[Federal Register: July 21, 2010 (Volume 75, Number 139)]
[Notices]
[Page 42474]
[DOCID:fr21jy10-104]

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

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

[DOT Docket No. DOT-OST-2010-0074]

The Future of Aviation Advisory Committee (FAAC) Subcommittee on
Competitiveness and Viability; Notice of Meeting

AGENCY: U.S. Department of Transportation, Office of the Secretary of
Transportation.

ACTION: Notice of Meeting.

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

SUMMARY: The Department of Transportation (DOT), Office of the
Secretary of Transportation, announces the second meeting of the FAAC
Subcommittee on Competitiveness and Viability, which will be held in
Chicago, Illinois. This notice provides details on the date, time, and
location of the meeting, which will be open to the public. The purpose
of the FAAC is to provide advice and recommendations to the Secretary
of Transportation to ensure the competitiveness of the U.S. aviation
industry and its capability to manage effectively the evolving
transportation needs, challenges, and opportunities of the global
economy. The Subcommittee on Competitiveness and Viability is charged
with examining changes in the operating and competitive structures of
the U.S. airline industry; considering innovative strategies to open up
new international markets and expand commercial opportunities in
existing markets; investigating strategies to encourage the development
of cost-effective, cutting-edge technologies and equipment that are
critical for a competitive industry coping with increasing economic and
environmental challenges; and examining the adequacy of current Federal
programs to address the availability of intermodal transportation
options and alternatives, small and rural community access to the
aviation transportation system, the role of State and local governments
in contributing to such access, and how the changing competitive
structure of the U.S. airline industry is likely to transform travel
habits of small and rural communities.

DATES: The Subcommittee on Competitiveness and Viability meeting will
be held on August 4, 2010, from 12:45 p.m. to 5 p.m.

ADDRESSES: The meeting will be held at the corporate headquarters of
United Airlines, 77 West Wacker Drive, Chicago, Illinois 60601.
    Public Access: The meeting is open to the public. (See below for
registration instructions.)
    Public Comments: Persons wishing to offer written comments and
suggestions concerning the activities of the advisory committee or
subcommittee should file comments in the Public Docket (Docket Number
DOT-OST-2010-0074 at http:[sol][sol]www.regulations.gov) or
alternatively through e-mail at<EMAIL_ADDRESS>If comments and
suggestions are intended specifically for the Subcommittee on
Competitiveness and Viability, the term ``Competitiveness'' should be
listed in the subject line of the message. To ensure such comments can
be considered by the subcommittee before its August 4, 2010, meeting,
public comments must be filed by 5 p.m. Eastern Daylight time
Wednesday, July 28, 2010.

SUPPLEMENTARY INFORMATION:

Agenda

    Under section 10(a)(2) of the Federal Advisory Committee Act (5
U.S.C. App. 2), we are giving notice of a meeting of the Subcommittee
on Competitiveness and Viability of the Future of Aviation Advisory
Committee taking place on August 4, 2010, at 12:45 p.m., at 77 West
Wacker Drive, Chicago, Illinois 60601. The agenda includes--
    1. Reports from subcommittee members on assigned topics,
    2. Further discussion of topics offered by subcommittee members for
referral to the full committee on the subject of competitiveness and
viability of the aviation industry, and
    3. Identification of priority issues for the third subcommittee
meeting.

Registration

    The meeting room can accommodate up to 25 members of the public.
Persons desiring to attend must pre-register by July 28, 2010, through
e-mail to<EMAIL_ADDRESS>The term ``Registration: Competitiveness''
should be listed in the subject line of the message, and admission will
be limited to the first 25 persons to pre-register and receive a
confirmation of their pre-registration. No arrangements are being made
for audio or video transmission or for oral statements or questions
from the public at the meeting. Minutes of the meeting will be taken
and will be made available to the public.

Request for Special Accommodation

    The DOT is committed to providing equal access to this meeting for
all participants. If you need alternative formats or services because
of a disability, please send a request to<EMAIL_ADDRESS>with the term
``Special Accommodations'' listed in the subject line of the message by
close of business Wednesday, July 28, 2010.

FOR FURTHER INFORMATION CONTACT: Todd Homan, Director, Office of
Aviation Analysis, U.S. Department of Transportation; Room 86W-312,
1200 New Jersey Avenue, SE., Washington, DC 20590;<PHONE_NUMBER>.

    Issued in Washington, DC, on July 16, 2010.
Pamela Hamilton-Powell,
Designated Federal Official, Future of Aviation Advisory Committee.
[FR Doc. 2010-17824 Filed 7-20-10; 8:45 am]
BILLING CODE P


[Federal Register Volume 77, Number 138 (Wednesday, July 18, 2012)]
[Rules and Regulations]
[Pages 42181-42185]
[FR Doc No: 2012-17381]

=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Chapter I

[EPA-HQ-OPPT-2012-0495; FRL-9356-2]

Polychlorinated Biphenyls (PCBs); Disposition of Request
Submitted Under TSCA Section 21

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of reasons for Agency response.

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

SUMMARY: This document announces EPA's reasons for denying a request
submitted by the Basel Action Network, the Sierra Club, and the Center
for Biological Diversity (petitioners), requesting that EPA take
certain actions to protect human health and the marine environment from
polychlorinated biphenyls (PCBs) that leach from ships sunk through the
U.S. Navy's sinking exercises (SINKEX) program. As noted in a letter
dated July 10, 2012, EPA denied the request for rules under the Toxic
Substances Control Act (TSCA). The reasons for the denial are discussed
in this document. EPA will respond separately to the petitioners'
request for revisions to the general permit for the transport of target
vessels under SINKEX issued by EPA under the Marine Protection,
Research, and Sanctuaries Act (MPRSA).

DATES: July 18, 2012.

FOR FURTHER INFORMATION CONTACT: For technical information contact:
Peter Gimlin, National Program Chemicals Division (7404T), Office of
Pollution Prevention and Toxics, Environmental Protection Agency, 1200
Pennsylvania Ave. NW., Washington, DC 20460-0001; telephone number:
(202) 566-0515; fax number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>    For general information contact: The TSCA-Hotline, ABVI-Goodwill,
422 South Clinton Ave., Rochester, NY 14620; telephone number: (202)
554-1404; email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    This action is directed to the public in general. This action may,
however, be of interest to you if you manufacture, process, distribute
in commerce, use or dispose of PCBs. Since other entities may also be
interested, the Agency has not attempted to describe all the specific
entities that may be affected by this action. If you have any questions
regarding the applicability of this action to a particular entity,
consult the technical contact person listed under FOR FURTHER
INFORMATION CONTACT.

