[Federal Register Volume 81, Number 197 (Wednesday, October 12, 2016)]
[Notices]
[Pages 70467-70468]
[FR Doc No: 2016-24568]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32306; File No. 812-14609]

Harris Associates Investment Trust, et al.; Notice of Application

October 5, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').

Action:  Notice of an application for an order pursuant to: (a) Section
6(c) of the Investment Company Act of 1940 (``Act'') granting an
exemption from sections 18(f) and 21(b) of the Act; (b) section
12(d)(1)(J) of the Act granting an exemption from section 12(d)(1) of
the Act; (c) sections 6(c) and 17(b) of the Act granting an exemption
from sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d)
section 17(d) of the Act and rule 17d-1 under the Act to permit certain
joint arrangements and transactions. Applicants request an order that
would permit certain registered open-end management investment
companies to participate in a joint lending and borrowing facility.

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Applicants:  Harris Associates Investment Trust (the ``Trust''), a
Massachusetts business trust registered under the Act as an open-end
management investment company with multiple series and Harris
Associates L.P. (the ``Adviser''), a Delaware limited partnership
registered as an investment adviser under the Investment Advisers Act
of 1940.

Filing Dates:  The application was filed on February 8, 2016 and
amended on June 21, 2016.

Hearing or Notification of Hearing:  An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on October 31, 2016 and should be accompanied by proof of
service on the applicants, in the form of an affidavit, or, for
lawyers, a certificate of service. Pursuant to Rule 0-5 under the Act,
hearing requests should state the nature of the writer's interest, any
facts bearing upon the desirability of a hearing on the matter, the
reason for the request, and the issues contested. Persons who wish to
be notified of a hearing may request notification by writing to the
Commission's Secretary.

Addresses:  Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090; Applicants: 111 S. Wacker Drive,
Suite 4600, Chicago, Illinois 60606-4319.

For Further Information Contact:  Emerson S. Davis, Senior Counsel, at
(202) 551-6868 or Daniele Marchesani, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Chief Counsel's Office).

Supplementary Information:  The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling<PHONE_NUMBER>.

Summary of the Application

    1. Applicants request an order that would permit the applicants to
participate in an interfund lending facility where each Fund could lend
money directly to and borrow money directly from other Funds to cover
unanticipated cash shortfalls, such as unanticipated redemptions or
trade fails.\1\ The Funds will not borrow under the facility for
leverage purposes and the loans' duration will be no more than 7
days.\2\
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    \1\ Applicants request that the order apply to the applicants
and to any existing or future registered open-end management
investment company or series thereof for which the Adviser or any
successor thereto or an investment adviser controlling, controlled
by, or under common control with the Adviser or any successor
thereto serves as investment adviser (each a ``Fund'' and
collectively the ``Funds'' and each such investment adviser an
``Adviser''). For purposes of the requested order, ``successor'' is
limited to any entity that results from a reorganization into
another jurisdiction or a change in the type of a business
organization. Applicants are not requesting that the order also
apply, and the order will not apply, to any fund or series that is a
money market fund that complies with Rule 2a-7 under the Act.
    \2\ Any Fund, however, will be able to call a loan on one
business day's notice.
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    2. Applicants anticipate that the proposed facility would provide a
borrowing Fund with a source of liquidity at a rate lower than the bank
borrowing rate at times when the cash position of the Fund is
insufficient to meet temporary cash requirements. In addition, Funds
making short-term cash loans directly to other Funds would earn
interest at a rate higher than they otherwise could obtain from
investing their cash in repurchase agreements or certain other short
term money market instruments. Thus, applicants assert that the
facility would benefit both borrowing and lending Funds.
    3. Applicants agree that any order granting the requested relief
will be subject to the terms and conditions stated in the Application.
Among others, the Adviser, through a designated committee, would
administer the facility as a disinterested fiduciary as part of its
duties under the investment management agreements with the Funds and
would receive no additional fee as compensation for its services in
connection with the administration of the facility. The facility would
be subject to oversight and certain approvals by the Funds' Board,
including, among others, approval of the interest rate formula and of
the method for allocating loans across Funds, as well as review of the
process in place to evaluate the liquidity implications for the Funds.
A Fund's aggregate outstanding interfund loans will not exceed 15% of
its net assets, and the Fund's loans to any one Fund will not exceed 5%
of the lending Fund's net assets.\3\
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    \3\ Under certain circumstances, a borrowing Fund will be
required to pledge collateral to secure the loan.
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    4. Applicants assert that the facility does not raise the concerns
underlying section 12(d)(1) of the Act given that the Funds are part of
the same group of investment companies and there will be no duplicative
costs or fees to the Funds.\4\ Applicants also assert that the proposed
transactions do not raise the concerns underlying sections 17(a)(1),
17(a)(3), 17(d) and 21(b) of the Act as the Funds would not engage in
lending transactions that unfairly benefit insiders or are detrimental
to the Funds. Applicants state that the facility will offer both
reduced borrowing costs and enhanced returns on loaned funds to all
participating Funds and each Fund would have an equal opportunity to
borrow and lend on equal terms based on an interest rate formula that
is objective and verifiable. With respect to the relief from section
17(a)(2) of the Act, applicants note that any collateral pledged to
secure an interfund loan would be subject to the same conditions
imposed by any other lender to a Fund

that imposes conditions on the quality of or access to collateral for a
borrowing (if the lender is another Fund) or the same or better
conditions (in any other circumstance).\5\
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    \4\ Applicants state that the obligation to repay an interfund
loan could be deemed to constitute a security for the purposes of
sections 17(a)(1) and 12(d)(1) of the Act.
    \5\ Applicants state that any pledge of securities to secure an
interfund loan could constitute a purchase of securities for
purposes of section 17(a)(2) of the Act.
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    5. Applicants also believe that the limited relief from section
18(f)(1) of the Act that is necessary to implement the facility
(because the lending Funds are not banks) is appropriate in light of
the conditions and safeguards described in the application and because
the Funds would remain subject to the requirement of section 18(f)(1)
that all borrowings of a Fund, including combined interfund loans and
bank borrowings, have at least 300% asset coverage.
    6. Section 6(c) of the Act permits the Commission to exempt any
persons or transactions from any provision of the Act if such exemption
is necessary or appropriate in the public interest and consistent with
the protection of investors and the purposes fairly intended by the
policy and provisions of the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may exempt any person, security, or
transaction, or any class or classes of persons, securities, or
transactions, from any provision of section 12(d)(1) if the exemption
is consistent with the public interest and the protection of investors.
Section 17(b) of the Act authorizes the Commission to grant an order
permitting a transaction otherwise prohibited by section 17(a) if it
finds that (a) the terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned; (b) the proposed transaction is consistent with the policies
of each registered investment company involved; and (c) the proposed
transaction is consistent with the general purposes of the Act. Rule
17d-1(b) under the Act provides that in passing upon an application
filed under the rule, the Commission will consider whether the
participation of the registered investment company in a joint
enterprise, joint arrangement or profit sharing plan on the basis
proposed is consistent with the provisions, policies and purposes of
the Act and the extent to which such participation is on a basis
different from or less advantageous than that of the other
participants.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-24568 Filed 10-11-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 10 (Tuesday, January 16, 2018)]
[Notices]
[Pages 2252-2254]
[FR Doc No: 2018-00522]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82465; File No. SR-ISE-2017-113]

Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the
Exchange's Schedule of Fees at Chapter VIII, Section J, Entitled
``Nasdaq ISE Trades Feed''

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, Nasdaq ISE, LLC (``ISE'' 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    The Exchange proposes to amend the Exchange's Schedule of Fees at
Chapter VIII, Section J, entitled ``Nasdaq ISE Trades Feed,'' to
introduce a monthly fee of $1,000 for unlimited internal and/or
external distribution of the Nasdaq ISE Trade Feed,\3\ as described
further below.
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    \3\ As part of this proposal, the Exchange proposes to correct a
typographical error by renaming the Nasdaq ISE Trades Feed the
``Nasdaq ISE Trade Feed.'' The Exchange hereinafter refers to the
product by its corrected name.
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    The text of the proposed rule change is available on the Exchange's
website at http://ise.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 purpose of the proposed rule change is to amend the Exchange's
Schedule of Fees at Chapter VIII, Section J, entitled ``Nasdaq ISE
Trades Feed,'' to introduce a monthly fee of $1,000 for unlimited
internal and/or external distribution of the ISE Trade Feed.
    The Nasdaq ISE Trade Feed is a direct data feed product that
displays last sale information about trades that occur in the
Exchange's execution system, along with opening price, cumulative
volume, and high and low prices for the day. The data provided for each
instrument includes the symbols (series and underlying security), put
or call indicator, expiration date, the strike price of the series, and
trading status. Access to real-time last sale options data from the
Exchange increases transparency and enables firms to provide
dynamically updated tickers, portfolio trackers and price/time charts.
    The Exchange presently offers subscriptions to the Nasdaq ISE Trade
Feed for free. The Exchange proposes to amend Section J to charge a fee
of $1,000 per month (for unlimited internal and external distribution)
for a subscription to the Nasdaq ISE Trade Feed. Upon effectiveness of
the proposal, this monthly fee will apply to all firms that choose to
subscribe to the Nasdaq ISE Trade Feed, including firms that currently
receive it for free.
    Although the Exchange proposes to offer the Nasdaq ISE Trade Feed
for a fee on a standalone basis, it notes that the Trade Feed is a
purely optional product and a subscription to it is not required to
receive the data that it provides. The same ISE trade information that
is available on the Nasdaq ISE Trade Feed is also broadcast on two
other Nasdaq ISE data feeds: the ISE Top Quote Feed and the ISE Depth
of Market Feed.
    The Exchange's proposal to charge a fee for the Nasdaq ISE Trade
Feed reflects the value of the investments that the Exchange has made
in developing, maintaining, and upgrading the ISE Trade Feed product
and the Exchange trading facility that supports it, which include the
following:
     Exchange Re-Platform and Harmonization of Specifications.
In connection with its recent acquisition by Nasdaq, Inc. and the
associated efforts to re-platform and integrate the Exchange into the
Nasdaq, Inc. family of exchanges, the Exchange upgraded the ISE Trade
Feed so that it is consistent with the specifications and formats of
the other Nasdaq, Inc. data feeds. The re-platforming and associated
upgrades will render connection to and consumption of the ISE Trade
Feeds and other data products easier for customers to manage. Having
one harmonized specification document format that is standardized
across six exchanges makes initial onboarding and implementation of the
data feeds into customers' systems more efficient than having multiple
documents in disparate

