Document ID: SEC-2006-0864-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca, Inc.
Posted Date: 2006-07-10T04:00Z

[Federal Register: July 10, 2006 (Volume 71, Number 131)]
[Notices]               
[Page 38957-38961]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jy06-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54079; File No. SR-PCX-2005-97]

 
Self-Regulatory Organizations; NYSE Arca, Inc., Notice of Filing 
of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Requiring 
ETP Holders To Participate in the Federal Trade Commission's National 
Do-Not-Call Registry

June 30, 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 May 18, 2006, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 
\3\ filed with the Securities and Exchange Commission (``Commission'' 
or ``SEC'') the proposed rule change as described in Items I, II and 
III below, which Items have been prepared by the self-regulatory 
organization. On May 26, 2006, NYSE Arca filed Amendment No. 1 to the 
proposed rule change.\4\ On June 21, 2006, NYSE Arca filed Amendment 
No. 2 to the proposed rule change.\5\ The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On March 6, 2006, the Pacific Exchange, Inc. filed a rule 
proposal, effective upon filing, to amend its rules to reflect these 
name changes: from Pacific Exchange, Inc. to NYSE Arca, Inc.; from 
PCX Equities, Inc. to NYSE Arca Equities, Inc.; from PCX Holdings, 
Inc., to NYSE Arca Holdings, Inc.; and from the Archipelago 
Exchange, L.L.C. to NYSE Arca, L.L.C. See File No. SR-PCX-2006-24 
(March 6, 2006). This proposal has been amended to reflect these 
name changes.
    \4\ In Amendment No. 1, NYSE Arca partially amended the text of 
proposed amended NYSE Arca Equities Rule 9.20 and made conforming 
and technical changes to the original filing.
    \5\ In Amendment No. 2, NYSE Arca made additional changes to the 
text of proposed amended NYSE Arca Equities Rule 9.20 and to the 
original filing.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange, through its wholly-owned subsidiary NYSE Arca 
Equities, Inc. (``NYSE Arca Equities'' or the ``Corporation''), 
proposes to amend NYSE Arca Equities Rule 9.20. The proposed rule 
change would require ETP Holders to participate in the Federal Trade 
Commission's (``FTC'') national do-not-call registry. The current text 
of Arca Equities Rule 9.20(b) would be deleted. The text of the 
proposed rule change is set forth below. Italics indicate new text.

NYSE Arca Equities Rules

RULE 9 CONDUCTING BUSINESS WITH THE PUBLIC

* * * * *

Telemarketing

    9.20(b) (1) General Telemarketing Requirements. No ETP Holder or 
associated person shall make any telephone solicitation, as defined in 
Section 9.20(b)(10)(B) to:
    (A) Any residence of a person before the hour of 8 a.m. or after 9 
p.m. (local time at the called party's location), unless:
    (i) The ETP Holder has an established business relationship with 
the person pursuant to Section 9.20(b)(10)(A);
    (ii) The ETP Holder has received that person's prior express 
invitation or permission; or

[[Page 38958]]

