallstreet.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 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 adjust the fee schedule for FilterView to
reflect substantial enhancements to its underlying data feeds since the
current fee was set in 2006.\3\ Specifically, the Exchange proposes to
change the monthly subscription fee for FilterView from $500 to $750
per month per subset of data.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 54286 (August 8,
2006), 71 FR 46955 (August 15, 2006) (SR-NASDAQ-2006-028).
---------------------------------------------------------------------------

FilterView
    FilterView allows market data Distributors to receive a subset of
any other real-time data feed offered by the Exchange, allowing
Distributors to control information processing costs by lowering the
bandwidth required to process Exchange data. FilterView is commonly
purchased in two types: NLS FilterView and Nasdaq NOIView. NLS
FilterView separates Nasdaq Last Sale (``NLS'') \4\ data into two
distinct data

streams: (i) NLS data from the Nasdaq execution system, and (ii) NLS
data from the FINRA/Nasdaq Trade Trade [sic] Reporting Facility
(``TRF'') system. Nasdaq NOIView distributes order imbalance
information from Nasdaq TotalView \5\ in the minutes leading up to the
Nasdaq Opening and Closing Crosses. This includes an indicative
clearing price and net order imbalance in the Nasdaq execution system.
---------------------------------------------------------------------------

    \4\ NLS is a market data product that contains real-time last
sale information for trades executed on the Exchange or reported to
the FINRA/Nasdaq Trade Reporting Facility.
    \5\ TotalView is the Exchange's complete Depth-of-Book data feed
for Nasdaq-listed securities as well as securities listed by other
exchanges, and provides every eligible order at each price level for
all Nasdaq members. TotalView includes the Net Order Imbalance
Indicator (``NOII''), which provides data relating to buy and sell
interest at the open and close of the trading day, in the context of
an Initial Public Offering, and after a trading halt.
---------------------------------------------------------------------------

Proposed Change
    As a result of substantial enhancements to the data feeds
underlying FilterView since the current fee was set in 2006, the
Exchange proposes to change its monthly subscription fee from $500 to
$750 per month per subset of data.
    The value of Nasdaq FilterView, a subset of other market data
feeds, is inextricably connected to trade execution: Market data feeds
require trade orders to provide useful information, and investors
utilize such data to make trading decisions. Over the eleven years that
have elapsed since the current distribution fees were set,\6\ the
Exchange has invested in an array of upgrades to both its trade
execution and market information services, increasing the overall value
of these services, including FilterView.\7\ These upgrades include:
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 54286 (August 8,
2006), 71 FR 46955 (August 15, 2006) (SR-NASDAQ-2006-028).
    \7\ Many of these upgrades are common to several Nasdaq-
affiliated exchanges, as improvements to the products and services
of one exchange are reproduced in other exchanges.
---------------------------------------------------------------------------

     Enhanced Services. In 2013 [sic], the Exchange enhanced
its data feeds by: (i) Converting to binary codes to make more
efficient use of bandwidth and to provide greater timestamp
granularity; (ii) adding a symbol directory message to identify a
security and its key characteristics; (iii) adding a new IPO message
for Nasdaq-listed securities for quotation release time and IPO price;
and (iv) adding the Market Wide Circuit Breaker (``MWCB'') Decline
Level message to inform recipients of the setting for MWCB breach
points for the trading day, and an MWCB Status Level Message to inform
data recipients when an MWCB has breached an established level.\8\
---------------------------------------------------------------------------

    \8\ See http://www.nasdaqtrader.com/TraderNews.aspx?id=dtn2013-45 and http://www.nasdaqtrader.com/TraderNews.aspx?id=dtn2013-33.
---------------------------------------------------------------------------

     Exchange Traded Managed Funds (``ETMFs''). In 2015, the
Exchange modified its data feeds to accommodate ETMFs, a type of
investment vehicle that combines the features of an open-end mutual
funds [sic] and an Exchange Traded Fund (``ETF'') to support an
actively managed-investment strategy.\9\ ETF [sic] trading differs from
other types of equity trading in that it uses a trading protocol called
``Net Asset Value-Based Trading,'' in which all bids, offers, and
execution prices are expressed as a premium or discount to the ETMF's
next-determined Net Asset Value (``NAV''). This distinct pricing format
requires an entirely new set of data fields in which to distribute
information related to prices and trades, and the Exchange modified
Nasdaq Basic to accommodate that format.\10\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Act Release No. 73562 (November 7,
2014), 79 FR 68309 (November 14, 2014) (SR-NASDAQ-2014-020)
(approving the listing and trading of Exchange-Traded Managed Fund
Shares).
    \10\ See http://www.nasdaqtrader.com/TraderNews.aspx?id=dtn2015-7.
---------------------------------------------------------------------------