formats across different platforms. Furthermore, any updates or
enhancements that are introduced across any of the six exchanges will
now be more cost effective for customers to implement because of the
standardized message format. In addition, the migration to the Nasdaq
Inet technology allows customers to seamlessly conduct business across
multiple exchanges by leveraging Nasdaq's standard messaging protocols
to interact with ISE data feeds as well as all Nasdaq options data
feeds. Moreover, the hardware efficiencies provide a highly-distributed
and efficient system for the Exchange to operate from.
     Geographic Diversity. In connection with the Exchange's
integration into the Nasdaq, Inc. family of exchanges, the Exchange
moved its disaster recovery system to the site utilized by the other
Nasdaq, Inc. exchanges in Chicago, Illinois. Customers can both receive
market data and send orders through the Chicago facility, potentially
reducing overall networking costs. Additionally, this new disaster
recovery location enables firms to easily connect to a multitude of
multi-asset class engines currently housed in or near this Chicago
facility, which also may reduce networking costs. Adding such
geographic diversity helps protect the market in the event of a
catastrophic event impacting the entire East Coast. Lastly, the new
facility has new equipment that will offer improved performance and
resiliency.
    The Exchange notes while it and its sister exchange, Nasdaq GEMX,
LLC, are unique among their competitors in offering a standalone Trade
Feed, the Exchange proposes to price the product at or below the prices
that competing exchanges charge for their data feeds. The Exchange
notes that although fees for external distribution of data feeds are
typically higher than internal distribution fees, the Exchange proposes
to charge the same price for both internal and external distribution of
the Trade Feed as a means of incentivizing external distribution.
    The Exchange also notes that it proposes to price its Trade Feed
higher than that of the Nasdaq GEMX product. The Exchange believes that
this price differential is reasonable given the fact that the Exchange
has more listings, strike volume, and market makers than does Nasdaq
GEMX, such that the Exchange's Trade Feed product has greater potential
value to customers than does the Nasdaq GEMX product. Specifically, the
ISE market has 3,788 listed options on its platform, totaling 732,000
strikes. Comparatively, GEMX has 2,642 listed options and 619.000 [sic]
strikes. ISE also has 33% more market makers providing liquidity than
does GEMX.
    Finally, offering valuable trade data as a standalone feed allows
for a much lower bandwidth option that customers can utilize instead of
having to subscribe to other ISE feeds that may include quotes and
orders and require much more system effort to consume and utilize due
to the larger number of messages required for processing.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\4\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\5\ 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.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4) and (5).
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    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 self-regulatory organization (``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.'' \6\
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    \6\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70
FR 37496, 37499 (June 29, 2005) (``Regulation NMS Adopting
Release'').
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    Likewise, in NetCoalition v. Securities and Exchange Commission \7\
(``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.\8\ 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.'' \9\
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    \7\ NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir. 2010).
    \8\ See NetCoalition, at 534-535.
    \9\ Id. at 537.
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    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'. . . .'' \10\ Although the court and
the SEC were discussing the cash equities markets, the Exchange
believes that these views apply with equal force to the options
markets.
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    \10\ 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)).
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    The Exchange believes that its proposal is reasonable to charge a
monthly fee for all subscriptions to the Nasdaq ISE Trade Feed because
this product provides valuable data to firms. As noted above, access to
real-time last sale options data from the Exchange increases
transparency and enables firms to provide dynamically updated tickers,
portfolio trackers and price/time charts.
    Moreover, the Exchange believes its proposal to charge a monthly
fee of $1,000 for a subscription to the Nasdaq ISE Trade Feed is a
reasonable reflection of the Exchange's costs in producing,
maintaining, and upgrading the product to provide value to subscribers.
The Exchange notes, for example, that in connection with its recent
acquisition by Nasdaq, Inc. and the associated efforts to re-platform
and integrate the Exchange into the Nasdaq, Inc. family of exchanges,
the Exchange upgraded the Trade Feed so that it is consistent with the
specifications and formats of the other Nasdaq, Inc. data feeds. The
re-platforming and associated upgrades will render connection to and
consumption of the Trade Feeds and other data products easier for
customers to manage.
    Moreover, the Exchange's integration into Nasdaq, Inc. has also
resulted in its migration to a more robust and geographically diverse
disaster recovery facility, located in Chicago, IL. 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.
    The Exchange notes that while it and its sister exchange, Nasdaq
GEMX, LLC, are unique among its competitors in offering a standalone
Trade Feed, the Exchange proposes to price the product

at or below the prices that competing exchanges charge for their data
feeds. The Exchange notes that although fees for external distribution
of data feeds are typically higher than internal distribution fees, the
Exchange proposes to charge the same price for both internal and
external distribution of the ISE Trade Feed as a means of incentivizing
external distribution.
    The Exchange also notes that it proposes to price its Trade Feed
higher than that of the Nasdaq GEMX product. The Exchange believes that
this price differential is reasonable given the fact that the Exchange
has more listings, strike volume, and market makers than does Nasdaq
GEMX, such that the Exchange's Trade Feed product has greater potential
value to customers than does the Nasdaq GEMX product.
    The Exchange believes that the proposal is an equitable allocation
and is not unfairly discriminatory because the Exchange will apply the
same fee to all, regardless of membership.

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. 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.
    In this instance, the proposed establishment of the Nasdaq ISE
Trade Feed fee does not impose an undue burden on competition because a
subscription to the Nasdaq ISE Trade Feed is completely voluntary and
subject to extensive competition from other exchanges. In sum, if the
change proposed herein is unattractive to market participants, it is
likely that the Exchange will lose market share as a result.
Accordingly, the Exchange does not believe that the proposed change
will impair the ability of members or competing order execution venues
to maintain their competitive standing in the financial markets.

C. 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.\11\ 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.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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-ISE-2017-113 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-ISE-2017-113. 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-ISE-2017-113 and should be submitted on
or before February 6, 2018.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00522 Filed 1-12-18; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 88, Number 70 (Wednesday, April 12, 2023)]
[Notices]
[Pages 22075-22078]
[FR Doc No: 2023-07612]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97257; File No. SR-MSRB-2023-03]

Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of a Proposed Rule Change To Amend MSRB Rules
G-12 and G-15 To Define Regular-Way Settlement for Municipal Securities
Transactions as Occurring One Business Day After the Trade Date and To
Amend Rule G-12 To Update an Outdated Cross Reference

April 6, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice
is hereby given that on March 28, 2023 the Municipal Securities
Rulemaking Board (``MSRB'' or ``Board'') 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 MSRB. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The MSRB filed with the Commission a proposed rule change to amend
MSRB Rules G-12, on uniform practice, and G-15, on confirmation,
clearance, settlement and other uniform practice requirements with
respect to transactions with customers, to define regular-way
settlement for municipal securities transactions as occurring one
business day after the trade date and a proposed amendment to Rule G-12
to update an outdated cross reference (the ``proposed rule change'').
    The MSRB requests that the proposed rule change be approved with an
implementation date of May 28, 2024, to align with the implementation
date for Exchange Act Rule 15c6-1, as amended.\3\
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    \3\ See Exchange Act Release No. 96930 (Feb. 15, 2023), 88 FR
13872 at 13916 (Mar. 6, 2023) (File No. S7-050-22) (``SEC's T+1
Adopting Release''). If the Commission's compliance date were to
change, the MSRB would issue a regulatory notice to modify the
compliance date to remain aligned with the Commission's compliance
date.
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    The text of the proposed rule change is available on the MSRB's
website at https://msrb.org/2023-SEC-Filings, at the MSRB's principal
office, 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 MSRB 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 MSRB 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
    Consistent with the MSRB's strategic goal to modernize the MSRB
Rule Book, the proposed rule change would amend MSRB Rule G-
12(b)(ii)(B)-(D) and MSRB Rule G-15(b)(ii)(B)-(C) to define regular-way
settlement for municipal securities transactions as occurring on one
business day after the trade date (``T+1''). This proposed rule change
would align with regular-way settlement on T+1 for equities and
corporate bonds under Exchange Act Rule 15c6-1, as amended.\4\ Although
Exchange Act Rule 15c6-1, as amended \5\ does not apply to municipal
securities transactions, the MSRB believes that the regular-way
settlement cycle for municipal securities transactions in the secondary
market should be consistent with that for equity and corporate bond
transactions. Therefore, to facilitate a T+1 standard settlement cycle,
the MSRB is proposing to amend MSRB Rule G-12(b)(ii)(B)-(D) and Rule G-
15(b)(ii)(B)-(C) to define regular-way settlement as occurring on the
first business day following the trade date rather than on the second
business day following the trade date.
---------------------------------------------------------------------------