    (iii) The person called is a broker or dealer.
    (B) Any person that previously has stated that he or she does not 
wish to receive an outbound telephone call made by or on behalf of the 
ETP Holder; or
    (C) Any person who has registered his or her telephone number on 
the Federal Trade Commission's national do-not-call registry.
    (2) National Do-Not-Call Registry Exceptions. An ETP Holder will 
not be liable for violating Section 9.20(b)(1)(C) if:
    (A) The ETP Holder has an established business relationship with 
the recipient of the call. A person's request to be placed on an ETP 
Holder's firm-specific do-not-call list terminates the established 
business relationship exception to that national do-not-call registry 
provision for that ETP Holder even if the person continues to do 
business with the ETP Holder;
    (B) The ETP Holder has obtained the person's prior express 
invitation or permission. Such permission must be evidenced by a 
signed, written agreement between the person and the ETP Holder that 
states that the person agrees to be contacted by the ETP Holder and 
includes the telephone number to which the calls may be placed; or
    (C) The associated person making the call has a personal 
relationship with the recipient of the call.
    (3) Safe Harbor Provision. The ETP Holder or associated person 
making telephone solicitations will not be liable for violating Section 
9.20(b)(1)(C) if the ETP Holder or associated person demonstrates that 
the violation is the result of an error and that as part of the ETP 
Holder's routine business practice it meets the following standards:
    (A) The ETP Holder has established and implemented written 
procedures to comply with the national do-not-call rules;
    (B) The ETP Holder has trained its personnel, and any entity 
assisting in its compliance, in procedures established pursuant to the 
national do-not-call rules;
    (C) The ETP Holder has maintained and recorded a list of telephone 
numbers that it may not contact; and
    (D) The ETP Holder uses a process to prevent telephone 
solicitations to any telephone number on any list established pursuant 
to the do-not-call rules, employing a version of the national do-not-
call registry obtained from the administrator of the registry no more 
than thirty-one (31) days prior to the date any call is made, and 
maintains records documenting this process.
    (4) Procedures. Prior to engaging in telemarketing, an ETP Holder 
must institute procedures to comply with Section 9.20(b)(1). Such 
procedures must meet the minimum standards:
    (A) Written policy. The ETP Holder must have a written policy 
available upon demand for maintaining a do-not-call list.
    (B) Training of personnel engaged in telemarketing. Personnel 
engaged in any aspect of telemarketing must be informed and trained in 
the existence and use of the do-not-call list, including the policies 
and procedures of the firm regarding communication with the public.
    (C) Recording, honoring do-not-call requests. If an ETP Holder 
receives a request from a person not to receive calls from that ETP 
Holder, the ETP Holder must record the request and place the person's 
name, if provided, and telephone number on the firm's do-not-call list 
at the time the request is made. The ETP Holder must honor a person's 
do-not-call request within a reasonable time from the date such request 
is made. This period may not exceed 30 days from the date of such 
request. If such requests are being recorded or maintained by a party 
other than the ETP Holder on whose behalf the telemarketing call is 
made, the ETP Holder on whose behalf the telemarketing call is made 
will be liable for any failure to honor the do-not-call request.
    (D) Identification of sellers and telemarketers. An ETP Holder or 
person associated with an ETP Holder making a call for telemarketing 
purposes must provide the called party with the name of the individual 
caller, the name of the ETP Holder, an address or telephone number at 
which the ETP Holder may be contacted, and that the purpose of the call 
is to solicit the purchase or sale of securities or a related service. 
The telephone number provided may not be a 900 number or any other 
number for which charges exceed local or long distance transmission 
charges.
    (E) Affiliated persons or entities. In the absence of a specific 
request by the person to the contrary, a person's do-not-call request 
shall apply to the ETP Holder making the call, and will not apply to 
affiliated entities unless the consumer reasonably would expect them to 
be included given the identification of the caller and the product or 
service being advertised.
    (F) Maintenance of do-not-call lists. An ETP Holder making calls 
for telemarketing purposes must maintain a record of the caller's 
request not to receive further telemarketing calls. A firm-specific do-
not-call request must be honored for five years from the time the 
request is made.
    (5) Wireless Communications.
    (A) ETP Holders are prohibited from using an automatic telephone 
dialing system or an artificial or prerecorded voice when initiating a 
telephone call to any telephone number assigned to a paging service, 
cellular telephone service, specialized mobile radio service, or other 
radio common carrier service, or any service for which the called party 
is charged for the call.
    (B) The provisions set forth in this rule are applicable to ETP 
Holders telemarketing or making telephone solicitations calls to 
wireless telephone numbers.
    (6) Outsourcing Telemarketing. If an ETP Holder uses another entity 
to perform telemarketing services on its behalf, the ETP Holder remains 
responsible for ensuring compliance with all provisions contained in 
this rule.
    (7) Pre-Recorded Messages.
    (A) An ETP Holder may not initiate any telephone call to any 
residence using an artificial or prerecorded voice to deliver a 
message, without the prior express consent of the person called, unless 
the call:
    (i) Is not made for a commercial purpose;
    (ii) Is made for a commercial purpose, but does not include or 
introduce an unsolicited advertisement or constitute a telephone 
solicitation; or
    (iii) Is made to any person with whom the ETP Holder has an 
established business relationship at the time the call is made.
    (B) All artificial or prerecorded telephone messages shall:
    (i) At the beginning of the message, state clearly the identity of 
the ETP Holder that is responsible for initiating the call. The ETP 
Holder responsible for initiating the call must state the name under 
which the ETP Holder is registered to conduct business with the 
applicable State Corporation Commission (or comparable regulatory 
authority); and
    (ii) During or after the message, the ETP Holder must state clearly 
the telephone number (other than that of the autodialer or prerecorded 
message player that placed the call) of such ETP Holder. The telephone 
number provided may not be a 900 number or any other number for which 
charges exceed local or long distance transmission charges.
    (iii) For telemarketing messages to a residence, such telephone 
number, mentioned in Section 9.20(b)(7)(B)(ii) above, must permit any 
person to make