B. How can I access information about this action?

    EPA has established a docket for this action under docket
identification (ID) number EPA-HQ-OPPT-2012-0495. All documents in the
docket are listed in the docket index available at http://www.regulations.gov. Although listed in the index, some information is
not publicly available, e.g., Confidential Business Information (CBI)
or other information whose disclosure is restricted by statute. Certain
other material, such as copyrighted material, will be publicly
available only in hard copy. Publicly available docket materials are
available electronically at http://www.regulations.gov, or, if only
available in hard copy, at the OPPT Docket. The OPPT Docket is located
in the EPA Docket Center (EPA/DC) at Rm. 3334, EPA West Bldg., 1301
Constitution Ave. NW., Washington, DC. The EPA/DC Public Reading Room
hours of operation are 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding legal holidays. The telephone number of the EPA/DC Public
Reading Room is<PHONE_NUMBER>, and the telephone number for the OPPT
Docket is<PHONE_NUMBER>. Docket visitors are required to show
photographic identification, pass through a metal detector, and sign
the EPA visitor log. All visitor bags are

processed through an X-ray machine and subject to search. Visitors will
be provided an EPA/DC badge that must be visible at all times in the
building and returned upon departure.

II. Overview

    On April 11, 2012, EPA received a request from the Basel Action
Network, the Sierra Club, and the Center for Biological Diversity
(petitioners). The petitioners requested that EPA take certain actions
to protect human health and the marine environment from PCBs that leach
from ships sunk through the U.S. Navy's SINKEX program. The petitioners
requested that EPA amend the existing general permit issued to the Navy
under MPRSA (33 U.S.C. 1401 et seq.), or, in the alternative, enact
rules under TSCA (15 U.S.C. 2601 et seq.). In requesting actions under
TSCA, the petitioners have invoked the citizen petition provisions of
section 21 of TSCA (15 U.S.C. 2620).
    After careful consideration, EPA denied the request for TSCA rules
by letter dated July 10, 2012. This document explains EPA's reasons for
denying the request to initiate rulemakings under TSCA. EPA will
respond separately to the petitioners' requests for revisions to the
general permit for the transport of target vessels under SINKEX issued
by EPA under MPRSA.

III. What is a TSCA section 21 Petition?

    Under TSCA section 21, any person can petition EPA to initiate a
rulemaking proceeding for the issuance, amendment, or repeal of a rule
under TSCA section 4, 6, or 8 or an order under TSCA section 5(e) or
6(b)(2). A TSCA section 21 petition must set forth the facts that are
claimed to establish the necessity for the action requested. EPA is
required to grant or deny the petition within 90 days of its filing. If
EPA grants the petition, the Agency must promptly commence an
appropriate proceeding. If EPA denies the petition, the Agency must
publish its reasons for the denial in the Federal Register. A
petitioner may commence a civil action in a U.S. district court to
compel initiation of the requested rulemaking proceeding within 60 days
of either a denial or the expiration of the 90-day period.

IV. What is the MPRSA?

    In 1972, Congress enacted Title I of MPRSA, also referred to as the
Ocean Dumping Act, because unregulated dumping of material into ocean
waters endangers human health, welfare, and amenities, and the marine
environment, ecological systems, and economic potentialities. 33 U.S.C.
1401(a). MPRSA section 101(a) prohibits, unless authorized by permit,
the (1) transportation from the United States of any material for the
purpose of dumping it into ocean waters, and (2) in the case of a
vessel or aircraft registered in the United States or flying the United
States flag, or in the case of a United States department, agency, or
instrumentality, transportation from any location, any material for the
purpose of dumping it into ocean waters. 33 U.S.C. 1411(a). MPRSA
section 101(b) also prohibits the unpermitted dumping of any material
transported from a location outside of the United States into certain
ocean waters of the United States. MPRSA section 3(f) defines the term
``dumping'' broadly (to mean ``a disposition of material'') but the
term excludes, among other things, ``the construction of any fixed
structure or artificial island nor the intentional placement of any
device in ocean waters or on or in the submerged land beneath such
waters, for a purpose other than disposal, when such construction or
such placement is otherwise regulated by Federal or State law or occurs
pursuant to an authorized Federal or State program.'' 33 U.S.C.
1402(f).
    Though MPRSA authorizes the U.S. Army Corps of Engineers to issue
MPRSA permits (subject to EPA review and concurrence) with respect to
dredged material, EPA has permit authority for all other materials. 33
U.S.C. 1412 and 1413.

V. What is SINKEX?

    In 1977, EPA issued a general permit to the Navy for the transport
of target vessels (SINKEX) under MPRSA section 102 (42 FR 2462, January
11, 1977). The permit authorizes the Navy to transport vessels from the
United States or from any other location for the purpose of sinking
such vessels in ocean waters in testing ordnance and providing related
data subject to four conditions:

    1. Such vessels may be sunk at times determined by the
appropriate Navy official;
    2. Necessary measures shall be taken to insure that the vessel
sinks to the bottom rapidly and permanently, and that marine
navigation is not otherwise impaired by the sunk vessel;
    3. All such vessel sinkings shall be conducted in water at least
1,000 fathoms (6,000 feet) deep and at least 50 nautical miles from
land [i.e., that portion of the baseline from which the territorial
sea is measured, as provided for in the Convention on the
Territorial Sea and the Contiguous Zone, which is in closest
proximity to the proposed disposal site]; and
    4. Before sinking, appropriate measures shall be taken by
qualified personnel at a Navy or other certified facility to remove
to the maximum extent practicable all materials which may degrade
the marine environment, including without limitation (i) emptying of
all fuel tanks and fuel lines to the lowest point practicable,
flushing of such tanks and lines with water, and again emptying such
tanks and lines to the lowest point practicable so that such tanks
and lines are essentially free of petroleum, and (ii) removing from
the hulls other pollutants and all readily detachable material
capable of creating debris or contributing to chemical pollution. 33
CFR 229.2(a).

    The Navy also must make an annual report to EPA setting forth the
name of each vessel used as a target vessel, its approximate tonnage,
and the location and date of sinking. 33 CFR 229.2(b).
    In 1989, the Navy identified the potential for viscous PCBs at
levels of concern in wool felt used as acoustical damping material (on
submarines) and as gasket material (on all vessels). The Navy promptly
notified EPA and halted most SINKEXs pending further evaluation. In
1993, the Navy conducted a modeling study that predicted PCBs
introduced to the deep benthic environment would have little chance of
physical or biological transport to surface waters and that PCB
sediment concentrations would pose no notable threat to benthic
organisms. Other Navy studies had indicated that most of the PCBs
introduced or to be introduced by the Navy through SINKEXs to the deep
benthic environment would be solid materials and not readily leachable.
In 1996, EPA and the Navy entered into an Agreement regarding the
further course of study and continuing conduct of SINKEX activities
using a finite number of vessels prepared according to the terms of the
Agreement (Ref. 1).
    In 1999, EPA signed a letter designed to clarify and specify, with
regard to PCBs, the manner in which the Navy would proceed with SINKEX
activities under the existing MPRSA general permit. At that time, EPA
confirmed its belief that SINKEX operations could continue under the
MPRSA general permit and its requirements, including as interpreted to
impose specific requirements relating to materials containing PCBs. The
terms and conditions of EPA's 1999 interpretation were accepted by the
Navy as of August 2, 1999 (Ref. 2).
    The 1999 EPA letter required that the Navy conduct specified
studies and produce certain information to EPA. For the studies, the
Navy was to complete a study involving monitoring the ex-USS Agerholm,
including sample collection, assessment and analysis. The ex-USS
Agerholm study included assessment and analyses of sediments, core
samples, and fish tissue for PCBs, as well as toxicity and
bioaccumulation

