[Federal Register Volume 78, Number 190 (Tuesday, October 1, 2013)]
[Notices]
[Pages 60260-60264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-24084]


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COMMODITY FUTURES TRADING COMMISSION


Order of the Commodity Futures Trading Commission Relating to the 
Continuation, Shutdown, and Resumption of Certain Commission Operations 
in the Event of a Lapse in Appropriations

AGENCY: Commodity Futures Trading Commission

ACTION: Notice of order; final order.

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SUMMARY: This order is being issued to provide for the continuation, 
shutdown, and resumption of certain operations of the Commodity Futures 
Trading Commission (the ``Commission'') in the event of a lapse in 
appropriations, and to alert all persons regulated by or engaged in 
proceedings at the Commission of these provisions.

DATES: This notice and order is effective on September 27, 2013.

FOR FURTHER INFORMATION CONTACT: For market oversight matters contact 
David Van Wagner, Chief Counsel, Division of Market Oversight (DMO), at 
202-418-5481 or [email protected], Matthew Hunter, Deputy Director, 
DMO at 202-418-5861 or [email protected]. For clearing matters, contact 
Ananda Radhakrishnan, Director, Division of Clearing and Risk (DCR), at 
202-418-5188 or [email protected]; Robert B. Wasserman, Chief 
Counsel, DCR, at 202-418-5092 or [email protected]; or John C. 
Lawton, Deputy Director, DCR, at 202-418-5480, or [email protected]. For 
matters involving intermediaries, contact Gary Barnett, Director, 
Division of Swap Dealer and Intermediary Oversight (DSIO), 202-418-5977 
or [email protected]; Thomas Smith, Deputy Director, DSIO, at 202-418-
5495 or [email protected]; Erik Remmler, Deputy Director, DSIO, at 202-
418-7630 or [email protected]; or Kevin Piccoli, Deputy Director, DSIO, 
at 646-746-9834 or [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    As of 12:01 a.m. on October 1, 2013, the funding of many federal 
government activities is set to expire. Unless

[[Page 60261]]

appropriations are enacted for Fiscal Year 2014, federal departments 
and agencies whose continued operations are dependent upon such 
funding--including the Commission--will be required to execute 
contingency plans for this lapse in appropriations (commonly referred 
to as a ``shutdown''). Under 31 U.S.C. 1341 (the ``Antideficiency 
Act''), the Commission is prohibited from expending or obligating any 
funds in the absence of appropriations, subject to a narrow set of 
exceptions.\1\ The Commission may use one of the exceptions to the 
Antideficiency Act set forth in 31 U.S.C. 1342, which permits agencies 
to obligate funds before an appropriations measure has been enacted and 
to accept voluntary services during a lapse when certain employees are 
needed to perform emergency or ``excepted'' functions.\2\
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    \1\ The Antideficiency Act provides that an officer or employee 
of the United States may not make or authorize an expenditure or 
obligation exceeding an amount in an appropriation or fund for the 
expenditure or obligation; involve the government in a contract or 
obligation for the payment of money before an appropriation is made 
unless authorized by law; make or authorize an expenditure or 
obligation of funds required to be sequestered under section 252 of 
the Balanced Budget and Emergency Deficit Control Act of 1985; or 
involve the government in a contract or obligation for the payment 
of money required to be sequestered under section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985.
    \2\ Section 1342 of Title 31 of the U.S. code provides that an 
officer or employee of the United States Government may not accept 
voluntary services for the government or employ personal services 
exceeding that authorized by law except for emergencies involving 
the safety of human life or the protection of property. As used in 
this section, the term ``emergencies involving the safety of human 
life or the protection of property'' does not include ongoing, 
regular functions of government the suspension of which would not 
imminently threaten the safety of human life or the protection of 
property.
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    The Department of Justice's Office of Legal Counsel has determined 
that government work performed so that the commodities and futures 
markets can continue to operate and so that trading may continue 
qualifies as an ``excepted'' function as set forth in 31 U.S.C. 
1342.\3\ OLC Memorandum for the Director of the Office of Management 
and Budget, Government Operations in the Event of a Lapse in 
Appropriations, OLC Opinion, at 2-3 (Aug. 16, 1995). Consequently, in 
the event of a lapse in appropriations, the Commission may incur 
obligations to allow certain employees who perform ``excepted'' 
functions to continue to perform those functions. This authority, 
however, does not permit the Commission to fund ongoing, regular 
functions, the suspension of which would not imminently threaten the 
safety of human life or the protection of property during a lapse in 
appropriations. Id. at 1 (citing 31 U.S.C. 1342). Thus, the Commission 
has designated certain essential personnel to fulfill its obligation to 
protect property.
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    \3\ Specifically, the Department of Justice's Office of Legal 
Counsel has opined that: ``In the absence of government supervision, 
the stock markets, commodities and futures exchanges would be unable 
to operate . . . these actions and the others required as part of a 
true shut down of the federal government would impose significant 
health and safety risks on millions of Americans, some of which 
would undoubtedly result in the loss of human life, and they would 
immediately result in massive dislocations of and losses to the 
private economy, as well as disruptions of many aspects of society 
and of private activity generally, producing incalculable amounts of 
suffering and loss.'' Id.
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    The Commission's regulations, found in title 17 of the Code of 
Federal Regulations, place a number of filing obligations on registered 
entities, intermediaries, market participants and the public within 
specified time frames, establish Commission authority to stay certain 
actions by designated and registered entities, and also include 
provisions relating to requests for Commission approval and issuance of 
exemption and interpretative relief and guidance with specific time 
frames for Commission action. The Commission has reviewed its statute 
and regulations in light of its obligation to protect the safety of 
human life or the protection of property to determine which Commission 
operations will continue during a lapse in appropriations.