[[Page 38959]]

a do-not-call request during regular business hours for the duration of 
the telemarketing campaign.
    (8) Telephone Facsimile or Computer Advertisements
    No ETP Holder or associated person may use a telephone facsimile 
machine, computer or other device to send an unsolicited advertisement 
to a telephone facsimile machine, computer or other device.
    (A) For purposes of Section 9.20(b)(8) of this rule, a facsimile 
advertisement is not ``unsolicited'' if the recipient has granted the 
ETP Holder or associated person prior express invitation or permission 
to deliver the advertisement. Such express invitation or permission 
must be evidenced by a signed, written statement that includes the 
facsimile number to which any advertisements may be sent and clearly 
indicates the recipient's consent to receive such facsimile 
advertisements from the ETP Holder or associated person.
    (B) ETP Holders and associated persons must clearly mark, in a 
margin at the top or bottom of each page of the transmission, the date 
and time it is sent and an identification of the ETP Holder or 
associated person sending the message and the telephone number of the 
sending machine or of the ETP Holder or associated person sending the 
transmission.
    (9) Caller Identification Information
    (A) Any ETP Holder that engages in telemarketing, as defined in 
Section 9.20(b)(10)(B) of this rule, must transmit caller 
identification information. Such caller identification information must 
include either the Calling Party Number (``CPN'') or the calling 
party's billing number, also known as the Charge Number (``ANI''), and, 
when available from the telephone carrier, the name of the ETP Holder. 
The telephone number so provided must permit any person to make a do-
not-call request during regular business hours. Whenever possible, CPN 
is the preferred number and should be transmitted.
    (B) Any ETP Holder that engages in telemarketing, as defined in 
Section 9.20(b)(10)(B) of this rule, is prohibited from blocking the 
transmission of caller identification information.
    (C) Provision of caller identification information does not obviate 
the requirement for a caller to verbally supply identification 
information during a call.
    (10) Definitions.
    (A) For purposes of Section 9.20, an ETP Holder has an 
``established business relationship'' with a person if:
    (i) The person has made a financial transaction or has a security 
position, a money balance, or account activity with the ETP Holder or 
at a clearing firm that provides clearing services to such ETP Holder 
within the previous 18 months immediately preceding the date of the 
telemarketing call;
    (ii) The ETP Holder is the broker-dealer of record for an account 
of the person within the previous 18 months immediately preceding the 
date of the telemarketing call; or
    (iii) The person has contacted the ETP Holder to inquire about a 
product service offered by the ETP Holder within the previous three 
months immediately preceding the date of the telemarketing call, which 
relationship has not been previously terminated by either party.

