[Federal Register Volume 82, Number 187 (Thursday, September 28, 2017)]
[Proposed Rules]
[Pages 45220-45228]
[FR Doc No: 2017-20561]

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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

23 CFR Parts 778 and 773

Federal Railroad Administration

49 CFR Part 264

Federal Transit Administration

49 CFR Part 622

[Docket No. FHWA-2016-0037]
FHWA RIN 2125-AF73: FRA RIN 2130-AC66: FTA RIN 2132-AB32

Program for Eliminating Duplication of Environmental Reviews

AGENCY: Federal Highway Administration (FHWA), Federal Railroad
Administration (FRA), Federal Transit Administration (FTA), DOT.

ACTION: Notice of proposed rulemaking (NPRM); request for comments.

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SUMMARY: This NPRM provides interested parties with the opportunity to
comment on proposed regulations governing the U.S. Department of
Transportation's (DOT) Program for Eliminating Duplication of
Environmental Reviews (Program) established by Section 1309 of the
Fixing America's Surface Transportation Act (FAST Act). Section 1309
directed the U.S. Secretary of Transportation (Secretary) to establish
a pilot program authorizing up to five States to conduct environmental
reviews and make approvals for projects under State environmental laws
and regulations instead of the National Environmental Policy Act
(NEPA). The FAST Act requires the Secretary, in consultation with the
Chair of the Council on Environmental Quality (CEQ), to promulgate
regulations to implement the requirements of the Program, including
application requirements and criteria necessary to determine whether
State laws and regulations are at least as stringent as the applicable
Federal law. The FHWA, FRA, and FTA, hereinafter referred to as ``the
Agencies,'' are proposing these regulations on behalf of the Secretary
and seek comments on the proposals contained in this NPRM. This rule
would also implement a provision in Section 1308 of the FAST Act that
amends the corrective action period that the Agencies must provide to a
State participating in the Surface Transportation Project Delivery
Program (Section 327 Program).

DATES: Comments must be received on or before November 27, 2017.

ADDRESSES: You may submit comments, identified by the document number
at the top of this document, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility, U.S. Department of
Transportation, 1200 New Jersey Ave. SE., West Building Ground Floor
Room W12-140, Washington, DC 20590.
     Hand Delivery/Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Ave. SE., between 9:00 a.m. and 5:00 p.m.,
Monday through Friday, except Federal holidays. The telephone number is
(202) 366-9329.
    Instructions: All submissions received must include the agency name
and docket number or Regulatory Information Number (RIN) for this
rulemaking. All comments received will be posted without change to
www.regulations.gov, including any personal information provided.
    Docket: For access to the docket to read background documents or
comments received, go to www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For FHWA, James Gavin, Office of
Project Development and Environmental Review,<PHONE_NUMBER>, or Diane
Mobley, Office of Chief Counsel,<PHONE_NUMBER>. For FRA, Michael
Johnsen, Office of Railroad Policy and Development,<PHONE_NUMBER>, or
Chris Van Nostrand, Office of Chief Counsel,<PHONE_NUMBER>. For FTA,
Megan Blum, Office of Planning and Environment,<PHONE_NUMBER>, or
Helen Serassio, Office of Chief Counsel,<PHONE_NUMBER>. The Agencies
are located at 1200 New Jersey Ave. SE., Washington, DC 20590. Office
hours are from 9:00 a.m. to 5:00 p.m. ET, Monday through Friday, except
Federal holidays.

SUPPLEMENTARY INFORMATION:

Background

    On December 4, 2015, President Obama signed into law the FAST Act
(Pub. L. 114-94, 129 Stat. 1312), which contains new requirements
related to the National Environmental Policy Act (NEPA) (42 U.S.C. 4321
et seq.). Section 1309 of the FAST Act, codified at 23 U.S.C. 330,
established a pilot program that allows the Secretary to approve up to
five States to use one or more State environmental laws instead of NEPA
for environmental review of surface transportation projects. In order
to be eligible to participate in the Program, a State must have assumed
the Secretary's responsibilities for environmental

reviews under 23 U.S.C. 327. To participate in the Program, a State
must submit an application and enter into an agreement with DOT.
    Section 1308(5) of the FAST Act amended the 23 U.S.C. 327(j)
termination procedures for the Section 327 Program by: (1) Changing the
number of days for corrective action the Agencies must provide to the
State from 30 days to not less than 120 calendar days, and 2) upon the
request of the Governor of the State, requiring the Agencies provide a
detailed description of each responsibility in need of corrective
action.
    Under Section 1309 of the FAST Act (23 U.S.C. 330), DOT, in
consultation with the Chair of CEQ, must promulgate regulations
implementing the requirements of that provision. The proposed
regulations would establish the Program, specify the information that
applicants must submit to participate in the Program, and define the
criteria the Agencies, in consultation with the Office of the Secretary
and with the concurrence of the Chair of CEQ, will use to determine
whether a State law or regulation is as stringent as the Federal
requirements under NEPA, the procedures implementing NEPA, and NEPA-
related regulations and Executive Orders. This NPRM proposes
regulations establishing the Program and requests the public's
comments.

Section-by-Section Discussion of the Proposals

23 CFR Part 778--Pilot Program for Eliminating Duplication of
Environmental Reviews

    The Agencies propose a title to this part that clearly describes
the Program's scope.

Section 778.101 Purpose

    The Agencies propose a section to explain the purpose of the
Program.

Section 778.103 Eligibility and Certain Limitations

    The Agencies propose a section describing the Program's eligibility
requirements and the limitations of a State's participation.
    This section proposes four requirements necessary for a State to
participate in the Program. First, a State must act through the
Governor or top-ranking State transportation official who is charged
with responsibility for highway construction. Second, a State must
expressly consent to the exclusive jurisdiction of the U.S. District
Courts for compliance, discharge, and enforcement of any responsibility
under this Program. Third, a State must have assumed the
responsibilities of the Secretary under 23 U.S.C. 327. Fourth, a State
must have laws in effect authorizing the State to take the actions
necessary to carry out the alternative environmental review and
approval procedures under State laws and regulations.
    Section 778.103 identifies two conditions governing a State's
participation in the Program. First, State environmental laws and
regulations may only be substituted as a means for complying with NEPA,
procedures governing the implementation of NEPA, and related
regulations and Executive Orders. Second, compliance with State
environmental laws and regulations does not substitute for compliance
with any other applicable Federal environmental requirements.

Section 778.105 Application Requirements for Participation in the
Program

    The Agencies propose a section describing the required content of
an eligible State's application to participate in the Program.
    To participate in the Program, any eligible State would submit an
application that includes:
    (1) A full and complete description of the alternative
environmental review and approval procedures the State proposes to use,
including (i) the procedures the State uses to engage the public and
consider alternatives to the proposed action; and (ii) the extent to
which the State considers environmental consequences or impacts on
resources potentially impacted by the proposed actions (40 CFR 1508.7
and 1508.8).
    (2) Identification of each Federal environmental requirement the
State is seeking to substitute, within the limitations of this section;
    (3) Identification of each State environmental law and regulation
that the State intends to substitute for a Federal environmental
requirement, within the limitations of this section;
    (4) A detailed explanation of how the State environmental law and
regulation intended to substitute for a Federal environmental
requirement is at least as stringent as the Federal requirement;
    (5) A detailed description of the projects or classes of
transportation projects for which the State anticipates exercising the
authority that may be granted under the Program;
    (6) Verification that the State has the financial and personnel
resources necessary to carry out the Program;
    (7) Evidence that the State has sought public comments on its
application prior to its submittal and the State's response to any
comments it received;
    (8) A point of contact for questions regarding the application and
a point of contact regarding potential implementation of the Program
(if different);
    (9) Certification and explanation by the State's Attorney General
or other State official legally empowered by State law to issue legal
opinions that bind the State that the State has legal authority to
enter into the Program, and that the State consents to exclusive
Federal court jurisdiction for the compliance, discharge, and
enforcement of any responsibility under this Program;
    (10) Certification by the State's Attorney General or other State
official legally empowered by State law to issue legal opinions that
bind the State that the State has laws that are comparable to the
Freedom of Information Act (FOIA), 5 U.S.C. 552, including providing
that any decision regarding the public availability of a document under
those laws is reviewable by a court of competent jurisdiction; and
    (11) The State Governor's (or in the case of the District of
Columbia, the Mayor's) or the State's top ranking transportation
official's signature approving the application.

