[Federal Register: August 20, 2008 (Volume 73, Number 162)]
[Notices]
[Page 49177-49178]
[DOCID:fr20au08-45]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 1121-082]

Pacific Gas and Electric Company; Notice of Application for
Amendment of License, Soliciting Comments, Motions To Intervene and
Protests

August 13, 2008.
    Take notice that the following hydroelectric application has been
filed with the Commission and is available for public inspection:
    a. Type of Application: Amendment of license.
    b. Project No.: 1121-082.
    c. Date Filed: July 21, 2008.
    d. Applicant: Pacific Gas and Electric Company.
    e. Name of Project: Battle Creek Hydroelectric Project.
    f. Location: On Battle Creek, the North Fork and South Fork Battle
Creek in Shasta and Tehama Counties, California.
    g. Filed Pursuant to: Federal Power Act, 16 U.S.C. 791a-825r.
    h. Applicant Contact: Liv K. Imset, Senior License Coordinator,
Pacific Gas and Electric Company, P.O. Box No. 770000, San Francisco,
CA 94177;<PHONE_NUMBER>.
    i. FERC Contact: CarLisa Linton-Peters, telephone<PHONE_NUMBER>;
e-mail<EMAIL_ADDRESS>    j. Deadline for filing comments, motions to intervene and protest
is September 30, 2008.
    Please include the project number (P-1121) on any comments or
motions filed. All documents (an original and eight copies) must be
filed with: Kimberly D. Bose, Secretary, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426.
    Motions to intervene, protests, comments and recommendations may be
filed electronically via the Internet in lieu of paper filings, see 18
CFR 385.2001 (a)(1)(iii) and the instructions on the Commission's Web
site (http://www.ferc.gov) under the ``e-filing'' link. The Commission
strongly encourages electronic filings.
    The Commission's Rules of Practice and Procedure require all
intervenors filing documents with the Commission to serve a copy of
that document on each person whose name appears on the official service
list for the project. Further, if an intervenor files comments or
documents with the Commission relating to the merits of an issue that
may affect the responsibilities of a particular resource agency, they
must also serve a copy of the document on that resource agency. A copy
of any motion to intervene must also be served upon each representative
of the Applicant specified in the particular application.
    k. Description of Request: Pacific Gas and Electric Company
(licensee) is requesting that its license for the Battle Creek
Hydroelectric Project be amended to support the Battle Creek Salmon and
Steelhead Restoration Project (Restoration Project). The Chinook salmon
and steelhead are federally-listed species. The Restoration Project is
a collaborative effort to restore fish habitat on Battle Creek and some
of its tributaries through modification of the project facilities and
operations, including instream flow releases. This collaborative effort
is between PG&E, the U.S. Department of the Interior, Bureau of
Reclamation, the U.S. Fish and Wildlife Service, the National Oceanic
and Atmospheric Administration, National Marine Fisheries Service, and
the California Department of Fish and Game.
    The Restoration Project will reestablish approximately 42 miles
total of prime salmon and steelhead habitat