A person's established business relationship with an ETP Holder does 
not extend to the ETP Holder's affiliated entities unless the person 
would reasonably expect them to be included, given the nature and type 
of products or services offered by the affiliate and the identity of 
the affiliate. Similarly, a person's established business relationship 
with an ETP Holder's affiliate does not extend to the ETP Holder unless 
the person would reasonably expect the ETP Holder to be included. A 
person's request to be placed on an ETP Holder's firm-specific do-not-
call list as set forth in Section 9.20(b)(1)(B) of this rule terminates 
an established business relationship for purposes of telemarketing and 
telephone solicitation, even if the person continues to do business 
with the ETP Holder.
    (B) The terms ``telemarketing'' and ``telephone solicitation'' mean 
the initiation of a telephone call or message for the purpose of 
encouraging the purchase or rental of, or investment in, property, 
goods, or services, which is transmitted to any person.
    (C) The term ``personal relationship'' means any family member, 
friend or acquaintance of the telemarketer making the call.
    (D) The term ``account activity'' shall include, but not be limited 
to, purchases, sales, interest credits or debits, charges or credits, 
dividend payments, transfer activity, securities receipts or 
deliveries, and/or journal entries relating to securities or funds in 
the possession or control of the ETP Holder.
    (E) The term ``broker-dealer of record'' refers to the broker-
dealer identified on a customer's account application for accounts held 
directly at a mutual fund or variable insurance product issuer.
    (F) The terms ``automatic telephone dialing system'' and 
``autodialer'' mean equipment which has the capacity to store or 
produce telephone numbers to be called using a random or sequential 
number generator and to dial such numbers.
    (G) The term ``telephone facsimile machine'' means equipment which 
has the capacity to transcribe text or images (or both) from paper, 
into an electronic signal and to transmit that signal over a regular 
telephone line, or to transcribe text or images (or both) from an 
electronic signal received over a regular telephone line onto paper.
    (H) The term ``unsolicited advertisement'' means any material 
advertising the commercial availability or quality of any products or 
services which is transmitted to any person without that person's prior 
express invitation or permission.
    Rule 9.20(c)-(d)--No Change.
* * * * *

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

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

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

1. Purpose
    The purpose of this Amendment No. 2 is to make the proposed rule 
consistent with NYSE Rule 404A by including provisions concerning 
general telemarketing requirements, procedures, wireless 
communications, outsourcing telemarketing, pre-recorded messages, 
telephone facsimile or computer advertisements and caller 
identification. This Amendment No. 2 replaces the original filing in 
its entirety. In 2003, the FTC, via its Telemarketing Sales Rule, and 
the Federal Communications Commission (``FCC''), via its Miscellaneous 
Rules Relating to Common Carriers, established requirements for sellers 
and telemarketers to participate in a national do-not-call registry.\6\ 
Since June 2003,

[[Page 38960]]

consumers have been able to enter their home telephone numbers into the 
national do-not-call registry, which is maintained by the FTC. Under 
rules of the FTC and FCC, sellers and telemarketers generally are 
prohibited from making telephone solicitations to consumers whose 
numbers are listed in the national do-not-call registry. The FCC's do-
not-call rules apply to broker-dealers while the FTC's rules do not.\7\
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    \6\ The do-not-call rules of the FCC and FTC are very similar in 
terms of substance, in part, because Congress directed the FCC to 
consult with the FTC to maximize consistency between their 
respective do-not-call rules. See The Do-Not-Call Implementation 
Act, 108 Pub. L. 10, 117 Stat. 557 (March 11, 2003).
    \7\ See 15 U.S.C. 6102(d)(2)(A), which provides that ``The Rules 
promulgated by the Federal Trade Commission under subsection (a) 
shall not apply to * * * [among other persons, brokers or dealers] 
.* * * '' The FTC's rules were not promulgated under 15 U.S.C. 6102. 
The FCC's rules are not subject to this limitation and apply to all 
sellers and telemarketers.
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    In February 2005, the SEC requested that NYSE Arca adopt the 
proposed telemarketing rules to require ETP Holders to participate in 
the do-not-call registry.\8\ Because broker-dealers are subject to the 
FCC's do-not-call rules, NYSE Arca modeled its rules in this area after 
those of the FCC and codified these do-not-call requirements in NYSE 
Arca Equities Rule 9.20(b), with minor modifications tailoring the 
rules to broker-dealer activities and the securities industry. Current 
NYSE Arca Rule 9.20(b) will be deleted and replaced in its entirety 
with proposed Rule 9.20(b) set forth in Exhibit 5.
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    \8\ The Telemarketing and Consumer Fraud and Abuse Prevention 
Act of 1994 (codified at 15 U.S.C. 6102) requires the SEC to 
promulgate telemarketing rules substantially similar to those of the 
FTC or to direct self-regulatory organizations to promulgate such 
rules unless the SEC determines that such rules are not in the 
interest of investor protection.
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Safe Harbor Provision for the National Do-Not-Call Registry 
Requirements

