[Federal Register Volume 81, Number 199 (Friday, October 14, 2016)]
[Rules and Regulations]
[Pages 70970-70974]
[FR Doc No: 2016-24932]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2016-0429; FRL-9952-59]

Isofetamid; Pesticide Tolerances for Emergency Exemptions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation establishes time-limited tolerances for
residues of the fungicide isofetamid, N-[1,1-dimethyl-2-[2-methyl-4-(1-
methylethoxy)phenyl]-2-oxoethyl]-3-methyl-2-thiophenecarboxamide, in or
on caneberry subgroup 13-07A and bushberry subgroup 13-07B. This action
is in response to EPA's granting of an emergency exemption, under the
Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) authorizing
use of the pesticide on caneberry subgroup 13-07A and bushberry
subgroup 13-07B. This regulation establishes maximum permissible levels
for residues of isofetamid in or on these commodities. The time-limited
tolerances expire on December 31, 2019.

DATES: This regulation is effective October 14, 2016. Objections and
requests for hearings must be received on or before December 13, 2016,
and must be filed in accordance with the instructions provided in 40
CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

ADDRESSES: The docket for this action, identified by docket
identification (ID) number EPA-HQ-OPP-2016-0429, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory
Public Docket (OPP Docket) in the Environmental Protection Agency
Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334,
1301 Constitution Ave. NW., Washington, DC 20460-0001. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>, and the telephone number for the OPP
Docket is<PHONE_NUMBER>. Please review the visitor instructions and
additional information about the docket available at http://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: Michael L. Goodis, Registration
Division (7505P), Office of Pesticide Programs, Environmental
Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-
0001; main telephone number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    You may be potentially affected by this action if you are an
agricultural producer, food manufacturer, or pesticide manufacturer.
The following list of North American Industrial Classification System
(NAICS) codes is not intended to be exhaustive, but rather provides a
guide to help readers determine whether this document applies to them.
Potentially affected entities may include:
    [emsp14]Crop production (NAICS code 111).
    [emsp14]Animal production (NAICS code 112).
    [emsp14]Food manufacturing (NAICS code 311).
    [emsp14]Pesticide manufacturing (NAICS code 32532).

B. How can I get electronic access to other related information?

    You may access a frequently updated electronic version of 40 CFR
part 180 through the Government Printing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

C. How can I file an objection or hearing request?

    Under section 408(g) of the Federal Food, Drug, and Cosmetic Act
(FFDCA), 21 U.S.C. 346a, any person may file an objection to any aspect
of this regulation and may also request a hearing on those objections.
You must file your objection or request a hearing on this regulation in
accordance with the instructions provided in 40 CFR part 178. To ensure
proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-
2016-0429 in the subject line on the first page of your submission. All
objections and requests for a hearing must be in writing, and must be
received by the Hearing Clerk on or before December 13, 2016. Addresses
for mail and hand delivery of objections and hearing requests are
provided in 40 CFR 178.25(b).
    In addition to filing an objection or hearing request with the
Hearing Clerk as described in 40 CFR part 178, please submit a copy of
the filing (excluding any Confidential Business Information (CBI)) for
inclusion in the public docket. Information not marked confidential
pursuant to 40 CFR part 2 may be disclosed publicly by EPA without
prior notice. Submit the non-CBI copy of your objection or hearing
request, identified by docket ID number EPA-HQ-OPP-2016-0429, by one of
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be CBI or other
information whose disclosure is restricted by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW., Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please follow the
instructions at http://www.epa.gov/dockets/contacts.html.

Additional instructions on commenting or visiting the docket, along
with more information about dockets generally, is available at http://www.epa.gov/dockets.