    \4\ 17 CFR 240.15c6-1.
    \5\ Id.
---------------------------------------------------------------------------

Background
    The SEC initially adopted Exchange Act Rule 15c6-1 \6\ in 1993 to
shorten the settlement cycle of most equity and corporate bond
transactions from the industry standard of within five business days
(``T+5'') to requiring settlement within three business days
(``T+3'').\7\ The T+3 settlement cycle remained in effect until 2017
when the SEC amended Exchange Act Rule 15c6-1 \8\ to require the
settlement of most equity and corporate bond transactions within two
business days (``T+2'').\9\ On February 15, 2023, the SEC adopted
amendments to Exchange Act Rule 15c6-1 (``Amended SEC Rule 15c6-1'')
\10\ to further shorten the settlement process, requiring the
settlement of most equity and corporate bond transactions on T+1.
---------------------------------------------------------------------------

    \6\ Id.
    \7\ Exchange Act Release No. 33023 (Oct. 6, 1993), 58 FR 52891
(Oct. 13, 1993). In adopting Rule 15c6-1, the Commission set a
compliance date of June 1, 1995, 58 FR at 52891 (Oct. 13, 1993).
    \8\ 17 CFR 240.15c6-1.
    \9\ Exchange Act Release No. 80295 (Mar. 22, 2017), 82 FR 15564
(Mar. 29, 2017).
    \10\ 17 CFR 240.15c6-1.
---------------------------------------------------------------------------

    Amended SEC Rule 15c6-1(a) \11\ prohibits a broker-dealer from
effecting or entering into a contract for the purchase or sale of a
security (other than an exempted security,\12\ a government security, a
municipal security, commercial paper, bankers' acceptances, or
commercial bills) that provide for payment of funds and delivery of
securities later than T+1, unless the parties expressly agree to a
different settlement date at the time of the transaction.\13\ The
recent

amendments to SEC Rule 15c6-1 \14\ change only the standard settlement
date for securities transactions covered by the existing rule and do
not impact the existing exclusions enumerated in the rule.\15\
---------------------------------------------------------------------------

    \11\ 17 CFR 240.15c6-1(a).
    \12\ 15 U.S.C. 78c(a)(12), (amended Apr. 5, 2012).
    \13\ Subsection (c) of Rule15c6-1, 17 CFR 240.15c6-1(c), was
also amended to prohibit a broker-dealer from effecting or entering
into a contract for firm commitment offerings of securities (other
than exempt securities) priced after 4:30 p.m. Eastern Time that
provide for payment of funds and delivery of securities later than
T+2, unless the parties expressly agree to a different settlement
date at the time of the transaction.
    \14\ 17 CFR 240.15c6-1. See also SEC's T+1 Adopting Release, 88
FR at 13874 (Mar. 6, 2023).
    \15\ In addition, the SEC adopted a new rule, Rule 15c6-2, 17
CFR 240.15c6-2, to improve the processing of institutional trades
through new requirements for broker-dealers and registered
investment advisers related to same-day affirmations. As SEC Rule
15c6-2 does not apply to municipal securities, the MSRB is
evaluating whether a like requirement should be considered under
MSRB rules.
---------------------------------------------------------------------------

Proposal
    Shortening the settlement process can serve to reduce operational
risks that can be present between trade date and settlement date, which
can promote investor protection, help reduce the risk of counterparty
default and the capital required to mitigate this risk.\16\ In support
of these objectives and to promote regulatory consistency, the MSRB has
consistently stated that the regular-way settlement cycle for municipal
securities transactions in the secondary market should be consistent
with that for equity and corporate bond transactions.\17\ Market
efficiencies could be eroded if market participants encounter different
settlement cycles when replacing equity or corporate bonds with
municipal securities. For that reason, the MSRB adopted a T+3
settlement cycle in 1994,\18\ and a T+2 settlement cycle in 2017.\19\
In order to continue to maintain consistency across asset classes and
harmonize with Amended SEC Rule 15c6-1,\20\ the MSRB is proposing to
amend MSRB Rule G-12(b)(ii)(B)-(D) and MSRB Rule G-15(b)(ii)(B)-(C),
which both currently define regular-way settlement as occurring on T+2,
to define regular-way settlement as occurring on T+1.
---------------------------------------------------------------------------

    \16\ See SEC's T+1 Adopting Release, 88 FR at 13919 (Mar. 6,
2023).
    \17\ See, e.g., ``T+3 Settlement, Amendments Filed: Rules G-12
and G-15,'' MSRB Reports, Vol. 14, No. 4 (August 1994) at 3;
``Report of the Municipal Securities Rulemaking Board on T+3
Settlement for the Municipal Securities Market'' (Mar.17, 1994); and
Exchange Act Release No. 77364; File No. SR-MSRB-2016-04 (Mar. 14,
2016), 81 FR 14906 (Mar. 18, 2016).
    \18\ See Exchange Act Release No. 34541 (Aug. 17, 1994), File
No. SR-MSRB-1994-10 (Aug. 9, 1994).
    \19\ See Exchange Act Release No. 77744 (Apr. 29, 2016), File
No. SR-MSRB-2016-04 (Mar. 1, 2016). See also MSRB Notice 2016-15
(``MSRB to Amend Rules to Define Two-Day Settlement Cycle'').
    \20\ 17 CFR 240.15c6-1.
---------------------------------------------------------------------------

    As a result, with regular-way settlement occurring on T+1,
settlement for ``when, as and if issued'' transactions under MSRB Rule
G-12(b)(ii)(C) would be required to be a date agreed upon by both
parties that is not earlier than one business day after notification of
the initial settlement date for the issue.\21\ Specifically, the
proposed rule change would amend MSRB G-12(b)(ii)(C)(2) for ``when, as
and if issued'' transactions not eligible for automated comparison to
specify that the date agreed upon by both parties shall not be earlier
than the first business day, rather than the second business day,
following the date that the confirmation indicating the final
settlement date is sent.\22\ For all other municipal securities
transactions under MSRB Rule G-12(b)(ii)(D), the proposed rule change
would amend the current time frame to provide that a broker, dealer or
municipal securities dealer (a ``dealer'') would be prohibited from
effecting a transaction that provides for payment of funds and delivery
of securities later than the first business day, rather than the second
business day, after the transaction unless expressly agreed to by the
parties.\23\
---------------------------------------------------------------------------

