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Code · REGISTER · 2006-09-12 · SECURITIES AND EXCHANGE COMMISSION · Notices

Notices. Notice of a temporary, emergency amendment to sentencing guidelines, policy statements, and commentary

25,661 words·~117 min read·/register/2006/09/12/06-7582

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54398; File No. SR-ISE-2006-42] Self-Regulatory Organizations; the International Securities Exchange, Inc., Notice of Filing and Order Granting Accelerated Approval of a Proposed Rule Change Relating to Short Sales August 31, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on July 25, 2006, the International Securities Exchange, Inc.
(the “Exchange” or the “ISE”) filed with the Securities and Exchange Commission the proposed rule change as described in Items I and II below, which items have been prepared by the self-regulatory organization. The Commission is publishing this notice and order to solicit comments on the proposed rule change from interested persons and to grant accelerated approval. 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 ISE is proposing to adopt a rule with respect to short selling on the ISE Stock Exchange, the Exchange's entry into the trading of non-option equity securities.
The text of the proposed rule change is available on the Exchange's Web site ( *http://www.iseoptions.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 self-regulatory organization 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 III below. The self-regulatory organization 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 *Purpose* —Currently the ISE only trades options on equity securities and indices. The purpose of this proposed rule change is to adopt a rule that will be necessary for ISE ultimately to trade non-option equity securities.
Specifically, Commission Regulation SHO 3 and Rule 10a-1 4 under the Securities Exchange Act of 1934 (“Exchange Act”) govern the marking of orders in equity securities as long and short, the short sale of securities, and securities borrowing and delivery requirements. In order for the ISE to trade equity securities it will need to adopt a rule implementing these provisions. Proposed Rule 2105 does so by:
(a)Requiring members to mark orders in compliance with Regulation SHO;
(b)implementing the short-sale restrictions of the “tick rule” contained in the Short Sale Rule; and
(c)prohibiting members from entering orders in equity securities unless the member can comply with the borrowing and delivery requirements of Regulation SHO. Proposed Rule 2105 exempts from its requirements transactions, securities and persons similarly exempted under Regulation SHO. 5 3 Rules 242.200 through 242.203 under the Exchange Act; 17 CFR 242.200-242.203 (“Regulation SHO”). 4 17 CFR 240.10a-1 (“Short Sale Rule”). 5 Rule 2105 is substantially similar to Rule 30.20 of the Chicago Board Options Exchange, Incorporated (“CBOE”). *Basis* —The basis under the Exchange Act for this proposed rule change is found in Section 6(b)(5), in that the proposed rule filing is designed to promote just and equitable principles of trade, remove impediments to and perfect the mechanisms of a free and open market and a national market system. Specifically, the proposal will permit the Exchange to trade equity securities in a manner that complies with Regulation SHO and the Short Sale Rule. B. Self-Regulatory Organization's Statement on Burden on Competition The proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties. The Exchange will notify the Commission of any written comments received by the Exchange. III. 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 e-mail to *rule-comments@sec.gov.* Please include File No. SR-ISE-2006-42 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-ISE-2006-42. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549. Copies of such filing also will be available for inspection and copying at the principal office of the ISE and on ISE's Web site at *http://www.iseoptions.com* . All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-ISE-2006-42 and should be submitted on or before October 3, 2006. IV. Commission's Findings and Order Granting Accelerated Approval of Proposed Rule Change The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5), which requires that an exchange have rules designed, among other things, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, and in general to protect investors and the public interest. 6 By incorporating the requirements of Regulation SHO and the Short Sale Rule, the proposed rule will contribute to a coordinated regulatory effort to prevent short sale fraud and manipulation and, in so doing, will protect investors. 6 In approving this rule proposal, the Commission notes that it has also considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). Acceleration The Commission finds good cause for approving the proposed rule change prior to the 30th day after the date of publication of notice of filing thereof in the **Federal Register** . The proposal incorporates the provisions of Regulation SHO and the Short Sale Rule and will be necessary for the ISE to trade non-option equity securities on the ISE Stock Exchange. The Exchange's adoption of a rule incorporating the provisions of Regulation SHO and the Short Sale Rule in order to trade non-option equity securities benefits the investing public. The Commission does not believe that ISE's proposal raises any novel regulatory issues. Accordingly, the Commission believes good cause exists, consistent with Sections 6(b)(5) and 19(b) of the Exchange Act, 15 U.S.C. 78f(b)(5) and 78s(b), to approve the proposed rule change on an accelerated basis. V. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 7 that the proposed rule change (File No. SR-ISE-2006-42) be and hereby is approved on an accelerated basis. 7 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 8 8 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-15051 Filed 9-11-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54399; File No. SR-ISE-2006-45] Self-Regulatory Organizations; International Securities Exchange, Inc.; Order Granting Accelerated Approval of Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval of Amendment No. 1 Thereto Relating To Establishing ISE Stock Exchange, LLC as a Facility of the International Securities Exchange, Inc September 1, 2006. I. Introduction On July 31, 2006, the International Securities Exchange, Inc. (“ISE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934, as amended (“Act”), 1 and Rule 19b-4 thereunder, 2 a proposed rule change establishing a facility, ISE Stock Exchange, LLC (“ISE Stock”), that would administer a fully automated trading system for the trading of equity securities by Electronic Access Members, or EAMs, of ISE under the rules of ISE. The proposed rule change was published for comment in the **Federal Register** on August 10, 2006. 3 The Commission received no comments regarding the proposal. On August 31, 2006, ISE filed Amendment No. 1 to the proposed rule change. 4 This order grants accelerated approval to the proposed rule change and Amendment No. 1 thereto, and solicits comments from interested persons on Amendment No. 1. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Securities Exchange Act Release No. 54273 (August 3, 2006), 71 FR 45868. 4 In Amendment No. 1, ISE made changes to the proposed rule change to reflect changes made in the Second Amendment and Restated Limited Liability Company Agreement (“LLC Agreement”) of ISE Stock, and made clarifying changes to the LLC Agreement, in part, to specifically reference ISE in various provisions, to clarify the voting rights of Members who have transferred Units, to clarify the details of the exception from the voting restrictions as they relate to International Securities Exchange Holdings, Inc. (“Holdings”), to clarify that ISE's Board must determine whether any change to the LLC Agreement must be filed with the Commission pursuant to Section 19(b) of the Act, and to apply the call right described in Section 9.8 of the LLC Agreement to all Units. II. Description of the Proposal A. Overview The Exchange proposes to establish ISE Stock as a facility, as that term is defined in Section 3(a)(2) of the Act, 5 of ISE. ISE Stock would administer a fully automated trading system for the trading of equity securities by Electronic Access Members, or EAMs, of ISE under the rules of ISE. The Exchange submitted to the Commission the Certificate of Formation of ISE Stock and the LLC Agreement. The Certificate of Formation and the LLC Agreement are the source of ISE Stock's governance and operating authority and, therefore, function in a similar manner as articles of incorporation and by-laws function for a corporation. 5 15 U.S.C. 78c(a)(2). ISE is a founding and controlling member of ISE Stock. ISE owns all of the Class A Units of ISE Stock, representing 51% of the voting securities of ISE Stock. In addition to its ownership stake in ISE Stock, ISE has entered into a management agreement (the “Management Agreement”) with ISE Stock. Pursuant to the Management Agreement, ISE Stock has appointed ISE as ISE Stock's manager (“Manager”) to perform certain management, operational, and related services. As described in Section 8.1 of the LLC Agreement, with limited exceptions, ISE, as the Manager, would have the complete and exclusive authority to manage the operations and affairs of ISE Stock. In addition, ISE would have responsibility for all regulatory functions related to the facility (including conducting market surveillance for trading on ISE Stock). ISE Stock would have responsibility for the business operations of the facility to the extent those activities are not inconsistent and do not interfere with the regulatory and oversight functions of ISE. 6 6 *See* Amendment No. 1 *supra* note 4 and LLC Agreement, Section 6.1(d). The Exchange submitted to the Commission the Certificate of Formation and the LLC Agreement of ISE Stock specifically relating to the control and governance of ISE Stock that would ensure that ISE has the authority within ISE Stock to maintain its responsibility for all regulatory functions related to the ISE Stock facility. 7 The LLC Agreement would ensure that the Commission and ISE would have regulatory authority over investors and members of the advisory board of ISE Stock (the “Advisory Board”). 8 7 The Board of Directors of ISE would be required to determine if any changes to the LLC Agreement are required to be filed with the Commission pursuant to Section 19(b) of the Act and Rule 19b- 4 thereunder. *See* Amendment No. 1 *supra* note 4 and LLC Agreement, Section 12.1. 8 The Advisory Board consists of seven members, three of which must be officers, directors, or partners of holders of the Class A Units, and four of which must be officers, directors, or partners of holders of the Class B Units. *See* LLC Agreement, Section 8.2(d)(iii). B. Description of LLC Membership Interests in ISE Stock As a limited liability company, ownership of ISE Stock is represented by limited liability company membership interests in ISE Stock. The holders of such membership interests are referred to as the members (the “Members”) of ISE Stock. The membership interests are divided into two classes—Class A and Class B limited liability company membership units (collectively, the “Units”). The Units represent equity interests in ISE Stock and entitle the holders thereof to participate in certain of ISE Stock's allocations and distributions. Each “Class A Unit” represents a limited liability company membership interest in ISE Stock, and as a class, the holders of the Class A Units hold fifty-one percent (51%) of the aggregate voting rights of all Members. Each holder of a Class A Unit has a vote, in respect of each Class A Unit held by such holder of record on each matter on which holders of Units are entitled to vote, equal to the product of
(A)51 and
(B)a fraction, whose numerator is the number of Class A Units then held by such holder and whose denominator is the number of Class A Units then held by all holders of Class A Units. 9 Currently, ISE holds all of the Class A Units, making it a fifty-one percent (51%) owner of ISE Stock. 9 LLC Agreement, Section 3.2(a). Each “Class B Unit” represents a limited liability company membership interest in ISE Stock. Each holder of a Class B Unit has a vote, in respect of each Class B Unit held by such holder of record on each matter on which holders of Class B Units shall be entitled to vote as specifically required by the LLC Agreement 10 or by the Delaware Limited Liability Company Act (“DLLCA”), equal to the product of
(A)49 and
(B)a fraction, whose numerator is the number of Class B Units then held by such holder and whose denominator is the number of Class B Units then held by all holders of Class B Units. 11 There are 49 Class B Units issued and outstanding, held by 11 Class B Unit holders. ISE represents that currently no Class B Unit holder owns more than 5 units. 10 The LLC Agreement provides holders of Class B Units the right to vote for Class B Advisory Board Members and to vote on certain amendments to the LLC Agreement. *See* LLC Agreement, Sections 3.2(b), 8.2(d)(iii), and 12.1. 11 LLC Agreement, Section 3.2(b). C. Management of ISE Stock As the Manager of ISE Stock, ISE would have the authority to make all decisions regarding the business of ISE Stock and matters concerning the Units, including whether or not to authorize distributions. 12 In certain limited circumstances, the Manager would need the approval of two-thirds of the disinterested members of the Advisory Board prior to taking certain actions. 13 The Manager would be responsible for the control and management of the business of ISE Stock, and must exercise good faith and integrity in handling its affairs. 12 LLC Agreement, Section 8.1 and 8.12. 13 LLC Agreement, Section 8.7. Under Section 7.1 of the LLC Agreement, other than as set forth in the LLC Agreement or required by the DLLCA or by the Commission, the Members do not participate in the management or control of ISE Stock's business, they do not transact any business for ISE Stock, and they do not have the power to act for or bind ISE Stock. All of those powers are vested solely and exclusively in the Manager. Specifically, under Section 8.1 of the LLC Agreement, subject to the limitations provided in the LLC Agreement 14 and except as specifically provided therein, the Manager has exclusive and complete authority and discretion to manage the operations and affairs of ISE Stock and to make all decisions regarding the business of ISE Stock and has the power to act for or bind ISE Stock. Any action taken by the Manager constitutes the act of and serves to bind ISE Stock. Further, except as otherwise specifically provided in the LLC Agreement, the Manager has all rights and powers of a “manager” under the DLLCA, and has all authority, rights and powers in the management of ISE Stock business to do any and all other acts and things necessary, proper, convenient or advisable to effectuate the purposes of the LLC Agreement. Lastly, under Section 8.13 of the LLC Agreement, any replacement and appointment of the Manager, and any assignment of the rights and obligations of the Manager under the Management Agreement, is subject to the rule filing process pursuant to Section 19 of the Act. 14 The following actions by the Manager require the consent of two thirds of the disinterested members of the Advisory Board: Taking an act that would make it impossible to carry on the ordinary business of ISE Stock; possessing ISE Stock property for purposes other than ISE Stock business purposes; making loans to any Member or its Related Persons; taking an act that would subject a Member to personal liability; or engaging in transactions with the Manager or any Member or any Related Person of the Manager or any other Member on terms that are not reflective of an “arms' length” transaction. *See* LLC Agreement, Section 8.7; *see also* Schedule A of the LLC Agreement. D. Governance of ISE Stock Section 8.2(d)(i) of the LLC Agreement establishes the Advisory Board of ISE Stock as a general advisory board and provides that the Advisory Board will have no power or authority to act for ISE Stock or to otherwise participate in the ISE Stock's management, except for certain limited matters. 15 Other than the matters for which approval of the Advisory Board is specifically required by the LLC Agreement, any actions taken by the Advisory Board are advisory only, and neither the Manager nor any of its Related Persons are required or otherwise bound to act in accordance with any decision, action or comments of the Advisory Board. The Advisory Board has no power or authority to act for ISE Stock or to otherwise participate in ISE Stock management. All decisions, including responsibility for the management of ISE Stock, rest with the Manager, and in no event will a member of the Advisory Board be considered a “manager” of ISE Stock. 15 *See* LLC Agreement, Section 8.2(d) and 8.7. Section 8.2(d)(ii) of the LLC Agreement provides that the purpose of the Advisory Board is to:
(1)Review and assess any potential conflicts of interest that may arise between ISE Stock, on the one hand, and the Manager, any Member and/or any of their respective Related Persons, 16 on the other hand (including without limitation conflicts with respect to the receipt by the Manager, or its Related Persons, of fees for services rendered to ISE Stock); and
(2)generally to consult with the Manager on ISE Stock's progress in achieving its business objectives. 16 “Related Person” means
(i)With respect to any Person, any executive officer (as defined under Rule 3b-7 under the Act), director, general partner, manager or managing member, as applicable, and all “affiliates” and “associates” of such Person (as such terms are defined in Rule 12b-2 under the Act);
(ii)with respect to any Person constituting an “Exchange Member” (as such term is defined in the Constitution of ISE), any broker or dealer with which such “Exchange Member” is associated;
(iii)with respect to any Person that is an executive officer (as defined under Rule 3b-7 under the Act), director, general partner, manager or managing member of a company, corporation or similar entity, such company, corporation or entity, as applicable; and