Section 778.107 Application Review and Approval

    The Agencies propose a section establishing the review and approval
process for a State's application to the Program.
    To begin the review and approval process, the applicable Operating
Administration also would solicit public comments on a State's complete
application and would consider comments before making a decision on the
application. In addition to the State's application, the Operating
Administration may provide other documents for public review such as a
draft of the proposed agreement. After receiving a complete
application, the Operating Administration would have 120 calendar days
to make a decision on the State's application. The Operating
Administration would transmit the decision to the applicant, with an
explanation in writing.
    In making the decision, the Operating Administration would approve
a State's application only if:
    (1) That State is party to an agreement with the Operating
Administration under 23 U.S.C. 327;
    (2) The Operating Administration has determined, after considering
any public comments received, the State has the capacity, including
financial and

personnel, to undertake the alternative environmental review and
approval procedures; and
    (3) The Operating Administration, in consultation with the Office
of the Secretary, with the concurrence of the Chair of CEQ, and after
considering public comments received, has determined the State laws or
regulations described in the State's application are at least as
stringent as the Federal requirements they substitute.
    Before the Operating Administration approves the application, the
State must enter into a written agreement with the Operating
Administration. At a minimum the written agreement must:
    (1) Be executed by the Governor or top-ranking transportation
official in the State charged with responsibility for highway
construction;
    (2) Provide that the State agrees to assume the responsibilities of
the Program, as identified by the Operating Administration;
    (3) Provide that the State expressly consents to accept Federal
court jurisdiction for the compliance, discharge, or enforcement of any
responsibility it undertakes for the Program;
    (4) Certify that State laws or regulations exist that authorize the
State to carry out the responsibilities of the Program;
    (5) Certify that State laws or regulations exist that are
comparable to FOIA (5 U.S.C. 552), including a provision that any
decision regarding the public availability of a document under the
State laws or regulations is reviewable by a Court of competent
jurisdiction;
    (6) Commit the State to maintain the personnel and financial
resources necessary to carry out its responsibilities under the
Program;
    (7) Have a term of not more than 5 years, the term of a State's
agreement with the Operating Administration in accordance with 23
U.S.C. 327, or a term ending on December 4, 2027, whichever is sooner;
and
    (8) Be renewable.
    The Operating Administration's execution of the Agreement would
constitute approval of the application. A State approved to participate
in the Program may further apply the approved alternative environmental
review and approval procedures to locally administered projects for up
to 25 local governments at the request of those local governments. For
such locally administered projects, the State would be responsible for
ensuring that the requirements of the approved alternative State
procedures are met.

Section 778.109 Criteria for Determining Stringency

    After consultation with the Agencies, CEQ identified criteria the
Agencies would use to determine whether the State laws or regulations
are at least as stringent as the Federal NEPA requirements. These
criteria provide for protection of the environment, provide opportunity
for public participation and comment (including access to the
documentation necessary to review the potential impact of a project),
and ensure consistent review of projects that would otherwise have been
covered under NEPA. The legislative and regulatory citations noted are
intended to indicate, in general, the basis for the criteria. Based on
CEQ's criteria, the Agencies and CEQ propose that to be considered at
least as stringent as the Federal NEPA requirements, a State
environmental law or regulation, at a minimum, must:
    (a) Define the types of actions that normally require an
environmental impact assessment, including government-sponsored
projects such as those receiving Federal financial assistance or permit
approvals. (42 U.S.C. 4332(2)(C); 40 CFR 1508.18);
    (b) Ensure an early process for determining the scope of the action
and issues that need to be addressed, identifying the significant
issues, and for the classification of the appropriate environmental
impact assessment in accordance with the significance of the likely
impacts. For actions that may result in significant impacts on the
human environment the scoping process should be an open and public
process. (23 U.S.C. 139(e); 40 CFR 1501.3, 1501.4, 1501.7, 1507.3(b),
1508.14, and 1508.25);
    (c) Prohibit agencies and non-governmental proponents from taking
action concerning the proposal until the environmental impact
evaluation is complete when such action would (1) have adverse
environmental impacts or (2) limit the choice of reasonable
alternatives. (40 CFR 1506.1 and 1506.10(b)).
    (d) Protect the integrity and objectivity of the analysis by
requiring the agency to take responsibility for the scope and content
of the analysis and by preventing conflicts of interest among the
parties developing the analysis and the parties with financial or other
interest in the outcome of the project. (42 U.S.C. 4332(2)(D); 40 CFR
1506.5);
    (e) Based on a proposed action's purpose and need, require
objective evaluation of reasonable alternatives to the proposed action
(including the alternative of not taking the action) if it may result
in significant impacts to the human environment or, for those actions
that may not result in significant impacts, consideration of
alternatives if they will involve unresolved conflicts concerning
alternative uses of available resources (42 U.S.C. 4332(2)(C)(iii); 42
U.S.C. 4332(2)(E); 23 U.S.C. 330(b)(1)(A); 40 CFR 1502.13, 1502.14, and
1508.9);
    (f) Require an assessment of the reasonably foreseeable direct,
indirect, and cumulative impacts of a proposed action (and any
reasonable alternatives) on the human environment, and a comparison of
those potential impacts with existing environmental conditions (42
U.S.C. 4332(2)(C); 23 U.S.C. 330(b)(1)(B); 40 CFR 1502.16, 1508.9(b),
and 1508.4);
    (g) Require the consideration of appropriate mitigation for the
impacts associated with a proposal and reasonable alternatives
(including avoiding, minimizing, rectifying, reducing or eliminating
the impact over time, and compensating for the impact) (40 CFR
1502.14(f), 1502.16(h), and 1508.20);
    (h) Provide for adequate interagency participation, including
appropriate coordination and consultation with State, Federal, tribal,
and local agencies with jurisdiction by law, special expertise, or an
interest with respect to any environmental impact associated with the
proposal, and for collaboration that would eliminate duplication of
reviews. For actions that may result in significant impacts to the
human environment, the process should allow for the development of
plans for interagency coordination and public involvement, and the
setting of timetables for the review process (42 U.S.C. 4332(2)(C); 23
U.S.C. 139(d) and 139(g); 40 CFR 1500.5(e), 1501.6, 1502.25, and part
1503);
    (i) Provide an opportunity for public participation and comment
that is commensurate with the significance of the proposal's impacts on
the human environment, and require public access to the documentation
developed during the environmental review and a process to respond to
public comments. (42 U.S.C. 4332(2)(C); 23 U.S.C. 330(b)(1)(A); FAST
Act, Sec. 1309(c)(2)(B)(ii); 40 CFR 1502.19, part 1503, and 1506.6; and
E.O. 11514, Sec. 1(b));
    (j) Include procedures for the elevation and resolution of
interagency disputes prior to a final decision on the proposed project.
(23 U.S.C. 139(h); 40 CFR part 1504);
    (k) Require, for the conclusion of the process, a concise
documentation of findings (for actions that would not