studies. The Navy also prepared analysis of the leach rate of PCBs (in
the various materials likely to be present on target vessels) into sea
water at the temperature and pressure present on a sunken vessel (i.e.,
representative of conditions authorized under the MPRSA general
permit).
    The 1999 letter explained EPA's interpretation of the general
permit requirements to clarify and specify, with regard to PCBs, the
manner in which the Navy could proceed with SINKEX activities
(transport for the purposes of disposal into ocean waters) under the
MPRSA general permit (40 CFR 229.2)). EPA explained that, under the
MPRSA general permit:

    Before engaging in a SINKEX, the Navy must conduct an inventory
of each SINKEX vessel to ascertain the presence of PCBs, and that
the inventory and list of items removed prior to sinking must be
provided to EPA in the annual report required under the general
permit. Before sinking a SINKEX vessel, qualified personnel at a
Navy or other approved facility must:
    a. Remove all transformers containing 3 pounds or more of
dielectric fluid and all capacitors containing 3 pounds or more of
dielectric fluid;
    b. Use all reasonable efforts to remove any capacitors and
transformers containing less than 3 pounds of dielectric fluid from
the vessel (reasonable efforts include, but are not necessarily
limited to, the removal of capacitors from electrical and control
panels by using hand tools such as wire or bolt cutters or a screw
driver); and
    c. Drain and flush hydraulic equipment, heat transfer equipment,
high/low pressure systems, cutting power machinery which uses
cooling or cutting oil, and containers containing liquid PCBs at
>=50 ppm [parts per million].

    EPA also explained its belief that it is often practicable to
remove specified materials containing non-liquid PCBs before sinking a
vessel. To the extent that removal is practicable, EPA explained that
these non-liquid PCBs are required to be removed under the MPRSA
general permit. However, when such objects cannot be practicably
removed or their removal threatens the structural integrity of the
vessels so as to impede the SINKEX, EPA recognized that the Navy could
leave such items in place (e.g., felt materials that are bonded in
bolted flanges or mounted under heavy equipment, certain paints and
adhesives). EPA noted that objects may be considered not capable of
practicable removal if equipment must be disassembled or removed for
access to the objects, if the objects must be removed by heat, chemical
stripping, scraping, abrasive blasting or similar process, or if
removal would endanger human safety or health even when conducted with
protective equipment and reasonable safety measures.
    Shortly after the 1999 letter, EPA made a determination under TSCA
section 9(b) that the risks associated with PCBs on target vessels used
in SINKEX could be eliminated or reduced to a sufficient extent by
actions taken under MPRSA and that such risks should be addressed
solely under MPRSA.

VI. Summary of the Request

    On April 11, 2012, the Basel Action Network, the Sierra Club, and
the Center for Biological Diversity requested that EPA take certain
actions to protect human health and the marine environment from PCBs
that leach from ships sunk through the U.S. Navy's SINKEX program (Ref.
3). The petitioners requested that EPA amend the existing general
permit issued to the Navy under MPRSA or, in the alternative, enact
rules under TSCA. Specifically, the submission asks EPA to:
    1. Require all PCB-contaminated materials in concentrations of 50
ppm or greater to be removed from SINKEX vessels prior to sinking.
    2. Require all PCB-contaminated materials in concentrations of <50
ppm to be removed from SINKEX vessels prior to sinking to the maximum
extent practicable.
    3. Require additional studies to determine whether PCB-contaminated
materials in concentrations of <50 ppm constitute ``trace''
contaminants. The request states that such additional studies should
include the most recent data on the toxicity, persistence, and
bioaccumulation of PCBs and should include monitoring at multiple
recent SINKEX sink sites. The request further states that studies
should also assess the releases of other potentially hazardous
pollutants into the marine environment from SINKEX ships including
heavy metals, asbestos, and radioactive substances.

VII. Disposition of the Request for Rules Under TSCA

A. What was EPA's response?

    In a letter dated July 10, 2012, EPA denied the petitioners'
request to initiate rulemakings under TSCA (Ref. 4). A copy of the
Agency's letter is available in the docket for this action. EPA's
reasons for denying the request for TSCA rules are provided in Unit
VII.B of this unit.

B. What were EPA's reasons for this denial?

    1. Requests for rules requiring removal of PCB-contaminated
materials--a. PCBs on SINKEX vessels are regulated solely under the
authority of MPRSA. TSCA is not the appropriate vehicle for the
regulation of PCBs on ships used in the Navy's SINKEX program, because
the Administrator in 1999 determined under TSCA section 9(b) that such
regulation should be under MPRSA, not TSCA. This section 9(b)
determination is not subject to TSCA section 21. Section 21 of TSCA
allows any person to petition ``to initiate a proceeding for the
issuance, amendment, or repeal of a rule under section 2603, 2605, or
2607 of this title or an order under section 5(e) or 6(b)(2) of this
title'' (15 U.S.C. 2620(a)), but not a determination under section 2608
(TSCA section 9).
    Moreover, the petitioners have provided no basis to cause EPA to
reconsider this determination. Section 9(b) of TSCA provides:

    The Administrator shall coordinate actions taken under [TSCA]
with actions taken under other Federal laws administered by the
Administrator. If the Administrator determines that a risk to health
or the environment associated with a chemical substance or mixture
could be eliminated or reduced to a sufficient extent by actions
taken under the authorities contained in such other Federal laws,
the Administrator shall use such authorities to protect against such
risk unless the Administrator determines, in the Administrator's
discretion, that it is in the public interest to protect against
such risk by actions taken under [TSCA].