(iv)any two or more Persons that have any agreement, arrangement or understanding (whether or not in writing) to act together for the purpose of acquiring, voting, holding or disposing of Units of ISE Stock. LLC Agreement, Section 2.1 “Definitions.” “Person” means any individual, partnership, limited liability company, association, corporation, trust or other entity. LLC Agreement, Section 2.1 “Definitions.” Section 8.2(d)(iii) of the LLC Agreement provides that the Advisory Board consists of seven members. Each Member of ISE Stock may nominate a candidate for election to serve on the Advisory Board. Three members of the Advisory Board would be officers, directors, or partners of holders of the Class A Units, and are to be elected annually by a plurality of the holders of the Class A Units voting together as a class (each a “Class A Advisory Board Member”). Each Class A Advisory Board member would serve for a term of one year. Four members of the Advisory Board would be officers, directors, or partners of holders of the Class B Units, and, except as provided below, would be elected annually by a plurality of the holders of the Class B Units voting together as a class (each a “Class B Advisory Board Member”). In any situation where an Advisory Board Member's job status changes, either upon a significant change in the employment status at the same employer or upon a change of employer, or if the Member employing the Advisory Board member ceases to be a holder of Class B Units, the Advisory Board member must tender his or her resignation to the Manager, which the Manager, in consultation with the Advisory Board, may, but need not, accept. Notwithstanding any of the foregoing, no Member, other than ISE, would have more than one representative elected to the Advisory Board during any term. The initial Class B Advisory Board Members would serve staggered terms with
(x)two of such Class B Advisory Board Members serving two consecutive one-year terms, and
(y)the other two of such Class B Advisory Board Members serving three consecutive one-year terms. Thereafter, each Class B Advisory Board Member would serve for a term of one year. In no event would any Class B Advisory Board Member serve more than three consecutive one-year terms. Each Class B Advisory Board Member would serve until the conclusion of its one-year term, and until such Class B Advisory Board Member's successor has been elected, or re-elected as permitted under the LLC Agreement, by a plurality of the holders of the Class B Units voting together as a class, except in the event of such Class B Advisory Board Member's earlier death, resignation, or termination. Under Section 8.2(e) of the LLC Agreement, ISE Stock also has advisory committees (the “Advisory Committees”), each consisting of up to ten individuals who consult with ISE Stock and assist with the development of:
(i)Agency broker trading;
(ii)institutional trading;
(iii)technology; and
(iv)bulk quoting. As with the Advisory Board, the Advisory Committees have no power or authority to act for ISE Stock or to otherwise participate in management. These limitations on the powers of the Advisory Board and Advisory Committees of ISE Stock will enable ISE to have complete authority over the actions of ISE Stock, especially as they relate to regulatory responsibilities. Under Section 8.2(d)(vii) of the LLC Agreement, in discharging his or her responsibilities as a member of the Advisory Board, such member must take into consideration the effect that ISE Stock's actions would have on the ability of ISE Stock and ISE 17 to carry out their respective responsibilities under the Act and whether or not his or her actions as a member of the Advisory Board would cause ISE Stock and ISE to engage in conduct that fosters and does not interfere with ISE Stock's and ISE's ability to prevent fraudulent and manipulative acts and practices; to promote just and equitable principles of trade; to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities; to remove impediments to and perfect the mechanisms of a free and open market and a national market system; and, in general, to protect investors and the public interest. 18 Furthermore, in discharging his or her responsibilities as a member of the Advisory Board, each member must comply with the federal securities laws and the rules and regulations thereunder and cooperate with ISE and the Commission pursuant to their respective regulatory authority and the provisions of the LLC Agreement. 17 *See* Amendment No. 1 *supra* , note 4. 18 *Id* . Under Section 8.2(d)(viii) of the LLC Agreement, the Manager, in its sole discretion, may, after appropriate notice and opportunity for hearing, terminate an Advisory Board member:
(i)In the event such Advisory Board member has violated any provision of the LLC Agreement or any federal or state securities law; or
(ii)if the Manager determines that such action is necessary or appropriate in the public interest or for the protection of investors. These provisions would require all members of ISE Stock's Advisory Board, regardless of their association with ISE, to adhere to regulatory responsibilities, in that they must comply with federal securities laws and the rules and regulations promulgated thereunder, and cooperate with the Commission and ISE pursuant to their regulatory authority. In addition, all members of the Advisory Board would be required to take into consideration ISE's responsibility to comply with the requirements under Section 6(b)(5) of the Act. 19 Members of the Advisory Board that do not adhere to these requirements face termination from the ISE Stock Advisory Board and possible sanctions by regulatory authorities. 19 *See* Amendment No. 1 *supra* , note 4. E. Voting Limitations of Members Under Section 7.11 of the LLC Agreement, no Person (other than ISE), either alone or together with its Related Persons, as of any record date for the determination of members entitled to vote on any matter, would be entitled to:
(i)Vote or cause the voting of Units beneficially owned by such Person or its Related Persons, in person or by proxy or through any voting agreement, plan, or arrangement, to the extent that such Units represent in the aggregate more than twenty percent (20%) of voting power of the then-issued and outstanding Units (such threshold being hereinafter referred to as the “Voting Limitation”); or
(ii)enter into any voting agreement, plan, or arrangement that would result in Units beneficially owned by such Person or its Related Persons, subject to such voting agreement, plan, or arrangement not being voted on a matter, or any proxy relating thereto being withheld, where the effect of that voting agreement, plan, or arrangement would be to enable any Person, alone or together with its Related Persons, to exceed the Voting Limitation. ISE Stock must disregard any such votes purported to be cast in excess of the Voting Limitation. The limitations imposed by Section 7.11 of the LLC Agreement may be waived by the Manager, if in its sole discretion, it consented to expressly permit such waiver of the Voting Limitation; and such waiver was filed with, and approved by, the Commission under Section 19(b) of the Act and shall have become effective thereunder. In granting a waiver, the Manager must have determined that:
(i)The exercise of such voting rights or the entering of such agreement, plan or other arrangement, as applicable, by such Person, either alone or together with its Related Persons, will not impair the ability of ISE Stock and ISE, as the manager, to carry out its functions and responsibilities, including, but not limited to, under the Act, is otherwise in the best interests of ISE Stock and its Members;
(ii)the exercise of such voting rights or the entering of such agreement, plan or other arrangement, as applicable, by such Person, either alone or together with its Related Persons, will not impair the ability of the Commission to enforce the Act; 20
(iii)neither such Person nor its Related Persons are subject to any applicable “statutory disqualification” (within the meaning of Section 3(a)(39) of the Act); and
(iv)neither such Person nor its Related Persons is an “Exchange Member” (as such term is defined in the Constitution of ISE). 20 *See* Amendment No. 1 *supra* , note 4. F. Ownership Limitations of Members and Changes in Ownership Under Section 9.2(a) of the LLC Agreement, no Person (other than ISE), either alone or together with its Related Persons, at any time, may own, directly or indirectly, of record or beneficially, an aggregate amount of Units which would result in more than a twenty
(20)Percentage Interest level 21 in ISE Stock (the “Concentration Limitation”). Any transfer of Units that would result in the acquisition and holding by any Person, alone or together with its Related Persons, of an aggregate Percentage Interest level which crosses the threshold level of twenty percent (20%) is not valid unless a waiver has been granted by the Manager, and such waiver may not be granted unless such waiver is filed and approved pursuant to the rule filing process of Section 19 of the Act. 22 21 “Percentage Interest” shall mean
(i)As of any time when the number of outstanding Class B Units does not exceed 49,
(x)with respect to the Class B Units one percent (1%) (or fraction thereof) as to each Unit (or fraction thereof) held by such holder of Class B Units and
(y)as to the holders of Class A Units, in the aggregate, 100% less the aggregate Percentage Interest of holders of Class B Units as of such time; and as to each holder of a Class A Unit, the product of
(x)the aggregate Percentage Interest of all holders of Class A Units and
(y)a fraction, whose numerator is the number of Class A Units then held by such holder and whose denominator is the number of Class A Units then held by all holders of Class A Units; and
(ii)as of any time when the number of outstanding Class B Units exceeds 49, as to each holder of a Class A Unit or Class B Unit, the percentage equivalent of a fraction whose numerator is the number of Units held by such holder and whose denominator is the aggregate number of Units outstanding. LLC Agreement, Section 2.1 “Definitions.” 22 *See* LLC Agreement, Section 9.2(b). The limitations imposed by Sections 9.2(a) of the LLC Agreement may be waived by the Manager, if in its sole discretion, it consented to expressly permit such waiver of the Concentration Limitation; and such waiver shall have been filed with, and approved by, the Commission under Section 19(b) of the Act and shall have become effective thereunder. In granting a waiver, the Manager must have determined that:
(i)Such beneficial ownership of Units by such Person, either alone or together with its Related Persons, will not impair the ability of ISE Stock and the Manager to carry out its functions and responsibilities, including but not limited to, under the Act, is otherwise in the best interests of ISE Stock and its Members;
(ii)such beneficial ownership of Units by such Person, either alone or together with its Related Persons, will not impair the ability of the Commission to enforce the Act;
(iii)neither such Person nor its Related Persons are subject to any applicable “statutory disqualification” (within the meaning of Section 3(a)(39) of the Act); and
(iv)neither such Person nor its Related Persons is an “Exchange Member” (as such term is defined in the Constitution of ISE). Under Section 9.1 of the LLC Agreement, no Member may sell, assign, pledge or in any manner dispose of or create or suffer the creation of a security interest in or any encumbrance on all or a portion of its Units (the commission of any such act being referred to as a “Transfer”, any person who effects a Transfer being referred to as a “Transferor” and any person to whom a Transfer is effected being referred to as a “Transferee”) except in accordance with the terms and conditions set forth in Article 9 of the LLC Agreement. Any Transfer or purported Transfer of a Unit in ISE Stock not made in accordance with the LLC Agreement shall be null and void and of no force or effect whatsoever. Furthermore, any transfer of Units that results in a reduction of ISE's Percentage Interest level of Class A Units or Percentage Interest level in ISE Stock below the twenty percent (20%) threshold is subject to the rule filing process pursuant to Section 19 of the Act. 23 23 *See* LLC Agreement, Section 9.2(d). Section 9.3 of the LLC Agreement provides that a Member may not Transfer all or any portion of its Units in ISE Stock to any Person without the consent of the Manager, which consent may be given or withheld in the Manager's sole discretion; provided, that, subject to Section 9.10 of the LLC Agreement, a Member may transfer all or a portion of its Units in ISE Stock to one or more of its Permitted Transferees 24 without the consent of the Manager or any other Member as long as such transfer does not otherwise violate the LLC Agreement. 25 24 “Permitted Transferee” means, with respect to another Person,
(i)Any Person directly or indirectly owning, controlling or holding with power to vote 80% or more of the outstanding voting securities of and equity or beneficial interests in such other Person,
(ii)any Person 80% or more of whose outstanding voting securities and equity or beneficial interests are directly or indirectly owned, controlled or held with power to vote by such other Person,
(iii)any Person 80% or more of whose outstanding voting securities and equity or other beneficial interests are directly or indirectly owned, controlled or held with power to vote by a Person directly or indirectly owning, controlling or holding with power to vote 80% or more of the outstanding voting securities and equity or other beneficial interests of such other Person with whom affiliate status is being tested,
(iv)any Family Members or Family Trusts of such Person and
(v)any Member. LLC Agreement, Section 2.1 “Definitions.” “Family Members” means, with respect to any natural Person, such Person's spouse, children, parents and lineal descendants of such Person's parents. LLC Agreement, Section 2.1 “Definitions.” “Family Trusts” means, with respect to any natural Person, a trust benefiting solely such Person or the Family Members of such Person. LLC Agreement, Section 2.1 “Definitions.” 25 If a Member transfers all of its Units, whether or not the transfer is to a Permitted Transferee, such transfer must first be approved by the Manager. *See* Amendment No. 1 *supra,* note 4 and LLC Agreement, Section 9.3(c). Under Section 9.11 of the LLC Agreement, unless a Transferee of a Member's Units becomes a Substituted Member, 26 such Transferee shall have no right to obtain or require any information or account of ISE Stock transactions, or to inspect ISE Stock's books or to vote on ISE Stock matters. 27 Furthermore, any successor or Transferee under the LLC Agreement shall be subject to and bound by the LLC Agreement as if originally a party to the LLC Agreement. 26 “Substituted Member” means any Person admitted to the Company as a substituted Member pursuant to the provisions of Article 9. LLC Agreement, Section 2.1 “Definitions.” 27 The Member retains the right to vote the Units. *See* Amendment No. 1 *supra* , note 4 and LLC Agreement, Section 9.3(b). G. Regulatory Jurisdiction Over Members Under Section 6.1(b) of the LLC Agreement, each Member acknowledges that to the extent that they relate to the business of ISE Stock, the books, records, premises, officers, directors, agents and employees of Members shall be deemed to be the books, records, premises, officers, directors, agents and employees of ISE Stock for purposes of and subject to oversight pursuant to the Act. Furthermore, the books, records, premises, officers, directors, agents and employees of ISE Stock shall be deemed to be the books, records, premises, officers, directors, agents and employees of ISE for purposes of and subject to oversight pursuant to the Act. In addition, the books and records of ISE Stock will be kept within the U.S. 28 28 LLC Agreement, Section 6.1(a). Section 13.1(a) of the LLC Agreement generally provides that a Member may not disclose any confidential information of ISE Stock or of any other Members to any persons, except as expressly provided by the LLC Agreement. However, Section 13.1(a) provides exceptions for, among other things, disclosure required by the federal securities laws and any other applicable self-regulatory organization, or in response to a request by the Commission pursuant to the Act or by ISE. In addition, confidential information pertaining to the self-regulatory function of ISE (including but not limited to disciplinary matters, trading data, trading practices and audit information) contained in the books and records of ISE Stock shall:
(i)Not be made available to any persons (other than as provided in the next sentence) other than to those officers, directors, employees, and agents of ISE Stock that have a reasonable need to know the contents thereof;
(ii)be retained in confidence by ISE Stock and the officers, directors, employees and agents of ISE Stock; and
(iii)not be used for any commercial purposes. 29 Nothing in the LLC Agreement may be interpreted as to limit or impede the rights of the Commission or ISE to access and examine such confidential information pursuant to the federal securities laws and the rules and regulations thereunder, or to limit or impede the ability of any Member or any officers, directors, employees or agents of ISE Stock or any Member to disclose such confidential information to the Commission or ISE. 30 29 LLC Agreement, Section 13.1(b). 30 LLC Agreement, Section 13.1(c). Under Section 6.1(c) of the LLC Agreement, ISE Stock, its Members, and officers, directors, agents, and employees of ISE Stock and its Members irrevocably submit to the jurisdiction of the U.S. federal courts, the Commission and ISE, for the purposes of any suit, action or proceeding pursuant to the U.S. federal securities laws, the rules or regulations thereunder, directly arising out of, or relating to, ISE Stock activities or Section 6.1 of the LLC Agreement (except that such jurisdiction also includes Delaware for any such matter relating to the organizational or internal affairs of ISE Stock), and waive, and agree not to assert by way of motion, as a defense or otherwise in any such suit, action or proceeding, any claims that it is not personally subject to the jurisdiction of the Commission, that the suit, action or proceeding is an inconvenient forum or that the venue of the suit, action or proceeding is improper, or that the subject matter of the LLC Agreement may not be enforced in or by such courts or agency. Under Section 6.1(d) of the LLC Agreement, ISE Stock, its Members, the officers, directors, agents, and employees of ISE Stock and its Members agree to comply with the federal securities laws and the rules and regulations thereunder and cooperate with ISE and the Commission pursuant to their respective regulatory authority and the provisions of the LLC Agreement; and to engage in conduct that fosters and does not interfere with ISE Stock's and ISE's 31 ability to prevent fraudulent and manipulative acts and practices; to promote just and equitable principles of trade; to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities; to remove impediments to and perfect the mechanisms of a free and open market and a national market system; and, in general, to protect investors and the public interest. 31 *See* Amendment No. 1 *supra* , note 4. Section 6.1(e) of the LLC Agreement provides that ISE Stock and each Member shall take such action as is necessary to ensure that its respective officers, directors, agents, and employees consent in writing to the application to them of the applicable provisions of Section 6.1 with respect to their ISE Stock-related activities. Under Section 7.1(b) of the LLC Agreement, the Manager may, after appropriate notice and opportunity for hearing, suspend or terminate a Member's voting privilege or membership:
(i)In the event such Member has violated a provision of this Agreement or any federal or state securities law;