II. Background and Statutory Findings

    EPA, on its own initiative, in accordance with FFDCA sections
408(e) and 408(l)(6) of, 21 U.S.C. 346a(e) and 346a(1)(6), is
establishing time-limited tolerances for the fungicide, isofetamid, N-
[1,1-dimethyl-2-[2-methyl-4-(1-methylethoxy)phenyl]-2-oxoethyl]-3-
methyl-2-thiophenecarboxamide, in or on caneberry subgroup 13-07A at
4.0 parts per million (ppm) and bushberry subgroup 13-07B at 5.0 ppm.
These time-limited tolerances expire on December 31, 2019.
    Section 408(l)(6) of FFDCA requires EPA to establish a time-limited
tolerance or exemption from the requirement for a tolerance for
pesticide chemical residues in food that will result from the use of a
pesticide under an emergency exemption granted by EPA under FIFRA
section 18. Such tolerances can be established without providing notice
or period for public comment. EPA does not intend for its actions on
FIFRA section 18 related time-limited tolerances to set binding
precedents for the application of FFDCA section 408 and the safety
standard to other tolerances and exemptions. Section 408(e) of FFDCA
allows EPA to establish a tolerance or an exemption from the
requirement of a tolerance on its own initiative, i.e., without having
received any petition from an outside party.
    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a
tolerance (the legal limit for a pesticide chemical residue in or on a
food) only if EPA determines that the tolerance is ``safe.'' Section
408(b)(2)(A)(ii) of FFDCA

defines ``safe'' to mean that ``there is a reasonable certainty that no
harm will result from aggregate exposure to the pesticide chemical
residue, including all anticipated dietary exposures and all other
exposures for which there is reliable information.'' This includes
exposure through drinking water and in residential settings, but does
not include occupational exposure. Section 408(b)(2)(C) of FFDCA
requires EPA to give special consideration to exposure of infants and
children to the pesticide chemical residue in establishing a tolerance
and to ``ensure that there is a reasonable certainty that no harm will
result to infants and children from aggregate exposure to the pesticide
chemical residue . . . .''
    Section 18 of FIFRA authorizes EPA to exempt any Federal or State
agency from any provision of FIFRA, if EPA determines that ``emergency
conditions exist which require such exemption.'' EPA has established
regulations governing such emergency exemptions in 40 CFR part 166.

III. Emergency Exemption for Isofetamid on Caneberry Subgroup 13-07A
and Bushberry Subgroup 13-07B and FFDCA Tolerances

    The Washington State Department of Agriculture (WSDA) requested an
emergency exemption for the use of isofetamid on blackberries,
blueberries, and raspberries to control gray mold caused by Botrytis
cinerea. Botrytis cinerea has a very wide host range which causes gray
mold that becomes visible on developed fruit just prior to harvest.
According to WSDA, Botrytis cinerea developed fungicide resistance and
coupled with the unseasonably warm weather in Washington State, created
conditions favorable for gray mold outbreaks resulting in crop damage
and yield loss. After having reviewed the submission, EPA determined
that an emergency condition exists for Washington, and that the
criteria for approval of an emergency exemption are met. EPA has
authorized a specific exemption under FIFRA section 18 for the use of
isofetamid on blueberry, blackberry, and raspberry for control of gray
mold (Botrytis cinerea) in Washington.
    As part of its evaluation of the emergency exemption application,
EPA assessed the potential risks presented by residues of isofetamid in
or on caneberry subgroup 13-07A and bushberry subgroup 13-07B. In doing
so, EPA considered the safety standard in FFDCA section 408(b)(2), and
EPA decided that the necessary tolerance under FFDCA section 408(l)(6)
would be consistent with the safety standard and with FIFRA section 18.
Consistent with the need to move quickly on the emergency exemption in
order to address an urgent non-routine situation and to ensure that the
resulting food is safe and lawful, EPA is issuing this tolerance
without notice and opportunity for public comment as provided in FFDCA
section 408(l)(6). Although these time-limited tolerances expire on
December 31, 2019, under FFDCA section 408(l)(5), residues of the
pesticide not in excess of the amounts specified in the tolerance
remaining in or on caneberry subgroup 13-07A and bushberry subgroup 13-
07B after that date will not be unlawful, provided the pesticide was
applied in a manner that was lawful under FIFRA, and the residues do
not exceed a level that was authorized by these time-limited tolerances
at the time of that application. EPA will take action to revoke these
time-limited tolerances earlier if any experience with, scientific data
on, or other relevant information on this pesticide indicate that the
residues are not safe.
    Because these time-limited tolerances are being approved under
emergency conditions, EPA has not made any decisions about whether
isofetamid meets FIFRA's registration requirements for use on caneberry
subgroup 13-07A and bushberry subgroup 13-07B or whether permanent
tolerances for this use would be appropriate. Under these
circumstances, EPA does not believe that this time-limited tolerance
decision serves as a basis for registration of isofetamid by a State
for special local needs under FIFRA section 24(c). Nor does this
tolerance by itself serve as the authority for persons in any State
other than Washington to use this pesticide on the applicable crops
under FIFRA section 18 absent the issuance of an emergency exemption
applicable within that State. For additional information regarding the
emergency exemption for isofetamid, contact the Agency's Registration
Division at the address provided under FOR FURTHER INFORMATION CONTACT.