A. Tolling and Extension of Certain Procedural Time Limits Applicable 
to the Commission

    In the event of a lapse in appropriations, the Commission will not 
be processing or reviewing filings for Commission discretionary or 
mandatory approval or any other actions that are not directly related 
to the safety of human life or the protection of property. Matters not 
directly related to the protection of property include rule, rule 
amendment, and contract certifications filed with the Commission, rule 
amendments and contracts voluntarily submitted for Commission approval 
or review; requests for contract market designation, swap execution 
facility, swap data repository, derivatives clearing organization, and 
foreign board of trade registration; and other requests for Commission 
approval or other action.
    The above-mentioned matters do not include any emergency 
notifications that may be required by Commission regulations of 
designated or registered entities and intermediaries, or that are 
required by any rule of a registered entity that has been approved by 
or self-certified to the Commission. This includes emergency rules 
certified pursuant to regulation 40.6(a)(6) and (7) and emergency 
changes certified by a systemically important derivatives clearing 
organization pursuant to regulation 40.10(h).
    More specifically, matters not directly related to the protection 
of property include filings under judicially reinstated regulations 
1.47 and 1.48 (bona fide hedge requests), part 30 (regulation 30.10 
petitions for exemption and regulation 30.13 requests for 
certification), part 37 (swap execution facilities applications, 
demonstrations of compliance with core principles), part 38 (designated 
contract market applications, certifications of continued compliance in 
situations of merger or sale, and demonstrations of compliance with the 
core principles), part 39 (derivatives clearing organization 
applications, Commission review of swaps for determinations on clearing 
requirement, requests for orders regarding competition, and 
demonstrations of compliance with the core principles), part 40 (rule 
and contract filings-certifications and approvals and requests for 
confidential treatment of submissions, stays of certifications pursuant 
to regulation 40.12, determinations related to making swaps available 
to trade), part 41 (filing of notice-designated contract markets 
trading security futures products), part 48 (foreign board of trade 
registrations, adjudication of additional contracts for trading), and 
part 49 (swap data repository applications, registration of successor 
entities).
    Matters not directly related to the protection of property 
additionally include requests pursuant to regulations 145.7 and 145.9 
(requests for Commission records, petitions for confidential treatment 
of information submitted to the Commission, and appeals of FOIA 
decisions), regulation 140.99 filings (requests for exemptive, no-
action and interpretive letters), and part 165 (processing of 
whistleblower applications and appeals, and payments related to 
whistleblower awards).
    For the foregoing matters that are currently pending before the 
Commission pursuant to any of these provisions, all applicable time 
deadlines for Commission action will be tolled until the Commission is 
able to resume full operations. For such matters, the time remaining 
for Commission action will begin to run on the first business day 
following the resumption of Commission operations. For the foregoing 
matters arising during a lapse in appropriations, any time limit for 
Commission action shall begin to run on