(ii)such Member or its Related Persons are subject to any applicable “statutory disqualification” (within the meaning of Section 3(a)(39) of the Act); or
(iii)if the Manager determines that such action is necessary or appropriate in the public interest or for the protection of investors. ISE believes that this provision would require Members, regardless of the nature of their association with ISE, to adhere to regulatory responsibilities in that they must comply with federal securities laws and the rules and regulations thereunder, and cooperate with the Commission and ISE pursuant to their regulatory authority or face severe consequences such as termination of voting rights or ownership. In addition, Members would be required to take into consideration and facilitate ISE's and ISE Stock's ability to comply with the requirements under Section 6(b)(5) of the Act. 32 32 *See* Amendment No. 1 *supra* , note 4 and LLC Agreement, Section 6.1(d). H. Fair Representation of Trading Participants Members of (or holders of Units in) ISE Stock are not automatically entitled to trading privileges on the ISE Stock trading system, nor is the purchase of Units a pre-requisite for exercising trading privileges on the ISE Stock trading system. Rather, in order to exercise trading privileges on the ISE Stock trading system, a broker-dealer must be an approved EAM of ISE. There is only one type of EAM membership for both options trading on ISE and equities trading on the ISE Stock trading system. When an applicant is approved under ISE rules as an EAM, the member is issued one share of Class B Common Stock, Series B-3 (a “B-3 Share”). Under the ISE Constitution, holders of B-3 Shares, or EAMs, have the right to elect two members (the “B-3 Directors”) of the Board of Directors of ISE (the “ISE Board”). Nominees for election to the ISE Board to serve as Industry Directors, including B-3 Directors, are currently made by the Exchange's Nominating Committee, which is not a committee of the ISE Board, and is comprised of representatives of the holders of each series of Class B Common Stock. Stockholders also may nominate Industry Director candidates for election to the ISE Board by petition. Accordingly, since trading participants on the ISE Stock trading system must be EAMs, and since EAMs have the right to elect B-3 Directors of the ISE Board, the Exchange believes that ISE Stock trading system trading participants are fairly represented on the ISE Board. Additionally, as a result of ISE's stated strategy of selling Units to entities that will support trading on the ISE Stock trading system, trading participants will have representation via the ISE Stock Advisory Board. The Exchange proposes to modify the language in ISE Rule 312 (Limitation on Affiliation between the Exchange and Members) to clarify that this provision covers not only the Exchange, but ISE Stock as a facility of ISE, as well. I. Reorganization Into a Holding Company Structure According to the Exchange, it intends to reorganize into a holding company structure on September 1, 2006, in the manner described in Securities Exchange Act Release No. 53705 (April 21, 2006) (the “Reorganization”). 33 Upon the Reorganization, International Securities Exchange, LLC will become the registered “national securities exchange” under Section 6 of the Act, the self-regulatory organization (“SRO”) and continue to act as Manager of ISE Stock. ISE Holdings shall become the holder of the Class A Units of ISE Stock. Prior to the Reorganization, the provisions relating to, among other things, ownership and voting limitations (and exceptions therefrom) are applicable to ISE, as the holder of the Class A Units. Upon the Reorganization, those same provisions are applicable to ISE Holdings, as the holder of the Class A Units. 33 *See* Securities Exchange Act Release No. 53705 (April 21, 2006), 71 FR 25260 (April 28, 2006) (SR-ISE-2006-04). III. Discussion, Commission Findings, and Accelerated Approval of the Proposed Rule Change and Amendment No. 1 Thereto After careful review, the Commission finds that the proposed rule change, as amended, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange. 34 In particular, the Commission finds that the proposed rule change, as amended, is consistent with Section 6(b)(1) of the Act, 35 which requires a national securities exchange to be so organized and have the capacity to carry out the purposes of the Act and to enforce compliance by its members and persons associated with its members with the provisions of the Act, the rules or regulations thereunder, and the rules of the exchange. The Commission also finds that the proposed rule change, as amended, is consistent with Section 6(b)(3) of the Act, 36 which, among other things, requires that the rules of an exchange ensure fair representation of its members in the selection of its directors and administration of its affairs. 34 In approving the proposed rule change, the Commission has considered its impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). 35 15 U.S.C. 78f(b)(1). 36 15 U.S.C. 78f(b)(3). In addition, the Commission finds that the proposed rule change, as amended, is consistent with Section 6(b)(5) of the Act, 37 which requires that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices; to promote just and equitable principles of trade; to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities; to remove impediments to and perfect the mechanism of a free and open market and a national market system; and, in general, to protect investors and the public interest. 37 15 U.S.C. 78f(b)(5). A. ISE Stock as a Facility of the Exchange The Commission believes that the proposed rule change is consistent with Section 6(b)(1) of the Act 38 in that upon establishing ISE Stock as an Exchange facility and serving as manager of ISE Stock as described above, ISE will remain so organized, and have the capacity to be able, to carry out the purposes of the Act. The Commission further believes that ISE's proposal for ISE to operate ISE Stock as a facility of ISE is properly filed under Section 19(b) of the Act and Rule 19b-4 thereunder, and that ISE Stock is not required, separate from ISE, to apply for registration as a national securities exchange pursuant to Section 6(a) of the Act. 39 In addition, the Commission previously approved a similar structure with respect to the operation of the Boston Stock Exchange, Inc. 40 38 15 U.S.C. 78f(b)(1). 39 15 U.S.C. 78f(a). 40 *See* Securities Exchange Act Release No. 54364 (August 25, 2006), 71 FR 52185 (September 1, 2006) (SR-BSE-2006-20). Although ISE has contracted to undertake the fulfillment of SRO responsibilities under the Act and other regulatory compliance services for ISE Stock, 41 ISE Stock is, however, still responsible for assuring that its activities are consistent with the Act. Under Section 6.1(d) of the LLC Agreement, each ISE Stock Member, its officers, directors, agents, and employees, agree to comply with federal securities law; to cooperate with the Commission and ISE pursuant to their regulatory authority and the provisions of the LLC Agreement; and to engage in conduct that fosters and does not interfere with ISE Stock or ISE's ability to prevent fraudulent and manipulative acts and practices; promote just and equitable principles of trade; foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities; remove impediments to and perfect the mechanism of a free and open market and a national market system; and, in general, protect investors and the public interest. Section 8.2(d)(vii) of the LLC Agreement also requires each ISE Stock Advisory Board Member to cooperate with the Commission and ISE pursuant to the respective authority of the Commission and ISE. These provisions reinforce the notion that ISE Stock, as a facility of an Exchange, is not solely a commercial enterprise; it is an integral part of an SRO registered pursuant to the Act and, as such, is subject to obligations imposed by the Act. 41 *See* Item 10 of Exhibit 5(c) describing certain services to be performed under the Management Agreement. These obligations endure as long as ISE Stock is a facility of the Exchange, regardless of the size of ISE's ownership interest in ISE Stock. ISE currently, and in the future Holdings, owns a controlling interest in ISE Stock and, in the future, if ISE Holdings wishes to reduce its Percentage Interest in ISE Stock to below 20 percent, 42 pursuant to Section 9.2(d) of the LLC Agreement the Exchange would be required to file a proposed rule change with the Commission under Section 19(b) of the Act. Additionally, under Section 8.13(c) of the LLC Agreement, any replacement and appointment of the Manager, and any assignment of the rights and obligations of the Manager under the Management Agreement, must, prior to becoming effective, have been filed with, and approved by, the Commission. The Commission believes that these measures would alert the Commission to a significant reduction of ISE's interest in ISE Stock or control over the operations of ISE Stock. Such a reduction in ownership or control could warrant additional review of the LLC Agreement to ensure that ISE's responsibilities as the SRO of the ISE Stock facility are not compromised. 42 In this instance, interest refers to interest in ISE Stock Class A Units or overall interest in ISE Stock. The LLC Agreement includes additional provisions that make special accommodations for ISE as the SRO of the ISE Stock facility. For example, except for several limited exceptions, 43 Section 8.1 of the LLC Agreement provides that ISE as the manager will have “exclusive and complete authority and discretion to manage the operations and affairs” of ISE Stock. ISE has complete access to information through provisions such as Sections 13.1(c) of the LLC Agreement, which allows ISE Stock, Members, their officers, directors, agents, and employees, to disclose to the Commission or ISE confidential information. Furthermore, Section 7.2 of the LLC Agreement, subject to certain exceptions, gives all of the voting rights to Class A Units, of which ISE, and subsequently Holdings, owns 100 percent. In addition, Section 8.2(d)(iii) of the LLC Agreement provides that the holder of Class A Units is entitled to three of the seven seats on the ISE Stock Advisory Board. 43 *See* LLC Agreement, Section 8.7 for limitations. Because ISE has proposed to operate ISE Stock as its facility, ISE's obligations under the Act extend to its members' activities on ISE Stock, as well as to the operation and administration of ISE Stock. The Commission believes that Section 19 of the Act affords the Commission the ability to determine whether ISE's proposal is consistent with the Act, as would a separate application by ISE Stock to register as a national securities exchange. More specifically, the Commission believes that these provisions, described above, are consistent with the Act and enhance the ability of ISE to carry out its self-regulatory responsibilities with respect to its ISE Stock facility. B. Changes in Control of ISE The Commission believes that the restrictions in the LLC Agreement on changes in control of ISE Stock and the restrictions on the change in Manager (the entity that controls the operations of ISE Stock) are sufficient to enable ISE to carry out its self-regulatory responsibilities and should permit the Commission to fulfill its responsibilities under the Act. Schedule A of the LLC Agreement lists all ISE Stock Members, the number of units each holds, and the percentage of ownership in ISE Stock that such units represent. A change to this schedule, which is part of the LLC Agreement (as is the case with any other change to the LLC Agreement), would need to be filed with the Commission if the Board of ISE determines that it is required under Section 19(b) of the Act and Rule 19b-4 thereunder. 44 In addition, Section 9.2(a) and
(b)of the LLC Agreement provides that no person (other than ISE or Holdings) 45 may cross the 20 percent ownership threshold without a waiver from ISE, as manager, and such approval could not be granted without the filing and approval of a proposed rule change with the Commission pursuant to Section 19(b) of the Act. 46 44 *See* LLC Agreement, Section 12.1. 45 This exception for Holdings only applies as long as the concentration limitation provision found in Article Fourth, Subdivision III(a) of the ISE, Inc. Certificate of Incorporation is in place and as long as ISE is a wholly-owned subsidiary of Holdings. 46 Such a waiver may not be granted to Persons or Related Persons subject to “statutory disqualification” (within the meaning of Section 3(a)(39) of the Act) or Exchange Members (as such term is defined in the Constitution of ISE). *See* LLC Agreement, Section 9.2(c). As noted, ISE, and in the future Holdings, currently owns all of the Class A Units, and Section 7.2 of the LLC Agreement, subject to certain exceptions, gives all of the voting rights to Class A Units. In addition, Section 8.2(d)(iii) of the LLC Agreement provides that the holder of Class A Units is entitled to three of the seven seats on the ISE Stock Advisory Board. If ISE, or in the future Holdings, wishes to reduce its interest in ISE Stock to below 20 percent, 47 pursuant to Section 9.2(d) of the LLC Agreement, it would be required to file a proposed rule change under Section 19(b) of the Act. 47 In this instance, interest refers to interest in ISE Class A Units or overall interest in ISE Stock. As noted in the Voting Limitations section *supra* , under Section 7.11 of the LLC Agreement, no Person (other than ISE), either alone or together with its Related Persons, may exceed the Voting Limitation or enter into any voting agreement that would result in Units beneficially owned by such Person or its Related Persons not being voted where the effect would be to enable any Person, alone or together with its Related Persons, to exceed the Voting Limitation. The limitations imposed by Section 7.11 of the LLC Agreement may be waived by the Manager after such waiver is filed with, and approved by, the Commission under Section 19(b) of the Act. However, such a waiver may not be granted to Persons or Related Persons subject to “statutory disqualification” (within the meaning of Section 3(a)(39) of the Act) or Exchange Members (as such term is defined in the Constitution of ISE). 48 48 *See* LLC Agreement, Section 7.11(c). Additionally, as noted, Section 8.1 of the LLC Agreement, with limited exceptions, grants exclusive and complete authority over the operations and affairs of ISE Stock to ISE as the Manager. Under Section 8.13(c) of the LLC Agreement, any replacement and appointment of the Manager, and any assignment of the rights and obligations of the Manager under the Management Agreement, must, prior to becoming effective, have been filed with, and approved by, the Commission. In conclusion, the Commission believes that Sections 7.2, 8.1, 8.4(a) and (b), 8.13(c), 9.2(a), (b), and (d), and 12.1 of the LLC Agreement, together with the requirements of Section 19(b) of the Act and Rule 19b-4 thereunder, provide the Commission with sufficient authority over changes in control of ISE to enable the Commission to carry out its regulatory oversight responsibilities with respect to ISE and the ISE Stock facility. C. Regulatory Jurisdiction Over ISE Stock and Its Members The Commission believes that the terms of the LLC Agreement provide the Commission and ISE with sufficient regulatory jurisdiction over the controlling parties and Members to carry out their respective responsibilities under the Act. In Section 6.1(b) of the LLC Agreement, each Member acknowledges that, to the extent that they are related to the business of ISE Stock, the books, records, premises, officers, directors, agents, and employees of the Member are deemed to be the books, records, premises, officers, directors, agents, and employees of ISE for the purpose of and subject to oversight pursuant to the Act. Furthermore, the books, records, premises, officers, directors, agents, and employees of ISE Stock are deemed to be the books, records, premises, officers, directors, agents, and employees of ISE. This provision would enable the Commission to exercise its authority under Section 19(h)(4) 49 of the Act with respect to the officers, directors, agents, and employees of all Members, since all such officers, directors, agents, and employees, and officers, directors, agents, and employees of ISE Stock, to the extent that they are acting in matters related to ISE Stock activities, would be deemed to be the officers, directors, agents, and employees of ISE itself. Furthermore, the books and records of any ISE Member, to the extent that they are related to ISE Stock activities, are subject to the Commission's examination authority under Section 17(b)(1) of the Act, 50 as these records would be deemed to be the records of ISE itself. 49 15 U.S.C. 78s(h)(4). Section 19(h)(4) authorizes the Commission, by order, to remove from office or censure any officer or director of a national securities exchange if it finds, after notice and an opportunity for hearing, that such officer or director has:
(i)Willfully violated any provision of the Act or the rules and regulations thereunder, or the rules of a national securities exchange;
(ii)willfully abused his or her authority; or