     Nanosecond Granularity. In 2016, Nasdaq introduced a new
version of QBBO [sic] which allows for timestamp granularity to the
nanosecond.\11\
---------------------------------------------------------------------------

    \11\ See http://www.nasdaqtrader.com/TraderNews.aspx?id=dtn2016-03.
---------------------------------------------------------------------------

     Geographic Diversity. In 2015, all of the Nasdaq Exchanges
moved their Disaster Recover [sic] (``DR'') center from Ashburn,
Virginia, to Chicago Illinois. As a result, customers can both receive
market data and send orders through the Chicago facility, potentially
reducing overall networking costs. Adding such geographic diversity
helps protect the market in the event of a catastrophic event impacting
the entire East Coast.\12\
---------------------------------------------------------------------------

    \12\ See http://www.nasdaqtrader.com/TraderNews.aspx?id=dtn2015-17.
---------------------------------------------------------------------------

     Chicago ``B'' Feeds. In 2017, all of the Nasdaq exchanges
added a multicast IP address for proprietary equity and options data
feeds in Chicago, allowing firms the choice of having additional
redundancy to ensure data continuity.\13\
---------------------------------------------------------------------------

    \13\ See http://www.nasdaqtrader.com/TraderNews.aspx?id=dtn2017-02.
---------------------------------------------------------------------------

     Adjusted Closing Price. In 2013, Nasdaq introduced the
adjusted closing price as a field to reflect a security's previous day
official closing price, adjusted for corporate actions. For Nasdaq-
listed securities, the Nasdaq Official Closing Price is used,\14\ and
the consolidated close from the security's listing exchange is used for
non-Nasdaq securities.\15\
---------------------------------------------------------------------------

    \14\ Nasdaq's closing cross process produces a tradable closing
price that represents either the closing cross or the best available
price at the time of the transaction.
    \15\ See http://www.nasdaqtrader.com/TraderNews.aspx?id=dtn2013-25.
---------------------------------------------------------------------------

     New System Event Messages. In 2013, Nasdaq began
disseminating event messages to indicate the start and end of system
hours.\16\
---------------------------------------------------------------------------

    \16\ See http://www.nasdaqtrader.com/TraderNews.aspx?id=dtn2013-20.
---------------------------------------------------------------------------

    While these many changes were in the process of implementation,
fees for Nasdaq FilterView were falling in real terms. Indeed, the
proposed increase from $500 to $750 per month is at least partially
offset by inflation,\17\ and represents only an approximately 3.75
percent annual increase over the course of the eleven years that
elapsed between 2006 and 2017. The Exchange believes that the remaining
increase is more than justified by the substantial upgrades described
above.
---------------------------------------------------------------------------

    \17\ The Consumer Price Index increased by approximately 21
percent between August 2006 and November 2017. See https://data.bls.gov/cgi-bin/cpicalc.pl
---------------------------------------------------------------------------

    As a result of these upgrades, the Exchange proposes to change the
monthly subscription fee for FilterView from $500 to $750 per month per
subset of data. Given these specific enhancements to the data feeds
underlying FilterView, and to the Exchange's systems generally, and
given the fact that the Exchange has not increased the subscription fee
since 2006, the Exchange believes that the proposed fee increase is
appropriate.
    Nasdaq FilterView is optional in that the Exchange is not required
to offer it and broker-dealers are not required to purchase it. Firms
can discontinue use at any time and for any reason, including an
assessment of the fees charged.
    The proposed change does not change the cost of any other Exchange
product.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\18\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\19\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Commission and the courts have repeatedly expressed their
preference for competition over regulatory

intervention in determining prices, products, and services in the
securities markets. In Regulation NMS, while adopting a series of steps
to improve the current market model, the Commission highlighted the
importance of market forces in determining prices and SRO revenues and,
also, recognized that current regulation of the market system ``has
been remarkably successful in promoting market competition in its
broader forms that are most important to investors and listed
companies.'' \20\
---------------------------------------------------------------------------