in the North and South Forks of Battle Creek, plus an additional six
miles of habitat on the tributaries of Battle Creek. The Restoration
Project will be accomplished in three phases. The licensee is filing
this license amendment application for approval and implementation of
Phase 1A of the Restoration Project. Proposed work for Phase 1A
includes fish passage improvements on North Fork Battle Creek by: (1)
Installing fish screens and ladders at the North Battle Creek Feeder
and Eagle Canyon Diversion Dams; (2) installing the 4,500-foot long
Eagle Canyon Canal pipeline; (3) removing the Wildcat Diversion Dam and
appurtenant conveyance systems; and (4) modifying the Asbury Diversion
Dam by installing an upstream fish migration barrier and changing
maintenance procedures to eliminate use of the low-level outlet.
    The licensee has submitted the Battle Creek Salmon and Steelhead
Restoration Project Final Environmental Impact Statement/Environmental
Impact Report (EIS/EIR), prepared in July 2005, as part of its
application. The referenced EIS/EIR was a collaborative effort to
fulfill National Environmental Policy Act (NEPA) and California
Environmental Quality Act requirements. The EIS/EIR was a collaborative
effort between PG&E, the Bureau of Reclamation, California State Water
Resources Control Board, California Bay-Delta Authority, and the
Federal Energy Regulatory Commission (Commission). The Commission
intends to use the 2005 EIS/EIR to meet the NEPA requirements under the
proposed action to amend the Battle Creek Project. The EIS/EIR was
previously public noticed on July 29, 2005 and the document is
available for review at the Restoration Projects Web site (link: http:/
/www.usbr.gov/mp/nepa/nepa_projdetails.cfm?Project_ID=99).
    l. Location of the Application: A copy of the licensee's filing is
available for inspection and reproduction at the Commission's Public
Reference Room, located at 888 First Street, NE, Room 2A, Washington,
DC 20426, or by calling<PHONE_NUMBER>. This filing may also be viewed
on the Commission's Web site at http://ferc.gov using the ``eLibrary''
link. Enter the docket number excluding the last three digits in the
docket number field to access the document. You may also register
online at http://www.ferc.gov/docsfiling/esubscription.asp to be
notified via e-mail of new filings and issuances related to this or
other pending projects. For assistance, call toll-free at 1-866-208-
3372 or e-mail<EMAIL_ADDRESS>or for TTY, call (202) 502-
8659. A copy is also available for inspection and reproduction at the
address listed in item (h) above.
    m. Individuals desiring to be included on the Commission's mailing
list should so indicate by writing to the Secretary of the Commission.
    n. Comments, Protests, or Motions to Intervene: Anyone may submit
comments, a protest, or a motion to intervene in accordance with the
requirements of Rules of Practice and Procedure, 18 CFR 385.210,
385.211, and 385.214. In determining the appropriate action to take,
the Commission will consider all protests or other comments filed, but
only those who file a motion to intervene in accordance with the
Commission's Rules may become a party to the proceeding. Any comments,
protests, or motions to intervene must be received on or before the
specified comment date for the particular application (see item (j)
above).
    o. Any filing must bear in all capital letters the title
``COMMENTS'', ``PROTEST'', ``MOTION TO INTERVENE'', or
``RECOMMENDATIONS'', as applicable, and the Project Number of the
particular application to which the filing refers.
    p. Agency Comments: Federal, state, and local agencies are invited
to file comments on the described application. A copy of the
application may be obtained by agencies directly from the Applicant. If
an agency does not file comments within the time specified for filing
comments, it will be presumed to have no comments. One copy of an
agency's comments must also be sent to the Applicant's representatives.

Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. E8-19207 Filed 8-19-08; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 79, Number 234 (Friday, December 5, 2014)]
[Notices]
[Pages 72239-72240]
[FR Doc No: 2014-28611]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Notice of Intent To Rule on Request To Release Airport Property
at Eufaula Municipal Airport, Eufaula, Arkansas

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of Request to Release Airport Property.

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SUMMARY: The FAA proposes to rule and invites public comment on the
release of land at Eufaula Municipal Airport under the provisions of
Section 125 of the Wendell H. Ford Aviation Investment Reform Act for
the 21st Century (AIR 21).

DATES: Comments must be received on or before January 5, 2015.

ADDRESSES: Comments on this application may be mailed or delivered to
the FAA at the following address: Mr. Glenn A Boles, Manager, Federal
Aviation Administration, Southwest Region, Airports Division, AR/OK
Airports Development Office, ASW-630, Fort Worth, Texas 76137.
    In addition, one copy of any comments submitted to the FAA must be
mailed or delivered to The Honorable Selina Jayne-Dornan, Mayor of
Eufaula at the following address: City of Eufaula, Oklahoma, 64
Memorial Drive, Eufaula, OK 74432.

FOR FURTHER INFORMATION CONTACT: Mrs Kathy Franklin, Program Manager,
Federal Aviation Administration, AR/OK Airports Development Office,
ASW-630, 2601 Meacham Blvd., Fort Worth, Texas 76137.
    The request to release property may be reviewed in person at this
same location.