(iii)without reasonable justification or excuse, failed to enforce compliance with any such provision by a member or person associated with a member of the national securities exchange. 50 15 U.S.C. 78q(b)(1). In addition, in Section 6.1(c) of the LLC Agreement, ISE Stock, its Members, its officers, directors, agents, and employees, and the officers, directors, agents, and employees of its Members irrevocably submit to the jurisdiction of the Commission, for the purposes of any suit, action or proceeding pursuant to the U.S. federal securities laws and the rules or regulations thereunder, arising out of or relating to ISE Stock activities. In addition, ISE Stock, its Members, and each officer, director, agent, and employee of ISE and its Members, must waive as a defense or otherwise in any such suit, action, or proceeding, any claim that it is not personally subject to the jurisdiction of the Commission; that the suit, action or proceeding is an inconvenient forum; that the venue is improper; or that the subject matter of the suit, action, or proceeding may not be enforced by such courts or agency. 51 Moreover, pursuant to Section 6.1(e) of the LLC Agreement, ISE Stock and each Member are required to take such action as is necessary to ensure that ISE Stock and its Member's officers, directors, agents, and employees consent to the application of these requirements with respect to their ISE Stock-related activities. Finally, under Section 6.1(d) of the LLC Agreement, ISE Stock, and its Members, officers, directors, agents, and employees, and the officer, directors, agents, and employees of its Members agrees to cooperate with the Commission and ISE pursuant to their respective regulatory authority. 51 *See* LLC Agreement, Section 6.1(c). The Commission also notes that, even in the absence of these provisions of the LLC Agreement, Section 20(a) of the Act 52 provides that any person with a controlling interest in ISE Stock would be jointly and severally liable with and to the same extent that ISE Stock is liable under any provision of the Act, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action. 52 15 U.S.C. 78t(a). The Commission believes that, together, these provisions grant the Commission sufficient jurisdictional authority over ISE Stock and its Members. Moreover, ISE is required to enforce compliance with these provisions because they are “rules of the exchange” within the meaning of Section 3(a)(27) of the Act. 53 A failure on the part of ISE to enforce its rules could result in suspension or revocation of registration under Section 19(h)(1) of the Act. 54 53 15 U.S.C. 78c(a)(27). 54 15 U.S.C. 78s(h)(1). D. Restrictions on ISE Stock Members The Commission believes that the restriction on voting trust agreements in Section 7.11(a) of the LLC Agreement is reasonable and consistent with the Act. In the absence of such a provision, unaffiliated parties could act in concert and evade the LLC Agreement's provisions regarding changes in control of ISE Stock. In addition, the LLC Agreement treats as belonging to a single person any ISE Stock Units held by affiliated parties of the person. 55 A voting trust agreement would not necessarily be inconsistent with the Act, but any Members (other than ISE or, in the future, Holdings) wishing to establish a voting trust agreement first would need the consent of the Manager, 56 a consent that may not be given unless the Manager files a proposed rule change, thus affording the Commission an opportunity to review the matter. 55 *See* LLC Agreement, Sections 9.2(a). 56 Such a waiver may not be granted to any Person or Related Person subject to “statutory disqualification” (within the meaning of Section 3(a)(39) of the Act) or any Person or Related Person who are Exchange Members (as such term is defined in the Constitution of ISE). *See* LLC Agreement, Sections 7.11(c). In addition, the Commission believes that the ownership concentration limit described above, which prohibits a person (other than ISE or in the future Holdings) along with a related person from owning directly or indirectly more than 20 percent of the outstanding units of ISE Stock 57 absent a waiver, and would apply to those persons trading on the ISE Stock trading system, together with the provision that restricts the ability of Members to vote interests in excess of 20 percent, absent a waiver, 58 are reasonable and consistent with the Act. 59 Moreover, Exchange members (as defined in the ISE Constitution) would be prohibited from owning more than 20 percent. It is common for members who trade on an exchange to have ownership interests in the exchange. However, a member's interest could become so large as to cast doubt on whether the exchange can fairly and objectively exercise its self-regulatory responsibilities with respect to that member. A member that is also a controlling shareholder of an exchange or its facility might be tempted to exercise that controlling influence by directing the exchange to refrain from diligently surveilling the member's conduct or from punishing any conduct that violates the rules of the exchange or the federal securities laws. An exchange also might be reluctant to surveil and enforce its rules zealously against a member that controls and has a large economic interest in the Exchange. 57 *See* LLC Agreement, Section 9.2(a). 58 Neither the voting nor ownership limitation waiver may be granted to any Person or Related Person subject to “statutory disqualification” (within the meaning of Section 3(a)(39) of the Act) or any Person or Related Person who are Exchange Members (as such term is defined in the Constitution of ISE). *See* LLC Agreement, Sections 9.2(c) and 7.11(c). 59 The Commission believes that this provision would require ISE Stock to aggregate the interest of Members in ISE Stock and any indirect interest in ISE Stock through Members' interest in Holdings. *See* LLC Agreement, Section 9.2(a). E. Accelerated Approval of Proposed Rule Change and Amendment No. 1 The Commission finds good cause for approving this proposed rule change, and Amendment No. 1 thereto, before the thirtieth day after the publication of notice thereof in the **Federal Register** pursuant to Section 19(b)(2) of the Act. 60 The proposed rule change was published for a full comment period and no comments were received. In addition, the Commission notes that the proposed rule change, as amended, is substantially similar to the structure previously approved by the Commission. 61 That proposal was also published for a full comment period and the Commission received no comments on the proposal. Furthermore, accelerating approval of this proposed rule change, as amended, should benefit investors by permitting ISE to establish, without undue delay, an additional venue for the trading of equity securities for market participants, thereby increasing competition and efficiency. Lastly, the Commission believes that Amendment No. 1 serves to clarify and enhance the proposal. For these reasons, the Commission therefore finds good cause exists to accelerate approval of the proposed rule change, and Amendment No. 1 thereto. 62 60 15 U.S.C. 78s(b)(2). Pursuant to Section 19(b)(2) of the Act, the Commission may not approve any proposed rule change, or amendment thereto, prior to the thirtieth day after the date of publication of the notice thereof, unless the Commission finds good cause for so doing. 61 *See* Securities Exchange Act Release No. 54364 (August 25, 2006), 71 FR 52185 (September 1, 2006) (SR-BSE-2006-20). 62 15 U.S.C. 78s(b)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning Amendment No. 1, including whether Amendment No. 1 is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-ISE-2006-45 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-ISE-2006-45. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. 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 Amendment No. 1 of File Number SR-ISE-2006-45 and should be submitted on or before October 3, 2006. V. Conclusion *It is therefore ordered* , pursuant to Section 19(b)(2) of the Act, 63 that the proposed rule change (SR-ISE-2006-45) and Amendment No. 1 thereto are approved on an accelerated basis. 63 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 64 64 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-15054 Filed 9-11-06; 8:45 am] BILLING CODE 8010-01-P UNITED STATES SENTENCING COMMISSION Sentencing Guidelines for United States Courts AGENCY: United States Sentencing Commission. ACTION: Notice of a temporary, emergency amendment to sentencing guidelines, policy statements, and commentary. SUMMARY: Pursuant to section 1(c) of the Stop Counterfeiting in Manufactured Goods Act, Public Law 109-181, the Commission hereby gives notice of a temporary, emergency amendment to the sentencing guidelines, policy statements, and commentary. This notice sets forth the temporary, emergency amendment and the reason for amendment. DATE: The Commission has specified an effective date of September 12, 2006, for the emergency amendment. FOR FURTHER INFORMATION CONTACT: Michael Courlander, Public Affairs Officer, Telephone:
(202)502-4590. SUPPLEMENTARY INFORMATION: The Commission must promulgate a temporary, emergency amendment to implement the directive in section 1(c) of the Stop Counterfeiting in Manufactured Goods Act, Public Law 109-181, by September 12, 2006. The statutory deadline for the promulgation of the temporary, emergency amendment, in conjunction with the Commission's public meeting schedule (the promulgation of such amendments must occur in a public meeting), made it impracticable to publish a proposed temporary, emergency amendment in the **Federal Register** in order to provide an opportunity for public comment, and to publish the promulgated amendment not less than 30 days before the effective date. The Commission therefore had good cause not to publish a proposed amendment before the specified effective date and not to publish the promulgated amendment 30 days or more before such date. *See* 5 U.S.C. 553(b), (d)(3). The temporary, emergency amendment set forth in this notice also may be accessed through the Commission's Web site at *http://www.ussc.gov.* Authority: 28 U.S.C. 994(a), (o), (p), (x); section 1(c) of Public Law 109-181. Ricardo H. Hinojosa, Chair. *Amendment:* The Commentary to § 2B5.3 captioned “Application Notes” is amended in Note 2(A) by adding at the end the following:
(vii)A case under 18 U.S.C. § 2318 or § 2320 that involves a counterfeit label, patch, sticker, wrapper, badge, emblem, medallion, charm, box, container, can, case, hangtag, documentation, or packaging of any type or nature
(I)that has not been affixed to, or does not enclose or accompany a good or service; and
(II)which, had it been so used, would appear to a reasonably informed purchaser to be affixed to, enclosing or accompanying an identifiable, genuine good or service. In such a case, the 'infringed item' is the identifiable, genuine good or service. *Reason for Amendment:* This amendment implements the emergency directive in section 1(c) of the Stop Counterfeiting in Manufactured Goods Act, Public Law 109-181. The directive, which requires the Commission to promulgate an amendment under emergency amendment authority by September 12, 2006, instructs the Commission to “review, and if appropriate, amend the Federal sentencing guidelines and policy statements applicable to persons convicted of any offense under section 2318 or 2320 of title 18, United States Code * * *.” The directive further provides that the Commission shall: determine whether the definition of “infringement amount” set forth in application note 2 of section 2B5.3 of the Federal sentencing guidelines is adequate to address situations in which the defendant has been convicted of one of the offenses [under section 2318 or 2320 of title 18, United States Code,] and the item in which the defendant trafficked was not an infringing item but rather was intended to facilitate infringement, such as an anti-circumvention device, or the item in which the defendant trafficked was infringing and also was intended to facilitate infringement in another good or service, such as a counterfeit label, documentation, or packaging, taking into account cases such as *U.S.* v. *Sung,* 87 F.3d 194 (7th Cir. 1996). The emergency amendment adds subdivision
(vii)to Application Note 2(A) of § 2B5.3 (Criminal Infringement of Copyright or Trademark) to provide that the infringement amount is based on the retail value of the infringed item in a case under 18 U.S.C. 2318 or 2320 that involves a counterfeit label, patch, sticker, wrapper, badge, emblem, medallion, charm, box, container, can, case, hangtag, documentation, or packaging of any type or nature
(I)that has not been affixed to, or does not enclose or accompany a good or service; and
(II)which, had it been so used, would appear to a reasonably informed purchaser to be affixed to, enclosing or accompanying an identifiable, genuine good or service. In such a case, the “infringed item” is the identifiable, genuine good or service. [FR Doc. E6-15076 Filed 9-11-06; 8:45 am] BILLING CODE 2211-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10567 and # 10568] Texas Disaster Number TX-00195 AGENCY: Small Business Administration. ACTION: Amendment 1. SUMMARY: This is an amendment of the Presidential declaration of a major disaster for the State of Texas (FEMA-1658-DR), dated 8/15/2006. *Incident:* Flooding. *Incident Period:* 7/31/2006 and continuing through 8/25/2006. DATES: Effective Date: 8/25/2006. *Physical Loan Application Deadline Date:* 10/16/2006. *EIDL Loan Application Deadline Date:* 5/15/2007. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, National Processing and Disbursement Center, 14925 Kingsport Road Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the President's major disaster declaration for the State of Texas, dated 8/15/2006, is hereby amended to establish the incident period for this disaster as beginning 7/31/2006 and continuing through 8/25/2006. All other information in the original declaration remains unchanged. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Roger B. Garland, Acting Associate Administrator for Disaster Assistance. [FR Doc. E6-15100 Filed 9-11-06; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION Small Business Size Standards: Waiver of the Nonmanufacturer Rule AGENCY: U.S. Small Business Administration. ACTION: Notice of Waiver of the Nonmanufacturer Rule for Plastics Pallets (Twin Sheet Thermoformed). SUMMARY: The U.S. Small Business Administration
(SBA)is granting a waiver of the Nonmanufacturer Rule for Plastics Pallets (Twin Sheet Thermoformed). The basis for waiver is that no small business manufacturers are supplying this class of product to the Federal government. The effect of a waiver would be to allow otherwise qualified regular dealers to supply the products of any domestic manufacturer on a Federal contract set aside for small businesses; service-disabled veteran-owned small businesses or SBA's 8(a) Business Development Program. DATES: This waiver is effective September 27, 2006. FOR FURTHER INFORMATION CONTACT: Edith Butler, Program Analyst, by telephone at
(202)619-0422; by fax at
(202)481-1788; or by e-mail at *edith.butler@sba.gov.* SUPPLEMENTARY INFORMATION: Section 8(a)(17) of the Small Business Act,
(Act)15 U.S.C. 637(a)(17), requires that recipients of Federal contracts set aside for small businesses, service-disabled veteran-owned small businesses, or SBA's 8(a) Business Development Program provide the product of a small business manufacturer or processor, if the recipient is other than the actual manufacturer or processor of the product. This requirement is commonly referred to as the Nonmanufacturer Rule. The SBA regulations imposing this requirement are found at 13 CFR 121.406(b). Section 8(a)(17)(b)(iv) of the Act authorizes SBA to waive the Nonmanufacturer Rule for any “class of products” for which there are no small business manufacturers or processors available to participate in the Federal market. As implemented in SBA's regulations at 13 CFR 121.1202(c), in order to be considered available to participate in the Federal market for a class of products, a small business manufacturer must have submitted a proposal for a contract solicitation or received a contract from the Federal government within the last 24 months. The SBA defines “class of products” based on six digit coding systems. The first coding system is the Office of Management and Budget North American Industry Classification System (NAICS). The second is the Product and Service Code required as a data entry field by the Federal Procurement Data System. The SBA received a request on July 12, 2006, to waive the Nonmanufacturer Rule for Plastics Pallets (Twin Sheet Thermoformed). In response, on August 9, 2006, SBA published in the **Federal Register** a notice of intent to waive the Nonmanufacturer Rule for Plastics Pallets (Twin Sheet Thermoformed). SBA explained in the notice that it was soliciting comments and sources of small business manufacturers of this class of products. In response to this notice, no comments were received from any interested party. SBA has determined that there are no small business manufacturers of this class of products, and is therefore granting the waiver of the Nonmanufacturer Rule for Plastics Pallets (Twin Sheet Thermoformed). NAICS code 326199 and product number 4141. Authority: 15 U.S.C. 637(a)(17). Dated: August 31, 2006. Karen C. Hontz, Associate Administrator for Government Contracting. [FR Doc. E6-15096 Filed 9-11-06; 8:45 am] BILLING CODE 8025-01-P SOCIAL SECURITY ADMINISTRATION Additional Options for Requesting Administrative Review—Title II and Title XVI; Withdrawal AGENCY: Social Security Administration (SSA). ACTION: Withdrawal of notice. SUMMARY: We are withdrawing the notice we published in the **Federal Register** Notice on August 14, 2006. That notice explained that the Agency intended to expand the methods available for requesting administrative review by accepting oral requests from claimants in person or by telephone. In developing the business process, we discovered this change would not provide the same protections to the claimant that exist in the current process. As a result, we have determined that we will not change the appeal process in this manner at this time. DATES: *Effective Date:* This withdrawal will be effective on September 12, 2006. FOR FURTHER INFORMATION CONTACT: Rosemary Carey, Leader, Due Process Team, Social Security Administration, 6401 Security Boulevard, Baltimore, MD 21235,
(410)965-7936 or TTY
(410)966-5609. SUPPLEMENTARY INFORMATION: On August 14, 2006 (71 FR 46535), we published in the **Federal Register** a notice entitled Additional Options for Requesting Administrative Review—Title II and Title XVI. That notice explained that we intended to expand the methods available for requesting administrative review of our determinations or decisions in the Social Security and Supplemental Security Income programs by accepting oral requests from claimants in person or by telephone. Due to unanticipated business process considerations regarding such oral requests, we are rescinding this change. However, we will honor any oral requests that we have received from August 14, 2006, until the effective date of this withdrawal notice. Dated: September 6, 2006. Martin H. Gerry, Deputy Commissioner for Disability and Income Security Programs. [FR Doc. E6-15055 Filed 9-11-06; 8:45 am] BILLING CODE 4191-02-P DEPARTMENT OF STATE [Public Notice 5543] Determination on U.S. Position on Proposed European Bank for Reconstruction and Development
(EBRD)Project in Bosnia and Herzegovina Pursuant to section 561 of the Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2006 (Pub. L. 109-102) (FOAA), and Department of State Delegation of Authority Number 289, I hereby determine that the proposed 20 million Euro EBRD investment package, to provide financing to Raiffeisen Bank Bosnia and Herzegovina
(RBBH)for expanded financing of small and medium-size enterprises
(SMEs)and retail lending, will contribute to a stronger and more integrated economy in Bosnia and Herzegovina and directly support implementation of the Dayton Accords. I therefore waive the application of Section 561 of the FOAA to the extent that provision would otherwise prevent the U.S. Executive Directors of the EBRD from voting in favor of this project. This Determination shall be reported to the Congress and published in the **Federal Register** . Dated: August 31, 2006. Daniel Fried, Assistant Secretary of State for European and Eurasian Affairs, Department of State. [FR Doc. E6-15072 Filed 9-11-06; 8:45 am] BILLING CODE 4710-23-P DEPARTMENT OF TRANSPORTATION Federal Transit Administration [FTA Docket No. FTA-2006-25778] Agency Information Collection Activity Under OMB Review AGENCY: Federal Transit Administration, DOT. ACTION: Notice of request for comments. SUMMARY: The Federal Transit Administration invites public comments about our intention to request the Office of Management and Budget's
(OMB)approval to renew the following information collections:
(1)Bus Testing Program.