likely result in significant impacts to the human environment) or, for
actions that may result in significant impacts, a concise record that
states the decision that: (i) Identifies all alternatives considered
(specifying which were environmentally preferable); (ii) identifies and
discusses all factors that were balanced by the agency in making its
decision, and states how those considerations entered into the
decision; (iii) states whether all practicable means to avoid or
minimize environmental harm have been adopted, and if not, why they
were not; and (iv) describes the monitoring and enforcement program
that will be adopted where applicable for any mitigation (40 CFR 1501.4
and 1505.2);
    (l) Require the agency to supplement environmental impacts
assessments if there are substantial changes in the proposal that are
relevant to environmental concerns or significant new circumstances or
information relevant to environmental concerns and bearing on the
proposed action or its impacts (23 U.S.C. 330(e)(3); 40 CFR 1502.9);
and
    (m) Allow for the use of procedures that facilitate process
efficiency such as the identification of categories of actions that do
not individually or cumulatively have a significant impact on the human
environment and which have been found to not have such effect with
procedures that require the consideration of extraordinary
circumstances that would warrant a higher level of analysis, the use of
tiering, programmatic approaches, adoption, incorporation by reference,
approaches to eliminate duplication with other Federal requirements,
and special procedures to address emergency situations (23 U.S.C.
139(b)(3); 40 CFR 1502.20, 1502.21, 1502.25, 1506.2, 1506.3, 1506.4,
1507.3(b)(ii), and 1508.4).

Section 778.111 Review and Termination

    The Agencies propose a section describing the termination date of
the Program, the Operating Administration's responsibilities to review
each approved State's performance implementing the Program, and the
Operating Administration's right to terminate a State's participation
in the Program early.
    Under FAST Act Section 1309, the Program will terminate 12 years
after enactment (December 4, 2027). Until then, the Operating
Administration would review each participating State's performance, at
least once every 5 years. The Operating Administration would provide
public notice and an opportunity for public comment on the review. At
the conclusion of the Operating Administration's last review before the
expiration of the term, the Operating Administration may extend a
State's participation in the Program for an additional term not to
exceed 5 years (if this extension ends before December 4, 2027) or it
may terminate the State's participation in the Program.
    Finally, the Operating Administration could terminate a State's
participation in the Program if the Operating Administration, in
consultation with the Office of the Secretary and the Chair of CEQ,
determines a participating State's performance fails to meet the terms
of the written agreement, the requirements of 23 CFR part 778, or 23
U.S.C. 330. Before terminating the State's participation, the Operating
Administration would first notify the State and allow 90 days for the
State to take corrective action. If the State fails to take corrective
action during this time, the Operating Administration may then
terminate that State's participation in the Program.

23 CFR Part 773--Surface Transportation Project Delivery Program
Application Requirements and Termination

    The Agencies propose to revise section 773.117(a)(2) by modifying
the current termination time period language to state that the
Operating Administration(s) must provide the State no less than 120
days to take corrective actions.
    The Agencies propose to add a new section 773.117(a)(3) to include
that on the request of the Governor of the State, the Operating
Administration(s) shall provide a detailed description of each
responsibility in need of corrective action regarding an inadequacy
identified by the Operating Administration.

49 CFR Part 264--Program for Eliminating Duplication of Environmental
Reviews and the Surface Transportation Project Delivery Program

    The Agencies propose to revise the heading for 49 CFR part 264 and
add a reference to 23 U.S.C. 330 and the Program application procedures
in 23 CFR part 778 as applicable to rail projects. This cross-reference
would assist potential FRA applicants, State and Federal agencies, and
the public.

49 CFR Part 622--Environmental Impact and Related Procedures

    The Agencies propose to revise the authorities in subpart A--
Environmental Procedures to include a reference to 23 U.S.C. 330 and
the application procedures in 23 CFR part 778 as applicable to transit
projects. This cross-reference would assist potential FTA applicants,
State and Federal agencies, and the public.

Statutory/Legal Authority for This Rulemaking

    The Agencies have the authority for this rulemaking action under 49
U.S.C. 322(a), which provides authority to ``[a]n officer of the
Department of Transportation [to] prescribe regulations to carry out
the duties and powers of the officer.'' The Secretary delegated this
authority to the Agencies' Administrators in 49 CFR 1.81(a)(3), which
provides that the authority to prescribe regulations contained in 49
U.S.C. 322(a) is delegated to each Administrator ``with respect to
statutory provisions for which authority is delegated by other sections
in [49 CFR part 1].''

Rulemaking Analyses and Notices

    The Agencies will consider all comments received before the close
of business on the comment closing date indicated above and will make
such comments available for examination in the docket at the above
regulations.gov address. The Agencies will file comments received after
the comment closing date and consider them to the extent practicable.
In addition to late comments, the Agencies will also continue to file
relevant information in the docket as it becomes available after the
comment period closing date. Interested persons should continue to
examine the docket for new material. The Agencies may publish a final
rule at any time after close of the comment period.

Executive Order 12866 (Regulatory Planning and Review), Executive Order
13563 (Improving Regulation and Regulatory Review), Executive Order
13771 (Reducing Regulation and Controlling Regulatory Costs), and DOT
Regulatory Policies and Procedures

    Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). The
Agencies have determined preliminarily that this action would not be a
significant regulatory action under section 3(f) of Executive Order
12866 and would not be significant within the meaning of DOT's
regulatory policies and procedures (44 FR 11032). This

proposed rule is not expected to be an Executive Order 13771 regulatory
action because this proposed rule is not significant under Executive
Order 12866.
    Executive Order 13563 emphasizes the importance of quantifying both
costs and benefits, reducing costs, harmonizing rules, and promoting
flexibility. The Agencies anticipate that the economic impact of this
rulemaking would be minimal. The Agencies do not have specific data to
assess the monetary value of the benefits from the proposed changes
because such data does not exist and would be difficult to develop.
    This proposed rulemaking would not adversely affect, in any
material way, any sector of the economy. This proposed rulemaking sets
forth application requirements for the Program, which will result in
only minimal costs to Program applicants. In addition, these changes
would not interfere with any action taken or planned by another agency
and would not materially alter the budgetary impact of any
entitlements, grants, user fees, or loan programs. Consequently, a full
regulatory evaluation is not required.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (Pub. L. 96-354,
5 U.S.C. 601-612), the Agencies have evaluated the effects of this
proposed rule on small entities and anticipate that this action would
not have a significant economic impact on a substantial number of small
entities. ``Small entities'' include small businesses, not-for-profit
organizations that are independently owned and operated and are not
dominant in their fields, and governmental jurisdictions with
populations under 50,000. The proposed rule addresses application
requirements for States wishing to participate in the Program. As such,
it affects only States, and States are not included in the definition
of small entity set forth in 5 U.S.C. 601. Therefore, the Regulatory
Flexibility Act does not apply, and the Agencies certify that this
action would not have significant economic impact on a substantial
number of small entities.