[[Page 60262]]

the first business day following the resumption of Commission 
operations.
    Matters not directly related to the protection of property also 
include certain procedural regulations associated with Commission 
adjudicatory actions, in particular certain rules under part 3 
(procedure to deny, condition, or suspend, revoke, or place 
restrictions on registration), part 9 (related to review of exchange 
disciplinary, access denial or other adverse actions), part 10 (the 
Commission's rules of practice for adjudicatory proceedings before the 
Commission), part 12 (rules related to reparations proceedings), and 
part 171 (review of National Futures Association decisions). For these 
matters that are currently pending before the Commission pursuant to 
any of these provisions, or that arise during a lapse in 
appropriations, all applicable time deadlines for Commission action 
will be tolled until the Commission is able to resume full operations. 
Moreover, all applicable filing deadlines for parties to an 
adjudicative proceeding that arise during a lapse in appropriations 
will be extended until one business day after the Commission resumes 
its operations.

B. Continued Processing, Review, and Action Related to Certain Agency 
Regulations

    The Commission's regulations also impose filing obligations on 
registered entities, intermediaries, market participants and the 
public. The Commission has determined that certain filing requirements 
relate to the Commission's obligation to protect the safety of human 
life or property even during a lapse of appropriations. Accordingly, 
such filings will continue to review, process, and take any necessary 
or appropriation action taken, during a lapse in appropriations for the 
purpose of protecting the safety of human life or the property in 
accordance with the Commodity Exchange Act (CEA) and its implementing 
regulations..
    This category includes regulation 1.10 and 5.12 filings (financial 
reports of futures commission merchants (FCMs), introducing brokers 
(IBs), and retail foreign exchange dealers), regulation 1.12 and 5.6 
filings (notice provisions required of FCMs, IBs, and RFEDs), 
regulation 1.15 filings (risk assessment reporting requirements), 
regulation 1.16 filings (reports of accountants), regulation 1.17 
filings (capital requirements (business days would include those days 
the Commission is shut down for purposes of requirements relating to 
margin calls and the computation of margin) and any notice provision 
requirements),\4\ regulation 1.18 filings (current books and records), 
regulation 1.65 and 5.23 filings (notice of bulk transfers (a business 
day would include those days the Commission is shutdown)), regulation 
39.19 (derivatives clearing organization reporting requirements), 
regulation 40.6(a)(6) and (7) (emergency rule certifications), and 
regulation 40.10(h) (emergency changes certified by systemically 
important derivatives clearing organizations).
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    \4\ Generally, the Commission's regulations define business day 
to exclude only Saturday, Sunday, and federal holidays. Thus, a 
shutdown would not affect the timely processing, review, and action 
that may be necessary and appropriate related to the operation of 
these rules.
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    This category also includes part 15 filings (general reporting 
requirements), part 16 filings (clearing member reports), part 17 
filings (FCM reports), part 18 filings (reports by traders), part 19 
filings (bona fide hedge position reports), part 20 filings (large 
trader reporting for physical commodity swaps), part 21 filings 
(special call provisions), part 190 filings (bankruptcy rules), and 
regulation 40.6 filings (emergency rules of a registered entity). In 
addition, the Commission shall process, review, and take any necessary 
or appropriate action related to, chief compliance officer, swap 
valuation dispute, and risk exposure reports, pursuant to regulations 
3.3(e), 23.502(c), and 23.600(c), respectively, from swap dealers, 
major swap participants, and futures commission merchants, as 
applicable.\5\ Swap execution facilities, designated contract markets, 
derivatives clearing organizations, and swap data repositories 
financial resources reports required by regulations 37.1306, 38.1101, 
39.11, and 49.25, respectively, also will continue to be processed, 
reviewed, and subject to necessary and appropriate action.
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    \5\ Futures commission merchants are not required to submit swap 
valuation dispute or risk exposure reports to the Commission under 
regulations 23.502(c) and 23.600(c), respectively.
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    The Commission's regulations require and industry practice provides 
for notification to the Commission and its staff of certain emergency 
situations. Thus, the Commission will continue to process, review, and 
take any necessary or appropriate action related to notifications by 
registered entities and intermediaries of emergency situations such as 
system malfunctions, cyber security incidents or financial emergencies 
throughout a lapse in appropriations.