IV. Aggregate Risk Assessment and Determination of Safety

    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a
tolerance (the legal limit for a pesticide chemical residue in or on a
food) only if EPA determines that the tolerance is ``safe.'' Section
408(b)(2)(A)(ii) of FFDCA defines ``safe'' to mean that ``there is a
reasonable certainty that no harm will result from aggregate exposure
to the pesticide chemical residue, including all anticipated dietary
exposures and all other exposures for which there is reliable
information.'' This includes exposure through drinking water and in
residential settings, but does not include occupational exposure.
Section 408(b)(2)(C) of FFDCA requires EPA to give special
consideration to exposure of infants and children to the pesticide
chemical residue in establishing a tolerance and to ``ensure that there
is a reasonable certainty that no harm will result to infants and
children from aggregate exposure to the pesticide chemical residue . .
. .''
    Consistent with the factors specified in FFDCA section
408(b)(2)(D), EPA has reviewed the available scientific data and other
relevant information in support of this action. EPA has sufficient data
to assess the hazards of and to make a determination on aggregate
exposure expected as a result of this emergency exemption request and
the time-limited tolerances for isofetamid, N-[1,1-dimethyl-2-[2-
methyl-4-(1-methylethoxy)phenyl]-2-oxoethyl]-3-methyl-2-
thiophenecarboxamide, on caneberry subgroup 13-07A at 4.0 ppm and
bushberry subgroup 13-07B at 5.0 ppm. EPA's assessment of exposures and
risks associated with establishing time-limited tolerances follows.

A. Toxicological Points of Departure/Levels of Concern

    Once a pesticide's toxicological profile is determined, EPA
identifies toxicological points of departure (POD) and levels of
concern to use in evaluating the risk posed by human exposure to the
pesticide. For hazards that have a threshold below which there is no
appreciable risk, the toxicological POD is used as the basis for
derivation of reference values for risk assessment. PODs are developed
based on a careful analysis of the doses in each toxicological study to
determine the dose at which no adverse effects are observed (the NOAEL)
and the lowest dose at which adverse effects of concern are identified
(the LOAEL). Uncertainty/safety factors are used in conjunction with
the POD to calculate a safe exposure level--generally referred to as a
population-adjusted dose (PAD) or a reference dose (RfD)--and a safe
margin of exposure (MOE). For non-threshold risks, the Agency assumes
that any amount of exposure will lead to some degree of risk. Thus, the
Agency estimates risk in terms of the probability of an occurrence of
the adverse effect expected in a lifetime. For more information on the
general principles EPA uses in risk characterization and a complete
description of the risk assessment process, see http://www2.epa.gov/
pesticide-science-and-

assessing-pesticide-risks/assessing-human-health-risk-pesticides.
    A summary of the toxicological endpoints for isofetamid used for
human risk assessment is discussed in Unit III.B of the final rule
published in the Federal Register of July 30, 2015 (80 FR 45438) (FRL-
9923-86).

B. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary
exposure to isofetamid, EPA considered exposure under the time-limited
tolerances established by this action as well as all existing
isofetamid tolerances in 40 CFR 180.681. EPA assessed dietary exposures
from isofetamid in food as follows:
    i. Acute exposure. No acute effects were identified in the
toxicological studies for isofetamid; therefore, a quantitative acute
dietary exposure assessment is unnecessary.
    ii. Chronic exposure. In conducting the chronic dietary exposure
assessment EPA used the DEEM-FCID, Version 3.16 software with 2003-2008
food consumption data from the USDA's National Health and Nutrition
Examination Survey, What We Eat in America (NHANES/WWEIA). As to
residue levels in food, EPA evaluated the combined residues of parent
isofetamid and its metabolite GPTC (N-[l,l-dimethyl-2-(4-[beta]-D-
glucopyranosyloxy-2-methylphenyl)-2-oxoethyl]-3-methyl-2-
thiophenecarboxamide). EPA's chronic dietary exposure assessment is
based on mean residue levels found in field trials for each of the
crops on which isofetamid is used, using empirical and default
processing factors as available, and assuming 100 percent crop treated
(PCT).
    iii. Cancer. Based on the data summarized in Unit IV.A., EPA has
concluded that isofetamid does not pose a cancer risk to humans.
Therefore, a dietary exposure assessment for the purpose of assessing
cancer risk is unnecessary.
    iv. Anticipated residue and percent crop treated (PCT) information.
EPA did not use crop-specific PCT information in the dietary assessment
for isofetamid. EPA assumed that for each food commodity on which
isofetamid is used, 100% of the commodity has combined residues of
parent isofetamid and GPTC equal to the mean field trial residues.
    2. Dietary exposure from drinking water. The Agency used screening
level water exposure models in the dietary exposure analysis and risk
assessment for isofetamid in drinking water. These simulation models
take into account data on the physical, chemical, and fate/transport
characteristics of isofetamid. Further information regarding EPA
drinking water models used in pesticide exposure assessment can be
found at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/about-water-exposure-models-used-pesticide.
    Based on the Pesticide Flooded Application Model (PFAM) and the
Pesticide Root Zone Model Ground Water (PRZM GW), the estimated
drinking water concentrations (EDWCs) of isofetamid for chronic
exposures for non-cancer assessments are estimated to be 110 ppb for
surface water and 43 ppb for ground water.
    Modeled estimates of drinking water concentrations were directly
entered into the dietary exposure model. For chronic dietary risk
assessment, the water concentration of value 110 parts per billion
(ppb) was used to assess the contribution to drinking water.
    3. From non-dietary exposure. The term ``residential exposure'' is
used in this document to refer to non-occupational, non-dietary
exposure (e.g., for lawn and garden pest control, indoor pest control,
termiticides, and flea and tick control on pets).
    Isofetamid is currently registered for the following uses that
could result in residential exposures: Turfgrass including golf
courses, residential lawns, and recreational turfgrass. Since there may
be residential use sites, residential handler exposure and risk
estimates were calculated for all possible residential exposure
scenarios. Given that there is no dermal toxicity concern in regard to
isofetamid, the residential handler assessment only includes the
inhalation route of exposure. Residential handler exposure is expected
to be short-term in duration as a maximum of eight applications are
allowed per year. Thus, intermediate-term exposures are not likely
because of the intermittent nature of applications by homeowners. Unit
exposure values and estimates for area treated or amount handled were
taken from the Agency's 2012 Standard Operating Procedures for
Residential Pesticide Exposure Assessment (Section 3: Lawns/Turf). The
algorithms used to estimate exposure and dose for residential handlers
can be found in the 2012 Residential SOPs (Section 3: Lawns/Turf). For
all residential exposure scenarios, isofetamid risk estimates are not
of concern. Short-term inhalation MOEs range from 850,000 to
18,000,000.
    Further information regarding EPA standard assumptions and generic
inputs for residential exposures may be found at: http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/standard-operating-procedures-residential-pesticide.
    4. Cumulative effects from substances with a common mechanism of
toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when
considering whether to establish, modify, or revoke a tolerance, the
Agency consider ``available information'' concerning the cumulative
effects of a particular pesticide's residues and'' other substances
that have a common mechanism of toxicity.''
    EPA has not found isofetamid to share a common mechanism of
toxicity with any other substances, and isofetamid does not appear to
produce a toxic metabolite produced by other substances. For the
purposes of this tolerance action, therefore, EPA has assumed that
isofetamid does not have a common mechanism of toxicity with other
substances. For information regarding EPA's efforts to determine which
chemicals have a common mechanism of toxicity and to evaluate the
cumulative effects of such chemicals, see EPA's Web site at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/cumulative-assessment-risk-pesticides.