    \21\ Pursuant to MSRB Rule G-34, on CUSIP numbers, new issue,
and market information requirements, subparagraph (a)(ii)(E)(2), the
initial settlement is to be provided to the registered clearing
agency by the managing underwriter for the issue. With respect to
transactions not eligible for automated comparison, the settlement
date shall not be earlier than the first business day after the date
that the confirmation indicating the final settlement date is sent.
    \22\ For ``when, as and if issued'' transactions required to be
compared in an automated comparison system under Rule G-12(f)(i),
the settlement date shall continue to be not earlier than two
business days after notification of initial settlement date for the
issue is provided to the registered clearing agency by the managing
underwriter for the issue as required by Rule G-34(a)(ii)(E)(2).
    \23\ For example, variable rate demand obligations may establish
a settlement date expressly agreed to by the parties that may occur
later than regular-way settlement to coincide with the reset date
(e.g., T+5, T+3, etc.). See Three Day Settlement: Rules G-12(b) and
G-15(b), MSRB Reports, Vol. 15, No. 12 (July 1995), available at
https://www.msrb.org/sites/default/files/July1995-Volume15-Number2.PDF.
---------------------------------------------------------------------------

    Lastly, the proposed rule change would correct an outdated cross-
reference within MSRB Rule G-12. Specifically, MSRB Rule G-12(b)(ii)(C)
regarding the settlement date for ``when, as and if issued''
transactions currently cross-references MSRB Rule G-34 subsection
paragraph (a)(ii)(D)(2) in referring to the obligation that a managing
underwriter has to provide notification of initial settlement date of
an issue to the registered clearing agency. This obligation remains in
MSRB Rule G-34 but was moved to subparagraph (a)(ii)(E)(2) due to
previous amendments to Rule G-34. Correcting the cross-reference will
not alter the obligation of dealers under MSRB Rule G-34 or MSRB Rule
G-12.
Compliance Date
    The compliance date of the proposed rule change will be announced
by the MSRB in a notice published on the MSRB website, which date would
correspond with the industry's transition to a T+1 regular-way
settlement consistent with the implementation of Amended SEC Rule 15c6-
1,\24\ which is currently scheduled for May 28, 2024. If the SEC's
compliance date were to change, the MSRB would issue a regulatory
notice to modify the compliance date to remain aligned with the SEC's
compliance date.
---------------------------------------------------------------------------

    \24\ See SEC's T+1 Adopting Release, 88 FR at 13916 (Mar. 6,
2023).
---------------------------------------------------------------------------

2. Statutory Basis
    The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2) of the Exchange Act,\25\ which provides that the
Board shall propose and adopt rules to effect the purposes of this
title with respect to transactions in municipal securities effected by
brokers, dealers, and municipal securities dealers and advice provided
to or on behalf of municipal entities or obligated persons by brokers,
dealers, municipal securities dealers, and municipal advisors with
respect to municipal financial products, the issuance of municipal
securities, and solicitations of municipal entities or obligated
persons undertaken by brokers, dealers, municipal securities dealers,
and municipal advisors.
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78o-4(b)(2).
---------------------------------------------------------------------------

    Section 15B(b)(2)(C) of the Exchange Act \26\ provides that the
MSRB's rules shall be designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in municipal securities and municipal
financial products, to remove impediments to and perfect the mechanism
of a free and open market in municipal securities and municipal
financial products, and, in general, to protect investors, municipal
entities, obligated persons, and the public interest.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------

    The MSRB believes the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Act.\27\ The proposed amendments to MSRB
Rule G-12(b)(ii)(B) and (D) and MSRB Rule G-15(b)(ii)(B)-(C) would
define regular-

way settlement for municipal securities transactions to occur on T+1.
The proposed rule change will foster cooperation and coordination with
persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in municipal
securities and municipal financial products by applying the standard
for regular-way settlement established by the SEC to transactions in
municipal securities. Fostering a consistent standard across asset
classes of securities would continue to promote just and equitable
principles of trade by facilitating compliance and reducing the risk of
potential confusion that could result from an obligation to apply
different standards for different asset classes of securities. The MSRB
believes the proposed rule change would serve to remove impediments to
and perfect the mechanism of a free and open market by yielding long-
term benefits for a range of market participants including, but not
limited to, operational cost savings, reduced counterparty risk due to
a shorter settlement cycle, reduced market risk for unsettled trades,
decreasing clearing capital requirements, reduced pro-cyclical margin
and therefore reduced liquidity demands and risk. A shortened
settlement cycle, as facilitated by the proposed rule change, will
promote regulatory consistency, ensuring that market participants will
not encounter differing settlement cycles when replacing other
securities with municipal securities. The MSRB believes that the
proposed rule change would promote investor protection and the public
interest by reducing the timeframe for regular-way settlement and
avoiding misaligned settlement dates, which can serve to reduce risks
that can be present between trade date and settlement date, including
the incidence of failed transactions.
---------------------------------------------------------------------------

    \27\ Id.
---------------------------------------------------------------------------

    The MSRB believes the proposed amendment to correct an outdated
cross-reference in MSRB Rule G-12(b)(ii)(C) is consistent with Section
15B(b)(2)(C) of the Act.\28\ Correcting the cross-reference will not
alter a dealer's obligations under MSRB Rule G-34 or MSRB Rule G-12.
The proposed amendment promotes coordination with persons engaged in
facilitating transactions in municipal securities by aiding dealers'
understanding of the rule and facilitating compliance.
---------------------------------------------------------------------------

    \28\ Id.
---------------------------------------------------------------------------