15 U.S.C. 2610(b)
    In 1999, the Administrator determined under TSCA section 9(b) that
``the risk to health or the environment attributable to the
transportation and disposal of PCBs associated with SINKEX could be
eliminated or reduced to a sufficient extent by actions taken under the
authority of MPRSA.'' (Ref. 5). The Administrator further stated: ``I
have not identified a public interest in the regulation under TSCA of
the transportation and disposal of PCBs associated with SINKEX.'' (Ref.
5). Consequently, the Administrator determined that ``PCBs on SINKEX
vessels should be regulated solely under [MPRSA], rather than under
both MPRSA and TSCA.'' (Ref. 5).
    The petitioners do not present any new information that would cause
EPA to reconsider this determination. Although the petitioners present
information that they believe calls into question the sufficiency of
the current MPRSA general permit, they present no information
indicating that any risks that may not be adequately addressed by the
current permit could not be reduced to a sufficient extent by action
taken

under the authority of MPRSA, or that the public interest would be
served by regulation of SINKEX under TSCA in addition to regulation
under MPRSA. The petitioners implicitly suggest that any such risk
could be reduced to a sufficient extent under MPRSA by seeking
amendment of the MPRSA general permit to impose precisely the
conditions they ask EPA to impose under TSCA. In addition, given the
existence of the MPRSA general permit and the history of regulation of
SINKEX under MPRSA, EPA believes it is more efficient to continue to
regulate SINKEX under the authorities of MPRSA, and not to also
regulate SINKEX under TSCA.
    EPA is evaluating the request to revise the MPRSA general permit
and will respond shortly. As the Agency stated in issuing the TSCA
section 9(b) determination, EPA ``is prepared to revise the Navy
permit, or revoke it, in the event that the results of further studies
demonstrate an unexpected unacceptable risk to human health or the
environment from SINKEX.'' (Ref. 5).
    b. Petitioners have not shown that the requested PCB removal rules
would be necessary. The petitioners have not shown that a rule to
require removal of PCB-contaminated materials in concentrations of >=50
ppm would be necessary if EPA were to withdraw the TSCA section 9(b)
determination, given that the export of ships under the SINKEX program
containing PCBs in concentrations >=50 ppm would be prohibited by
existing TSCA regulations, absent rulemaking under TSCA section 6(e)(3)
allowing the export. 40 CFR 761.97. The petitioners have not shown that
a rule to require removal of PCB-contaminated materials in
concentrations <50 ppm to the maximum extent practicable would be
necessary, since the MPRSA general permit already does require removal
of PCB-contaminated materials to the maximum extent practicable. 40 CFR
229.2(a)(4). In addition, the petitioners do not provide an assessment
of risks specifically associated with PCBs in concentrations <50 ppm.
    2. Requests for rules requiring studies. The petitioners request
that the Agency issue a TSCA rule to require studies at multiple recent
SINKEX sink sites to determine whether PCB-contaminated materials in
concentrations of <50 ppm constitute ``trace'' contaminants, ``such
that their dumping will not cause undesirable effects including the
possibility of bioaccumulation.'' The petitioners' request is not
entirely clear, but EPA interprets it as a request for monitoring of
PCB concentrations in the vicinity of sunken SINKEX vessels to
determine, based on the most recent data on the toxicity, persistence,
and bioaccumulation of PCBs, whether materials on vessels with PCB
concentrations of <50 ppm would constitute trace contaminants.
    The petitioners do not attempt to conform their request to TSCA;
they do not address the applicable TSCA section 4 findings.
    For the Agency to issue a TSCA section 4 test rule to require
testing on a chemical substance, the Agency must find the following:
     The chemical substance may present unreasonable risk of
injury to health or the environment.
     There are insufficient data or experience upon which the
effects of the chemical substance can reasonably be determined or
predicted.
     Testing of the chemical substance is necessary to provide
the missing data.
    An alternative set of findings could support a section 4 rule as
well:
     The chemical substance is or will be produced in
substantial quantities and it enters or may reasonably be anticipated
to enter the environment in substantial quantities or there is or may
be significant or substantial human exposure.
     There are insufficient data or experience upon which the
effects of the chemical substance can reasonably be determined or
predicted.
     Testing of the chemical substance is necessary to provide
the missing data.
    The petitioners do not address these required statutory findings.
Nor does the request provide a basis for EPA to make the findings. For
example, the petitioners do not provide sufficient information to
demonstrate that there are insufficient data or experience upon which
the effects of the PCBs in question can reasonably be determined or
predicted, or that the requested monitoring would be necessary to
develop any such missing data. Among other things, the petitioners do
not demonstrate that the monitoring they request would be an effective
way to determine whether PCB-contaminated materials at concentration
<50 ppm constitute trace contaminants. The petitioners offer no
explanation of how PCBs detected in the vicinity of a sunken vessel
could be correlated with PCB-contaminated materials on the ship at
concentrations <50 ppm as opposed to materials on the ship with PCBs at
concentrations >50 ppm. EPA is not prepared, based on the information
provided in the request, to initiate a rulemaking under TSCA to require
the requested monitoring.
    Furthermore, testing requirements under TSCA section 4 can be
imposed only upon manufacturers and processors of chemical substances.
Manufacturing and processing of PCBs were, for the most part, banned by
TSCA section 6(e) more than 30 years ago. Although some incidental
manufacturing and processing of PCBs continues, EPA believes it makes
more sense that monitoring for PCBs in connection with SINKEX, if any
is necessary, fall under the authority of MPRSA rather than TSCA,
particularly given the connection between the ocean dumping activity
authorized under the MPRSA general permit for SINKEX and the PCB
monitoring requested. This approach is reinforced by the TSCA section
9(b) determination and is consistent with the TSCA section 9(b)
provision requiring the Administrator to ``coordinate actions taken
under [TSCA] with actions taken under other Federal laws administered
in whole or in part by the Administrator.''
    The petitioners' request regarding studies relating to ``other
potentially hazardous pollutants'' such as heavy metals, asbestos, and
radioactive substances is similarly unsupported in the submission. The
petitioners do not attempt to conform the request to TSCA section 4. In
addition, the petitioners do not even identify (other than asbestos)
the chemical substances or mixtures that they would like tested.
    For these reasons, EPA denied the request for TSCA rules.

VIII. References

    The following is a list of the documents that are specifically
referenced in this document and placed in the docket that was
established under docket ID number EPA-HQ-OPPT-2012-0495. For
information on accessing the docket, refer to Unit I.B. of this
document.

1. ``Agreement between the Department of the Navy and the United
States Environmental Protection Agency, Washington, DC'', August 19,
1996.
2. August 2, 1999, letter from EPA Office of Wetlands, Oceans, and
Watersheds Director Robert Wayland to Deputy Assistant Secretary of
the Navy Elsie Munsell.
3. Basel Action Network, Sierra Club, and the Center for Biological
Diversity. ``U.S. Navy Ocean Dumping Program; Petition to EPA to
Protect Human Health and the Environment from Unreasonable Risks
Associated with the Navy's Sinking Exercise Program (SINKEX),''
(April 2012).
4. July 10, 2012, letter from EPA Office of Chemical Safety and
Pollution Prevention's Acting Assistant Administrator Jim Jones to
the Basel

Action Network, the Sierra Club, and the Center for Biological
Diversity.
5. September 13, 1999, letter from EPA Administrator Carol M.
Browner to the Honorable Richard Danzig, and enclosure (Decision
Memorandum--EPA regulation of PCBs on Vessels Used for Navy Sinking
Exercise).

List of Subjects

    Environmental protection, Polychlorinated biphenyls, SINKEX.