    The FCC and FTC each provided persons subject to their respective 
do-not-call rules a ``safe harbor'' providing that a seller or 
telemarketer is not liable for a violation of the do-not-call rules 
that is the result of an error if the seller or telemarketer's routine 
business practice meets certain standards. The Corporation has provided 
a parallel safe harbor in paragraph (3) of proposed NYSE Arca Equities 
Rule 9.20(b); the safe harbor is limited the requirements of paragraph 
(1)(C) of proposed NYSE Arca Equities Rule 9.20(b), which prohibits an 
ETP Holder or associated person from initiating any telephone 
solicitation to any person who has registered his or her phone number 
with the national do-not-call registry.
    To be eligible for this proposed NYSE Arca Equities Rule 9.20(b) 
safe harbor, an ETP Holder must demonstrate that the ETP Holder's 
routine business practice meets four standards in proposed Rule 
9.20(b). First, the ETP Holder must have established and implemented 
written procedures to comply with the national do-not-call rules. 
Second, the ETP Holder must have trained its personnel, and any entity 
assisting it in its compliance, in procedures established pursuant to 
the national do-not-call rules. Third, the ETP Holder must have 
maintained and recorded a list of telephone numbers that the ETP Holder 
may not contact. Fourth, the ETP Holder must use a process to prevent 
telephone solicitations to any telephone number on any list established 
pursuant to the do-not-call rules, employing a version of the national 
do-not-call registry obtained from the FTC no more than thirty-one (31) 
days prior to the date any call is made, and must maintain records 
documenting this process.

Other Provisions

    This Amendment No. 2 includes additional provisions concerning 
general telemarketing requirements, procedures, wireless 
communications, outsourcing telemarketing, pre-recorded messages, 
telephone facsimile or computer advertisements and caller 
identification. Proposed Section 9.20(b)(1) outlines the General 
Telemarketing Requirements specifying when ETP Holders and associated 
persons may not contact residences and certain persons. Proposed 
Section 9.20(b)(2) provides an exception for calling a person on the 
national do-not-call registry if the ETP Holder has the person's 
permission to make calls, or if the ETP Holder has an established 
business relationship with the person. Proposed Section 9.20(b)(4) sets 
forth the procedures that ETP Holders must institute to comply with the 
General Telemarketing Requirements set forth in Section 9.20(b)(1). 
Proposed Section 9.20(b)(5) sets forth when ETP Holders are prohibited 
from using wireless communications. Proposed Section 9.20(b)(6) sets 
forth the requirement that ETP Holders outsourcing telemarketing remain 
responsible for compliance with Section 9.20(b). Proposed Section 
9.20(b)(7) sets forth the requirements that ETP Holders must satisfy to 
utilize pre-recorded messages. Proposed Section 9.20(b)(8) prohibits 
ETP Holders or associated person from using a telephone facsimile 
machine, computer or other device to send unsolicited advertisements to 
a telephone facsimile machine, computer or other device. Finally, 
proposed Section 9.20(b)(9) sets forth the requirement that ETP Holders 
engaging in telemarketing must transmit caller identification 
information.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Exchange Act \9\ in general, and furthers the 
objectives of section 6(b)(5) \10\ in particular, because it is 
designed to prevent fraudulent and manipulative acts and practices, to 
promote just and equitable principles of trade, and, in general, to 
protect investors and the public interest. The Exchange believes that 
the proposed rule change will increase the protection of investors by 
enabling investors who do not want to receive telephone solicitations 
from ETP Holders to receive the benefits and protections of the 
national do-not-call registry.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act.

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

    Written comments on the proposed rule change were neither solicited 
nor received by the Exchange.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

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

[[Page 38961]]

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-PCX-2005-97 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-PCX-2005-97. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/ rules/

sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Section, Station Place, 
100 F Street, NE., Washington, DC 20549-1090. Copies of such filing 
also will be available for inspection and copying at the principal 
office of the Exchange. All comments received will be posted without 
change; the Commission does not edit personal identifying information 
from submissions. You should submit only information that you wish to 
make available publicly. All submissions should refer to File Number 
SR-PCX-2005-97 and should be submitted on or before July 31, 2006.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
Nancy M. Morris,
Secretary.
[FR Doc. E6-10685 Filed 7-7-06; 8:45 am]

BILLING CODE 8010-01-P