SUPPLEMENTARY INFORMATION: The FAA invites public comment on the
request to release property at the Eufaula Municipal Airport under the
provisions of the AIR 21.
    On November 18, 2014, the FAA determined that the request to
release property at Eufaula Municipal Airport submitted by the City of
Eufaula met the procedural requirements of the Federal aviation
Regulations, Part 155. The FAA may approve the request, in whole or in
part, no later than January, 2015.
    The following is a brief overview of the request: The City of
Eufaula requests the release of 14.68 acres of airport property valued
at $29,360.00. The release of property will allow for the sale of the
property to the Oklahoma Department of Transportation for the
development of an industrial facility for maintenance activities. The
City of Eufaula will use the $29,360.00

resulting from the sale to fund construction of a pilots lounge and
restrooms which are not presently available at the airport.
    Any person may inspect the request in person at the FAA office
listed above under FOR FURTHER INFORMATION CONTACT.
    In addition, any person may, upon request, inspect the application,
notice and other documents germane to the application in person at the
Eufaula Municipal Airport.

    Issued in Fort Worth, Texas, on November 18, 2014.
Byron K. Huffman,
Acting Manager, Airports Division.
[FR Doc. 2014-28611 Filed 12-4-14; 8:45 am]
BILLING CODE P


[Federal Register Volume 85, Number 227 (Tuesday, November 24, 2020)]
[Notices]
[Pages 75107-75108]
[FR Doc No: 2020-25886]

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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

[Docket No. FMCSA-2013-0444; FMCSA-2014-0212; FMCSA-2015-0321; FMCSA-
2018-0051; FMCSA-2018-0052; FMCSA-2018-0053]

Qualification of Drivers; Exemption Applications; Epilepsy and
Seizure Disorders

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Notice of final disposition.

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SUMMARY: FMCSA announces its decision to renew exemptions for nine
individuals from the requirement in the Federal Motor Carrier Safety
Regulations (FMCSRs) that interstate commercial motor vehicle (CMV)
drivers have ``no established medical history or clinical diagnosis of
epilepsy or any other condition which is likely to cause loss of
consciousness or any loss of ability to control a CMV.'' The exemptions
enable these individuals who have had one or more seizures and are
taking anti-seizure medication to continue to operate CMVs in
interstate commerce.

DATES: Each group of renewed exemptions were applicable on the dates
stated in the discussions below and will expire on the dates provided
below.

FOR FURTHER INFORMATION CONTACT: Ms. Christine A. Hydock, Chief,
Medical Programs Division,<PHONE_NUMBER><EMAIL_ADDRESS>FMCSA,
Department of Transportation, 1200 New Jersey Avenue SE, Room W64-224,
Washington, DC 20590-0001. Office hours are from 8:30 a.m. to 5 p.m.,
ET, Monday through Friday, except Federal holidays. If you have
questions regarding viewing or submitting material to the docket,
contact Dockets Operations,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Public Participation

A. Viewing Documents and Comments

    To view comments, as well as any documents mentioned in this notice
as being available in the docket, go to http://www.regulations.gov.
Insert the docket number, FMCSA-2013-0444, FMCSA-2014-0212, FMCSA-2015-
0321, FMCSA-2018-0051, FMCSA-2018-0052, or FMCSA-2018-0053, in the
keyword box, and click ``Search.'' Next, click the ``Open Docket
Folder'' button and choose the document to review. If you do not have
access to the internet, you may view the docket online by visiting
Dockets Operations in Room W12-140 on the ground floor of the DOT West
Building, 1200 New Jersey Avenue SE, Washington, DC 20590, between 9
a.m. and 5 p.m., ET, Monday through Friday, except Federal holidays. To
be sure someone is there to help you, please call<PHONE_NUMBER> or
(202) 366-9826 before visiting Dockets Operations.

B. Privacy Act

    In accordance with 5 U.S.C. 553(c), DOT solicits comments from the
public to better inform its rulemaking process. DOT posts these
comments, without edit, including any personal information the
commenter provides, to www.regulations.gov, as described in the system
of records notice (DOT/ALL-14 FDMS), which can be reviewed at
www.transportation.gov/privacy.