    Dated: July 10, 2012.
James Jones,
Acting Assistant Administrator, Office of Chemical Safety and Pollution
Prevention.
[FR Doc. 2012-17381 Filed 7-17-12; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 80, Number 224 (Friday, November 20, 2015)]
[Notices]
[Pages 72763-72767]
[FR Doc No: 2015-29601]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76445; File No. SR-NASDAQ-2015-133]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Create a Market Access and Routing Subsidy or ``MARS''

November 16, 2015.
    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 November 2, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to amend the Exchange's transaction fees at
Chapter XV, Section 2 entitled ``NASDAQ Options Market--Fees and
Rebates,'' which governs pricing for Nasdaq Participants using the
NASDAQ Options Market (``NOM''), Nasdaq's facility for executing and
routing standardized equity and index options. The Exchange proposes to
create a subsidy program, the Market Access and Routing Subsidy or
``MARS,'' for NOM Participants that provide certain order routing
functionalities \3\ to other NOM Participants and/or use such
functionalities themselves.
---------------------------------------------------------------------------

    \3\ The order routing functionalities permit a NOM Participant
to provide access and connectivity to other Participants as well
utilize such access for themselves. The Exchange notes that under
this arrangement it will be possible for one NOM Participant to be
eligible for payments under MARS, while another NOM Participant
might potentially be liable for transaction charges associated with
the execution of the order, because those orders were delivered to
the Exchange through a NOM Participant's connection to the Exchange
and that Participant qualified for the MARS Payment. Consider the
following example: both Participants A and B are NOM Participants
but A does not utilize its own connections to route orders to the
Exchange, and instead utilizes B's connections. Under this program,
B will be eligible for the MARS Payment while A is liable for any
transaction charges resulting from the execution of orders that
originate from A, arrive at the Exchange via B's connectivity, and
subsequently execute and clear at The Options Clearing Corporation
or ``OCC,'' where A is the valid executing clearing Participant or
give-up on the transaction. Similarly, where B utilizes its own
connections to execute transactions, B will be eligible for the MARS
Payment, but would also be liable for any transaction [sic]
resulting from the execution of orders that originate from B, arrive
at the Exchange via B's connectivity, and subsequently execute and
clear at OCC, where B is the valid executing clearing Participant or
give-up on the transaction.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaq.cchwallstreet.com, at the principal office of
the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    NOM proposes a new subsidy program, MARS, which would pay a subsidy
to NOM Participants that provide certain order routing functionalities
to other NOM Participants and/or use such functionalities themselves.
Generally, under MARS, NOM proposes to make payments to participating
NOM Participants to subsidize their costs of providing routing services
to route orders to NOM. The Exchange believes that MARS will attract
higher volumes of electronic equity and ETF options volume to the
Exchange from non-NOM Participants as well as NOM Participants.
MARS System Eligibility
    To qualify for MARS, a NOM Participant's routing system
(hereinafter ``System'') would be required to meet certain criteria.
Specifically the Participant's System would be required to: (1) Enable
the electronic routing of orders to all of the U.S. options exchanges,
including NOM; (2) provide current consolidated market data from the
U.S. options exchanges; and (3) be capable of interfacing with NOM's
API to access current NOM match engine functionality. The NOM
Participant's System would also need to cause NOM to be one of the top
three default destination exchanges for individually executed
marketable orders if NOM is at the national best bid or offer
(``NBBO''), regardless of size or time, but allow any user to manually
override NOM as the default destination on an order-by-order basis.
    The Exchange would require NOM Participants desiring to participate
in MARS \4\ to complete a form, in a manner prescribed by the Exchange,
and reaffirm their information on a quarterly basis to the Exchange.
Any NOM Participant would be permitted to apply for MARS, provided the
above-referenced requirements are met,

including a robust and reliable System. The Participant would be solely
responsible for implementing and operating its System.
---------------------------------------------------------------------------

    \4\ For example, a NOM Participant that desires to qualify for
MARS in November must complete the form and submit it to the
Exchange no later than the last business day of November. Such form
will require the NOM Participant to identify the NOM Participant
seeking the MARS Payment and must list, among other things, the
connections utilized by the NOM Participant to provide Exchange
access to other NOM Participants and/or itself. MARS Payments would
be made one month in arrears (i.e., a MARS Payment earned for
activity in November would be paid to the qualifying NOM Participant
in December), as is the case with all other transactional payments
and assessments made by the Exchange.
---------------------------------------------------------------------------

MARS Eligible Contracts
    A MARS Payment would be made to NOM Participants that have System
Eligibility and have routed at least 5,000 Eligible Contracts daily in
a month, which were executed on NOM. For the purpose of qualifying for
the MARS Payment, Eligible Contracts may include Firm,\5\ Non-NOM
Market Maker,\6\ Broker-Dealer,\7\ Joint Back Office or ``JBO'' \8\ or
Professional \9\ equity option orders that add liquidity and are
electronically delivered and executed. Eligible Contracts do not
include Mini-Option orders.\10\
---------------------------------------------------------------------------

    \5\ The term ``Firm'' or (``F'') applies to any transaction that
is identified by a Participant for clearing in the Firm range at
OCC.
    \6\ The term ``Non-NOM Market Maker'' or (``O'') is a registered
market maker on another options exchange that is not a NOM Market
Maker. A Non-NOM Market Maker must append the proper Non-NOM Market
Maker designation to orders routed to NOM.
    \7\ The term ``Broker-Dealer'' or (``B'') applies to any
transaction which is not subject to any of the other transaction
fees applicable within a particular category.
    \8\ The term ``Joint Back Office'' or ``JBO'' applies to any
transaction that is identified by a Participant for clearing in the
Firm range at OCC and is identified with an origin code as a JBO. A
JBO will be priced the same as a Broker-Dealer as of September 1,
2014. A JBO participant is a Participant that maintains a JBO
arrangement with a clearing broker-dealer (``JBO Broker'') subject
to the requirements of Regulation T Section 220.7 of the Federal
Reserve System as further discussed in Chapter XIII, Section 5.
    \9\ The term ``Professional'' or (``P'') means any person or
entity that (i) is not a broker or dealer in securities, and (ii)
places more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s) pursuant
to Chapter I, Section 1(a)(48). All Professional orders shall be
appropriately marked by Participants.
    \10\ Mini Options are further specified in Chapter XV, Section
2(4).
---------------------------------------------------------------------------

    NOM Participants using an order routing functionality provided by
another Participant or its own functionality will continue to be
required to comply with best execution obligations.\11\ Specifically,
just as with any Customer \12\ order and any other routing
functionality, a NOM Participant will continue to have an obligation to
consider the availability of price improvement at various markets and
whether routing a Customer order through a functionality that
incorporates the features described above would allow for access to
such opportunities if readily available. Moreover, a NOM Participant
would need to conduct best execution evaluations on a regular basis, at
a minimum quarterly, that include its use of any router incorporating
the features described above.
---------------------------------------------------------------------------