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

    Section 15B(b)(2)(C) of the Exchange Act \29\ requires that MSRB
rules not be designed to impose any burden on competition not necessary
or appropriate in furtherance of the purposes of the Exchange Act. The
MSRB believes the proposed rule change to amend MSRB Rule G-
12(b)(ii)(B)-(D) and MSRB Rule G-15(b)(ii)(B)-(C) would not impose any
burden on competition and would not have an impact on competition, as
the proposed rule change would apply a uniform standard for regular-way
settlement for municipal securities to align with the standard
applicable to, among other securities, equity and corporate bond
transactions under Amended SEC Rule 15c6-1.\30\ In addition, the
proposed rule change would be applied equally to all dealers. Lastly,
the proposed rule change to correct an outdated cross-reference in MSRB
Rule G-12(b)(ii)(C) to properly reference MSRB Rule G-34(a)(ii)(E)(2)
rather than MSRB Rule G-34(a)(ii)(D)(2) would not impose any burden on
competition or have an impact on competition as the proposed change is
technical in nature, does not impose any new obligation and enhances
understanding of the rule.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78o-4(b)(2)(C).
    \30\ 17 CFR 240.15c6-1.
---------------------------------------------------------------------------

    Therefore, the MSRB believes the proposed rule change would not
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Exchange Act. In determining
whether these standards have been met the MSRB was guided by the
Board's Policy on the Use of Economic Analysis in MSRB Rulemaking.\31\
---------------------------------------------------------------------------

    \31\ Policy on the Use of Economic Analysis in MSRB Rulemaking
is available at http://msrb.org/Rules-and-Interpretations/Economic-Analysis-Policy.aspx. In evaluating whether there was a burden on
competition, the Board was guided by its principles that required
the Board to consider costs and benefits of a rule change, its
impact on capital formation and the main reasonable alternative
regulatory approaches.
---------------------------------------------------------------------------

    In accordance with this policy, the MSRB has evaluated the
potential impacts on competition of the proposed rule change.
    With the adoption of the Amended SEC Rule 15c6-1, the regular-way
settlement cycle for all securities (other than an exempted security, a
government security, commercial paper, commercial bills, bankers'
acceptances and municipal securities) is being shortened from T+2 to
T+1 starting on May 28, 2024. Without the MSRB's proposed amendments,
market participants would encounter different settlement cycles between
municipal securities and other securities such as equity and corporate
bonds, which would result in market inefficiencies and cause confusion
in the clearing and settlement process, especially for investors who
trade both municipal securities and other securities. The proposed
amendments are necessary to ensure a consistent settlement cycle for
municipal securities transactions and other securities transactions.
Benefits and Costs
    The MSRB considered the economic impact associated with the
proposed rule change relative to the baseline, which is the current T+2
settlement cycle, and assessed incremental changes in benefits and
costs in a proposed future state with a T+1 settlement cycle.
    The proposed rule change would yield long-term benefits for a range
of market participants including, but not limited to, operational cost
savings, reduced counterparty risk due to a shorter settlement cycle,
reduced market risk for unsettled trades, decreasing clearing capital
requirements, reduced pro-cyclical margin and therefore reduced
liquidity demands and risk. The MSRB believes the proposed rule change
would promote regulatory consistency \32\ and market efficiency by
having regular-way settlement for municipal securities transactions
consistent with the standard settlement for other security classes,
harmonized with Amended SEC Rule 15c6-1.\33\
---------------------------------------------------------------------------

    \32\ The MSRB has previously updated rules to harmonize with the
Commission to change regular-way settlement from T+5 to T+3 in 1995
and T+3 to T+2 in 2017.
    \33\ 17 CFR 240.15c6-1.
---------------------------------------------------------------------------

    The MSRB does not have the data necessary to form its own firm-
level estimates of the costs of updates to systems and processes and
utilized the Commission's estimates for its analysis.\34\ The MSRB
believes that dealers would incur some cost for the systems changes to
shift from a T+2 to T+1 settlement cycle. Firms with relatively smaller
revenue bases and/or firms that only participate in the municipal
securities market may be disproportionately impacted by changes that
require system investments. Since most firms, whether they clear
themselves or through a third-party firm, would be required to upgrade
the technology for the transition to a T+1 settlement cycle for all
other relevant securities, the system costs would already be realized
and there should be minimal or no incremental cost for the municipal
securities settlement cycle change. The MSRB does not have the data
necessary to form its own firm-level estimates of the costs of updates
to systems and processes and utilized the

Commission's estimates for its analysis. For select municipal dealers
who only trade municipal securities and clear themselves, the one-time
upfront costs for system upgrades and policy and procedure revision
would be approximately $874,000 per firm for dealers serving
institutional investors only and $1,276,000 per firm for dealers also
serving retail investors. This calculation is based on the Commission's
estimate of the one-time upfront cost of $8,740,000 per firm for
broker-dealers that serve institutional investors and $12,760,000 per
firm for broker-dealers that also serve retail investors when including
all securities, other than an exempted security (a government security,
a municipal security, commercial paper, bankers' acceptances, or
commercial bills).\35\ The MSRB believes these select dealers may
choose to use a third-party clearing firm if the cost for outsourcing
the clearing practice is lower than the estimated costs above. Finally,
the MSRB also believes that dealers would incur minimal ongoing direct
compliance costs after the initial transition to a T+1 standard
settlement cycle.\36\
---------------------------------------------------------------------------

    \34\ SEC's T+1 Adopting Release, 88 FR at 13937-13978 (March 6,
2023).
    \35\ Id. The MSRB's internal analysis assumes a cost saving of
90% for the one-time upfront cost for municipal securities only, as
opposed to many other securities, such as equities, corporate bonds,
asset-backed securities, mortgage-backed securities, and stock
options, etc., accounting for some fixed costs when working on a
single security product. In addition, the MSRB's internal analysis
assumes that dealers who trade municipal securities only and self-
clear are smaller in size than a typical broker-dealer in the SEC's
estimate.
    \36\ See SEC's T+1 Adopting Release, 88 FR at 13937 (March 6,
2023).
---------------------------------------------------------------------------

    In summary, the MSRB believes that the industry is equipped with
readily available technology for the transition to a T+1 settlement
cycle, and the changes are necessary or appropriate in furtherance of
the purposes of the Exchange Act. The MSRB believes the proposed rule
change would promote regulatory consistency and market efficiency by
having regular-way settlement for municipal securities transactions
consistent with the standard settlement for other security classes and
harmonized with Amended SEC Rule 15c6-1.\37\ As the proposed rule
change would be applied equally to all registered dealers transacting
in municipal securities, the MSRB believes that the proposed rule
change would not impose any additional burdens on competition, that are
not necessary or appropriate in furtherance of the purposes of the
Exchange Act.
---------------------------------------------------------------------------

    \37\ 17 CFR 240.15c6-1.
---------------------------------------------------------------------------

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

    Written comments were neither solicited nor received on the
proposed rule change.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period of up to 90 days (i) as
the Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
    (A) by order approve or disapprove such 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. 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-MSRB-2023-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-MSRB-2023-03. 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 MSRB. 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-MSRB-2023-03 and should be submitted on
or before May 3, 2023.