C. Extension of Open Comment Periods on Proposed Regulation and Other 
Matters That May Be Subject to a Request for Comment by the Commission.

    Finally, the Commission has proposed a number of rules to implement 
the CEA and certain provisions of the Wall Street Reform and Consumer 
Protection Act for which the comment period may expire while the 
Commission is shutdown. The Commission will be unable to process 
comment submissions until it resumes full operations, as such 
processing is unrelated to the protection of property. Therefore, the 
Commission is extending the comment periods for such rules, and for any 
other matters that may be subject to a request for comment by the 
Commission, until one business day after the Commission is able to 
resume full operations. Notice of the resumption of Commission 
operations at the conclusion of a shutdown will be provided on the 
Commission's Web site.

II. Administrative Compliance

A. Administrative Procedure Act

    To the extent that some of the provisions of this order may be 
subject to notice and comment under the Administrative Procedure Act 
(APA),\6\ and may be subject to the provisions of the APA that require 
publication or service of a substantive rule be made not less than 30 
days before its effective date,\7\ the Commission for good cause finds 
that notice and comment and a delayed effective date are impracticable 
and contrary to the public interest. The Commission may be obligated to 
commence orderly shutdown of its operations at the commencement of 
business on October 1 and has determined that it is in the interest of 
the public and the markets it regulates to have established and 
publicized its procedures for limiting its operations to only those 
that are essential to the protection of property before that time.
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    \6\ See 5 U.S.C. 553(b).
    \7\ See 5 U.S.C. 553(d).
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    Moreover, though the tolling of certain procedural time limits will 
delay the Commission's review and approval of certain industry filings, 
the review and approval provisions in the Commission's regulations 
implement review and approval provisions of the CEA in order to protect 
the public interest. It would be contrary to the CEA, and to the public 
interest, if these review and approval time limits continued to run 
while the Commission is unable to conduct routine business.

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    Finally, in order to protect the property interests of the public 
related to the orderly operation of the futures markets, the 
Commissioners will be supported by essential personnel in the 
surveillance of the markets in order to identify any emergency market 
situations that may require action to protect the safety of human life 
or property during a lapse in appropriations. It therefore is essential 
that reporting regulations associated with market surveillance and 
emergency notices continue to be processed and reviewed.

B. Paperwork Reduction Act

    The Paperwork Reduction Act provides that an agency may not conduct 
or sponsor, and a person is not required to respond to, a collection of 
information unless it has been approved by the Office of Management and 
Budget (OMB) and displays a currently valid control number.\8\ The 
collections of information referenced in this notice and order have 
valid control numbers that are currently in effect. Therefore, the 
Commission is not obligated to seek a control number in connection with 
this order.
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    \8\ 44 U.S.C. 3501 et seq.
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C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires the Commission to 
consider whether a rule it proposes will have a significant economic 
impact on a substantial number of small entities and either provide a 
regulatory flexibility analysis respecting the significant impact or 
certify that the rule will not have such an impact.\9\ The RFA is 
applicable only to a rule for which the Commission publishes a general 
notice of proposed rulemaking pursuant to 5 U.S.C. 553(b).\10\
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    \9\ 5 U.S.C. 601 et seq.
    \10\ 5 U.S.C. 601(2).
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    The Commission is not publishing this order as a general notice of 
proposed rulemaking. Therefore, neither a regulatory flexibility 
analysis nor a certification is required for this rulemaking action. 
Nonetheless, this order will impose no new regulatory obligations on 
any party. Rather, it simply establishes the limited regulatory 
framework under which the Commission will operate during a shutdown in 
order to ensure the protection of property.