    \11\ See Nasdaq Rule 5310A.
    \12\ The term ``Customer'' or (``C'') applies to any transaction
that is identified by a Participant for clearing in the Customer
range at OCC which is not for the account of [sic] broker or dealer
or for the account of a ``Professional'' (as that term is defined in
Chapter I, Section 1(a)(48)).
---------------------------------------------------------------------------

MARS Payment
    NOM Participants that have System Eligibility and have executed the
Eligible Contracts in a month may receive the MARS Payment of $0.10 per
contract. The MARS Payment will be paid only on executed Firm orders
that add liquidity and which are routed to NOM through a participating
NOM Participant's System. No payment will be made with respect to
orders that are routed to NOM, but not executed.
    A Participant will not be entitled to receive any other revenue for
the use of its System specifically with respect to orders routed to
NOM. The Exchange believes that the MARS Payment will subsidize the
costs of NOM Participants in providing the routing services.
    The Exchange proposes to add the MARS to new Chapter XV, Section
2(6), entitled ``Market Access and Routing Subsidy (``MARS'').''
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \13\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act \14\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among Participants and issuers and other persons using
any facility or system which the Exchange operates or controls, and is
not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    The Commission and the courts have repeatedly expressed their
preference for competition over regulatory intervention in determining
prices, products, and services in the securities markets. In Regulation
NMS, for example, the Commission indicated that market forces should
generally determine the price of non-core market data because national
market system regulation ``has been remarkably successful in promoting
market competition in its broader forms that are most important to
investors and listed companies.'' \15\ Likewise, in NetCoalition v.
NYSE Arca, Inc., 615 F.3d 525 (D.C. Cir. 2010), the DC 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.\16\ 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.'' \17\
---------------------------------------------------------------------------

    \15\ Exchange Act Release No. 34-51808 (June 9, 2005)
(``Regulation NMS Adopting Release'').
    \16\ See NetCoalition, 615 F.3d at 534.
    \17\ Id. at 537.
---------------------------------------------------------------------------

    Further, ``[n]o one disputes that competition for order flow is
`fierce.' . . . As the SEC explained, `[i]n the U.S. national market
system, buyers and sellers of securities, and the broker-dealers that
act as their order-routing agents, have a wide range of choices of
where to route orders for execution'; [and] `no exchange can afford to
take its market share percentages for granted' because `no exchange
possesses a monopoly, regulatory or otherwise, in the execution of
order flow from broker dealers'. . . .'' \18\ Although the Court and
the SEC were discussing the cash equities markets, the Exchange
believes that, as discussed above, these views apply with equal force
to the options markets.
---------------------------------------------------------------------------

    \18\ NetCoalition I, 615 F.3d at 539 (quoting ArcaBook Order, 73
FR at 74782-74783).
---------------------------------------------------------------------------

    The Exchange believes that MARS is reasonable because it is
designed to attract higher volumes of electronic equity and ETF options
volume to the Exchange, which will benefit all NOM Participants by
offering greater price discovery, increased transparency, and an
increased opportunity to trade on the Exchange. Moreover, the Exchange
believes that the proposed subsidy offered by MARS is both equitable
and not unfairly discriminatory because any qualifying NOM Participant
that offers market access and connectivity to the Exchange and/or
utilizes such functionality themselves may earn the MARS Payment for
all Eligible Contracts.
MARS System Eligibility
    The Exchange believes that requiring NOM Participants to maintain
their Systems according to the various requirements set forth by the
Exchange in order to qualify for MARS is reasonable because the
Exchange seeks to encourage market participants to send higher volumes
of orders to NOM, which will contribute to the Exchange's depth of book
as well as to the top of book liquidity. The Exchange also believes
that the proposed MARS is reasonable because it is designed to enhance
the competitiveness of the Exchange, particularly with respect to

those exchanges that offer their own front-end order entry system or
one they subsidize in some manner.\19\ The Exchange believes that
requiring Participants to maintain their Systems according to the
various requirements set forth by the Exchange in order to qualify for
MARS is equitable and not unfairly discriminatory because these
requirements will uniformly apply to all Participants desiring to
qualify for MARS.
---------------------------------------------------------------------------

    \19\ See, e.g., supra note 10 [sic]; Securities Exchange Act
Release No. 34-54121 (July 10, 2006), 71 FR 40566 (July 17, 2006)
(SR-ISE-2006-31) (describing PrecISE, which is a front-end, order
entry application for trading options utilized by International
Securities Exchange LLC).
---------------------------------------------------------------------------

    The Exchange also notes that the Chicago Board of [sic] Options
Exchange, Inc. (``CBOE'') currently offers a similar Order Routing
Subsidy (``ORS''), which, similar to the current proposal, allows CBOE
Participants [sic] to enter into subsidy arrangements with CBOE Trading
Permit Holders (``TPHs'') that provide certain order routing
functionalities to other CBOE TPHs and/or use such functionalities
themselves.\20\ Also, NYSE MKT LLC (``NYSE MKT'') had a Market Access
and Connectivity Subsidy (``MAC'') which allowed NYSE MKT Participants
[sic] to enter into subsidy arrangements with ATP Holders that provided
certain order routing functionalities to other ATP Holders and/or use
such functionalities themselves. The NYSE MKT program was
discontinued.\21\ Finally, in 2007, NASDAQ OMX PHLX LLC (``Phlx'')
offered a Market Access Provider Subsidy or ``MAPs'' as a per contract
fee payable by the Phlx to Eligible Market Access Providers for
Eligible Contracts submitted by MAPs for execution on Phlx. The subsidy
was applicable to any Phlx member organization that qualified as a MAP
and elected to participate for that calendar month.\22\
---------------------------------------------------------------------------

    \20\ See note 34 [sic]. CBOE's programs permit both CBOE
Participants and CBOE non-Participants to be eligible for a rebate.
CBOE Participants are eligible to receive exchange transaction fees
on transactions that earn a non-CBOE Participant a subsidy payment.
    \21\ See note 35 [sic]. See also Securities Exchange Act Release
No. 75609 (August 11 [sic], 2015), 80 FR 48132 (August 5 [sic],
2015) (SR-NYSEMKT-2015-059).
    \22\ See Securities Exchange Act Release No. 56274 (August 16,
2007), 72 FR 48720 (August 24, 2007) (SR-Phlx-2007-54). This program
is no longer being offered.
---------------------------------------------------------------------------

MARS Eligible Contracts
    The Exchange believes that excluding the volumes attributable to
Mini Options is reasonable, equitable, and not unfairly discriminatory
for the reasons below. Mini Options are also subject to separate
pricing.\23\ The Exchange does not desire to pay an additional subsidy
on top of the already discounted rates for Mini Options. Because all
NOM Participants seeking to qualify for MARS would be treated equally
with respect to excluding Mini Options volume, the proposal to exclude
this volume from the MARS Payment is not inequitable or unfairly
discriminatory.
---------------------------------------------------------------------------