    \20\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
---------------------------------------------------------------------------

    Likewise, in NetCoalition v. Securities and Exchange Commission
\21\ (``NetCoalition'') the D.C. Circuit upheld the Commission's use of
a market-based approach in evaluating the fairness of market data fees
against a challenge claiming that Congress mandated a cost-based
approach.\22\ As the court emphasized, the Commission ``intended in
Regulation NMS that `market forces, rather than regulatory
requirements' play a role in determining the market data . . . to be
made available to investors and at what cost.'' \23\
---------------------------------------------------------------------------

    \21\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \22\ See NetCoalition, at 534-535.
    \23\ Id. at 537.
---------------------------------------------------------------------------

    Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .'' \24\
---------------------------------------------------------------------------

    \24\ Id. at 539 (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782-83 (December 9, 2008)
(SR-NYSEArca-2006-21)).
---------------------------------------------------------------------------

    The Exchange proposes to change the monthly subscription fee for
FilterView from $500 to $750 per month per subset of data. The Exchange
believes that the proposed fee increase is reasonable. While the
Exchange has not increased such fees since 2006, the Exchange has added
a number of enhancements to the data feeds underlying FilterView, as
well as to the Exchange systems in general supporting FilterView. These
enhancements, which are described in greater detail above,
correspondingly enhance the value of FilterView. The proposed fee
increase is therefore reflective of, and closely aligned to, these
enhancements and the correspondingly increased value of the data feed.
The proposed changes are equitable allocations of reasonable dues, fees
and other charges because all recipients will be charged the same fee
for the same service. The proposed changes do not permit unfair
discrimination between customers, issuers, brokers, or dealers because
this service will be available on a non-discriminatory basis to all
similarly-situated recipients.
    In adopting Regulation NMS, the Commission granted self-regulatory
organizations (``SROs'') and broker-dealers (``BDs'') increased
authority and flexibility to offer new and unique market data to the
public. It was believed that this authority would expand the amount of
data available to consumers, and also spur innovation and competition
for the provision of market data. The Commission concluded that
Regulation NMS--by deregulating the market in proprietary data--would
itself further the Act's goals of facilitating efficiency and
competition:
    [E]fficiency is promoted when broker-dealers who do not need the
data beyond the prices, sizes, market center identifications of the
NBBO and consolidated last sale information are not required to receive
(and pay for) such data. The Commission also believes that efficiency
is promoted when broker-dealers may choose to receive (and pay for)
additional market data based on their own internal analysis of the need
for such data.\25\
---------------------------------------------------------------------------

    \25\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005) (``Regulation NMS Adopting
Release'').

The Commission was speaking to the question of whether BDs should be
subject to a regulatory requirement to purchase data, such as depth-of-
book data, that is in excess of the data provided through the
consolidated tape feeds, and the Commission concluded that the choice
should be left to them. Accordingly, Regulation NMS removed unnecessary
regulatory restrictions on the ability of exchanges to sell their own
data, thereby advancing the goals of the Act and the principles
reflected in its legislative history. If the free market should
determine whether proprietary data is sold to BDs at all, it follows
that the price at which such data is sold should be set by the market
as well. Accordingly, ``the existence of significant competition
provides a substantial basis for finding that the terms of an
exchange's fee proposal are equitable, fair, reasonable, and not
unreasonably or unfairly discriminatory.'' \26\
---------------------------------------------------------------------------

    \26\ Id. [sic]
---------------------------------------------------------------------------

    The proposed fees, like all market data fees, are constrained by
the Exchange's need to compete for order flow, as discussed below, and
are subject to competition from other exchanges and among broker-
dealers for customers. If Nasdaq is incorrect in its assessment of
price, it will lose market share as a result.