Unfunded Mandates Reform Act of 1995

    This proposed rule would not impose unfunded mandates as defined by
the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48).
This proposed rule will not result in the expenditure by State, local,
and tribal governments, in the aggregate, or by the private sector, of
$155 million or more in any one year (2 U.S.C. 1532). Further, in
compliance with the Unfunded Mandates Reform Act of 1995, the Agencies
will evaluate any regulatory action that might be proposed in
subsequent stages of the proceeding to assess the effects on State,
local, and tribal governments and the private sector. Additionally, the
definition of ``Federal Mandate'' in the Unfunded Mandates Reform Act
excludes financial assistance of the type in which State, local, or
tribal governments have authority to adjust their participation in the
Program in accordance with changes made in the Program by the Federal
Government.

Executive Order 13132 (Federalism Assessment)

    Executive Order 13132 requires agencies to ensure meaningful and
timely input by State and local officials in the development of
regulatory policies that may have a substantial, direct effect on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. The Agencies analyzed this proposed
action in accordance with the principles and criteria contained in
Executive Order 13132 and determined that it would not have sufficient
federalism implications to warrant the preparation of a federalism
assessment. The Agencies have also determined that this proposed action
would not preempt any State law or State regulation or affect the
States' ability to discharge traditional State governmental functions.
The Agencies invite State and local governments with an interest in
this rulemaking to comment on the effect that adoption of specific
proposals may have on State or local governments.

Executive Order 13175 (Tribal Consultation)

    The Agencies have analyzed this action under Executive Order 13175,
and believe that it would not have substantial direct effects on one or
more Indian tribes; would not impose substantial direct compliance
costs on Indian tribal governments; and would not preempt tribal law.
Therefore, a tribal summary impact statement is not required.

Executive Order 13211 (Energy Effects)

    The Agencies have analyzed this action under Executive Order 13211,
Actions Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use. The Agencies have determined that this action is
not a significant energy action under Executive Order 13211 because it
is not likely to have a significant adverse effect on the supply,
distribution, or use of energy. Therefore, a Statement of Energy
Effects under Executive Order 13211 is not required.

Executive Order 12372 (Intergovernmental Review)

    The DOT's regulations implementing Executive Order 12372 regarding
intergovernmental consultation on Federal programs and activities (49
CFR part 17) apply to this program. Accordingly, the Agencies solicit
comments on this issue.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et
seq.), Federal agencies must obtain approval from the Office of
Management and Budget for each collection of information they conduct,
sponsor, or require through regulations. The Agencies have determined
that this proposal does not contain collection of information
requirements for the purposes of the PRA.

Executive Order 12988 (Civil Justice Reform)

    This action meets applicable standards in sections 3(a) and 3(b)(2)
of Executive Order 12988, Civil Justice Reform, to minimize litigation,
eliminate ambiguity, and reduce burden.

Executive Order 12898 (Environmental Justice)

    Executive Order 12898, Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations, and DOT
Order 5610.2(a), 77 FR 27534 (May 10, 2012), require DOT agencies to
achieve environmental justice (EJ) as part of their mission by
identifying and addressing, as appropriate, disproportionately high and
adverse human health or environmental effects, including interrelated
social and economic effects, of their programs, policies, and
activities on minority populations and low-income populations in the
United States. The DOT Order requires DOT agencies to address
compliance with the Executive Order and the DOT Order in all rulemaking
activities. In addition, FHWA and FTA have issued additional documents
relating to administration of the Executive Order and the DOT Order. On
June 14, 2012, the FHWA issued an update to its EJ order, FHWA Order
6640.23A, FHWA Actions to Address

Environmental Justice in Minority Populations and Low-Income
Populations. FTA also issued an update to its EJ policy, FTA Policy
Guidance for Federal Transit Recipients, 77 FR 42077 (July 17, 2012).
    The Agencies have evaluated this proposed rule under the Executive
Order, the DOT Order, the FHWA Order, and the FTA Policy Guidance. The
Agencies have determined that the proposed application regulations, if
finalized, would not cause disproportionately high and adverse human
health and environmental effects on minority or low-income populations.
States participating in the Program must comply with DOT's and the
appropriate Agency guidance and policies on environmental justice.

Executive Order 13045 (Protection of Children)

    The Agencies have analyzed this action under Executive Order 13045,
Protection of Children from Environmental Health Risks and Safety
Risks. The Agencies certify that this action would not be an
economically significant rule and would not cause an environmental risk
to health or safety that may disproportionately affect children.

Executive Order 12630 (Taking of Private Property)

    The Agencies do not anticipate that this action would affect a
taking of private property or otherwise have taking implications under
Executive Order 12630, Governmental Actions and Interference with
Constitutionally Protected Property Rights.

National Environmental Policy Act

    Agencies are required to adopt implementing procedures for NEPA
that establish specific criteria for, and identification of, three
classes of actions: those that normally require preparation of an EIS;
those that normally require preparation of an EA; and those that are
categorically excluded from further NEPA review (40 CFR 1507.3(b)).
This proposed action qualifies for categorical exclusions under 23 CFR
771.117(c)(20) (promulgation of rules, regulations, and directives) and
771.117(c)(1) (activities that do not lead directly to construction)
for FHWA, and 23 CFR 771.118(c)(4) (planning and administrative
activities which do not involve or lead directly to construction) for
FTA. In addition, FRA has determined that this proposed action is not a
major FRA action requiring the preparation of an environmental impact
statement or environmental assessment under FRA's Procedures for
Considering Environmental Impacts (64 FR 28545, May 26, 1999, as
amended by 78 FR 2713, Jan. 14, 2013). The Agencies have evaluated
whether the proposed action would involve unusual or extraordinary
circumstances and have determined that this proposed action would not
involve such circumstances.
    Under the Program, a selected State may conduct environmental
reviews and make approvals for projects under State environmental laws
and regulations instead of NEPA. These State environmental laws and
regulations must be at least as stringent as the Federal requirements.
As a result, the Agencies find that this proposed rulemaking would not
result in significant impacts on the human environment.

Regulation Identifier Number

    A regulation identifier number (RIN) is assigned to each regulatory
action listed in the Unified Agenda of Federal Regulations. The
Regulatory Information Service Center publishes the Unified Agenda in
April and October of each year. The RIN contained in the heading of
this document can be used to cross reference this action with the
Unified Agenda.

List of Subjects

23 CFR Part 778

    Environmental protection, Eliminating duplication of environmental
reviews pilot program, Highways and roads.

23 CFR Part 773

    Environmental protection, Surface transportation project delivery
program application requirements and termination, Highways and roads.

49 CFR Part 264

    Environmental protection, Eliminating duplication of environmental
reviews pilot program, Railroads.

49 CFR Part 622

    Environmental protection, Environmental impact and related
procedures, Public transportation, Transit.

Brandye L. Hendrickson,

Acting Administrator, Federal Highway Administration.

Heath Hall,

Acting Administrator, Federal Railroad Administration.

Jane Williams,

Acting Administrator, Federal Transit Administration.

    For the reasons discussed in the preamble, the Agencies propose to
amend 23 CFR chapter I and 49 CFR chapters II and VI as follows:

Title 23--Highways

PART 773--SURFACE TRANSPORTATION PROJECT DELIVERY PROGRAM
APPLICATION REQUIREMENTS AND TERMINATION

0
1. The authority citation for part 773 continues to read as follows:

    Authority:  23 U.S.C. 315 and 327; 49 CFR 1.81(a)(4)-(6); 49 CFR
1.85.