    For the Commission, pursuant to delegated authority.\38\
---------------------------------------------------------------------------

    \38\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-07612 Filed 4-11-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 62 (Friday, March 30, 2018)]
[Proposed Rules]
[Pages 13716-13718]
[FR Doc No: 2018-06548]

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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2017-0661; FRL-9976-18--Region 9]

Air Plan Approval; Arizona; Hayden and Miami Areas; Lead and
Sulfur Dioxide Control Measures--Copper Smelters

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

SUMMARY: The Environmental Protection Agency (EPA) is proposing to
approve revisions to the Arizona State Implementation Plan (SIP). These
revisions concern emissions of lead and sulfur dioxide (SO2)
from the copper smelter at Hayden, AZ and SO2 from the
copper smelter at Miami, AZ. We are proposing to approve State rules to
regulate these emission sources under the Clean Air Act (CAA or the
Act). We are taking comments on this proposal and plan to follow with a
final action.

DATES: Any comments must arrive by April 30, 2018.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R09-

OAR-2017-0661 at http://www.regulations.gov, or via email to Kevin
Gong, at [email protected]. For comments submitted at Regulations.gov,
follow the online instructions for submitting comments. Once submitted,
comments cannot be removed or edited from Regulations.gov. For either
manner of submission, the EPA may publish any comment received to its
public docket. Do not submit electronically any information you
consider to be Confidential Business Information (CBI) or other
information whose disclosure is restricted by statute. Multimedia
submissions (audio, video, etc.) must be accompanied by a written
comment. The written comment is considered the official comment and
should include discussion of all points you wish to make. The EPA will
generally not consider comments or comment contents located outside of
the primary submission (i.e. on the web, cloud, or other file sharing
system). For additional submission methods, please contact the person
identified in the FOR FURTHER INFORMATION CONTACT section. For the full
EPA public comment policy, information about CBI or multimedia
submissions, and general guidance on making effective comments, please
visit http://www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Kevin Gong, EPA Region IX, (415) 972
3073, [email protected].

SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us'' and
``our'' refer to the EPA.

Table of Contents

I. The State's Submittal
    A. What rules did the State submit?
    B. Are there other versions of these rules?
    C. What is the purpose of the submitted rules and rule
revisions?
II. The EPA's Evaluation and Action
    A. How is the EPA evaluating the rules?
    B. Do the rules meet the evaluation criteria?
    C. EPA Recommendations To Further Improve the Rules
    D. Public Comment and Proposed Action
III. Incorporation by Reference
IV. Statutory and Executive Order Reviews

I. The State's Submittal

A. What rules did the State submit?

    Table 1 lists the Arizona Administrative Code rules and regulatory
appendix addressed by this proposal with their effective dates and the
dates they were submitted by the Arizona Department of Environmental
Quality (ADEQ).\1\
---------------------------------------------------------------------------

    \1\ In addition to the rules addressed in this proposal, ADEQ's
April 6, 2017 submittal also included R18-2-B1301.01--Limits on
Lead-Bearing Fugitive Dust from the Hayden Smelter; R18-2-B1302--
Limits on SO2 Emissions from the Hayden Smelter; R18-2-
715--Standards of Performance for Existing Primary Copper Smelters:
Site-Specific Requirements; and R18-2-715.01--Standards of
Performance for Existing Primary Copper Smelters; Compliance and
Monitoring. The EPA has already approved R18-2-B1301.01 into the
SIP, 83 FR 7614 (February 22, 2018) and intends to take action on
the remaining rules in a separate rulemaking.

                                            Table 1--Submitted Rules
----------------------------------------------------------------------------------------------------------------
             Rule  citation                       Rule title                   Effective             Submitted
----------------------------------------------------------------------------------------------------------------
R18-2-B1301.............................  Limits on Lead Emissions    7/1/2018 or 180 calendar          4/6/2017
                                           from the Hayden Smelter.    days after completion of
                                                                       all Converter Retrofit
                                                                       Project improvements
                                                                       authorized by Significant
                                                                       Permit Revision No. 60647.
R18-2-C1302.............................  Limits on SO2 Emissions     On the later of the               4/6/2017
                                           from the Miami Smelter.     effective date of the EPA
                                                                       Administrator's action
                                                                       approving it as part of
                                                                       the state implementation
                                                                       plan or January 1, 2018.
Appendix 14.............................  Procedures for Sulfur       5/7/2017..................        4/6/2017
                                           Dioxide and Lead Fugitive
                                           Emissions Studies for the
                                           Hayden Smelter.
R18-2-715.02............................  Standards of Performance    5/7/2017..................        4/6/2017
                                           for Existing Primary
                                           Copper Smelters; Fugitive
                                           Emissions.
----------------------------------------------------------------------------------------------------------------

    On July 17, 2017, the EPA determined that the submittal for the
rules and documents in Table 1 met the completeness criteria in 40 CFR
part 51 Appendix V, which must be met before formal EPA review.

B. Are there other versions of these rules?

    There are no previous versions of Rules R18-2-B1301, R18-2-C1302 or
Appendix 14 in the SIP. We approved an earlier version of Rule R18-2-
715.02 into the SIP on November 1, 2004 (69 FR 63321).