II. Background

    On August 17, 2020, FMCSA published a notice announcing its
decision to renew exemptions for nine individuals from the epilepsy and
seizure disorders prohibition in 49 CFR 391.41(b)(8) to operate a CMV
in interstate commerce and requested comments from the public (85 FR
50064). The public comment period ended on September 16, 2020, and no
comments were received.
    FMCSA has evaluated the eligibility of these applicants and
determined that renewing these exemptions would achieve a level of
safety equivalent to, or greater than, the level that would be achieved
by complying with Sec.  391.41(b)(8).
    The physical qualification standard for drivers regarding epilepsy
found in Sec.  391.41(b)(8) states that a person is physically
qualified to drive a CMV if that person has no established medical
history or clinical diagnosis of epilepsy or any other condition which
is likely to cause the loss of consciousness or any loss of ability to
control a CMV.
    In addition to the regulations, FMCSA has published advisory
criteria \1\ to assist medical examiners in determining whether drivers
with certain medical conditions are qualified to operate a CMV in
interstate commerce.
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    \1\ These criteria may be found in APPENDIX A TO PART 391--
MEDICAL ADVISORY CRITERIA, section H. Epilepsy: Sec.  391.41(b)(8),
paragraphs 3, 4, and 5, which is available on the internet at
https://www.gpo.gov/fdsys/pkg/CFR-2015-title49-vol5/pdf/CFR-2015-title49-vol5-part391-appA.pdf.
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III. Discussion of Comments

    FMCSA received no comments in this proceeding.

IV. Conclusion

    Based on its evaluation of the nine renewal exemption applications,
FMCSA announces its decision to exempt the following drivers from the
epilepsy and seizure disorders prohibition in Sec.  391.41(b)(8).
    In accordance with 49 U.S.C. 31136(e) and 31315(b), the following
groups of drivers received renewed exemptions in the month of August
and are discussed below.
    As of August 1, 2020, and in accordance with 49 U.S.C. 31136(e) and
31315(b), the following eight individuals have satisfied the renewal
conditions for obtaining an exemption from the epilepsy and seizure
disorders prohibition in the FMCSRs for interstate CMV drivers (85 FR
50064):

Brian Checkley (NJ)
Steven Ford (WI)
Paul Gomez (CA)
Thomas Ork (NY)
Milton Tatham (NV)
Phillip Moore (CT)
Joshua Thomas (MN)
Troy Nichols (TX)
    The drivers were included in docket number FMCSA-2013-0444, FMCSA-
2015-0321, FMCSA-2018-0051, FMCSA-2018-0052, and FMCSA-2018-0053. Their
exemptions were applicable as of August 1, 2020, and will expire on
August 1, 2022.
    As of August 28, 2020, and in accordance with 49 U.S.C. 31136(e)
and 31315(b), the following individual has satisfied the renewal
conditions for obtaining an exemption from the epilepsy and seizure
disorders prohibition in the FMCSRs for interstate CMV drivers (85 FR
50064):

Terry Hamby (NC)

    This driver was included in docket number FMCSA-2014-0212. The
exemption was applicable as of August 28, 2020, and will expire on
August 28, 2022.
    In accordance with 49 U.S.C. 31315(b), each exemption will be valid
for 2 years from the effective date unless revoked earlier by FMCSA.
The exemption will be revoked if the following occurs: (1) The person
fails to comply with the terms and conditions of the exemption; (2) the
exemption has resulted in a lower level of safety than was maintained
prior to being granted; or (3) continuation of the exemption would not
be consistent with the goals and objectives of 49 U.S.C. 31136(e) and
31315(b).