0
2. Amend Sec.  773.117 by revising paragraph (a)(2) and adding
paragraph (a)(3) to read as follows:
    (a) * * *
    (2) The Operating Administration(s) may not terminate a State's
participation without providing the State with notification of the
noncompliance issue that could give rise to the termination, and
without affording the State an opportunity to take corrective action to
address the noncompliance issue. The Operating Administration(s) must
provide the State a period of no less than 120 days to take corrective
actions. The Operating Administration(s) is responsible for making the
final decision on whether the corrective action is satisfactory.
    (3) On the request of the Governor of the State, the Operating
Administration(s) shall provide a detailed description of each
responsibility in need of corrective action regarding an inadequacy
identified by the Operating Administration(s).
* * * * *
0
3. Add part 778 to read as follows:

PART 778--PILOT PROGRAM FOR ELIMINATING DUPLICATION OF
ENVIRONMENTAL REVIEWS

Sec.
778.101 Purpose.
778.103 Eligibility and Certain Limitations.
778.105 Application requirements for participation in the program.
778.107 Application review and approval.
778.109 Criteria for Determining Stringency.
778.111 Review and Termination.

    Authority:  23 U.S.C. 330; 49 CFR 1.81.

Sec.  778.101  Purpose.

    The purpose of this part is to establish the requirements for a
State to participate in the pilot program for eliminating duplication
of environmental reviews (``Program'') under 23 U.S.C. 330. This
Program allows States to conduct environmental reviews and make
approvals for projects

under State environmental laws and regulations instead of the National
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).

Sec.  778.103  Eligibility and Certain Limitations.

    (a) Applicants. To be eligible for the Program, a State must:
    (1) Act by and through the Governor or top-ranking State
transportation official who is charged with responsibility for highway
construction;
    (2) Expressly consent to the exclusive jurisdiction of U.S.
District Courts for compliance, discharge, and enforcement of any
responsibility under this Program;
    (3) Have previously assumed the responsibilities of the Secretary
under 23 U.S.C. 327 related to environmental review, consultation, or
other actions required under certain Federal environmental laws; and
    (4) Identify laws authorizing the State to take the actions
necessary to carry out the equivalent environmental review and approval
procedures under State laws and regulations.
    (b) Certain Limitations. (1) State environmental laws and
regulations may only be substituted as a means of complying with:
    (i) NEPA;
    (ii) Procedures governing the implementation of NEPA and related
procedural laws under the authority of the Secretary, including 23
U.S.C. 109, 128, and 139; and
    (iii) Related regulations and Executive Orders.
    (2) Compliance with State environmental laws and regulations may
not serve as a substitute for the Secretary's responsibilities
regarding compliance with any other Federal environmental laws.

Sec.  778.105  Application requirements for participation in the
Program.

    (a) To apply to participate in the Program, a State must submit an
application to the Federal Highway Administration, Federal Railroad
Administration, or Federal Transit Administration, as appropriate.
    (b) Each application submitted must contain the following
information:
    (1) A full and complete description of the alternative
environmental review and approval procedures the State proposes,
including:
    (i) The procedures the State uses to engage the public and consider
alternatives to the proposed action; and
    (ii) The extent to which the State considers environmental
consequences or impacts on resources potentially impacted by the
proposed actions (such as air, water, or species).
    (2) Each Federal environmental requirement the State is seeking to
substitute, within the limitations of Sec.  778.103(b);
    (3) Each State environmental law and regulation the State intends
to substitute for a Federal environmental requirement, within the
limitations of Sec.  778.103(b);
    (4) A detailed explanation (with supporting documentation
incorporated by reference) of the basis for concluding the State
environmental law or regulation intended to substitute for a Federal
environmental requirement is at least as stringent as that Federal
requirement;
    (5) A description of the projects or classes of projects for which
the State anticipates exercising the authority that may be granted
under the Program;
    (6) Verification that the State has the financial and personnel
resources necessary to fulfill its obligations under the Program;
    (7) Evidence that the State has sought public comments on its
application prior to the submittal and the State's response to any
comments it received;
    (8) A point of contact for questions regarding the application and
a point of contact regarding potential implementation of the Program
(if different);
    (9) Certification and explanation by the State's Attorney General
or other State official legally empowered by State law to issue legal
opinions that bind the State that the State has legal authority to
enter into the Program, and that the State consents to exclusive
Federal court jurisdiction for the compliance, discharge, and
enforcement of any responsibility under this Program;
    (10) Certification by the State's Attorney General or other State
official legally empowered by State law to issue legal opinions that
bind the State that the State has laws that are comparable to the
Freedom of Information Act, 5 U.S.C. 552 (FOIA), including laws that
allow for any decision regarding the public availability of a document
under those laws to be reviewed by a court of competent jurisdiction;
and
    (11) The State Governor's (or in the case of the District of
Columbia, the Mayor's) or the State's top ranking transportation
official's signature approving the application.

Sec.  778.107  Application review and approval.

    (a) The Operating Administration must solicit public comments on
the application and must consider comments received before making a
decision to approve or disapprove the application. Materials made
available for this public review must include the State's application
and may include additional supporting materials.
    (b) After receiving an application Operating Administration deems
complete, the Operating Administration must make a decision on whether
to approve or disapprove the application within 120 calendar days. The
Operating Administration must transmit the decision in writing to the
State with a statement explaining the decision.
    (c) The Operating Administration will approve an application only
if it determines the following conditions are satisfied:
    (1) The State is party to an agreement with the Operating
Administration under 23 U.S.C. 327;
    (2) The Operating Administration has determined, after considering
any public comments received, the State has the capacity, including
financial and personnel, to undertake the alternative environmental
review and approval procedures; and
    (3) The Operating Administration, in consultation with the Office
of the Secretary with the concurrence of the Chair of CEQ, and after
considering public comments received, has determined that the State
environmental laws and regulations described in the State's application
are at least as stringent as the Federal requirements for which they
substitute.
    (d) The State must enter into a written agreement with the
Operating Administration.
    (e) The written agreement must:
    (1) Be executed by the Governor or top-ranking transportation
official in the State charged with responsibility for highway
construction;
    (2) Provide that the State agrees to assume the responsibilities of
the Program, as identified by the Operating Administration;
    (3) Provide that the State expressly consents to accept Federal
court jurisdiction for the compliance, discharge, or enforcement of any
responsibility undertaken as part of the Program;
    (4) Certify that State laws and regulations exist that authorize
the State to carry out the responsibilities of the Program;
    (5) Certify that State laws and regulations exist that are
comparable to FOIA (5 U.S.C. 552), including a provision that any
decision regarding the public availability of a document under the
State laws and regulations is reviewable by a court of competent
jurisdiction;
    (6) Contain a commitment that the State will maintain the personnel
and financial resources necessary to carry

out its responsibilities under the Program;
    (7) Have a term of not more than 5 years, the term of a State's
agreement with the Operating Administration in accordance with 23
U.S.C. 327, or a term ending on December 4, 2027, whichever is sooner;
and
    (8) Be renewable.
    (f) The State must execute the agreement before the Operating
Administration executes the agreement and approves the application. The
Operating Administration's execution of the agreement will constitute
approval of the application.
    (g) The agreement may be renewed at the end of its term, but may
not extend beyond December 4, 2027.
    (h) A State approved to participate in the Program may further
apply the approved alternative environmental review and approval
procedures to locally administered projects, for up to 25 local
governments at the request of those local governments. For such locally
administered projects, the State shall be responsible for ensuring that
the requirements of the approved alternative State procedures are met.