    \23\ See NOM's Rules at Chapter XV Section 2(5) [sic]
---------------------------------------------------------------------------

    The Exchange further notes that while MARS is only being offered to
qualifying NOM Participants for electronically-executed equity option
orders for Firms, Non-NOM Market Makers, Broker-Dealers, JBOs or
Professionals that add liquidity and not, for example, on the
electronic volumes of NOM Customers or NOM Market Makers \24\ the
Exchange believes this is reasonable, equitable and not unfairly
discriminatory for the reasons below. With respect to Customer orders,
the Exchange notes that Customer orders have the ability to earn
rebates today.\25\ Additionally, Customers are assessed lower
transaction fees with certain fees.\26\ The Exchange believes that the
availability of these rebates for Customer volumes as well as certain
lower transaction fees does not warrant paying an additional subsidy on
Customer volumes in MARS. With respect to NOM Market Makers, the
Exchange offers NOM Market Makers certain rebates \27\ and assesses
them lower transaction fees, as compared to other market
participants.\28\ The Exchange believes that the rebates coupled with
the lower transaction fees already provide ample incentive for
attracting NOM Market Maker volumes to the Exchange and that no further
subsidy is warranted at this time.
---------------------------------------------------------------------------

    \24\ The term ``NOM Market Maker'' or (``M'') is a Participant
that has registered as a Market Maker on NOM pursuant to Chapter
VII, Section 2, and must also remain in good standing pursuant to
Chapter VII, Section 4. In order to receive NOM Market Maker pricing
in all securities, the Participant must be registered as a NOM
Market Maker in at least one security.
    \25\ See NOM's Rules at Chapter XV, Section 2(1).
    \26\ Id.
    \27\ Id.
    \28\ Id.
---------------------------------------------------------------------------

    The proposed MAC [sic] Subsidy is designed to attract higher margin
business to the Exchange, business which at present has no opportunity
to transact at rates anywhere close to the rate assessed to Customers
and NOM Market Makers. To offer the proposed subsidy on Customer or NOM
Market Maker electronic volume would require funding from some other
source, such as raising fees for other Participants. As a result, the
Exchange believes it is appropriate to permit eligibility based on the
following type of volume: Firm, Non-NOM Market Maker, Broker-Dealer,
JBO and Professional, which Participants are charged higher per
contract transaction fees than other market Participants. The Exchange
notes that it is commonplace within the options industry for exchanges
to charge different rates and/or offer different rebates depending upon
the capacity in which a participant is trading. For these reasons, the
Exchange believes that the proposed change to offer a MARS Payment to
qualifying NOM Participants on certain electronic volume is reasonable,
equitable and not unfairly discriminatory for the reasons mentioned
herein.
    Finally, the Exchange believes that 5,000 Eligible Contracts is a
reasonable level of contracts, because the Exchange is only counting
add liquidity from Firms, Non-NOM Market Makers, Broker-Dealers, JBOs
and Professionals which are electronically delivered and executed. The
Exchange is not counting remove liquidity and therefore the number
reflects what the Exchange believes to be an appropriate level of
commitment from NOM Participants. The Exchange believes that 5,000
Eligible Contracts is equitable and not unfairly discriminatory because
this level will be uniformly applied to all qualifying Participants.
MARS Payment
    The Exchange believes that it is reasonable, equitable and not
unfairly discriminatory to pay the proposed MARS Payment to NOM
Participants that have System Eligibility and have executed the
Eligible Contracts, even when a different NOM Participant may be liable
for transaction charges resulting from the execution of the orders upon
which the subsidy might be paid. The Exchange notes that this sort of
arrangement already exists on other options exchanges such as Phlx
which pays a Qualified Contingent Cross (``QCC'') Rebate for floor
transactions.\29\ Today, this arrangement on Phlx results in a
situation where the floor broker is

earning a rebate and one or more different Phlx members are potentially
liable for the Exchange transaction charges applicable to QCC Orders.
With the QCC rebates applicable to transactions executed on the trading
floor, Phlx does not offer a front-end for order entry; unlike some of
the competing exchanges, Phlx has argued that it is necessary from a
competitive standpoint to offer this rebate to the executing floor
broker on a QCC Order.\30\ Also, all qualifying NOM Participants would
be uniformly paid the subsidy on all qualifying volume that was routed
by them to the Exchange and executed.
---------------------------------------------------------------------------

    \29\ See Phlx's Pricing Schedule. A Floor QCC Order must: (i) Be
for at least 1,000 contracts, (ii) meet the six requirements of Rule
1080(o)(3) which are modeled on the QCT Exemption, (iii) be executed
at a price at or between the NBBO; and (iv) be rejected if a
Customer order is resting on the Exchange book at the same price. In
order to satisfy the 1,000-contract requirement, a Floor QCC Order
must be for 1,000 contracts and could not be, for example, two 500-
contract orders or two 500-contract legs. See Phlx Rule 1064(e). See
also Securities Exchange Act Release No. 64688 (June 16, 2011), 76
FR 36606 (June 22, 2011) (SR-Phlx-2011-56).
    \30\ See also Securities Exchange Act Release No. 64688 (June
16, 2011), 76 FR 36606 (June 22, 2011) (SR-Phlx-2011-56) (Order
Granting Approval of Proposed Rule Change Establishing a Qualified
Contingent Cross Order for Execution on the Floor of the Exchange).
---------------------------------------------------------------------------

    The Exchange believes the $0.10 per contract rate that is being
offered to be paid as a subsidy is reasonable and will allow NOM
Participants to price their services at a level that will enable them
to attract order flow from market participants who would otherwise
utilize an existing front-end order entry mechanism offered by the
Exchange's competitors instead of incurring the cost in time and money
to develop their own internal systems to be able to deliver orders
directly to the Exchange's trading systems. The Exchange believes that
offering a flat rate is reasonable because all qualifying NOM
Participants would receive the same $0.10 per contract subsidy,
provided they met the qualifications for MARS.
    The Exchange believes that paying the MARS payments to a NOM
Participant, solely on electronically delivered and executed Firm
orders that add liquidity and are submitted by the qualifying NOM
Participant, is reasonable because, as noted herein Customers and NOM
Market Makers are offered other pricing incentives such as rebates and
lower fees. With respect to Non-NOM Market Makers, Professionals, JBOs
and Broker-Dealers the Exchange believes it is reasonable to
differentiate these market participants and Firms for the reasons which
follow. The Exchange desires to incentivize NOM Participants to
transact Firm, Non-NOM Market Maker, JBO, Broker-Dealer and
Professional orders on the Exchange to qualify for MARS and receive the
subsidy for Firm orders that add liquidity. The Exchange believes that
this proposal may incentivize NOM Participants that receive reduced
rates at other options exchanges to select NOM as a venue to send Firm,
Non-NOM Market Maker, JBO, Broker-Dealer and Professional orders by
offering competitive pricing to these market participants in the form
of a subsidy, even though the financial benefit will only be made with
respect to Firm orders that add liquidity. Such competitive,
differentiated pricing exists today on other options exchanges.\31\
Further, the Exchange believes there is nothing impermissible about the
MARS Payment being made solely on Firm orders that add liquidity. This
practice is consistent with longstanding differentials between Firms,
other Broker-Dealers, Non-NOM Market Makers and Professionals. The
options exchanges have differentiated between: retail customers and
professional customers; broker/dealers clearing in the ``Firm'' range
at OCC and broker/dealers registered as market makers and away market
makers; early-adopting market makers; and many others. The Commission
has also permitted price differentiation based on whether an order is
processed manually versus electronically. The proposal is consistent
with previously established pricing proposals accepted by the
Commission.
---------------------------------------------------------------------------