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 not necessary or appropriate in
furtherance of the purposes of the Act. In terms of inter-market
competition, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive, or rebate opportunities available at other venues to be more
favorable. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges and with
alternative trading systems that have been exempted from compliance
with the statutory standards applicable to exchanges. Because
competitors are free to modify their own fees in response, and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited.
    As noted above, Nasdaq FilterView most commonly includes elements
of NLS and TotalView, which are both types of ``non-core'' data that
provide subsets of the ``core'' quotation and last sale data provided
by securities information processors under the CTA Plan and the Nasdaq
UTP Plan. In 2016, an Administrative Law Judge in an application for
review by the Securities Industry and Financial Markets Association of
actions taken by Self-Regulatory Organizations examined whether another
``non-core'' product, Depth-of-Book data, is constrained by competitive
forces.\27\ After a four-day hearing and presentation of substantial
evidence, the administrative law judge stated that ``competition plays
a significant role in restraining exchange pricing of depth-of-book
products'' \28\

because ``depth-of-book products from different exchanges function as
substitutes for each other,'' \29\ and, as such, ``the threat of
substitution from depth-of-book customers constrains their depth-of-
book prices.'' \30\ As a result, ``[s]hifts in order flow and threats
of shifting order flow provide a significant competitive force in the
pricing of . . . depth-of-book data.'' \31\ The judge concluded that
``[u]nder the standards articulated by the Commission and DC Circuit,
the Exchanges have shown that they are subject to significant
competitive forces in setting fees for depth-of-book data: The
availability of alternatives to the Exchanges' depth-of-book products,
and the Exchanges' need to attract order flow from market participants
constrains prices.'' \32\ In addition, the administrative law judge
stated that ``[s]hifts in order flow and threats of shifting order flow
provide a significant competitive force in the pricing of . . . depth-
of-book data.'' \33\ As such, Nasdaq's depth-of-book fees are
``constrained by significant competitive forces.'' \34\
---------------------------------------------------------------------------

    \27\ See Securities Industry and Financial Markets Association,
Initial Decision Release No. 1015, 2016 SEC LEXIS 2278 (A.L.J. June
1, 2016).
    \28\ Id. at *92.
    \29\ Id.
    \30\ Id. at *93
    \31\ Id. at *104.
    \32\ Id. at *86.
    \33\ Id. at *37. [sic]
    \34\ Id. at *43. [sic]
---------------------------------------------------------------------------

    Market forces constrain the price of Nasdaq FilterView, just as
they do other market data fees, in the competition among exchanges and
other entities to attract order flow and in the competition among
Distributors for customers. Order flow is the ``life blood'' of the
exchanges. Broker-dealers currently have numerous alternative venues
for their order flow, including self-regulatory organization (``SRO'')
markets, as well as internalizing BDs and various forms of alternative
trading systems (``ATSs''), including dark pools and electronic
communication networks (``ECNs''). Each SRO market competes to produce
transaction reports via trade executions, and two FINRA-regulated TRFs
compete to attract internalized transaction reports. The existence of
fierce competition for order flow implies a high degree of price
sensitivity on the part of BDs, which may readily reduce costs by
directing orders toward the lowest-cost trading venues.
    Transaction execution and proprietary data products are
complementary in that market data is both an input and a byproduct of
the execution service. In fact, market data and trade execution are a
paradigmatic example of joint products with joint costs. The decision
whether and on which platform to post an order will depend on the
attributes of the platform where the order can be posted, including the
execution fees, data quality and price, and distribution of its data
products. Without trade executions, exchange data products cannot
exist. Moreover, data products are valuable to many end users only
insofar as they provide information that end users expect will assist
them or their customers in making trading decisions.
    The costs of producing market data include not only the costs of
the data distribution infrastructure, but also the costs of designing,
maintaining, and operating the exchange's transaction execution
platform and the cost of regulating the exchange to ensure its fair
operation and maintain investor confidence. The total return that a
trading platform earns reflects the revenues it receives from both
products and the joint costs it incurs.
    Moreover, the operation of the exchange is characterized by high
fixed costs and low marginal costs. This cost structure is common in
content and content distribution industries such as software, where
developing new software typically requires a large initial investment
(and continuing large investments to upgrade the software), but once
the software is developed, the incremental cost of providing that
software to an additional user is typically small, or even zero (e.g.,
if the software can be downloaded over the internet after being
purchased).\35\
---------------------------------------------------------------------------

    \35\ See William J. Baumol and Daniel G. Swanson, ``The New
Economy and Ubiquitous Competitive Price Discrimination: Identifying
Defensible Criteria of Market Power,'' Antitrust Law Journal, Vol.
70, No. 3 (2003).
---------------------------------------------------------------------------