Larry W. Minor,
Associate Administrator for Policy.
[FR Doc. 2020-25886 Filed 11-23-20; 8:45 am]
BILLING CODE 4910-EX-P


[Federal Register: November 21, 2006 (Volume 71, Number 224)]
[Notices]
[Page 67415-67418]
[DOCID:fr21no06-79]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54748; File No. SR-OCC-2006-01]

Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Amended Filing of Proposed Rule Change To Revise Option
Adjustment Methodology

 November 14, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on January 12, 2006, The
Options Clearing Corporation (``OCC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II, and III below, which items have been prepared
by OCC. On March 9, 2006, the Commission published notice of the
proposed rule change to solicit comments from interested parties.\2\
The Commission received ten comment letters.\3\ To address the concerns
raised by the commenters, OCC amended the proposed rule change on
September 25, 2006. The Commission is publishing this notice to solicit
comments on the proposed rule change, as amended, from interested
parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ Securities Exchange Act Release No. 53400 (March 2, 2006),
71 FR 12226.
    \3\ Joseph Haggenmiller (March 8, 2006); Erik A. Hartog,
Operating Manager, Allagash Trading LLC (March 21, 2006); Jeffrey
Woodring (March 22, 2006); Adam Besch-Turner (March 23, 2006);
Christopher Nagy, Chairman, Options Committee, Securities Industry
Association (March 24, 2006); Mike Ianni (April 5, 2006); Mike Ianni
(April 5, 2006); Peter van Dooijeweert, President, Alopex Capital
Management, LLC (April 26, 2006); Bob Linville and Deborah
Mittelman, Service Bureau Committee Co-Chairs, Financial Information
Forum (May 2, 2006); and William H. Navin, Executive Vice President,
General Counsel, and Secretary, The Options Clearing Corporation
(September 29, 2006).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    OCC is seeking to amend Article VI (Clearance of Exchange
Transactions), Section 11A of OCC's By-Laws to (1) eliminate the need
to round strike prices and/or units of trading in the event of certain
stock dividends, stock distributions, and stock splits and (2)

provide for the adjustment of outstanding options for special dividends
(i.e., cash distributions not declared pursuant to a policy or practice
of paying such distributions on a quarterly or other regular basis).
The proposed rule change would also add a $12.50 per contract threshold
amount for cash dividends and distributions to trigger application of
OCC's adjustment rules.

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

    In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.\4\
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    \4\ The Commission has modified the text of the summaries
prepared by OCC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