(2)Transit Research, Development, Demonstration and Deployment Projects. The collections involve our Bus Testing and Transit Research Programs. The information to be collected for the Bus Testing Program is necessary to ensure that buses have been tested at the Bus Testing Center for maintainability, reliability, safety, performance, structural integrity, fuel economy, emissions, and noise. The information to be collected for Transit Research, Development, Demonstration and Deployment Projects is necessary to determine eligibility of applicants and ensure mass transportation service at a minimum cost. We are required to publish this notice in the **Federal Register** by the Paperwork Reduction Act of 1995. The **Federal Register** Notice with a 60-day comment period soliciting comments was published on June 20, 2006. DATES: Comments must be submitted before October 12, 2006. A comment to OMB is most effective if OMB receives it within 30 days of publication. FOR FURTHER INFORMATION CONTACT: Sylvia L. Marion, Office of Administration, Office of Management Planning,
(202)366-6680. SUPPLEMENTARY INFORMATION: *Title:* Bus Testing Program ( *OMB Number: 2132-0550* ). *Abstract:* 49 U.S.C. 5323(c) provides that no Federal funds appropriated or made available after September 30, 1989, may be obligated or expended for the acquisition of a new bus model (including any model using alternative fuels) unless the bus has been tested at the Bus Testing Center (Center) in Altoona, Pennsylvania. 49 U.S.C. 5318(a) further specifies that each new bus model is to be tested for maintainability, reliability, safety, performance (including braking performance), structural integrity, fuel economy, emissions, and noise. The operator of the Bus Testing Center, the Pennsylvania Transportation Institute (PTI), has entered into a cooperative agreement with FTA. PTI operates and maintains the Center, and establishes and collects fees for the testing of the vehicles at the facility. Upon completion of the testing of the vehicle at the Center, a test report is provided to the manufacturer of the new bus model. The bus manufacturer certifies to an FTA grantee that the bus the grantee is purchasing to an FTA grantee that the bus the grantee is purchasing has been tested at the Center. Also, grantees about to purchase a bus use this report to assist them in making their purchasing decisions. PTI maintains a reference file for all the test reports which are made available to the public. *Estimated Total Annual Burden:* 404 hours. *Title:* 49 U.S.C. Section 5312(a) Transit Research, Development, Demonstration and Deployment Projects. *Abstract:* 49 U.S.C. 5312(a) authorizes the Secretary of Transportation to make grants or contracts for research, development, demonstration and deployment projects, and evaluation of technology of national significance to public transportation, that the Secretary determines will improve mass transportation service or help transportation service meet the total urban transportation needs at a minimum cost. In carrying out the provisions of this section, the Secretary is also authorized to request and receive appropriate information from any source. The information collected is submitted as part of the application for grants and cooperative agreements and is used to determine eligibility of applicants. Collection of this information also provides documentation that the applicants and recipients are meeting program objectives and are complying with FTA Circular 6100.1B and other Federal requirements. *Estimated Total Annual Burden:* 11,240 hours. ADDRESSES: All written comments must refer to the docket number that appears at the top of this document and be submitted to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725—17th Street, NW., Washington, DC 20503, Attention: FTA Desk Officer. *Comments are Invited On:* Whether the proposed collection of information is necessary for the proper performance of the functions of the Department, including whether the information will have practical utility; the accuracy of the Department's estimate of the burden of the proposed information collection; ways to enhance the quality, utility, and clarity of the information to be collected; and ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques or other forms of information technology. Issued on: September 5, 2006. Ann Linnertz, Acting Associate Administrator for Administration. [FR Doc. E6-15026 Filed 9-11-06; 8:45 am] BILLING CODE 4910-57-P DEPARTMENT OF TRANSPORTATION Federal Transit Administration Environmental Impact Statement for the North Metro Corridor AGENCY: Federal Transit Administration (FTA), U.S. Department of Transportation. ACTION: Notice of intent to prepare an environmental impact statement (EIS). SUMMARY: The Federal Transit Administration
(FTA)and the Denver Regional Transportation District (RTD), in cooperation with the U.S. Army Corps of Engineers (USACE) and the Colorado Department of Transportation (CDOT), will prepare an Environmental Impact Statement
(EIS)to evaluate the impacts of transit improvements, including a potential commuter rail line or a light rail line, in the North Metro Corridor between Downtown Denver and the City of Thornton in Adams County, Colorado. The EIS will be prepared in accordance with FTA/FHWA regulations (23 CFR 771 et seq.) implementing the National Environmental Policy Act (NEPA), as well as provisions of the recently enacted Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). The purpose of this Notice of Intent is to alert interested parties regarding the plan to prepare the EIS, to provide information on the nature of the proposed transit project, to invite participation in the NEPA process, including comments on the scope of the EIS proposed in this notice, and to announce that public scoping meetings will be conducted. DATES: Written comments on the scope of the EIS should be sent to Dave Shelley, RTD Project Manager, by October 31, 2006. Public scoping meetings will be held on September 27 and 28, 2006 from 5:30 p.m. to 8:15 p.m. at the locations indicated below. An interagency scoping meeting will be scheduled after agencies with an interest in the proposed project have been identified. ADDRESSES: Written comments on the scope of the EIS should be sent to Dave Shelley, RTD Project Manager, North Metro Corridor, Regional Transportation District (RTD), 1560 Broadway, Suite 700, Denver, CO 80202. Comments may also be offered at the public scoping meetings. The addresses for the public scoping meetings are as follows: Wednesday, September 27, 2006, City of Thornton Civic Center Complex, 9500 Civic Center Drive, Thornton, CO 80229. Thursday, September 28, 2006, Bruce Randolph Middle School, 3955 Steele Street, Denver, CO 80205. For more information for assistance needs for the scoping meetings, please contact Dave Shelley at
(303)299-2408 at least 48 hours before the meeting. All meetings will be conducted in wheelchair accessible locations. FOR FURTHER INFORMATION CONTACT: Mr. David Beckhouse, Community Planner, Federal Transit Administration, Region VIII, 12300 West Dakota Ave., Suite 310, Lakewood, CO 80228-2583,
(720)963-3306. SUPPLEMENTARY INFORMATION: *The Proposed Project:* The project extends 18 miles between Denver Union Station
(DUS)and 162nd Avenue
(SH7)north of Thornton. The project proposes stations at Globeville/Swansea, Commerce City, 88th Avenue, 100th Avenue, 112th Avenue, 124th Avenue, 144th Avenue, and 162nd Avenue. *Purposes of and Need for the Proposed Project:* The North Metro area is forecast to be one of the fastest growing areas of the region and the country over the next 20 years. Growth rates for both population and employment are forecast to be double the regional average. The I-25 and I-76 corridors are forecast to intensify as employment corridors, with the areas between the two facilities filling in with residential development. Congestion along north I-25 is already severe, with forecasts indicating increasing severity and duration of congestion. In addition to increasing congestion, access through and from the area to other areas in the metro region is difficult. Many roadways are not continuous, requiring circuitous travel. Existing transit service in the area is minimal and utilizes the congested roadway network. The project will provide a new fixed-guideway, high-capacity transportation facility to improve local and regional mobility and accessibility for the North Metro area. This transit project is included as part of RTD's FasTracks Program, a 12-year comprehensive plan for transit service and facilities in the Denver region. The FasTracks Plan is a $4.7 billion program that was endorsed by the voters of the Denver metropolitan area in 2004. The voters of the region approved an increase in the regional sales and use tax from 0.6% to 1.0% in order to provide for the expedited build out of the transit system. FasTracks includes a funding plan for 119 new miles of rail transit, 18 miles of bus rapid transit, 21,000 new spaces in park n Rides and significant improvements to the bus system. The FasTracks projects have been adopted in the current Denver area Regional Transportation Plan (RTP). *Alternatives:* The EIS scoping process will include an evaluation of the results of the MIS conducted by RTD between 1998 and 2001 as well as the Three Corridors Scoping Study that was completed in October 2005. The Locally Preferred Alternative
(LPA)of the MIS was either Light Rail Transit
(LRT)or Diesel Multiple Units
(DMU)between DUS and 124th Avenue along the Union Pacific Railroad
(UPRR)Boulder Branch. This recommendation was approved by the Denver Regional Council of Governments and included in the fiscally constrained RTP and the MetroVision 2030 Master Plan. FTA and RTD propose that the EIS evaluate the following three alternatives: 1. The no-action alternative is the option of implementing nothing more that the existing and committed road and transit improvements; 2. The TSM alternative includes various transportation improvements beyond the existing and committed projects plus enhanced bus transit service in the North Metro Corridor; 3. The MIS LPA will be evaluated as the proposed project as a commuter rail line between DUS and 162nd Avenue (SH 7) along the existing UPRR Boulder Branch line. The EIS will also consider any additional reasonable fixed-guideway, high capacity transit alternatives identified during scoping that provide similar transportation benefits while reducing or avoiding adverse impacts. *The NEPA Process and the Role of Participating Agencies and the Public:* The purpose of the NEPA process is to explore, in a public setting, potentially significant effects of implementing the proposed action and alternatives on the physical, human, and natural environment. Areas of investigation include, but are not limited to, land use, development potential, land acquisition and displacements, historic resources, visual and aesthetic qualities, air quality, noise and vibration, energy use, safety and security, and ecosystems, including threatened and endangered species. Measures to avoid, minimize, or mitigate any significant adverse impacts will be identified. Regulations implementing NEPA, as well as provisions of the recently enacted Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), call for public involvement in the EIS process. Section 6002 of SAFETEA-LU requires that FTA and RTD do the following:
(1)Extend an invitation to other Federal and non-Federal agencies and Indian tribes that may have an interest in the proposed project to become “participating agencies,”
(2)provide an opportunity for involvement by participating agencies and the public in helping to define the purpose and need for a proposed project, as well as the range of alternatives for consideration in the EIS; and
(3)establish a plan for coordinating public and agency participation in and comment on the environmental review process. An invitation to become a participating agency, with the scoping information packet appended, will be extended to other Federal and non-Federal agencies and Indian tribes that may have an interest in the proposed project. It is possible that we may not be able to identify all Federal and non-Federal agencies and Indian tribes that may have such an interest. Any Federal or non-Federal agency or Indian tribe interested in the proposed project that does not receive an invitation to become a participating agency should notify at the earliest opportunity the Project Manager identified above under ADDRESSES . A comprehensive public involvement program will be developed and a public and agency involvement Coordination Plan will be created. The program will include outreach to local and county officials and community and civic groups; a public scoping process to define the issues of concern among all parties interested in the project; organizing periodic meetings with various local agencies, organizations and committees; a public hearing on release of the Draft Environmental Impact Statement (DEIS); and development and distribution of project newsletters. The purposes of and need for the proposed project have been preliminarily identified in this notice. We invite the public and participating agencies to consider the preliminary statement of purposes of and need for the proposed project, as well as the alternatives proposed for consideration. Suggestions for modifications to the statement of purposes of and need for the proposed project and any other alternatives that meet the purposes of and need for the proposed project are welcomed and will be given serious consideration. Comments on potentially significant environmental impacts that may be associated with the proposed project and alternatives are also welcomed. There will be additional opportunities to participate in the scoping process in addition to the public meetings announced in this notice. In accordance with 23 CFR 771.105(a) and 771.133, FTA will comply with all Federal environmental laws, regulations, and executive orders applicable to the proposed project during the environmental review process. These requirements include, but are not limited to, the regulations of the Council on Environmental Quality and FTA implementing NEPA (40 CFR parts 1500-1508, and 23 CFR part 771), the project-level air quality conformity regulation of the U.S. Environmental Protection Agency
(EPA)(40 CFR part 93), the Section 404(b)(1) guidelines of EPA (40 CFR part 230), the regulation implementing Section 106 of the National Historic Preservation Act (36 CFR part 800), the regulation implementing section 7 of the Endangered Species Act (50 CFR part 402), Section 4(f) regulation implementing the DOT Act (23 CFR 771.135), and Executive Orders 12898 on environmental justice, 11988 on floodplain management, and 11990 on wetlands. In accordance with 36 CFR 800.8 FTA and RTD will coordinate compliance with Section 106 requirements and the requirements of the NEPA Process. RTD will utilize the Memorandum of Agreement between the FTA, Region VIII and the U.S. Army Corps of Engineers (USACE), dated January, 2006 for documentation to comply with Section 404 mandates. In addition, RTD may seek Section 5309 New Starts funding for the project. As provided in the FTA New Starts regulation (49 CFR part 611), New Starts funding requires the submission of certain specific information to FTA to support a request to initiate preliminary engineering, which is normally done in conjunction with the NEPA process. Issued on: September 7, 2006. Lee O. Waddleton, Regional Administrator, Region VIII, Federal Transit Administration. [FR Doc. E6-15093 Filed 9-11-06; 8:45 am] BILLING CODE 4910-57-P DEPARTMENT OF TRANSPORTATION Federal Transit Administration Alternative Transportation in Parks and Public Lands Program AGENCY: Federal Transit Administration (FTA), DOT. ACTION: Alternative Transportation in Parks and Public Lands Program announcement of Project Selections. SUMMARY: The U.S. Department of Transportation
(DOT)Federal Transit Administration
(FTA)announces the selection of projects to be funded under Fiscal Year 2006 appropriations for the Alternative Transportation in Parks and Public Lands (ATPPL) program, authorized by Section 3021 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act—A Legacy for Users of 2005 (SAFETEA-LU) and codified in 49 U.S.C. 5320. The ATPPL program funds capital and planning expenses for alternative transportation systems in parks and public lands. Federal land management agencies and State, tribal and local governments acting with the consent of a Federal land management agency are eligible recipients. This is the first year of the ATPPL program. Funding is authorized for this program through FY 2009. FOR FURTHER INFORMATION CONTACT: Project sponsors who are State, local, or tribal entities may contact the appropriate FTA Regional Administrator (See Appendix A) for grant-specific issues. Project sponsors who are a Federal land management agency or a specific unit of a Federal land management agency should work with the contact listed below at their headquarters office to coordinate the availability of funds to that unit. • *Bureau of Land Management:* Linda Force, *Linda_Force@blm.gov* , 202-557-3567. • *Fish and Wildlife Service:* Nathan Caldwell, *nathan_caldwell@fws.gov* , 703-358-2376. • *Forest Service:* Ellen LaFayette, *elafayette@fs.fed.us* , 703-605-4509. • *National Park Service:* Kevin Percival, *Kevin_Percival@nps.gov* , 303-969-2429. For general information about the Alternative Transportation in the Parks and Public Lands program, please contact Tina Hodges, Office of Budget and Policy, Federal Transit Administration, *tina.hodges@dot.gov* , 202-366-4287. SUPPLEMENTARY INFORMATION: A total of $21,780,000 was appropriated for FTA's Alternative Transportation in the Parks and Public Lands program in Fiscal Year
(FY)2006. Of this amount, a minimum of $19,503,990 was available for project awards; $108,900 was reserved for oversight activities; and up to $2,167,110 was available for planning, technical assistance, research. A total of 78 applicants requested $40.5 million, approximately twice the amount available for projects, indicating high competition for funds. An interagency technical review committee evaluated the project proposals based on the criteria defined in 49 U.S.C. 5320(g)(2). Then, as specified in Section 5320(g), the Secretary of the Interior's designee determined the final selection of projects after consultation with and in cooperation with the Secretary of Transportation's designee. For FY 2006, the program will fund 42 projects totaling $19,631,170. The goals of the program are to conserve natural, historical, and cultural resources; reduce congestion and pollution; improve visitor mobility and accessibility; enhance visitor experience; and ensure access to all, including persons with disabilities through alternative transportation projects. The projects selected for funding in FY 2006 represent a diverse set of capital and planning projects across the country, ranging from bus purchases to a ferry dock. Awards State Public land unit Agency Funding recipient Type of project Project description FY 2006 funding AK Chugach National Forest Forest Service Alaska Railroad Railroad Purchase Diesel Multiple Unit Rail vehicles to provide rail service to recreation areas in Chugach National Forest $4,700,000 AK Glacier Bay National Park and Preserve National Park Service State of Alaska Boat Dock Replace the existing passenger and freight dock 1,200,000 AZ Grand Canyon National Park National Park Service National Park Service Bus Rebuild the Hermits Road Shuttle Bus transfer area 733,050 CA Inyo National Forest, Devils Postpile National Monument Forest Service Forest Service Planning Study Feasibility study for implementation of a sustainable transportation system for Reds Meadow/Devils Postpile 167,000 CA Muir Woods National Monument/Golden Gate National Recreation Area National Park Service National Park Service Intelligent Transportation System Design and build electronic warning signs, traffic counters, highway advisory radio, web cameras, a centralized management software package, and other equipment as necessary 490,000 CA Muir Woods National Monument/Golden Gate National Recreation Area National Park Service National Park Service Planning Study Secure consultant services for planning effort to address visitor access issues at Muir Woods National Monument (managed by Golden Gate National Recreation Area) 500,000 CA Point Reyes National Seashore National Park Service National Park Service Planning Study Fund an implementation feasibility study and financial plan for the upgrade of an existing park shuttle system to an alternate-fuel system for the heavily visited Point Reyes Headlands 175,000 CA San Francisco Maritime National Historical Park and Golden Gate National Recreation Area National Park Service National Park Service Planning Study Planning to extend San Francisco Municipal Railway's Historic streetcars from Fisherman's Wharf 0.85 mile to San Francisco Maritime National Historic Park and the Fort Mason Center at Golden Gate Nat'l Recreation Area 300,000 CA Sequoia and Kings Canyon National Park National Park Service National Park Service Bus Lease busses for the Giant Forest Shuttle and Gateway Shuttle Link to connect key sites within Sequoia National Park lodging, camping, food service facilities, popular day use trails, and features of the world-famous Giant Forest Sequoia grove 165,000 CA Sequoia and Kings Canyon National Park National Park Service City of Visalia Bus Purchase five shuttle busses for the City of Visalia to run a new service from the San Joaquin Valley to popular Sequoia National Park 400,000 CA Yosemite National Park National Park Service Yosemite Area Regional Transit System (YARTS) Park and Ride Lot Construct two park and ride lots to allow visitors to park and use the YARTS service to access the national park, mitigating congestion within the park 582,579 CA Yosemite National park National Park Service National Park Service Planning Study Update traffic, transit, parking, and intersection counts;