Sec.  778.109  Criteria for Determining Stringency

    To be considered at least as stringent as a Federal requirement
under this Program, the State laws and regulations, must, at a minimum:
    (a) Define the types of actions that normally require an
environmental impact assessment, including government-sponsored
projects such as those receiving Federal financial assistance or permit
approvals. (42 U.S.C. 4332(2)(C); 40 CFR 1508.18);
    (b) Ensure an early process for determining the scope of the action
and issues that need to be addressed, identifying the significant
issues, and for the classification of the appropriate environmental
impact assessment in accordance with the significance of the likely
impacts. For actions that may result in significant impacts on the
human environment the scoping process should be an open and public
process. (23 U.S.C. 139(e); 40 CFR 1501.3, 1501.4, 1501.7, 1507.3(b),
1508.14, and 1508.25);
    (c) Prohibit agencies and non-governmental proponents from taking
action concerning the proposal until the environmental impact
evaluation is complete when such action would:
    (1) Have adverse environmental impacts or
    (2) Limit the choice of reasonable alternatives. (40 CFR 1506.1 and
1506.10(b)).
    (d) Protect the integrity and objectivity of the analysis by
requiring the agency to take responsibility for the scope and content
of the analysis and by preventing conflicts of interest among the
parties developing the analysis and the parties with financial or other
interest in the outcome of the project. (42 U.S.C. 4332(2)(D); 40 CFR
1506.5);
    (e) Based on a proposed action's purpose and need, require
objective evaluation of reasonable alternatives to the proposed action
(including the alternative of not taking the action) if it may result
in significant impacts to the human environment or, for those actions
that may not result in significant impacts, consideration of
alternatives if they will involve unresolved conflicts concerning
alternative uses of available resources (42 U.S.C. 4332(2)(C)(iii); 42
U.S.C. 4332(2)(E); 23 U.S.C. 330(b)(1)(A); 40 CFR 1502.13, 1502.14, and
1508.9);
    (f) Require an assessment of the reasonably foreseeable direct,
indirect, and cumulative impacts of a proposed action (and any
reasonable alternatives) on the human environment, and a comparison of
those potential impacts with existing environmental conditions (42
U.S.C. 4332(2)(C); 23 U.S.C. 330(b)(1)(B); 40 CFR 1502.16, 1508.9(b),
and 1508.4);
    (g) Require the consideration of appropriate mitigation for the
impacts associated with a proposal and reasonable alternatives
(including avoiding, minimizing, rectifying, reducing or eliminating
the impact over time, and compensating for the impact) (40 CFR
1502.14(f), 1502.16(h), and 1508.20);
    (h) Provide for adequate interagency participation, including
appropriate coordination and consultation with State, Federal, tribal,
and local agencies with jurisdiction by law, special expertise, or an
interest with respect to any environmental impact associated with the
proposal, and for collaboration that would eliminate duplication of
reviews For actions that may result in significant impacts to the human
environment, the process should allow for the development of plans for
interagency coordination and public involvement, and the setting of
timetables for the review process (42 U.S.C. 4332(2)(C); 23 U.S.C.
139(d) and 139(g); 40 CFR 1500.5(e), 1501.6, 1502.25, and part 1503);
    (i) Provide an opportunity for public participation and comment
that is commensurate with the significance of the proposal's impacts on
the human environment, and require public access to the documentation
developed during the environmental review and a process to respond to
public comments (42 U.S.C. 4332(2)(C); 23 U.S.C. 330(b)(1)(A); FAST
Act, Sec. 1309(c)(2)(B)(ii); 40 CFR 1502.19, part 1503, and 1506.6; and
E.O. 11514, Sec. 1(b));
    (j) Include procedures for the elevation and resolution of
interagency disputes prior to a final decision on the proposed project
(23 U.S.C. 139(h); 40 CFR part 1504);
    (k) Require, for the conclusion of the process, a concise
documentation of findings (for actions that would not likely result in
significant impacts to the human environment) or, for actions that may
result in significant impacts, a concise record that states the agency
decision that:
    (i) Identifies all alternatives considered (specifying which were
environmentally preferable),
    (ii) Identifies and discusses all factors that were balanced by the
agency in making its decision and states how those considerations
entered into the decision,
    (iii) States whether all practicable means to avoid or minimize
environmental harm have been adopted, and if not, why they were not;
and
    (iv) Describes the monitoring and enforcement program that will be
adopted where applicable for any mitigation (40 CFR 1501.4 and 1505.2).
    (l) Require the agency to supplement environmental impact
assessments if there are substantial changes in the proposal that are
relevant to environmental concerns or significant new circumstances or
information relevant to environmental concerns and bearing on the
proposed action or its impacts. (23 U.S.C. 330(e)(3); 40 CFR 1502.9);
and
    (m) Allow for the use of procedures that facilitate process
efficiency such as the identification of categories of actions that do
not individually or cumulatively have a significant impact on the human
environment and which have been found to not have such effect with
procedures that require the consideration of extraordinary
circumstances that would warrant a higher level of analysis, the use of
tiering, programmatic approaches, adoption, incorporation by reference,
approaches to eliminate duplication with other Federal requirements,
and special procedures to address emergency situations (23 U.S.C.
139(b)(3); 40 CFR 1502.20, 1502.21, 1502.25, 1506.2, 1506.3, 1506.4,
1507.3(b)(ii), and 1508.4).

Sec.  778.111  Review and Termination

    (a) In General. The Program shall terminate December 4, 2027.
    (b) Review. The Operating Administration must review each

participating State's performance in implementing the requirements of
the Program at least once every 5 years.
    (1) The Operating Administration must provide notice and an
opportunity for public comment during the review.
    (2) At the conclusion of its last review prior to the expiration of
the term, the Operating Administration may extend a State's
participation in the Program for an additional term of not more than 5
years (as long as such term does not extend beyond the termination date
of the Program) or terminate the State's participation in the Program.
    (c) Early Termination. (1) If the Operating Administration, in
consultation with the Office of the Secretary and the Chair of CEQ,
determines that a State is not administering the Program consistent
with the terms of its written agreement, or the requirements of this
part or 23 U.S.C. 330, the Operating Administration must provide the
State notification of that determination.
    (2) After notifying the State of its determination under paragraph
(c)(1), the Operating Administration must provide the State a maximum
of 90 days to take the appropriate corrective action. If the State
fails to take such corrective action, the Operating Administration may
terminate the State's participation in the Program.

Title 49--Transportation

PART 264--PROGRAM FOR ELIMINATING DUPLICATION OF ENVIRONMENTAL
REVIEWS AND THE SURFACE TRANSPORTATION PROJECT DELIVERY PROGRAM

0
4. The authority citation for part 264 is revised to read as follows:

    Authority:  23 U.S.C. 327; 49 CFR 1.81; 23 U.S.C. 330.

0
5. Revise the heading for part 264 to read as set forth above.
0
6. Revise Sec.  264.101 to read as follows:

Sec.  264.101  Procedures for complying with the surface transportation
project delivery program application requirements and termination and
the procedures for participating in and complying with the program for
eliminating duplication of environmental reviews.

    The procedures for complying with the surface transportation
project delivery program application requirements and termination are
set forth in part 773 of title 23 of the Code of Federal Regulations.
The procedures for participating in and complying with the program for
eliminating duplication of environmental reviews are set forth in part
778 of title 23 of the Code of Federal Regulations.