    \31\ See Phlx's Pricing Schedule at Section II. Phlx offers
Firms a Monthly Firm Fee Cap to lower transaction fees.
---------------------------------------------------------------------------

    The Exchange believes that paying the MARS payments to a NOM
Participant, solely on electronically delivered and executed Firm
orders that add liquidity and are submitted by the qualifying NOM
Participant, is equitable and not unfairly discriminatory because MARS
should provide an incentive for Firms to add liquidity on NOM, which
order flow brings increased liquidity to the Exchange for the benefit
of all Exchange Participants. To the extent the purpose of the proposed
MARS is achieved, all the Exchange's Participants, including Non-NOM
Market Makers, Professionals and Broker-Dealers, should benefit from
the improved market liquidity.
    Further, the Exchange believes that paying the MARS payments to a
NOM Participant, solely on executed on [sic] Firm orders that add
liquidity and not paying a subsidy for the removal of liquidity, is
reasonable because the Exchange desires to incentivize NOM participants
to add liquidity to NOM. Today, NOM offers rebates to Customers,
Professionals and NOM Market Makers for adding liquidity on NOM.\32\
Attracting liquidity on NOM benefits all market participants who have
an opportunity to interact with such liquidity. Further, the Exchange
believes that paying the MARS payments to a NOM Participant, solely on
executed Firm orders that add liquidity and not orders that remove
liquidity, is equitable and not unfairly discriminatory because all NOM
Participants that qualify for a MARS Payment would only be paid on add
liquidity.
---------------------------------------------------------------------------

    \32\ See NOM's Rules at Chapter XV, Section 2(1).
---------------------------------------------------------------------------

    Finally, the Exchange believes that adding a new Chapter XV,
Section 2(6) is reasonable, equitable and not unfairly discriminatory
as it will make finding MARS easier for all Participants.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. In terms of inter-market
competition, the Exchange notes that it operates in a highly
competitive market in which market participants can readily favor
competing venues if they deem fee levels at a particular venue to be
excessive, or rebate opportunities available at other venues to be more
favorable. In such an environment, the Exchange must continually adjust
its fees to remain competitive with other exchanges and with
alternative trading systems that have been exempted from compliance
with the statutory standards applicable to exchanges. Because
competitors are free to modify their own fees in response, and because
market participants may readily adjust their order routing practices,
the Exchange believes that the degree to which fee changes in this
market may impose any burden on competition is extremely limited.
MARS System Eligibility
    The Exchange believes that requiring Participants to maintain their
Systems according to the various requirements set forth by the Exchange
in order to qualify for MARS does not create an undue burden on intra-
market competition because the proposed requirements will uniformly
apply to all Participants desiring to qualify for MARS.
MARS Eligible Contracts
    The Exchange believes that excluding Mini Options does not create
an undue burden on intra-market competition because this type of order
will uniformly be excluded from the volume calculation for all
qualifying NOM Participants for MARS.
    The Exchange believes that excluding Customer and NOM Market Makers
orders from the types of orders that would be eligible for MARS does
not create an undue burden on intra-market competition, because
Customers are

assessed lower transaction fees and are eligible for rebates. With
respect to NOM Market Makers, the Exchange offers NOM Market Makers
rebates and assesses them lower transaction fees as compared to other
Participants.
    The Exchange believes that preventing Participants from receiving
any other revenue for the use of its System, specifically with respect
to orders routed to NOM does not create undue burden on intra-market
competition because the Exchange would continue to uniformly apply its
MARS requirements to all NOM Participants.
    Finally, the Exchange believes that the 5,000 Eligible Contracts
requirement does not create an undue burden on intra-market competition
because this level will be uniformly applied to all qualifying NOM
Participants.
MARS Payment
    The Exchange believes that paying the proposed MARS Payment to
qualifying NOM Participants that have System eligibility and have
executed the Eligible Contracts does not create an undue burden on
intra-market competition, even when a different NOM Participant, other
than the NOM Participant receiving the subsidy, may be liable for
transaction charges, because this sort of arrangement already exists on
the Exchange [sic] and would be uniformly applied to all qualifying NOM
Participants.
    The Exchange believes that paying the proposed $0.10 per contract
MARS Payment to qualifying NOM Participants that have System
Eligibility and have executed the Eligible Contracts in a month, solely
on executed Firm orders that add liquidity, does not create an undue
burden on intra-market competition because the Exchange is counting all
Firm, Non-NOM Market Maker, JBO, Broker-Dealer and Professional volume
toward the Eligible Contracts. Customers and NOM Market Makers are
offered other pricing incentives such as rebates and lower fees. The
increased order flow will bring increased liquidity to the Exchange for
the benefit of all Participants. To the extent the purpose of the
proposed MARS is achieved, all the Exchange's Participants, including
Non-NOM Market Makers, Professionals and Broker-Dealers, should benefit
from the improved market liquidity.
    The Exchange believes that paying the MARS payments to a NOM
Participant, solely on electronically delivered and executed Firm
orders that add liquidity, and are submitted by the qualifying NOM
Participant, does not create an undue burden on intra-market
competition because MARS should provide an incentive for Firms to add
liquidity on NOM, which order flow brings increased liquidity to the
Exchange for the benefit of all Exchange Participants. To the extent
the purpose of the proposed MARS is achieved, all the Exchange's
Participants, including Non-NOM Market Makers, Professionals and
Broker-Dealers, should benefit from the improved market liquidity.
    Further, the Exchange believes that paying the MARS payments to a
NOM Participant, solely on executed Firm orders that add liquidity and
not paying a subsidy for the removal of liquidity does not create an
undue burden on intra-market competition because the Exchange desires
to incentivize NOM participants to add liquidity to NOM. Attracting
liquidity on NOM benefits all Participants who have an opportunity to
interact with such liquidity. Also, all NOM Participants that qualify
for a MARS Payment would only be paid on add liquidity.

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.\33\
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2015-133 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2015-133. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549 on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NASDAQ-2015-133, and should
be submitted on or before December 11, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
---------------------------------------------------------------------------

    \34\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-29601 Filed 11-19-15; 8:45 am]
BILLING CODE 8011-01-P