(2)update existing trip tables;
(3)update and complete computer models;
(4)evaluate the relationships between transportation and park experience;
(5)correlate visitor experience with traffic data 486,000 CO Mesa Verde National Park National Park Service National Park Service Planning Study Fund the remaining planning tasks and allow the Transportation Plan to be completed in early 2007 57,868 CO Rocky Mountain Arsenal National Wildlife Refuge Fish and Wildlife Service City of Commerce City Planning Study Conduct a shuttle feasibility study that would determine if a shuttle is needed 40,000 CO The Maroon Bells—Snowmass Wilderness Area, White River National Forest, Colorado Forest Service Roaring Forks Transit Authority Bus Purchase four buses to expand transit service to visitors 1,680,000 FL Ding Darling National Wildlife Refuge Fish and Wildlife Service Lee County Transit Planning Study Planning, technical analyses, and coordination of transportation system 700,000 HI Hawaii Volcanoes National Park National Park Service National Park Service Planning Study Data collection/studies and resource surveys for potential alternative transportation system along two primary roads where congestion and over-crowding are causing resource damage and compromising visitor safety and experience 120,000 ID, WY Grand Teton National Park National Park Service National Park Service Planning Study Create a Public Transportation Business Plan for public transportation service in Grand Teton National Park 99,934 IL Midewin National Tallgrass Prairie Forest Service Forest Service Planning Study Develop an alternative transportation system plan for the prairie 256,600 KS Tall Grass Prairie National Preserve National Park Service National Park Service Bus Replace two existing buses used for park tours 280,000 MA Cape Cod National Seashore National Park Service Cape Cod Regional Transit Authority Bus/Intelligent Transportation System Purchase ITS communication equipment to allow timed transfers and coordination of local transit service 175,000 MA Cape Cod National Seashore National Park Service National Park Service Planning Study Define the needs and evaluate alternative satellite maintenance/storage sites for a transit service to be implemented 200,000 MA Cape Cod National Seashore National Park Service National Park Service Tram Replace three trailers for trams to transport visitors to destinations within and near the National Seashore 400,000 MA Lowell National Historical Park National Park Service National Park Service Railroad Address safety issues:
(1)signalization of grade crossings,
(2)rehabilitate trolley bridge,
(3)replace deteriorated railroad ties and substandard rails 338,000 MA Parker River National Wildlife Refuge, Essex County National Heritage Area, MA DCR Sandy Point Fish and Wildlife Service Essex National Heritage Commission Planning Study Develop a plan to complete safe, off-road connections between the Newburyport MBTA Transit Center, the Refuge Headquarters and the Refuge 95,000 MD Patuxent Research Refuge Fish and Wildlife Service Fish and Wildlife Service Tram Rehabilitate existing prototype electric tram and tram tour route 108,639 ME Acadia National Park National Park Service Maine Department of Transportation Bus Purchase two vans with trailers for bicycles for Acadia's Island Explorer transit system, allowing visitors to better access recreation opportunities in the park without private cars 120,000 ME Acadia National Park National Park Service Maine Department of Transportation Bus Replace eight propane powered buses for Acadia's Island Explorer transit system, which connects visitor destinations in the park with campgrounds, motels, and community business districts 1,400,000 NJ Gateway National Recreation Area—Sandy Hook National Park Service National Park Service Planning Study Fund a planning study to assess needs and establish a set of integrated intelligent transportation system
(ITS)parking/traveling information systems requirements 150,000 NY Roosevelt-Vanderbilt National Historic Sites National Park Service National Park Service Planning Study Design a three-year phased field-test of an alternative transportation system that links the four park sites with the Town Center and the Poughkeepsie Train Station; structure a regional ATS partnership 68,000 OH Cuyahoga Valley National Park National Park Service National Park Service Design Prepare design documents to allow for upgrade of railroad signals at grade crossings of Cuyahoga Valley Scenic Railroad 170,000 OH Cuyahoga Valley National Park National Park Service National Park Service Design Develop plans to rehabilitate existing rail in Cuyahoga National Park 185,000 OH Cuyahoga Valley National Park National Park Service National Park Service Maintenance Vehicle Purchase a railroad maintenance vehicle to maintain 51 miles of railroad track 170,000 OH Cuyahoga Valley National Park National Park Service Cuyahoga Valley Scenic Railroad Railroad Purchase an additional ADA accessible railcar 373,000 OR Lewis and Clark National Historical Park National Park Service Sunset Empire Transportation District Bus Fund shuttle bus leasing from the park's partner, Sunset Empire Transit District 50,000 OR Mt. Hood National Forest Forest Service Oregon Department of Transportation Planning Study Planning for a new alternative transportation system to provide transportation to and within Mt. Hood National Forest in order to reduce congestion on U.S. Highway 26 100,000 PR San Juan National Historic Site National Park Service Codevisa Transit with municipality of San Juan Bus Purchase two small trams that would be operated by the municipality of San Juan to provide transportation between the two forts 640,000 TX Santa Ana National Wildlife Refuge Fish and Wildlife Service Fish and Wildlife Service Bus Replace current tram at Santa Ana National Wildlife Refuge 510,000 VA Back Bay National Wildlife Refuge Fish and Wildlife Service Fish and Wildlife Service Bus Purchase two alternative-fueled specialty trams that will replace the antiquated tram system presently used to transport visitors through Back Bay National Wildlife Refuge to adjoining False Cape State Park 160,000 VA Shenandoah National Park National Park Service National Park Service Bus Purchase an ADA accessible bus to replace existing leased vehicle 60,000 VT Marsh-Billing-Rockefeller National Historical Park and Town of Woodstock National Park Service National Park Service Planning Study Perform a fiscal analysis study that will investigate a system to shuttle visitors, including elderly and mobility impaired, from points within the Woodstock community to the park visitor center 78,500 WA North Cascades National Park National Park Service National Park Service Bus Purchase 4 buses to replace old buses that transport visitors within the Lake Chelan National Recreation Area 947,000 Total $19,631,170 Applying for Funds Recipients who are State or local government entities will be required to apply for ATPPL funds electronically through FTA's electronic grant award and management system, TEAM. The content of these grant applications must reflect the approved proposal. ( **Note:** Applications for the ATPPL program do not require Department of Labor Certification.) Upon grant award, payments to grantees will be made by electronic transfer to the grantee's financial institution through the Electronic Clearing House Operation
(ECHO)system. Staff in FTA's Regional offices are available to assist applicants. Recipients who are Federal land management agencies will be required to enter into an interagency agreement with FTA. FTA will administer one interagency agreement with each Federal land management agency receiving funding through the program for all of that agency's projects. Individual units of Federal land management agencies should work with the contact at their headquarters office listed above to coordinate the availability of funds to that unit. Program Requirements Section 5320 requires funding recipients to meet certain requirements. For FY 2006, FTA has developed interim requirements that reflect existing statutory and regulatory provisions. These can be found in the document “Alternative Transportation in Parks and Public Lands Program: Requirements for Recipients of FY 2006 Funding” available at *http://www.fta.dot.gov/atppl.* These requirements are incorporated into the grant agreements and inter-agency agreements used to fund the selected projects. Pre-Award Authority Pre-award authority allows an agency that will receive a grant or interagency agreement to incur certain project costs prior to receipt of the grant or interagency agreement and retain eligibility of the costs for subsequent reimbursement after the grant or agreement is approved. The recipient assumes all risk and is responsible for ensuring that all conditions are met to retain eligibility, including compliance with Federal requirements such as the National Environmental Policy Act (NEPA), SAFETEA-LU planning requirements, and provisions established in the grant contract or Interagency Agreement. This automatic pre-award spending authority, when triggered, permits a grantee to incur costs on an eligible transit capital or planning project without prejudice to possible future Federal participation in the cost of the project or projects. Under the authority provided in 49 U.S.C. 5320(h), FTA is extending pre-award authority for FY 2006 ATTPL projects effective as of August 28, 2006, when the projects were publicly announced. The conditions under which pre-award authority may be utilized are specified below: a. Pre-award authority is not a legal or implied commitment that the project(s) will be approved for FTA assistance or that FTA will obligate Federal funds. Furthermore, it is not a legal or implied commitment that all items undertaken by the applicant will be eligible for inclusion in the project(s). b. All FTA statutory, procedural, and contractual requirements must be met. c. No action will be taken by the grantee that prejudices the legal and administrative findings that the Federal Transit Administrator must make in order to approve a project. d. Local funds expended pursuant to this pre-award authority will be eligible for reimbursement if FTA later makes a grant or interagency agreement for the project(s). Local funds expended by the grantee prior to August 28, 2006 will not be eligible for credit toward local match or reimbursement. Furthermore, the expenditure of local funds on activities such as land acquisition, demolition, or construction, prior to the completion of the NEPA process, would compromise FTA's ability to comply with Federal environmental laws and may render the project ineligible for FTA funding. e. When a grant for the project is subsequently awarded, the Financial Status Report, in TEAM-Web, must indicate the use of pre-award authority, and the pre-award item in the project information section of TEAM should be marked “yes.” Reporting Requirements All recipients must submit quarterly milestone/progress reports to FTA containing the following information:
(1)Narrative description of project(s); and,
(2)discussion of all budget and schedule changes. State and local government entities should submit this information through FTA's TEAM grants management system. The headquarters office for each Federal land management agency should collect a quarterly report for each of the projects delineated in the interagency agreement and then send these reports (preferably by e-mail) to Henrika Buchanan-Smith, FTA Office of Transit Programs, *Henrika.Buchanan-Smith@dot.gov* ; 202-366-2053; 400 7th St., SW., Room 9315; Washington, DC 20590. Examples can be found on the program Web site at *http://www.fta.dot.gov/atppl.* The quarterly reports are due to FTA on the dates noted below: Quarter Covering Due date 1st Quarter Report October 1-December 31 January 31. 2nd Quarter Report January 1-March 31 April 30. 3rd Quarter Report April 1-June 30 July 31. 4th Quarter Report July 1-September 31 October 31. In order to allow FTA to compute aggregate program performance measures as required by the President's Management Agenda, FTA requests that all recipients of funding for capital projects under the ATPPL program submit the following information annually: • Annual visitation to the land unit; • Annual number of persons who use the alternative transportation system (ridership/usage); • An estimate of the number of vehicle trips mitigated based on alternative transportation system usage and the typical number of passengers per vehicle; • Cost per passenger; and, • A note of any special services offered for those systems with higher costs per passenger but more amenities. State and local government entities should submit this information as part of their fourth quarter report through FTA's TEAM grants management system. Federal land management agencies should also send this information as part of their fourth quarter report (preferably by e-mail), to Henrika Buchanan-Smith, FTA, *Henrika.Buchanan-Smith@dot.gov* ; 202-366-5080; 400 7th St., SW.; Room 9315; Washington, DC 20590. Examples can be found on the program Web site at *http://www.fta.dot.gov/atppl.* Oversight Recipients of FY 2006 ATPPL funds will be required to certify that they will comply with all applicable Federal and FTA programmatic requirements. FTA direct grantees will complete this certification as part of the annual Certification and Assurances package, and Federal Land Management Agency recipients will complete the certification by signing the interagency agreement. This certification is the basis for oversight reviews conducted by FTA. The Secretary of Transportation and FTA have elected not to apply the triennial review requirements of 49 U.S.C. 5307(h)(2) to ATPPL recipients that are other Federal agencies. Instead, working with the existing oversight systems at the Federal Land Management Agencies, FTA will perform periodic reviews of specific projects funded by the ATPPL program. These reviews will ensure that projects meet the basic statutory, administrative, and regulatory requirements as stipulated by this notice and the certification. To the extent possible, these reviews will be coordinated with other reviews of the project. FTA direct grantees of ATPPL funds (State, local and tribal government entities) will be subject to all applicable triennial, State management, civil rights, and other reviews. Issued in Washington, DC, this 5th day of September, 2006. James S. Simpson, Administrator. Appendix A—FTA Regional Offices Region I Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. Richard Doyle, FTA Regional Administrator, Kendall Square, 55 Broadway, Suite 920, Cambridge, MA 02142-1093,
(617)494-2055. Region II New Jersey, New York, and Virgin Islands. Letitia Thompson, FTA Regional Administrator, One Bowling Green, Room 429, New York, NY 10004-1415,
(212)668-2170. Region III Delaware, District of Columbia, Maryland, Pennsylvania, Virginia, and West Virginia. Susan Borinsky, FTA Regional Administrator, 1760 Market Street, Suite 500, Philadelphia, PA 19103-4124,
(215)656-7100. Region IV Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, Puerto Rico, South Carolina, and Tennessee. Yvette Taylor, FTA Regional Administrator, 61 Forsyth Street, SW., Suite 17T50, Atlanta, GA 30303,
(404)562-3500. Region V Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin. Marisol Simon, FTA Regional Administrator, 200 West Adams Street, Suite 320, Chicago, IL 60606-5232,
(312)353-2789. Region VI Arkansas, Louisiana, New Mexico, Oklahoma, and Texas. Robert Patrick, FTA Regional Administrator, 819 Taylor Street, Room 8A36, Ft. Worth, TX 76102,
(817)978-0550. Region VII Iowa, Kansas, Missouri, and Nebraska. Mokhtee Ahmad, FTA Regional Administrator, 901 Locust Street, Suite 404, Kansas City, MO 64106,
(816)329-3920. Region VIII Colorado, Montana, North Dakota, South Dakota, Utah, and Wyoming. Lee Waddleton, FTA Regional Administrator, 12300 West Dakota, Suite 310, Lakewood, CO 80228-2583,
(720)963-3300. Region IX American Samoa, Arizona, California, Guam, Hawaii, Nevada, and the Northern Mariana Islands. Leslie Rogers, FTA Regional Administrator, 201 Mission Street, Suite 2210, San Francisco, CA 94105-1839,
(415)744-3133. Region X Alaska, Idaho, Oregon, and Washington. Richard F. Krochalis, FTA Regional Administrator, Jackson Federal Building, 915 Second Avenue, Suite 3142, Seattle, WA 98174-1002,
(206)220-7954. [FR Doc. E6-15095 Filed 9-11-06; 8:45 am] BILLING CODE 4910-57-P DEPARTMENT OF TRANSPORTATION Federal Transit Administration [Docket No: FTA-2006-23511] Notice of Proposed Agency Guidance and Request for Comments on the Eligibility of Joint Development Improvements Under Federal Transit Law AGENCY: Federal Transit Administration (FTA), DOT. ACTION: Notice of proposed guidance with request for comment. SUMMARY: The Federal Transit Administration
(FTA)seeks public comment on the following proposed guidance on joint development capital projects funded by the Federal Transit Administration. The Safe, Accountable, Flexible, Efficient Transportation Equity Act of 2005: A Legacy for Users (SAFETEA-LU) enacted certain amendments to the definition of the term “capital project” as used in 49 U.S.C. 5302(a)(1)(G) relating to “joint development” activities by recipients of Federal funds under 49 U.S.C. 5301 *et seq.* (Federal Transit Law). The Federal Transit Administration
(FTA)proposes to adopt the following guidance in accordance with the procedures for notice and an opportunity for the public to comment set forth at 49 U.S.C. 5334(l) and FTA's Notice of Final Policy Statement for Implementation of Notice and Comment Procedures for Documents Imposing “Binding Obligations,” as published in the **Federal Register** on June 5, 2006. The following proposed guidance seeks to ensure maximum benefit to the people who ride public transportation, to FTA grantees that choose to sponsor joint development improvements (the project sponsor), and to their joint development partners by
(i)Affording FTA grantees maximum flexibility within the law to work with the private sector and others for purposes of joint development,
(ii)generally deferring to the decisions of the project sponsor, negotiating and contracting at arm's length with third parties, to utilize Federal Transit funds and program income for joint development purposes, and
(iii)promoting transit-oriented development, subject to the broad parameters set forth herein. DATES: Comments must be received by October 12, 2006. Late-filed comments will be considered to the extent practicable. ADDRESSES: To ensure your comments are not entered more than once into the DOT Docket, please identify your submissions by the following docket number: FTA-2006-23511. Please make your submissions by only one of the following means: • *Web site: http://dms.dot.gov.* Follow the instructions for submitting comments on the DOT electronic docket site. • *Web Site: http://dms.dot.gov.* Follow the online instructions for making submissions to the DOT electronic docket site. • *Fax:* 1-202-493-2478. • *U.S. Post or Express Mail:* Docket Management System, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590-001. • *Hand Delivery:* To the Docket Management System; Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal Holidays. *Instructions:* All submissions must make reference to the “Federal Transit Administration” and include the docket number for this notice set forth above. Due to security procedures in effect since October 2001 regarding mail deliveries, mail received through the U.S. Postal Service may be subject to delays. Parties making submissions responsive to this notice should consider using an express mail firm to ensure the prompt filing of any submissions not filed electronically or by hand. Note that all submissions received, including any personal information therein, will be posted without change or alteration to *http://dms.dot.gov.* *Docket:* For access to the DOT docket to read materials relating to this notice, please go to *http://dms.dot.gov* at any time or to the Docket Management System. FOR FURTHER INFORMATION CONTACT: For program questions, please contact Robert Tuccillo at