PART 622--ENVIRONMENTAL IMPACT AND RELATED PROCEDURES

0
7. The authority citation for part 622 is revised to read as follows:

    Authority:  42 U.S.C. 4321 et seq.; 49 U.S.C. 303 and 5323(q);
23 U.S.C. 139, 326, 327, and 330; Pub. L. 109-59, 119 Stat. 1144,
sections 6002 and 6010; 40 CFR parts 1500-1508; 49 CFR 1.81; Pub. L.
112-141, 126 Stat. 405, sections 1315, 1316, 1317, and 1318; and
Pub. L. 114-94, section 1309.

0
8. Revise Sec.  622.101 to read as follows:

Sec.  622.101  Cross-reference to procedures.

    The procedures for complying with the National Environmental Policy
Act of 1969, as amended (42 U.S.C. 4321 et seq.), and related statutes,
regulations, and orders are set forth in part 771 of title 23 of the
Code of Federal Regulations. The procedures for complying with 49
U.S.C. 303, commonly known as ``Section 4(f),'' are set forth in part
774 of title 23 of the Code of Federal Regulations. The procedures for
complying with the surface transportation project delivery program
application requirements and termination are set forth in part 773 of
title 23 of the Code of Federal Regulations. The procedures for
participating and complying with the program for eliminating
duplication of environmental reviews are set forth in part 778 of title
23 of the Code of Federal Regulations.

[FR Doc. 2017-20561 Filed 9-27-17; 8:45 am]
 BILLING CODE 4910-22-P


[Federal Register Volume 79, Number 9 (Tuesday, January 14, 2014)]
[Notices]
[Pages 2498-2501]
[FR Doc No: 2014-00466]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71258; File No. SR-Phlx-2013-125]

Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change Relating to
Routing Fees

January 8, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 31, 2013, NASDAQ OMX PHLX LLC (``Phlx'' 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 the
Substance of the Proposed Rule Change

    The Exchange proposes to amend Section V of the Pricing Schedule
entitled ``Routing Fees.''
    While the changes proposed herein are effective upon filing, the
Exchange has designated that the amendments be operative on January 2,
2014.
    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaqomxphlx.cchwallstreet.com/, at the principal
office of the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of this filing is to amend the Routing Fees in Section
V of the Pricing Schedule in order to continue to incentivize members
to direct Customer orders to the Exchange.
    Today, the Exchange assesses a Non-Customer a $0.95 per contract
Routing Fee to any options exchange. The Customer \3\ Routing Fee for
option orders routed to The NASDAQ Options Exchange LLC (``NOM'') is a
$0.05 per contract Fixed Fee in addition to the actual transaction fee
assessed. The Customer Routing Fee for option orders routed to NASDAQ
OMX BX, Inc. (``BX Options'') is $0.00. The Customer Routing Fee for
option orders routed to all other options exchanges \4\ (excluding NOM
and BX Options) is a fixed fee of $0.20 per contract (``Fixed Fee'') in
addition to the actual transaction fee assessed. If the away market
pays a

rebate, the Routing Fee is $0.00 per contract. For all Routing Fees,
the transaction fee will continue to be based on the away market's
actual transaction fee or rebate for particular market participants
and, in the case that there is no transaction fee or rebate assessed by
the away market, the Fixed Fee.
---------------------------------------------------------------------------

    \3\ The term ``Customer'' applies to any transaction that is
identified by a member or member organization for clearing in the
Customer range at The Options Clearing Corporation (``OCC'') which
is not for the account of broker or dealer or for the account of a
``Professional'' (as that term is defined in Rule 1000(b)(14)).
    \4\ Including BATS Exchange, Inc. (``BATS''), BOX Options
Exchange LLC (``BOX''), the Chicago Board Options Exchange,
Incorporated (``CBOE''), C2 Options Exchange, Incorporated (``C2''),
International Securities Exchange, LLC (``ISE''), the Miami
International Securities Exchange, LLC (``MIAX''), NYSE Arca, Inc.
(``NYSE Arca''), NYSE MKT LLC (``NYSE Amex'') and Topaz Exchange,
LLC (``Gemini'').
---------------------------------------------------------------------------

    With respect to the fixed costs, the Exchange incurs a fee when it
utilizes Nasdaq Options Services LLC (``NOS''), a member of the
Exchange and the Exchange's exclusive order router.\5\ Each time NOS
routes an order to an away market, NOS is charged a clearing fee \6\
and, in the case of certain exchanges, a transaction fee is also
charged in certain symbols, which fees are passed through to the
Exchange. The Exchange currently recoups clearing and transaction
charges incurred by the Exchange as well as certain other costs
incurred by the Exchange when routing to away markets, such as
administrative and technical costs associated with operating NOS,
membership fees at away markets, Options Regulatory Fees (``ORFs'') and
technical costs associated with routing options. The Exchange assesses
the actual away market fee at the time that the order was entered into
the Exchange's trading system. This transaction fee would be calculated
on an order-by-order basis since different away markets charge
different amounts.
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    \5\ In May 2009, the Exchange adopted Rule 1080(m)(iii)(A) to
establish NOS, a member of the Exchange, as the Exchange's exclusive
order router. See Securities Exchange Act Release No. 59995 (May 28,
2009), 74 FR 26750 (June 3, 2009) (SR-Phlx-2009-32). NOS is utilized
by the Exchange's fully automated options trading system, PHLX
XL[supreg].
    \6\ The Options Clearing Corporation (``OCC'') assesses $0.01
per contract side.
---------------------------------------------------------------------------