A. Changes relating to Adjustments for Certain Stock Dividends, Stock
Distributions, and Stock Splits
    OCC's By-Laws currently specify two alternative methods of
adjusting for stock dividends, stock distributions, and stock splits.
In cases where one or more whole shares are issued with respect to each
outstanding share, the number of outstanding option contracts is
correspondingly increased and strike prices are proportionally
reduced.\5\ In all other cases, the number of shares to be delivered
under the option contract is increased and the strike price is reduced
proportionately.\6\
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    \5\ For example, in the event of a 2-for-1 split, an XYZ $60
option calling for the delivery of 100 shares of XYZ stock would be
subdivided into two XYZ $30 options, each calling for the delivery
of 100 shares of XYZ stock.
    \6\ For example, in a 3-for-2 split, an XYZ $60 option calling
for the delivery of 100 shares would be adjusted to call for the
delivery of 150 shares and the strike price would be reduced to $40.
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    Although these two methods have been used since the inception of
options trading, in certain circumstances either method can produce a
windfall profit for one side and a corresponding loss for the other due
to rounding of adjusted strike prices. These profits and losses, while
small on a per-contract basis, can be significant for large positions.
Because equity option strike prices are currently stated in eighths,
OCC's By-Laws require adjusted strike prices to be rounded to the
nearest eighth. For example, if an XYZ $50 option for 100 shares were
to be adjusted for a 3-for-2 split, the deliverable would be increased
to 150 shares and the strike price would be adjusted to $33.33, which
would then be rounded up to $33-\3/8\. Prior to the adjustment, a call
holder would have had to pay $5,000 to exercise ($50 x 100 shares).
After the adjustment, the caller has to pay $5,006.25 for the
equivalent stock position ($33.375 x 150 shares). Conversely, an
exercising put holder would receive $5,006.25 instead of $5,000. The
$6.25 difference represents a loss for call holders and put writers and
a windfall for put holders and call writers.
    A loss/windfall can also occur when the split results in a
fractional deliverable (e.g., when a 4-for-3 split produces a
deliverable of 133.3333 shares). In those cases, OCC's By-Laws
currently require that the deliverable be rounded down to eliminate the
fraction, and if appropriate, the strike price be further adjusted to
the nearest eighth to compensate for the diminution in the value of the
contract resulting from the elimination of the fractional share.
However, even if these steps are taken, small rounding inequities may
remain.
    The windfall profits and correspondent losses resulting from the
rounding process have historically been accepted as immaterial. Due to
recent substantial increases in trading volume and position size,
however, they have become a source of concern to exchanges and market
participants. In addition, OCC has been informed that some traders may
be exploiting announcements of splits and similar events by quickly
establishing positions designed to capture rounding windfalls at the
expense of other market participants.
    The inequity that results from the need to round strike prices can
be eliminated by using a different adjustment method: namely, adjusting
the deliverable but not the strike prices or the values used to
calculate aggregate exercise prices and premiums. As an illustration of
the proposed adjustment methodology, in the XYZ $50 option 3-for-2
split example described above, the resulting adjustment would be a
deliverable of 150 shares of XYZ stock while the strike price would
remain at $50. In this case, the presplit multiplier of 100, used to
extend aggregate strike price and premium amounts, is unchanged. For
example, a premium of 1.50 would equal $150 ($1.5 x 100) both before
and after the adjustment. An exercising call holder would continue to
pay $50 times 100 (for a total of $5,000) but would receive 150 shares
of XYZ stock instead of 100.\7\ This is the method currently used for
property distributions such as spin-offs and special dividends large
enough to require adjustments under OCC's By-Laws.
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    \7\ The same adjustment methodology would apply to reverse stock
splits or combination of shares. For example, in a 3-for-4 reverse
stock split on a XYZ $50 option calling for the delivery of 100
shares, the resulting adjustment would be a deliverable of 75 shares
of XYZ stock while the strike price would remain at $50.
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    The inequity that results from the need to eliminate fractional
shares from the deliverable and to compensate by further reducing the
strike price to the nearest eighth can be eliminated by adjusting the
deliverable to include cash in lieu of the fractional share. As an
illustration, consider a 4-for-3 split of the stock underlying an XYZ
$80 option with a 100 share deliverable. Employing the proposed
adjustment method, the deliverable would be adjusted to 133.3333
shares, which would be rounded down to 133 shares, and the strike price
would remain $80. However, instead of compensating for the elimination
of the .3333 share by reducing the strike prices, the strike prices
would be left unchanged, and the deliverable would be adjusted to 133
shares plus the cash value of the eliminated fractional share (.3333 x
the post-split value of a share of XYZ stock as determined by OCC). The
adjusted option would also continue to use 100 as the multiplier to
calculate aggregate strike and premium amounts.
    The proposed revised adjustment methodology would not generally be
used for 2-for-1 or 4-for-1 stock distributions or splits (since such
distributions or splits normally result in strike prices that do not
require rounding to the nearest eighth). In addition, the revised
adjustment methodology would not generally be used for stock dividends,
stock distributions, or stock splits with respect to any series of
options having exercise prices stated in decimals.\8\ For those
options, the existing adjustment rules would continue to apply. The
reason for this is that once the market has converted to decimal
strikes, the rounding errors created by rounding to the nearest cent
would be immaterial even given the larger positions taken in today's
markets and the other factors discussed above. Because conversion to