D. Cost Benefit Analysis

    Section 15(a) of the CEA \11\ requires the Commission to consider 
the costs and benefits of its actions before promulgating a regulation 
under the CEA. Section 15(a) specifies that the costs and benefits 
shall be considered against five broad areas of market and public 
concern: (1) Protection of market participants and the public; (2) 
efficiency, competitiveness and financial integrity of futures markets; 
(3) price discovery; (4) sound risk management practices; and (5) other 
public interest considerations. The Commission may give greater weight 
to one or more of the five enumerated considerations to determine, in 
its discretion, that a particular rule is necessary or appropriate to 
protect the public interest or to effectuate any of the provisions or 
accomplish any of the purposes of the CEA.
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    \11\ 7 U.S.C. 19(a).
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    This order imposes the cost of delay on parties with petitions for 
approval, self-certification filings, rights of review, and 
adjudicative matters before the Commission. As the Commission would be 
limited by law during a lapse in appropriations to function only with 
respect to the protection of property, these costs are unavoidable.
    In terms of benefits, this order provides for the limited 
continuation of Commission business. The order also confirms the 
ongoing regulatory obligations of registered entities and 
intermediaries notwithstanding a shutdown, in order to ensure that the 
Commission has available to it all information necessary to identify 
emergency situations and take action to protect property and, hence, to 
protect market participants and the public, the efficiency and 
financial integrity of the futures markets, and price discovery.
    The order also notifies market participants and the public of the 
matters in which the Commission will be engaged, as well as of the 
tolling and extensions of time put in place with respect to filings 
under Commission regulations. Tolling ensures that the Commission will 
have an opportunity to review routine industry filings once a lapse in 
appropriations is resolved and take steps if necessary to protect the 
interests of the market and the public before those filings are 
finalized. The extensions of time ensure that all persons with filing 
obligations in certain adjudicative proceedings that arise during a 
shutdown or who wish to submit comments during a comment period that 
will close during a shutdown will not be prejudiced by the inability of 
the Commission to accept those filings or comments.

III. Order

    In light of the foregoing, the Commission has determined to issue 
the following Order, pursuant to its authority under the provisions of 
the Commodity Exchange Act, 7 U.S.C. 1 et seq., and in compliance with 
the Anti-Deficiency Act, 31 U.S.C. 1341 and 1342.
    It is hereby ordered that, in the event of a lapse in 
appropriations (also referred to as ``shutdown'') commencing at 12:01 
a.m. on October 1, 2013, the Commission will commence operating 
according to the procedures set forth in this Order, with respect to 
its regulations found in title 17 of the Code of Federal Regulations:
    1. Tolling and Extension of Certain Procedural Time Limits. The 
Commission shall not process any filings, or review any matters for 
Commission approval or action to the extent that the matters are not 
directly related to the protection of property for the duration of a 
shutdown. This applies to rule, rule amendment and contract 
certifications, except for emergency rules certified pursuant to 
regulation 40.6(a)(6) and (7), and emergency changes certified pursuant 
to regulation 40.10(h); rules, rule amendments and contracts 
voluntarily submitted for Commission approval or review; requests for 
contract market designation, and swap execution facility, swap data 
repository, derivatives clearing organization, and foreign board of 
trade registration; and other requests for Commission approval or other 
action.
    Specifically, except as otherwise provided in this order, 
applications under judicially reinstated sections 1.47 and 1.48, 
sections 30.10 and 30.13, and parts 36, 37, 38, 39, 40 41, 48, and 49 
of the Commission's regulations officially shall not be processed or 
reviewed during a lapse in appropriations, and the time limits for 
Commission action shall be tolled until the resumption of Commission 
operations at the conclusion of a shutdown. Requests and appeals 
submitted under sections 145.7 and 145.9 of the Commission's 
regulations, requests submitted under section 140.99, and filings and 
payments under part 165 additionally shall not be processed until the 
resumption of Commission operations.
    The time Commission shall process and commence review of any new 
matters under these provisions of the Commission's regulations 
beginning on the first full business day after the Commission is able 
to resume full operations at the conclusion of a shutdown. For matters 
that are pending under these provisions at the time a shutdown may 
commence, all applicable time deadlines for Commission action shall be 
tolled. The