C. Safety Factor for Infants and Children

    1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA
shall apply an additional tenfold (10X) margin of safety for infants
and children in the case of threshold effects to account for prenatal
and postnatal toxicity and the completeness of the database on toxicity
and exposure unless EPA determines based on reliable data that a
different margin of safety will be safe for infants and children. This
additional margin of safety is commonly referred to as the Food Quality
Protection Act Safety Factor (FQPA SF). In applying this provision, EPA
either retains the default value of 10X, or uses a different additional
Safety Factor (SF) when reliable data available to EPA support the
choice of a different factor.
    2. Prenatal and postnatal sensitivity. There is no evidence of
developmental toxicity or reproductive susceptibility associated with
isofetamid, and there are no residual uncertainties concerning pre- or
post-natal toxicity or exposure.
    3. Conclusion. EPA has determined that reliable data show that the
safety of infants and children would be adequately protected if the
FQPA SF were reduced to 1X for isofetamid. That decision is based on
the following findings:
    i. The toxicity database for isofetamid is complete.
    ii. There is no indication that isofetamid is a neurotoxic chemical
and

there is no need for a developmental neurotoxicity study or additional
Uncertainty Factors (UF) to account for neurotoxicity.
    iii. There is no evidence that isofetamid results in increased
susceptibility in in utero rats or rabbits in the prenatal
developmental studies or in young rats in the 2-generation reproduction
study.
    iv. There are no residual uncertainties identified in the exposure
databases. The dietary food exposure assessments were performed based
on 100 PCT and average (mean) level field trial residues. EPA made
conservative (protective) assumptions in the ground and surface water
modeling used to assess exposure to isofetamid in drinking water. EPA
used similarly conservative assumptions to assess postapplication
exposure of children as well as incidental oral exposure of toddlers.
These assessments will not underestimate the exposure and risks posed
by isofetamid.

D. Aggregate Risks and Determination of Safety

    EPA determines whether acute and chronic dietary pesticide
exposures are safe by comparing aggregate exposure estimates to the
acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA
calculates the lifetime probability of acquiring cancer given the
estimated aggregate exposure. Short-, intermediate-, and chronic-term
risks are evaluated by comparing the estimated aggregate food, water,
and residential exposure to the appropriate PODs to ensure that an
adequate MOE exists.
    1. Acute risk. An acute aggregate risk assessment takes into
account acute exposure estimates from dietary consumption of food and
drinking water. No adverse effect resulting from a single oral exposure
was identified and no acute dietary endpoint was selected. Therefore,
isofetamid is not expected to pose an acute dietary risk.
    2. Chronic risk. Using the exposure assumptions described in this
unit for chronic exposure, EPA has concluded that chronic exposure to
isofetamid from food and water will utilize <1% of the cPAD for
children 1-2 years old, the population group receiving the greatest
exposure. Based on the explanation in the unit regarding residential
use patterns, chronic residential exposure to residues of isofetamid is
not expected.
    3. Short-term risk. Short-term aggregate exposure takes into
account short-term residential exposure plus chronic exposure to food
and water (considered to be a background exposure level). Isofetamid is
currently registered for uses that could result in short-term
residential exposure, and the Agency has determined that it is
appropriate to aggregate chronic exposure through food and water with
short-term residential exposures to isofetamid.
    Using the exposure assumptions described in this unit for short-
term exposures, EPA has concluded the combined short-term food, water,
and residential isofetamid exposures result in aggregate MOEs of 24,000
and 3,900 for adults and children (1-2 years old), respectively.
Because EPA's level of concern for isofetamid is a MOE of 100 or below,
these MOEs are not of concern.
    4. Intermediate-term risk. Intermediate-term aggregate exposure
takes into account intermediate-term non-dietary, non-occupational
exposure plus chronic exposure to food and water (considered to be a
background exposure level). An intermediate-term adverse effect was
identified; however, isofetamid is not registered for any use patterns
that would result in intermediate-term residential exposure.
Intermediate-term risk is assessed based on intermediate-term
residential exposure plus chronic dietary exposure. Because there is no
intermediate-term residential exposure and chronic dietary exposure has
already been assessed under the appropriately protective cPAD (which is
at least as protective as the POD used to assess intermediate-term
risk), no further assessment of intermediate-term risk is necessary,
and EPA relies on the chronic dietary risk assessment for evaluating
intermediate-term risk for isofetamid.
    5. Aggregate cancer risk for U.S. population. Based on the lack of
evidence of carcinogenicity in two adequate rodent carcinogenicity
studies, isofetamid is not expected to pose a cancer risk to humans.
    6. Determination of safety. Based on these risk assessments, EPA
concludes that there is a reasonable certainty that no harm will result
to the general population, or to infants and children, from aggregate
exposure to isofetamid residues.