decimal strikes might be phased in rather than applied to all series of
equity options simultaneously, the rule has been drafted to cover both
methods of expressing exercise prices, applying the appropriate rule to
each.
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    \8\ Although there are currently no decimal strikes for equity
options, OCC wants to avoid the need for further amendments to its
By-Laws and the options disclosure document in the event that such
strikes are introduced in the future.
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    The proposed changes in adjustment methodology would not be
implemented until the exchanges have conducted appropriate educational
efforts and definitive copies of an appropriate supplement to the
options disclosure document, Characteristics and Risks of Standardized
Options, were available for distribution.\9\
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    \9\ OCC will notify the Commission and issue an Important Notice
when the proposed adjustment methodology is implemented.
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B. Changes to the Definition of ``Ordinary Dividends and
Distributions''
    Article VI, Section 11A(c) of OCC's By-Laws currently provides that
as a general rule, outstanding options will not be adjusted to
compensate for ordinary cash dividends. Interpretation and Policy .01
under Section 11A of Article VI provides that a cash dividend will
generally be deemed to be ``ordinary'' if the amount does not exceed
10% of the value of the underlying stock on the declaration date (``10%
Rule''). The OCC Securities Committee is authorized to decide on a
case-by-case basis whether to adjust for dividends exceeding that
amount. As a result, OCC historically has not adjusted for special cash
dividends unless the amount of the dividend was greater than 10% of the
stock price at the close of trading on the declaration day.
    The 10% Rule predated a number of significant developments,
including, the introduction of Long-term Equity AnticiPation Security
(``LEAPS'') options, the sizeable open interest seen today, the large
contract volume associated with trading and spreading strategies, and
modern option pricing models that take dividends into account. When
open interest and individual positions were smaller, not adjusting for
dividends of less than 10% did not have the pronounced impact it does
today. Additionally, changes to the tax code which now tax dividends
more favorably have provided an incentive for companies to pay more
dividends, including special dividends. In light of these
considerations, it is appropriate that the 10% Rule now be revised.
    Under the revision proposed by OCC, a cash dividend or distribution
would be considered ordinary (regardless of size) if the OCC Securities
Committee determines that such dividend or distribution was declared
pursuant to a policy or practice of paying such dividends or
distributions on a quarterly or other regular basis. In addition, as a
general rule, a cash dividend or distribution that is less than $12.50
per contract would not trigger the adjustment provisions of Article VI,
Section 11A.
1. No Adjustment for Regularly-Scheduled Dividends Needed
    Dividends declared by an issuer pursuant to a policy or practice of
such issuer are known and can thus be priced into option premiums. By
definition, however, special dividends cannot be anticipated in advance
and therefore cannot be integrated into option pricing models.\10\ If
adjustments are not made in response to special dividends (i.e., by
calling for the delivery of the dividend) call holders can capture the
dividends only by exercising their options. Often in these cases,
especially with LEAPS options or FLEX options which can exist for 5 to
10 years, early exercise would sacrifice substantial option time value.
This economic disadvantage would be further magnified if the option
position is large, as is often the case today. Conversely, put holders
often receive a windfall benefit from the increase in the in-the-money
value on the ex date. To the extent that equity options can be priced
accurately and consistently without dislocations due to unforeseen
special dividends, these economic disadvantages can be avoided.
Moreover, because special dividends are one-off events, adjusting for
them would not cause the proliferation of outstanding series that would
result from adjusting for regular dividends as explained below.
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    \10\ OCC has been told that some traders form judgments as to
the likelihood that certain issuers may declare special cash
dividends and factor those judgments into their pricing models.
However, that is clearly not the case with all traders or all
issues.
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2. De Minimis Threshold
    Adjusting for dividends can cause a proliferation of outstanding
option symbols and series.\11\ In the interest of providing some limit
on option symbol proliferation, the proposed rule change includes a de
minimis threshold of $12.50 per contract. Special dividends smaller
than these amounts would not trigger an adjustment.
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    \11\ Symbols proliferate when adjustments are made because often
the dividend amount must be added to the deliverable yielding a non-
standard option. The exchanges then introduce standard options with
the same strikes.
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    OCC believes that a threshold that is a set dollar amount is
preferable to one that is a percentage of the stock price (like OCC's
existing 10% Rule) because there are operational problems with applying
a percentage threshold. Under the existing 10% Rule, in order to
determine whether this threshold is met, the per share dividend amount
is applied to the closing price of the underlying security on the
dividend declaration date. The date the dividend is announced (by press
release or by some other means) is not normally the ``declaration
date'' when the dividend is officially declared by an issuer's board of
directors. Until the actual declaration date, investors and traders may
not know whether or not an announced dividend will trigger an
adjustment based on the company's share price. In the interim, it is
difficult for traders and investors to price their options because they
do not know if an adjustment will be made.
    The advantage of a fixed dollar threshold is avoiding uncertainty.
The per contract value of the dividend can be immediately determined
without the need to wait until the declaration date and without the
need to do a calculation based on the closing price of the underlying
shares.
3. Consistency Across Relevant Interpretations
    Interpretations and Policies .01 and .08 under Article VI, Section
11A apply to cash distributions. Interpretation and Policy .01 (as
proposed to be amended) would apply in general to all cash
distributions. Interpretation and Policy .08 currently carves out
exceptions for fund share cash distributions and does not include a
threshold minimum. In the interest of clarity and consistency with
Interpretation and Policy .01, Interpretation .08 would be revised to
provide for the same $12.50 per contract threshold. Clause (ii) of
Interpretation and Policy .08 would be deleted because it is an
exception to the 10% Rule and would no longer be needed when the 10%
Rule is abolished.
4. The Amendment
    OCC understands that certain option traders may have integrated
into their pricing models the probability of special dividends based on
the OCC rules currently in effect and that eliminating the 10% Rule
with respect to existing contracts may unfairly affect these options
traders. To ensure that no options series that were opened before
disclosure of the rule change are affected by elimination of the 10%
Rule, OCC will delay eliminating the 10% Rule and replacing it with the
fixed dollar threshold so that these changes will be implemented only
for corporate events announced on or after February 1, 2009. OCC plans
to provide ODD disclosure of this rule change before May 29, 2007
(after which date the