    Today, a member organization qualifying for a Tier 2, 3 or 4 rebate
in the Customer Rebate Program in Section B of the Pricing Schedule is
entitled to receive a credit equal to the applicable Fixed Fee plus
$0.05 per contract, unless the away market transaction fee is $0.00 or
the away market pays a rebate, in which case the member organization is
entitled to receive a credit equal to the applicable Fixed Fee. The
Exchange proposes to amend the Routing Fees to state that a member
organization that qualifies (1) for a Tier 2, 3, 4 or 5 rebate in the
Customer Rebate Program in Section B of the Pricing Schedule; and (2)
routes away more than 5,000 Customer contracts per day in a given month
to an away market is entitled to receive a credit equal to the
applicable Fixed Fee plus $0.05 per contract, unless the away market
transaction fee is $0.00 or the away market pays a rebate, in which
case the member organization is entitled to receive a credit equal to
the applicable Fixed Fee.
    The Exchange recently added a new tier to the Customer Rebate
Program.\7\ The Exchange desires to offer the credit to member
organizations that qualify for a Tier 2, 3, 4 or 5 rebate in the
Customer Rebate Program going forward. The Exchange added a second
requirement which requires the member organization to route away more
than 5,000 Customer contracts per day in a given month to receive the
credit because the Exchange believes that the 5,000 threshold will
reward member organizations that route a certain amount of Customer
orders to the Exchange by providing them a credit in the event that
those contracts are not executed at Phlx.\8\ The 5,000 threshold
represents what the Exchange believes is a reasonable amount of
Customer contracts to warrant the receipt of the credit toward fees. As
a result of this added criteria, some member organizations that are
currently receiving a credit may no longer receive a credit if they do
not route away more than 5,000 Customer contracts per day in a given
month. These member organizations would continue to qualify for a
Customer rebate if they transacted the requisite amount of Customer
orders on the Exchange as specified in the Customer Rebate Program. The
credit only applies to orders routed away from the Exchange and would
now only be offered to member organizations that qualify for a Tier 2,
3, 4 or 5 rebate in the Customer Rebate Program and have more than
5,000 Customer contracts routed to an away market per day in a given
month.
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    \7\ See SR-Phlx-2013-130 (not yet published).
    \8\ Certain Customer contracts which are executed on Phlx are
entitled to the Customer Rebate Program rebates in Section B of the
Pricing Schedule. Customer rebates are paid on Customer Rebate Tiers
in Section B of the Pricing Schedule according to categories (A or
B). The Customer Rebate Tiers are calculated by totaling Customer
volume in Multiply Listed Options (including SPY) that are
electronically-delivered and executed, except volume associated with
electronic QCC Orders, as defined in Exchange Rule 1080(o) in a
month.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal to amend its Pricing
Schedule is consistent with Section 6(b) of the Act \9\ in general, and
furthers the objectives of Section 6(b)(4) and (b)(5) of the Act \10\
in particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among members and issuers and
other persons using any facility or system which Phlx operates or
controls, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4), (5).
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    The Exchange believes that the addition of the criteria that a
member organization must route more than 5,000 Customer contracts per
day in a given month to an away market, in addition to qualifying for
Tiers 2, 3, 4 and now 5, is reasonable because the Exchange is
intending to provide a credit to member organizations that qualify for
a Customer rebate and route away a certain amount of volume. The
addition of Tier 5 reflects a recent amendment to the Customer Rebate
Program. Today, all member organizations that qualify for a Customer
rebate tier which pays a rebate are eligible for the credit. The
requirement that a member organization qualify for a Tier 2, 3, 4 or 5
Customer rebate should incentivize member organizations to continue to
send Customer orders to Phlx by offering the credit in the event a
certain amount of those orders are not filled on the Exchange and
routed to an away market. By offering member organizations a credit
toward the cost of routing to an away market with the additional volume
requirements attached, the Exchange is seeking to encourage market
participants to transact a greater number of Customer orders on Phlx
which liquidity benefits all market participants. Customer liquidity
benefits all market participants by providing more trading
opportunities, which attracts Specialists and Market Makers. An
increase in the activity of these market participants in turn
facilitates tighter spreads, which may cause an additional
corresponding increase in order flow from other market participants. In
addition, the credit toward Customer Routing Fees is in addition to the
Customer rebate received for the qualifying Customer Rebate Tier.
    The Exchange is now adding a new criteria, that all member
organizations that qualify for a Customer rebate tier which pays a
rebate are eligible for a credit provided the member organization also
routes away more than 5,000 Customer contracts per day in a given month
to an away market. The 5,000 Customer contracts represents a
significant amount of volume to warrant a credit to reduce fees for
member organizations that were unable to execute their Customer orders
on the Exchange. It is important to note that when orders are routed to
an away market they are routed based on price first.\11\ Further,
market participants may

submit orders to the Exchange as ineligible for routing or ``DNR'' to
avoid Routing Fees.\12\ The Exchange believes it is reasonable to apply
the credit only when a member organization has routed away a certain
number of Customer orders, in this case 5,000 Customer orders per day,
particularly since the member may choose not to have their orders
routed. Despite the fact that the additional criteria may prevent some
member organizations that receive the credit today from receiving it in
the future, the Exchange believes that this added incentive is
reasonable because it would impact those members that are routing away
a certain amount of Customer orders and incurring higher Routing Fees.
Member organizations will continue to direct their Customer orders to
Phlx in order to obtain the applicable Customer rebate offered to
qualifying orders through the Customer Rebate Program. Only in the
instance that those orders are not filled, and the member organization
has not indicated that the orders should be returned, will those orders
be routed to an away market. At the time the order is entered, the
member organization submitting the order does not know if the order
will be filled on Phlx or routed away. The Exchange believes that it is
reasonable to credit member organizations that qualify for a Tier 2, 3,
4 or 5 Customer rebate and that have more than 5,000 Customer contracts
per day in a given month routed to an away market, because the credit
will compensate those members for Routing Fees which are incurred when
routing that quantity of Customer orders to an away market.
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    \11\ PHLX XL will route orders to away markets where the
Exchange's disseminated bid or offer is inferior to the national
best bid (best offer) (``NBBO'') price. See Rule 1080(m). The PHLX
XL II system will contemporaneously route an order marked as an
Intermarket Sweep Order (``ISO'') to each away market disseminating
prices better than the Exchange's price, for the lesser of: (a) The
disseminated size of such away markets, or (b) the order size and,
if order size remains after such routing, trade at the Exchange's
disseminated bid or offer up to its disseminated size. If contracts
still remain unexecuted after routing, they are posted on the book.
Once on the book, should the order subsequently be locked or crossed
by another market center, the PHLX XL II system will not route the
order to the locking or crossing market center, with some exceptions
noted in Rule 1080(m).
    \12\ See Rule 1066(h) (Certain Types of Orders Defined) and
1080(b)(i)(A) (PHLX XL and PHLX XL II).
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    The Exchange believes that the addition of Tier 5 to the first
qualifying criteria is equitable and not unfairly discriminatory
because the Exchange intends to continue to offer the credit to member
organizations that are sending a certain amount of Customer volume to
the Exchange which qualifies for a Customer rebate. Any market
participant that transacts Customer orders may qualify for a Customer
rebate provided they transact a qualifying number of Customer
contracts. Further, the Exchange believes that the addition of the
second criteria that a member organization must route more than 5,000
Customer contracts per day in a given month to an away market is
equitable and not unfairly discriminatory because the Exchange will
apply the second criteria (more than 5,000 Customer contracts per day
routed to an away market) to all market participants in a uniform
manner.

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. The Customer Rebate Program in
Section B of the Pricing Schedule seeks to encourage Customer order
flow to be directed to the Exchange, which order flow benefits all
market participants. All market participants are eligible to qualify
for a Customer Rebate. Further, the Exchange will continue to offer the
credit to all member organizations that qualify for certain Customer
rebates (Tiers 2, 3, 4 or 5) and route away a certain amount of volume.
The Exchange believes that offering member organizations that qualify
for a Tier 2, 3, 4 or 5 Customer rebate, and that route more than 5,000
Customer contracts per day in a month to an away market, a credit does
not impose an undue burden on competition, but rather promotes
competition on the Exchange and encourages members to direct Customer
orders to Phlx.
    The Exchange does not believes that the added criteria that member
organizations that route more than 5,000 Customer contracts to an away
market receive the credit will impose a burden on competition because
member organizations will continue to direct their Customer orders to
Phlx in order to obtain the applicable Customer rebate offered to
qualifying orders through the Customer Rebate Program. If those
Customer orders are not filled and the member organization has not
indicated that the orders should be returned, the Customer orders will
be routed to an away market and may be applicable for the credit. The
member organization that submits those Customer orders to the Exchange
is unaware at that time the order is submitted if the order will be
filled on Phlx or routed. For this reason, the Exchange does not
believe that the added criteria will impose an undue burden on
competition.
    Market participants may submit orders to the Exchange as ineligible
for routing or ``DNR'' to avoid Routing Fees.\13\ It is important to
note that when orders are routed to an away market they are routed
based on price first.\14\ Today, other options exchanges also assess
similar fees to recoup costs incurred when routing orders to away
markets.\15\
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    \13\ See note 12.
    \14\ See note 11.
    \15\ See Chicago Board of Options Exchange, Incorporated's Fee
Schedule. See NYSE Amex's Fee Schedule.
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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.\16\ 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 necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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    \16\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-Phlx-2013-125 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2013-125. 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-Phlx-2013-125, and should be
submitted on or before February 4, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
Kevin M. O'Neill,
Deputy Secretary.
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    \17\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2014-00466 Filed 1-13-14; 8:45 am]
BILLING CODE 8011-01-P