V. Other Considerations

A. Analytical Enforcement Methodology

    An adequate enforcement methodology (liquid chromatography with
tandem mass spectrometry (LC-MS/MS)) is available to enforce the
tolerance expression.
    The method may be requested from: Chief, Analytical Chemistry
Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD
20755-5350; telephone number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
B. International Residue Limits

    In making its tolerance decisions, EPA seeks to harmonize U.S.
tolerances with international standards whenever possible, consistent
with U.S. food safety standards and agricultural practices. EPA
considers the international maximum residue limits (MRLs) established
by the Codex Alimentarius Commission (Codex), as required by FFDCA
section 408(b)(4). The Codex Alimentarius is a joint United Nations
Food and Agriculture Organization/World Health Organization food
standards program, and it is recognized as an international food safety
standards-setting organization in trade agreements to which the United
States is a party. EPA may establish a tolerance that is different from
a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain
the reasons for departing from the Codex level.
    The Codex has not established any MRLs for isofetamid.

VI. Conclusion

    Therefore, time-limited tolerances are established for residues of
isofetamid, isofetamid, in or on caneberry subgroup 13-07A and
bushberry subgroup 13-07B at 4.0 and 5.0 ppm. These tolerances expire
on December 31, 2019.

VII. Statutory and Executive Order Reviews

    This action establishes tolerances under FFDCA sections 408(e) and
408(l)(6). The Office of Management and Budget (OMB) has exempted these
types of actions from review under Executive Order 12866, entitled
``Regulatory Planning and Review'' (58 FR 51735, October 4, 1993).
Because this action has been exempted from review under Executive Order
12866, this action is not subject to Executive Order 13211, entitled
``Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001) or Executive
Order 13045, entitled ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997). This
action does not contain any information collections subject to OMB
approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et
seq., nor does it require any special considerations under Executive
Order 12898, entitled ``Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income

Populations'' (59 FR 7629, February 16, 1994).
    Since tolerances and exemptions that are established in accordance
with FFDCA sections 408(e) and 408(l)(6), such as the tolerances in
this final rule, do not require the issuance of a proposed rule, the
requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et
seq.) do not apply.
    This action directly regulates growers, food processors, food
handlers, and food retailers, not States or tribes, nor does this
action alter the relationships or distribution of power and
responsibilities established by Congress in the preemption provisions
of FFDCA section 408(n)(4). As such, the Agency has determined that
this action will not have a substantial direct effect on States or
tribal governments, on the relationship between the national government
and the States or tribal governments, or on the distribution of power
and responsibilities among the various levels of government or between
the Federal Government and Indian tribes. Thus, the Agency has
determined that Executive Order 13132, entitled ``Federalism'' (64 FR
43255, August 10, 1999) and Executive Order 13175, entitled
``Consultation and Coordination with Indian Tribal Governments'' (65 FR
67249, November 9, 2000) do not apply to this action. In addition, this
action does not impose any enforceable duty or contain any unfunded
mandate as described under Title II of the Unfunded Mandates Reform Act
(UMRA) (2 U.S.C. 1501 et seq.).
    This action does not involve any technical standards that would
require Agency consideration of voluntary consensus standards pursuant
to section 12(d) of the National Technology Transfer and Advancement
Act (NTTAA) (15 U.S.C. 272 note).