    In Nasdaq's case, it is costly to build and maintain a trading
platform, but the incremental cost of trading each additional share on
an existing platform, or distributing an additional instance of data,
is very low. Market information and executions are each produced
jointly (in the sense that the activities of trading and placing orders
are the source of the information that is distributed) and are each
subject to significant scale economies. In such cases, marginal cost
pricing is not feasible because if all sales were priced at the margin,
Nasdaq would be unable to defray its platform costs of providing the
joint products.
    An exchange's BD customers view the costs of transaction executions
and of data as a unified cost of doing business with the exchange. A BD
will disfavor a particular exchange if the expected revenues from
executing trades on the exchange do not exceed net transaction
execution costs and the cost of data that the BD chooses to buy to
support its trading decisions (or those of its customers). The choice
of data products is, in turn, a product of the value of the products in
making profitable trading decisions. If the cost of the product exceeds
its expected value, the BD will choose not to buy it. Moreover, as a BD
chooses to direct fewer orders to a particular exchange, the value of
the product to that BD decreases, for two reasons. First, the product
will contain less information, because executions of the BD's trading
activity will not be reflected in it. Second, and perhaps more
important, the product will be less valuable to that BD because it does
not provide information about the venue to which it is directing its
orders. Data from the competing venue to which the BD is directing more
orders will become correspondingly more valuable.
    Competition among trading platforms can be expected to constrain
the aggregate return each platform earns from the sale of its joint
products, but different platforms may choose from a range of possible,
and equally reasonable, pricing strategies as the means of recovering
total costs. Nasdaq pays rebates to attract orders, charges relatively
low prices for market information and charges relatively high prices
for accessing posted liquidity. Other platforms may choose a strategy
of paying lower liquidity rebates to attract orders, setting relatively
low prices for accessing posted liquidity, and setting relatively high
prices for market information. Still others may provide most data free
of charge and rely exclusively on transaction fees to recover their
costs. Finally, some platforms may incentivize use by providing
opportunities for equity ownership, which may allow them to charge
lower direct fees for executions and data.
    In this environment, there is no economic basis for regulating
maximum prices for one of the joint products in an industry in which
suppliers face competitive constraints with regard to the joint
offering. Such regulation is unnecessary because an ``excessive'' price
for one of the joint products will ultimately have to be reflected in
lower prices for other products sold by the firm, or otherwise the firm
will experience a loss in the volume of its sales that will be adverse
to its overall profitability. In other words, an increase in the price
of data will ultimately have to be accompanied by a decrease in the
cost of executions, or the volume of both data and executions will
fall.\36\
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    \36\ Moreover, the level of competition and contestability in
the market is evident in the numerous alternative venues that
compete for order flow, including SRO markets, internalizing BDs and
various forms of alternative trading systems (``ATSs''), including
dark pools and electronic communication networks (``ECNs''). Each
SRO market competes to produce transaction reports via trade
executions, and two FINRA-regulated TRFs compete to attract
internalized transaction reports. It is common for BDs to further
and exploit this competition by sending their order flow and
transaction reports to multiple markets, rather than providing them
all to a single market. Competitive markets for order flow,
executions, and transaction reports provide pricing discipline for
the inputs of proprietary data products. The large number of SROs,
TRFs, BDs, and ATSs that currently produce proprietary data or are
currently capable of producing it provides further pricing
discipline for proprietary data products. Each SRO, TRF, ATS, and BD
is currently permitted to produce proprietary data products, and
many currently do or have announced plans to do so, including
Nasdaq, NYSE, NYSE MKT, NYSE Arca, IEX, and BATS/Direct Edge.

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    The proposed change is to increase the monthly subscription fee for
FilterView from $500 to $750 per month per subset of data. The proposal
will not impose any burden on competition because it is simply a price
change that will not alter the overall market structure. Because the
proposed fees will become one aspect of the total cost of interacting
with the Exchange, the Exchange will lose revenue if these total costs
prove to be excessive. Accordingly, the Exchange does not believe that
the proposed changes will impair the ability of members or competing
order execution venues to maintain their competitive standing in the
financial markets.

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

    No written comments were either solicited or received.

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)(ii) of the Act.\37\
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    \37\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or 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. 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 protected]. Please include
File Number SR-NASDAQ-2017-134 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-NASDAQ-2017-134. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2017-134 and should be submitted
on or before February 6, 2018.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\38\
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    \38\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00524 Filed 1-12-18; 8:45 am]
 BILLING CODE 8011-01-P