[[Page 60264]]

time remaining for Commission action will begin to run on the first 
full business day after the Commission is able to resume full 
operations.
    This tolling and extension of time limits also shall apply to 
certain procedural regulations associated with Commission adjudicatory 
actions, in particular the time-limited procedural regulations in parts 
3, 9, 10, 12, and 171. For matters that are currently pending before 
the Commission under any of these parts, all applicable time deadlines 
for Commission action shall toll, and the time remaining for Commission 
action shall begin to run on the first full business day after the 
Commission is able to resume full operations. Moreover, all time 
deadlines for filings by a party in an adjudicative proceeding that 
arise during a shutdown shall be extended until one business day after 
the Commission resumes its full operations. When a filing in an 
adjudicatory action is delayed by a shutdown, the time to reply to any 
delayed filing shall commence on the day the delayed filing is effected 
under this order.
    2. Procedures and Time Limits Not Extended or Tolled. In order to 
fulfill its obligations to protect property during a lapse in 
appropriations, which includes market surveillance and intermediary 
oversight, the Commission shall continue to process and review filings 
required of a registered entity or intermediary under certain 
Commission regulations, and take any action necessary and appropriate 
to preserve property with respect to these filings. These filings are 
contained in sections 1.10, 1.12, 1.15, 1.16, 1.17, 1.18, 1.65, 5.6, 
5.12, 5.23, 39.19, 40.6(a)(6) and (7), and 40.10(h) of the Commission's 
regulations, and also apply to any emergency notification to the 
Commission that may be required by any rule of a registered entity that 
has been approved by or self-certified to the Commission. In addition, 
the Commission shall continue to process and review reports to the 
extent they are required by regulations 3.3(e), 23.502(c), and 
23.600(c)(2). Filings under parts 15, 16, 17, 18, 19, 21, and 190 of 
the Commission's regulations also shall continue to be processed and 
reviewed.
    Review and processing of any notice of emergency actions designated 
or registered entities are required to report related to situations 
such as system malfunctions, cyber-security incidents, and financial 
emergencies shall continue during a shutdown. The Commission 
additionally shall receive and process reports related to the financial 
resources of a swap execution facility, designated contract market, 
derivatives clearing organization, and swap data repository pursuant to 
regulations 37.1306, 38.1101, 39.11, and 49.25, respectively.
    3. Extension of Open Comment Periods on Proposed Regulation and 
Other Matters That May Be Subject to a Request for Comment by the 
Commission. Any comment period for a proposed rulemaking or other 
matter that may be subject to a request for comment by the Commission 
that terminates during a shutdown shall be extended until one business 
day after the Commission resumes full operations after a shutdown.
    4. Resumption of Commission Operations. The Commission shall 
provide notice of the resumption of its operations at the conclusion of 
a shutdown on its Web site at www.cftc.gov.

    Issued in Washington, DC, on September 27, 2013 by the 
Commission.
Melissa D. Jurgens,
Secretary of the Commission.
[FR Doc. 2013-24084 Filed 9-30-13; 8:45 am]
BILLING CODE 6351-01-P