(202)366-4050. For legal questions, please contact Jayme Blakesley at
(202)366-0304. The principal office of FTA is located at 400 Seventh Street, SW., Washington, DC 20590-0001. Office hours are from 8:30 a.m. to 6 p.m., Monday through Friday, except Federal holidays. SUPPLEMENTARY INFORMATION: Statement of Policy Through this guidance, FTA interprets the definition and operation of the term “capital project” as defined at 49 U.S.C. 5302(a)(1)(G), and as amended by Section 3003(a) of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (“SAFETEA-LU”). This amendment permits FTA to issue public transportation grants “for the construction, renovation, and improvement of intercity bus and intercity rail stations and terminals,” including the construction, renovation, and improvement of commercial revenue-producing intercity bus stations or terminals. In doing so, it modifies the underlying policy of joint development improvements, and therefore enhances the ability of FTA grantees to work with the private sector and others for purposes of joint development. To ensure maximum benefit to the people who ride public transportation, to FTA grantees that choose to sponsor joint development improvements (the “project sponsor”), and to their joint development partners, the following guidance
(i)seeks to afford FTA grantees maximum flexibility within the law to work with the private sector and others for purposes of joint development,
(ii)generally will defer to the decisions of the project sponsor, negotiating and contracting at arm's length with third parties, to utilize Federal transit funds and program income for joint development purposes, and
(iii)aims to promote transit-oriented development, subject to the broad parameters set forth herein. Proposed Guidance Text I. Eligibility Criteria a. Definition of “Capital Project” Federal Transit Law defines a “capital project” for joint development as follows: A public transportation improvement that enhances economic development or incorporates private investment, including commercial and residential development, pedestrian and bicycle access to a public transportation facility, construction, renovation, and improvement of intercity bus and intercity rail stations and terminals, and the renovation and improvement of historic transportation facilities, because the improvement enhances the effectiveness of a public transportation project and is related physically or functionally to that public transportation project, or establishes new or enhanced coordination between public transportation and other transportation, and provides a fair share of revenue for public transportation that will be used for public transportation. 49 U.S.C. 5302(a)(1)(G). This definition establishes the following criteria for determining whether a joint development improvement is eligible for funding pursuant to a program established under 49 U.S.C. 5301 *et seq.* (the “Federal Transit Law”): The public transportation improvement must
(i)Enhance economic development or incorporate private investment; (ii)(a) Enhance the effectiveness of a public transportation project and relates physically or functionally to that public transportation project, or
(b)establish new or enhanced coordination between public transportation and other transportation; and
(iii)provide a fair share of revenue for public transportation that will be used for public transportation. In addition, a person making an agreement to occupy space in a facility under this subparagraph shall pay a reasonable share of the costs of the facility through rental payments and other means. 49 U.S.C. 5302(a)(1)(G)(i). Joint development improvements will be eligible for FTA funding only if they satisfy the criteria set forth above, and do not fall within the exclusion detailed at 49 U.S.C. 5302(a)(1)(G)(ii), which excludes the construction of a commercial revenue-producing facility (other than an intercity bus station or terminal) or a part of a public facility not related to public transportation. b. “Enhances Economic Development or Incorporates Private Investment” As noted above, it is a threshold requirement for Federal funding of a public transportation improvement as joint development that such improvement either
(i)Enhance economic development or
(ii)incorporate private investment. 1 1 In accordance with the statute's use of the disjunctive “or,” rather than the conjunctive “and,” FTA shall determine that a transportation improvement satisfies the threshold requirement for funding as joint development if the transportation improvement either
(i)Enhances economic development or
(ii)incorporates private investment (the disjunctive), and shall not require that the transportation improvement satisfy each of
(i)and
(ii)(the conjunctive). i. “Enhances Economic Development” This criterion requires that a joint development improvement enhance economic development. A grantee may satisfy this criterion by demonstrating that the joint development improvement will add value to privately-or publicly-funded economic development activity occurring in close proximity to a public transportation facility. ii. “Incorporates Private Investment” Any joint development improvement that incorporates private investment will satisfy this criterion. Private investment need not be monetary; it may take the form of cash, real property, or other benefit to be generated initially or over the life of the joint development improvements. FTA will not set a monetary threshold. The amount and form of private investment shall be negotiated by the parties to the joint development improvement. c. “Enhances the Effectiveness of a Public Transportation Project” Any reasonable forecast of joint development impacts that enhance the effectiveness of a public transportation project will satisfy this criterion. These impacts may include, but are not limited to, any of the following: increased ridership, shortened travel times, and lessened or deferred transit operating or capital costs. d. “Related Physically or Functionally” The disjunctive requirement of physical “or” functional relationship provides that a joint development improvement may be built separately from, but in functional relationship to, a public transportation project. Therefore, a joint development improvement satisfies this element if it is related physically or functionally to a public transportation project. i. “Physically Related” A joint development improvement is “physically related” to a public transportation project if it provides a direct physical connection to public transportation services or facilities. Illustrative, but not exhaustive, examples of physical relationships include
(i)projects built within or adjacent to public transportation facilities and
(ii)projects using air rights over public transportation facilities. ii. “Functionally Related” A joint development improvement is “functionally related” to a public transportation project if by activity and use, with or without a direct physical connection, it
(i)enhances the use of, connectivity with or access to public transportation; or
(ii)provides a transportation-related service (such as, but not limited to, remote baggage handling or shared ticketing) or community services (such as daycare or health care) to the public. Considerations include a reduction in travel time between the joint development project and the public transportation facility, reasonable access between the joint development project and the public transportation facility, and increased trip generation rates resulting from the relationship between the joint development project and the public transportation facility. While the functional relationship test of activity and use permits the use of FTA funds for joint development improvements located outside the structural envelope of a public transportation project, and may extend across an intervening street, major thoroughfare or unrelated property, functional relationships should not extend beyond the distance most people can be expected to safely and conveniently walk to use the transit service (in certain cases, for example, within a radius of 1,500 feet around the center of the public transportation project). e. “Establishes New or Enhanced Coordination Between Public Transportation and Other Transportation” 2 2 Subsection (e), “New or Enhanced Coordination,” explains the second method for complying with a disjunctive requirement. As explained in section (I)(d) of this document, a joint development improvement may satisfy this requirement by
(i)Relating physically or functionally to a public transportation project or
(ii)establishing new or enhanced coordination between public transportation and other transportation. Any reasonable forecast of joint development impacts that establish new or enhanced coordination between public transportation and other transportation will satisfy this criterion. FTA will accept any reasonably supported judgment of new or enhanced coordination from the project sponsor. i. “New or Enhanced Coordination” To establish new or enhanced coordination, a joint development improvement must create or enhance the physical or functional connections between public transportation and other transportation. 3 3 This requirement is similar to, but not the same as, the requirement of physical or functional relationship described at subsection (d)(i) and (ii). The two are distinct, disjunctive requirements, but they share common criteria. A project could satisfy both requirements, but need only satisfy one to qualify for funding as a joint development improvement. Visualized as such, the disjunctive requirement would appear as a Venn diagram—separate requirements with overlapping criteria. Examples of physical connections that establish new or enhanced coordination include, but are not limited to, proximate or shared ticket counters, termini, park-and-ride lots, taxicab bays, passenger drop-off points, waiting areas, bicycle paths and sidewalks connecting public transportation to non-transportation facilities. Projects that shorten the distance between public transportation termini and other transportation shall be presumed to enhance coordination. Examples of functional connections that establish new or enhanced coordination include, but are not limited to, shared or coordinated signage, schedules, and ticketing. ii. “Public Transportation” Section 5307(a)(7) of Title 49 defines “public transportation” as “transportation by a conveyance that provides regular and continuing general or special transportation to the public, but does not include schoolbus, charter, or intercity bus transportation or intercity passenger rail transportation provided by the entity described in chapter 243 4 (or a successor to such entity).” 4 National Railroad Passenger Corporation (“Amtrak”) iii. “Other Transportation” FTA interprets the term “other transportation,” as used in 49 U.S.C. 5307(a)(1)(G), to mean all forms of transportation that are not public transportation, including, but not limited to, airplane, school bus, charter bus, sightseeing vehicle, intercity bus and rail, automobile, taxicab, bicycle and pedestrian transportation. f. “Provides a Fair Share of Revenue for Public Transportation That Will Be Used for Public Transportation” The third criterion for determining whether a joint development improvement is eligible for funding pursuant to a program established under the Federal Transit Law is that the improvement “provides a fair share of revenue for public transportation that will be used for public transportation.” 5 49 U.S.C. 5302(a)(1)(G). FTA will not define the term “fair share of revenue,” nor will it set a monetary threshold. What is a fair share of revenue, and what form it should take, 6 shall be negotiated between the parties involved in the joint development improvement. The only requirements are
(i)That the public transportation provider receives a fair share of revenue,
(ii)that such revenue be used for public transportation, and
(iii)that the project sponsor obtain a written opinion of counsel or other advisor (or FTA's agreement) that the share of revenue to public transportation is fair. This allows a public transportation provider to negotiate for financial benefits in exchange for the benefits it will convey through the joint development improvement. 5 This criterion should not be confused with the requirement of 49 U.S.C. 5302(a)(1)(G)(ii) that “a person making an agreement to occupy space in a facility under this subparagraph shall pay a reasonable share of the costs of the facility through rental payments and other means.” 6 For example, “fair share of revenue” need not be a direct payment of revenue by an intercity bus provider to a transit agency but may take the form of an increase in revenues received by a transit agency, whether in its capacity as landlord or otherwise, as a result of enhanced passenger traffic created by the service of a jointly developed facility by an intercity bus provider, provided that the transit agency and intercity bus provider together designate and report to FTA the source of such “fair share of revenue.” FTA grantees shall expend the “fair share of revenue” in accordance with the common grant rule of 49 CFR 18.1-18.52. g. “Reasonable Share of the Costs of the Facility” While not a criterion to determine eligibility, as noted above, it is nonetheless required that any “person making an agreement to occupy space in a facility under [49 U.S.C. 5302(a)(1)(G)] shall pay a reasonable share of the costs of the facility through rental payments and other means.” FTA shall not require a specific valuation methodology and shall accept any reasonable valuation methodology used by the grantee to determine a reasonable share of the costs of the facility. II. Eligible Activities Subject to the eligibility criteria detailed at section
(II)above, joint development improvements expressly include the following: • Commercial and residential development; • Pedestrian and bicycle access to a public transportation facility; • Construction, renovation, and improvement of intercity bus and intercity rail stations and terminals; and • Renovation and improvement of historic transportation facilities. 49 U.S.C. 5302(a)(1)(G). These and other joint development improvements will be eligible for FTA funding if they satisfy the criteria set forth above, and do not fall within the exclusion detailed at 49 U.S.C. 5302(a)(1)(G)(ii), which excludes the construction of a commercial revenue-producing facility (other than an intercity bus station or terminal) or a part of a public facility not related to public transportation. 7 7 Many aspects of commercial and residential development will be excluded by 49 U.S.C. 5302(a)(1)(G)(ii), which makes ineligible for FTA financial assistance the “construction of a commercial revenue-producing facility (other than an intercity bus station or terminal) or a part of a public facility not related to public transportation.” It is important to note, however, that commercial and residential development is not excluded wholesale. For example, space in an FTA-funded facility may be made available for commercial revenue-producing activities and for connections to revenue producing activities. Similarly, non-commercial, non-revenue-producing aspects of commercial and residential developments may be eligible for FTA financial assistance, subject to the criteria detailed at section (II). Costs related to a joint development improvement are only eligible for Federal Transit funding pursuant to a budget contained in an approved grant. FTA cannot approve funding for costs associated with a joint development improvement that are not contained in an approved grant budget. FTA Regional Administrators approve joint development proposals as part of the grant approval process. Eligible costs for joint development improvements include, but are not limited to, the following: a. *Real Estate Acquisition,* including the acquisition of real property and structures thereon; 8 8 Note that certain costs in connection with real estate acquisition (such as costs associated with eminent domain and relocation assistance) shall be eligible, as provided by the respective statutes and regulations. b. *Demolition of Existing Structures;* c. *Site Preparation;* d. *Building Foundations,* including substructure improvements for buildings constructed over transit facilities; e. *Utilities,* including utility relocation and construction; f. *Walkways,* including bicycle lanes and pedestrian connections and access links between public transportation services and related development; g. *Open Space,* including site amenities and related streetscape improvements such as street furniture and landscaping; h. *Safety and Security Equipment and Facilities,* including lighting, surveillance and related intelligent transportation applications; i. *Construction, renovation, and improvement of bus and intercity rail stations and terminals;* j. *Facilities that Incorporate Community Services* such as daycare or health care; k. *Capital Project, and Equipment, for an Intermodal Transfer Facility or Transportation Mall,* including acquisition of facilities and equipment, roadbeds, tracks and bus ramps, pedestrian concourses, loading shelters, parking facilities, park-and-ride services, improvements of existing bus or rail transit terminals, stations, major transfer points, and shelters as well as other facilities directly related to the linking of public transportation facilities with other modes of transportation; l. *Furniture, Fixtures and Equipment (FFE):* Transportation-related FFE are eligible costs in all cases. However, due to the exclusion of commercial revenue-producing facilities (other than an intercity bus station or terminal) and public facilities not related to public transportation at 49 U.S.C. 5302(a)(1)(G)(ii), FFE related to commercial revenue-producing facilities (other than an intercity bus station or terminal) or public facilities not related to public transportation are considered ineligible; m. *Parking,* including parking improvements with a public transportation justification and use or an intercity bus or intercity rail justification and use in connection with joint development; and n. *Project Development Activities,* including design, engineering, construction cost estimating, environmental analysis, real estate packaging and financial projections (operating income and expenses, debt service and cash flow analysis), and negotiations to secure financing and tenants; o. *Professional Services,* including reasonable and necessary costs incurred to hire professionals to prepare or perform items a through n above, or to assist the grantee in reviewing the same. III. Ineligible Activities a. Construction of a Commercial Revenue-Producing Facility Eligible costs do not include construction of commercial revenue producing facilities (other than an intercity bus station or terminal) or part of a public facility not related to public transportation. IV. Federal Requirements FTA's Master Agreement contains the standard terms and conditions governing the administration of a project supported with Federal assistance awarded by FTA through a grant agreement or cooperative agreement with the recipient, or supported by FTA through a Transportation Infrastructure (TIFIA) Loan, loan guarantee, or line of credit with the recipient. Not every provision of the Master Agreement will apply to every project for which FTA provides Federal assistance through a grant agreement or cooperative agreement. The type of project, the Federal laws and regulations authorizing Federal assistance for the project, and the legal status of the recipient as a State or local government, private non profit entity, or private for profit entity will determine which Federal laws, regulations, and directives apply. Federal laws, regulations, and directives that do not apply will not be enforced. The recipient shall comply with all applicable Federal laws, regulations, and directives, except to the extent that FTA determines otherwise in writing. Any violation of a Federal law, regulation, or directive applicable to the recipient or its project may result in penalties to the violating party. Applicable crosscutting requirements likely to apply to joint development improvements include, but are not limited to, the following: a. Ground Lease or Transfer of Federally Assisted Real Estate If the joint development improvement involves a ground lease or transfer of federally-funded real estate and there is no Federal assistance for new improvements, then the following requirements apply to the lessee or transferee and must be incorporated into the lease or the conveyance instrument: i. Language found at 49 CFR 26.7 binding the lessee or transferee not to discriminate based on race, color, national origin, or sex; ii. Language found at 49 CFR 27.7; 27.9(b) and 37 binding the lessee or transferee not to discriminate based on disability and binding the same to compliance with the Americans with Disabilities Act with regard to any improvements constructed; and iii. Language contained in FTA's Master Agreement, updated annually in October, particularly relating to conflicts of interest and debarment and suspension. b. Federally Assisted Construction of Joint Development Improvements If the construction of improvements is also federally assisted, then the following requirements will apply and must be incorporated into the lease or the conveyance or encumbrance instrument: i. Buy America—language making it clear that the steel, iron, and manufactured goods used in the joint development project are produced in the United States, as described in 49 U.S.C. 5323(j) and 49 CFR part 661; ii. Planning and Environmental Analysis—language making it clear that the grantee must comply with, and the joint development project is subject to the requirements of: A. The FHWA/FTA metropolitan and statewide planning regulations at 23 CFR part 450; B. The National Environmental Policy Act of 1969, as amended, 42 U.S.C. 4321 *et seq.