C. What is the purpose of the submitted rules and rule revisions?

    On November 12, 2008, the EPA published a final rule revising the
lead National Ambient Air Quality Standards (NAAQS). On June 22, 2010,
the EPA promulgated a new 1-hour primary sulfur dioxide
(SO2) NAAQS. CAA section 172(c)(1) requires SIPs for
nonattainment areas to provide for implementation of all reasonably
available control measures (RACM), including reasonably available
control technology (RACT), and provide for attainment of the NAAQS. The
EPA designated the Hayden area as nonattainment for lead in 2014 (79 FR
52205) and designated the Hayden and Miami areas as nonattainment for
SO2 in 2013 (78 FR 47191). Rule R18-2-B1301 establishes
control requirements for lead emissions from the copper smelter located
in the Hayden, AZ nonattainment area (``Hayden Smelter''). Rule R18-2-
C1302 establishes control requirements for SO2 emissions
from the copper smelter located in the Miami, AZ nonattainment area
(``Miami Smelter''). Appendix 14 requires the evaluation and
characterization of fugitive lead and SO2 emissions from the
Hayden Smelter. Rule R18-2-715.02 contains the existing requirements
for fugitive SO2 emissions studies at both smelters. These
requirements will sunset after: (1) The revisions to Rule R18-2-715.02
are approved into the SIP, and (2) Rule B1302 (for the Hayden Smelter)
and Rule R18-2-C1302 (for the Miami Smelter) take effect. The EPA's
technical support documents (TSDs) have more information about these
rules.

II. The EPA's Evaluation and Action

A. How is the EPA evaluating the rules?

    SIP rules must be enforceable (see CAA section 110(a)(2)), must not
interfere with applicable requirements concerning attainment and
reasonable further progress or other CAA requirements (see CAA section
110(l)), and must not modify certain SIP control requirements in
nonattainment areas without ensuring equivalent or greater emissions
reductions (see CAA section 193). The EPA will address the overall

RACM/RACT requirement for the Hayden lead nonattainment area in the
context of our action on ADEQ's lead plan (``SIP Revision: Hayden Lead
Nonattainment Area,'' submitted by ADEQ to the EPA on March 3, 2017),
and we will address the RACM/RACT requirement for the Miami
SO2 nonattainment area in the context of our action on
ADEQ's SO2 plan (``Arizona SIP Revision: Miami Sulfur
Dioxide Nonattainment Area for the 2010 SO2 NAAQS,''
submitted by ADEQ to the EPA on March 8, 2017). Therefore, our
stringency evaluations here consider whether Rules R18-2-B1301 and R18-
2-C1302 implement reasonable controls for the two subject criteria
pollutants at the Hayden and Miami smelters.\2\
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    \2\ Appendix 14 does not establish control requirements, so it
is not subject to a stringency evaluation. Appendix 14 is still
subject to enforceability and SIP consistency evaluations, which we
describe in our TSD. The revisions to sunset the existing
requirements of Rule R18-2-715.02, are evaluated in context with
Appendix 14. See the TSD evaluating Appendix 14 for more information
on Rule R18-2-715.02. Rule R18-2-B1302 regulates SO2
emissions at the Hayden Smelter, and will be evaluated in a separate
rulemaking. The revisions to sunset the existing requirements of
Rules R18-2-715 and R18-2-715.01 in relation to the Hayden Smelter
will be evaluated in context with R18-2-B1302.
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    Guidance and policy documents that we use to evaluate
enforceability, rule stringency, and SIP revision requirements for the
applicable criteria pollutants include the following:
    1. ``Issues Relating to VOC Regulation Cutpoints, Deficiencies, and
Deviations,'' EPA, May 25, 1988 (the Bluebook, revised January 11,
1990).
    2. ``Guidance Document for Correcting Common VOC & Other Rule
Deficiencies,'' EPA Region 9 (the Little Bluebook, August 21, 2001).
    3. ``Implementation of the 2008 Lead National Ambient Air Quality
Standards: Guide to Developing Reasonably Available Control Measures
(RACM) for Controlling Lead Emissions,'' EPA Office of Air Quality
Planning and Standards (March 2012).
    4. ``Guidance for 1-Hour SO2 Nonattainment Area SIP
Submissions,'' EPA Office of Air Quality Planning and Standards (April
23, 2014).
    5. National Emission Standard for Hazardous Air Pollutants for
Primary Copper Smelting (40 CFR part 63, subpart QQQ).
    6. National Emission Standard for Hazardous Air Pollutants for
Secondary Lead Smelting (40 CFR part 63, subpart X).

B. Do the rules meet the evaluation criteria?

    These rules are consistent with CAA requirements and relevant
guidance regarding enforceability, rule stringency, and SIP revisions.
The TSDs have more information on our evaluation.

C. EPA Recommendations To Further Improve the Rules

    The TSDs describe additional rule revisions that we recommend for
the next time the State modifies the rules.

D. Public Comment and Proposed Action

    As authorized in section 110(k)(3) of the Act, the EPA proposes to
fully approve the submitted rules because they fulfill all relevant
requirements. We will accept comments from the public on this proposal
until April 30, 2018. If we take final action to approve the submitted
rules, our final action will incorporate these rules into the federally
enforceable SIP.

III. Incorporation by Reference

    In this rule the EPA is proposing to include in a final EPA rule
regulatory text that includes incorporation by reference. In accordance
with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by
reference the ADEQ rules described in Table 1 of this preamble. The EPA
has made, and will continue to make, these materials available through
www.regulations.gov and at the EPA Region IX Office (please contact the
person identified in the FOR FURTHER INFORMATION CONTACT section of
this preamble for more information).

IV. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP
submission that complies with the provisions of the Act and applicable
federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in
reviewing SIP submissions, the EPA's role is to approve state choices,
provided that they meet the criteria of the Act. Accordingly, this
proposed action merely proposes to approve state law as meeting federal
requirements and does not impose additional requirements beyond those
imposed by state law. For that reason, this proposed action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Orders
12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21,
2011);
     Is not an Executive Order 13771 (82 FR 9339, February 2,
2017) regulatory action because SIP approvals are exempted under
Executive Order 12866;
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the CAA; and
     Does not provide the EPA with the discretionary authority
to address disproportionate human health or environmental effects with
practical, appropriate, and legally permissible methods under Executive
Order 12898 (59 FR 7629, February 16, 1994).
    In addition, the SIP is not approved to apply on any Indian
reservation land or in any other area where the EPA or an Indian tribe
has demonstrated that a tribe has jurisdiction. In those areas of
Indian country, the rule does not have tribal implications and will not
impose substantial direct costs on tribal governments or preempt tribal
law as specified by Executive Order 13175 (65 FR 67249, November 9,
2000).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Lead, Reporting and
recordkeeping requirements, Sulfur dioxide.

    Authority:  42 U.S.C. 7401 et seq.

    Dated: March 19, 2018.
Alexis Strauss,
Acting Regional Administrator, Region IX.
[FR Doc. 2018-06548 Filed 3-29-18; 8:45 am]
 BILLING CODE 6560-50-P