exchanges would normally begin introducing LEAPS expiring in 2010
making a 2009 implementation impracticable). The delay in
implementation will ensure that all options series opened before the
ODD disclosure is made available (other than certain ``flex'' options
that will be grandfathered under the old rule) will have expired before
the change is effected.\12 \While delaying the implementation until
2009 postpones the benefit of making this needed change, it
accommodates the many firms that find the operational hurdles and
fairness issues associated with an earlier implementation onerous.
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    \12\ OCC intends to take a ``snapshot'' of flex series expiring
after January 31, 2009, that are outstanding at the time when ODD
disclosure of the rule change is made. Those series will be assigned
distinctive trading symbols and ``grandfathered'' under the old
rule. Trading will continue normally in grandfathered series until
their expiration, but the exchanges would be free to open otherwise
identical non-grandfathered series, which would be identified by
conventional flex trading symbols. If ODD disclosure is not made
until after the December 2006 expiration, it may also be necessary
to grandfather two classes of LEAPs with December expirations (SPY
and S&P 100 i-Shares) because the exchanges would ordinarily
introduce new series expiring in December 2009 after the December
2006 expiration.
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    OCC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act \13\ and the rules and
regulations thereunder applicable to OCC because (1) it is intended to
eliminate inequities that result from certain rounding practices
currently required by OCC's By-Laws and thus protect investors and (2)
it is intended to make more predictable when cash distributions by an
issuer will result in an adjustment to an option contract and thus make
the process for adjustments more equitable for all investors.
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    \13\ 15 U.S.C. 78q-1.
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would impose any
burden on competition.

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

    Written comments were not and are not intended to be solicited with
respect to the proposed rule change and none have been received.

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

    Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) as the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
    (A) By order approve 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, as amended, 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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-OCC-2006-01 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-OCC-2006-01. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all

written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Section, 100 F Street,
NE., Washington, DC 20549. Copies of such filing also will be available
for inspection and copying at the principal office of OCC and on OCC's
Web site at http://www.theocc.com. All comments received will be posted

without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-OCC-2006-01 and should be submitted on or before
December 12, 2006.
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    \14\ 17 CFR 200.30-3(a)(12).

    For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\14\
Nancy M. Morris,
Secretary.
[FR Doc. E6-19619 Filed 11-20-06; 8:45 am]

BILLING CODE 8011-01-P