* ; C. Executive Order No. 12898, “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations,” 59 FR 7629, Feb. 16, 1994; D. FTA statutory requirements on environmental matters at 49 U.S.C. 5324(b); Council on Environmental Quality regulations on compliance with the NEPA, 40 CFR part 1500 *et seq.* ; E. FHWA/FTA regulations, “Environmental Impact and Related Procedures,” 23 CFR part 771; F. Section 106 of the National Historic Preservation Act, 16 U.S.C. 470f, involving historic and archaeological preservation; Advisory Council on Historic Preservation regulations on compliance with Sec. 106, “Protection of Historic and Cultural Properties,” 36 CFR part 800; and G. restrictions on the use of certain publicly owned lands and historic resources unless the FTA makes the specific findings required by 49 U.S.C. 303. iii. Cargo Preference—language making it clear that items imported from abroad and used in the joint development were shipped predominantly on U.S.-flag ships and that the project complies with 46 CFR part 381, to the extent these regulations apply to the joint development; iv. Seismic Safety—language certifying that a structure conforms to seismic safety standards, as contained in 49 CFR part 41; v. Energy Assessments—Language making it clear that the transferee(s) or joint developer agrees to perform a mandatory, energy assessment as prescribed by 23 CFR part 771 and 42 U.S.C. 8373(b)(1) for any buildings constructed, reconstructed or modified with FTA assistance. The assessment shall be incorporated into the Environmental Impact Statement or Environmental Assessment, if the project has one; otherwise the assessment shall be provided with the application for FTA assistance; vi. Lobbying—49 CFR part 20; vii. Labor Protection—Language making it clear that the transferee or joint developer will adhere to labor protection requirements applying to Federal projects, such as Davis-Bacon—49 U.S.C. 5333(a) and 40 U.S.C. 3141 *et seq.* , and 29 CFR part 5; Copeland “Anti-Kickback” Act as amended, 18 U.S.C. 874 and 29 CFR part 3; and Contract Work Hours and Safety Standards Act, 40 U.S.C. 3701 *et seq,* and 29 CFR part 5 and at 40 U.S.C. 3704; as well as 49 U.S.C. 5333(b) concerning protection of transit employees; viii. Civil Rights Requirements—49 U.S.C. 5332 and DOT implementing regulations at 49 CFR part 21 (effecting Title VI of the Civil Rights Act of 1964), 49 CFR 26 (participation by Disadvantaged Business Enterprises in DOT financial assistance programs) and 49 CFR parts 27 and 37 (respectively, nondiscrimination on the basis of disability in programs or activities receiving Federal financial assistance and transportation services for individuals with disabilities); ix. Program Fraud—grantees agree to comply with Program Fraud Civil Remedies Act of 1986, as amended, 31 U.S.C. 3801 *et seq.* and 49 CFR part 31. Penalties may apply for noncompliance; x. Language making it clear that the level of Federal participation in the joint development provides no U.S. Government obligation to third parties in the project; and xi. Uniform Relocation—If the federally-funded site to be improved is occupied by other than the grantee and the occupant is displaced, the transferee(s) or joint developer must comply with 42 U.S.C. 4601 *et seq.* and the regulations at 49 CFR part 24. c. National Environmental Policy Act
(NEPA)In any instance in which FTA determines that NEPA applies to the joint development, the level of environmental analysis will depend upon the complexity of the project and its likely impacts. In some instances, minimal review will be necessary, in which case FTA may issue a Categorical Exclusion. Generally, however, joint development activities that portend significant environmental impacts will necessitate the preparation of an Environmental Assessment or an Environmental Impact Statement. FTA is available to provide guidance on the environmental review process. See generally the FTA Environmental Impact and Related Procedures at 23 CFR part 771. V. Eligibility Procedures Before becoming eligible for FTA funding, a joint development improvement must be approved by the FTA Regional Administrator, or his designee, responsible for the project sponsor's locality. Only FTA grantees may sponsor a joint development improvement. The project sponsor may submit a joint development proposal at any time. FTA approval shall be contingent upon the project sponsor certifying that the joint development improvement conforms to the criteria set forth above and that the project conforms to the requirements of the common grant rule found at 49 CFR 18.31. In the event that the project does not conform to 49 CFR 18.31, FTA may approve the project if the project sponsor submits an alternative certification explaining compliance with 49 U.S.C. 5302(a)(1)(G) and 49 CFR 18.25(g)(4) and
(5)together with supporting documentation, in each case in form and substance satisfactory to FTA in its reasonable discretion. The FTA Regional Administrator, or his designee, shall approve all proposals that meet the criteria described herein. Like all projects funded by FTA, joint development improvements are subject to the applicable crosscutting requirements. There are two methods for seeking approval for a joint development project. In all cases, the project sponsor must submit a completed Joint Development Checklist and proposed Joint Development Agreement. By submitting a completed Joint Development Checklist, the project sponsor shall certify that the proposed joint development improvement conforms to the criteria of 49 U.S.C. 5302(a)(1)(G) as outlined above. For an expedited review, the joint development proposal shall include a signed Certificate of Compliance. By signing the Certificate of Compliance, the project sponsor shall certify, among other things, that the proposed joint development improvement conforms to the requirements of 49 CFR 18.31. If a project sponsor seeks a more individualized review of the project, a joint development proposal shall include an explanation of compliance with 49 U.S.C. 5302(a)(1)(G) and 49 CFR 18.25(g)(4) and
(5)(the “alternative certification”) with supporting documentation. The Joint Development Checklist and Certificate of Compliance are attached hereto. VI. Real Property Real property acquired by a grantee or subgrantee pursuant to 49 U.S.C. 5302(a)(1)(G) shall be governed by 49 U.S.C. 5334(h)as amended, and subject to the obligations and conditions set forth in 49 CFR 18.31 as amended, which require the grantee or subgrantee to request disposition instructions from FTA whenever real property is no longer needed for the originally authorized purpose. 9 9 FTA shall rely on the parties to joint development transactions, including, notably, transit agencies, to determine the appropriate use and disposition of real property used on joint development improvements, so long as such disposition and use complies with applicable statutes and duly promulgated regulations of FTA. For example, FTA shall no longer apply, and shall not require it grantees to apply, its administratively-derived test of “highest and best transit use” (or any other tests) for determining the value of real property used in FTA-funded joint developments, including the disposition of real property connected to a joint development improvement. In the past, FTA relied on 49 CFR 18.25(g) as its authority for requiring (and determining in its discretion) the “highest and best transit use” of such property. No such requirement is expressly authorized or required by 49 CFR 18.25(g), however. VII. Applicability of Third Party Contracting Requirements FTA's third party contracting requirements, which appear in FTA Circular 4220.1E, have limited applicability to joint development projects. As described on page 12 of Circular 4220.1E, the third-party contracting requirements must apply to the federally funded construction aspects of joint development. With regard to revenue contracts as defined in the Circular, FTA will work with grantees on a case-by-case basis to craft approaches that satisfy the statutory and regulatory requirements while preserving the benefits of this innovative contracting strategy to the maximum possible extent. If a contract between a grantee and a third party involving a joint development project is not a construction contract or a revenue contract as defined by Circular 4220.1E, then such contract is not covered by FTA's third party contracting requirements. Paragraph 7.n. of Circular 4220.1E defines “revenue contracts” as “those third party contracts whose primary purpose is to either generate revenues in connection with a transit related activity or to create business opportunities utilizing an FTA funded asset.” Revenue contracts in joint development projects that do not meet this primary purpose test are not covered by the third party contracting requirements. For example, third party contracts to manage, operate, and/or maintain intercity bus or intercity rail terminals that are part of FTA-funded joint development projects or tenancy agreements with third party intercity bus or intercity rail operators are not covered revenue contracts. The primary purpose of such contracts is to carry out the congressional intent to give grantees the flexibility to integrate intercity rail and intercity bus terminals and their related services into FTA-funded joint development projects. Even in situations not covered by the third party contracting requirements, FTA generally favors full and open competition. However, where the third party contracting requirements are not involved, FTA will leave it to the full discretion of the grantees to determine the appropriate extent and nature of competition, if any, for such contracts. For example, in cases involving management of intercity bus or rail terminals or tenancy agreements in those terminals, FTA recognizes that given the unique nature of the national intercity rail and bus systems, a competitive procurement process for such contracts may not be appropriate. VII. Certificate of Compliance To ensure compliance with 49 CFR 18.31 and other Federal requirements related to joint development improvements, and the acquisition, use and disposition of real property for such improvements. FTA shall require project sponsors to sign a Certificate of Compliance or, in lieu of such certificate, an alternative certification explaining compliance with 49 U.S.C. 5302(a)(1)(G) and 49 CFR 18.25(g)(4) and
(5)with supporting documentation. By signing the Certificate of Compliance, the project sponsor shall certify, among other things, that the proposed joint development improvement conforms to the requirements of 49 CFR 18.31. IX. Satisfactory Continuing Control For purposes of this guidance and the Certificate of Compliance, “satisfactory continuing control” shall not mean complete operating or managerial control of a joint development facility. In determining whether “satisfactory continuing control” with respect to a joint development capital project is maintained, the project sponsor and FTA shall consider, as a primary factor, whether the project sponsor has the right and power to direct that such project shall be used for activities eligible for funding under Federal Transit Law (49 U.S.C. 53). Appendix A—Proposed Joint Development Checklist BILLING CODE 4910-57-P EN12SE06.020 BILLING CODE 4910-57-C Appendix B—Proposed Certificate of Compliance Certificate of Compliance Effective as of the date hereof, the undersigned hereby certifies and covenants to the Federal Transit Administration (“FTA”) as follows: 1. *Title.* Subject to the obligations and conditions set forth in 49 CFR 18.31, as amended, title to real property acquired under a grant or subgrant for FTA Project Number__, [insert project title here] (the “Project”), shall vest in the undersigned or subgrantee thereof (collectively or individually, as the case may be, the “Grantee”). 2. *Use.* Except as otherwise provided by Federal statutes, real property shall only be used for the originally authorized purposes (which may include Joint Development purposes that generate program income, both during and after the award period and used to support public transportation activities) as long as needed for such purposes, and that the Grantee shall not dispose of or encumber its title or other interests. 3. *Disposition.* When real property acquired with funds provided by FTA for the Project is no longer needed for the purpose originally authorized by FTA, the Grantee shall request disposition instructions from FTA and shall agree that, unless otherwise authorized by FTA, such disposition shall be made in accordance with applicable law, including without limitation 49 U.S.C. 5334(h) and 49 CFR 18.31. 4. *Federal Interest.* The Federal Government retains a Federal interest in any real property, equipment, and supplies financed with Federal assistance (“Project Property”) until, and to the extent that, the Federal Government relinquishes its Federal interest in such Project Property. 5. *Incidental Use.* Any incidental use of Project Property, as determined by FTA, shall not exceed that permitted under applicable Federal laws, regulations, and directives, including the requirements of FTA's Master Agreement. 6. *Encumbrance of Project Property.* The Grantee covenants to FTA as follows: a. *Written Transactions.* The Grantee agrees that it will not execute any transfer of title to the Project Property or enter into an instrument legally binding on the Grantee that would encumber Federal Interest in the Project Property. b. *Oral Transactions.* The Grantee agrees that it will not obligate itself in any manner to any third party with respect to Project Property. 7. *Notice to Joint Development Partner.* The undersigned has delivered to the Joint Development Partner a duly executed copy of this certificate, dated as of the date hereof, receipt of which has been acknowledged by the Joint Development Partner in writing to the undersigned on or before the date of execution of the Joint Development Agreement. 8. *Other Actions.* The Grantee
(a)agrees that it will not take any action that encumbers the Federal Interest in the Project Property and
(b)hereby affirms that each of its representations and warranties set forth in the Master Agreement is true and correct in all material respects as of the date hereof. The Grantee agrees that nothing herein shall supersede, amend, modify or otherwise affect the provisions, terms or conditions set forth in the Master Agreement. 9. *Definitions.* a. “FTA” shall have the meaning provided in the preamble of this certificate. b. “Grantee” shall have the meaning provided in section
(2)of this certificate. c. “Joint Development” shall mean a capital project as defined by 49 U.S.C. 5302(a)(1)(G) that is eligible for funding pursuant to the terms and conditions set forth in [insert new Joint Development circular number]. d. “Joint Development Partner” shall mean [insert definition]. e. “Master Agreement” shall mean that certain Master Agreement by and between FTA and the Grantee, as authorized by 49 U.S.C. 53, Title 23, United States Code (Highways), the National Capital Transportation Act of 1969, as amended, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, the Transportation Equity Act for the 21st Century, as amended, or other Federal laws that FTA administers, as the same may be lawfully revised, superseded or supplemented from time to time. f. “Project” shall have the meaning provided in section
(1)of this certificate. g. “Project Property” shall have the meaning provided in section
(4)of this certificate. 10. *No Estoppel.* The undersigned agrees that acceptance of this Certificate of Compliance by FTA shall not estop the Federal government from initiating or conducting, and shall not be used as a defense for, any investigation, audit or inquiry by the Federal government following approval by FTA of the project. Issued on the 5th day of September, 2006. James S. Simpson, Administrator. [FR Doc. E6-15022 Filed 9-11-06; 8:45 am] BILLING CODE 4910-57-P DEPARTMENT OF TRANSPORTATION Pipeline and Hazardous Materials Safety Administration Office of Hazardous Materials Safety Notice of Delays in Processing of Special Permit Applications AGENCY: Pipeline and Hazardous Materials Safety Administration, DOT. ACTION: List of application delayed more than 180 days. SUMMARY: In accordance with the requirements of 49 U.S.C. 5117(c), PHMSA is publishing the following list of special permit applications that have been in process for 180 days or more. The reason(s) for delay and the expected completion date for action on each application is provided in association with each identified application. FOR FURTHER INFORMATION CONTACT: Ann Mazzullo, Office of Hazardous Materials Special Permits and Approvals, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, 400 Seventh Street, SW., Washington, DC 20590-0001,
(202)366-4535. Key to “Reason for Delay” 1. Awaiting additional information from applicant. 2. Extensive public comment under review. 3. Application is technically complex and is of significant impact or precedent-setting and requires extensive analysis. 4. Staff review delayed by other priority issues or volume of special permit applications. Meaning of Application Number Suffixes N—New application. M—Modification request. X—renewal. PM—Party to application with modification request. Issued in Washington, DC, on September 6, 2006. R. Ryan Posten, Chief, Special Permits Program, Office of Hazardous Materials Safety, Special Permits & Approvals. New Special Permit Applications Application No. Applicant Reason for delay Estimated date of completion 13563-N Applied Companies, Valencia, CA 1 09-30-2006 14229-N Senex Explosives, Inc., Cuddy, PA 4 09-30-2006 14232-N Luxfer Gas Cylinders-Composite Cylinder Division, Riverside, CA 4 09-30-2006 14239-N Marlin Gas Transport, Inc., Odessa, FL 1 09-30-2006 14237-N Advanced Technology Materials, Inc. (ATMI), Danbury, CT 1 09-30-2006 14285-N INO Therapeutics LLC., Port Allen, LA 4 09-30-2006 14298-N Air Products and Chemicals, Inc., Allentown, PA 4 09-30-2006 14316-N VOTG North America, Inc., West Chester, PA 4 09-30-2006 14310-N Praxair, Danbury, CT 4 09-30-2006 14314-N North American Automotive Hazmat Action Committee 4 09-30-2006 14318-N Lockheed Martin Technical Operations, Vandenberg AFB, CA 4 09-30-2006 14289-N City Machine & Welding, Inc., Amarillo, TX 4 09-30-2006 14257-N Origin Energy American Samoa, Inc., Pago Pago, AS 4 09-30-2006 14266-N NCF Industries, Inc., Santa Maria, CA 3 09-30-2006 14277-N Ascus Technologies, Ltd., Cleveland, OH 3, 4 09-30-2006 Modification to Special Permits Application No. Application Reason for delay Estimated date of completion 12677-M Austin Powder Illinois Company, Cleveland, OH 1 09-30-2006 5749-M E.I. DuPont de Nemours, Wilmington, DE 4 09-30-2006 10481-M M-I Engineering Limited, Bradfrod, West Yorkshire 4 09-30-2006 [FR Doc. 06-7582 Filed 9-11-06; 8:45 am]
Connectionstraces to 38
Traces to 38 documents
U.S. Code
32 references not yet in our index
  • 17 CFR 240.19
  • 17 CFR 242.200-242
  • 17 CFR 240.10
  • Pub. L. 109-181
  • 87 F.3d 194
  • Pub. L. 109-102
  • 23 CFR 771
  • 40 CFR 93
  • 40 CFR 230
  • 36 CFR 800
  • 50 CFR 402
  • 23 CFR 771.135
  • 49 CFR 611
  • 49 CFR 18.1-18
  • 49 CFR 26.7
  • 49 CFR 27.7
  • 49 CFR 661
  • 23 CFR 450
  • 40 CFR 1500
  • 46 CFR 381
  • 49 CFR 41
  • 49 CFR 20
  • 29 CFR 5
  • 29 CFR 3
  • 49 CFR 21
  • 49 CFR 26
  • 49 CFR 31
  • 49 CFR 24
  • 49 CFR 18.31
  • 49 CFR 18.25(g)(4)
  • 49 CFR 18.25(g)
  • 49 USC 53
Citation graph
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Notices
Notice of a temporary, emergency amendment to sentencing guidelines, policy statements, and commentary
U.S.C.§ 78s
U.S.C.§ 552
U.S.C.§ 78c
U.S.C.§ 78f
C.F.R.§ 200.30-3
U.S.C.§ 78q
U.S.C.§ 78t
U.S.C.§ 553
U.S.C.§ 994
F. App'x87 F.3d 194
Cite17 CFR 240.19
Cite17 CFR 242.200-242
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