VIII. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
EPA will submit a report containing this rule and other required
information to the U.S. Senate, the U.S. House of Representatives, and
the Comptroller General of the United States prior to publication of
the rule in the Federal Register. This action is not a ``major rule''
as defined by 5 U.S.C. 804(2).

List of Subjects in 40 CFR Part 180

    Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and
recordkeeping requirements.

    Dated: September 30, 2016.
Michael Goodis,
Director, Registration Division, Office of Pesticide Programs.
    Therefore, 40 CFR chapter I is amended as follows:

PART 180--[AMENDED]

0
1. The authority citation for part 180 continues to read as follows:

    Authority:  21 U.S.C. 321(q), 346a and 371.

0
2. In Sec.  180.681, revise paragraph (b) to read as follows:

Sec.  [emsp14]180.681  Isofetamid; tolerances for residues.

* * * * *
    (b) Section 18 emergency exemptions. Time-limited tolerances
specified in the following table are established for residues of the
fungicide, isofetamid (N-[1,1-dimethyl-2-[2-methyl-4-(1-
methylethoxy)phenyl]-2-oxoethyl]-3-methyl-2-thiophenecarboxamide) in or
on the specified agricultural commodities, resulting from use of the
pesticide pursuant to FIFRA section 18 emergency exemptions. The
tolerances expire on the date specified in the table.

------------------------------------------------------------------------
                                                 Parts per    Expiration
                   Commodity                      million        date
------------------------------------------------------------------------
Caneberry subgroup 13-07A.....................          4.0   12/31/2019
Bushberry subgroup 13-07B.....................          5.0   12/31/2019
------------------------------------------------------------------------

* * * * *
[FR Doc. 2016-24932 Filed 10-13-16; 8:45 am]
 BILLING CODE 6560-50-P


[Federal Register Volume 77, Number 179 (Friday, September 14, 2012)]
[Notices]
[Page 56829]
[FR Doc No: 2012-22681]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings

    Take notice that the Commission has received the following Natural
Gas Pipeline Rate and Refund Report filings:

Filings Instituting Proceedings

    Docket Numbers: RP12-967-000.
    Applicants: Natural Gas Pipeline Company of America.
    Description: OXY Negotiated Rate Amendment to be effective 9/1/
2012.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5076.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-968-000.
    Applicants: Natural Gas Pipeline Company of America.
    Description: Amendment to Twin Eagle Negotiated Rate Agreement to
be effective 9/1/2012.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5077.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-969-000.
    Applicants: Northwest Pipeline GP.
    Description: NWP Fuel Factor Filing, Effective October 1, 2012 to
be effective 10/1/2012.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5082.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-970-000.
    Applicants: Northwest Pipeline GP.
    Description: NWP 2012 Housekeeping Filing No. 1 to be effective 10/
1/2012.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5083.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-971-000.
    Applicants: Northwest Pipeline GP.
    Description: NWP ACA Collection Change Filing to be effective 10/1/
2012.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5084.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-972-000.
    Applicants: Questar Overthrust Pipeline Company.
    Description: Sec 13.1, Daily Scheduling to be effective 9/30/2012.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5085.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-973-000.
    Applicants: Ozark Gas Transmission, L.L.C.
    Description: TABS Revisions to be effective 10/1/2012.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5121.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-974-000.
    Applicants: Ozark Gas Transmission, L.L.C.
    Description: Negotiated Rate--Laclede--contract 820171 to be
effective 9/1/2012.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5123.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-975-000.
    Applicants: Texas Eastern Transmission, LP.
    Description: 2012 Operational Entitlements Filing.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5132.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-976-000.
    Applicants: East Cheyenne Gas Storage, LLC.
    Description: ECGS Updated tariff filing to be effective 10/1/2012.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5146.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-977-000.
    Applicants: Trunkline Gas Company, LLC.
    Description: Negotiated Rates Filing--3 to be effective 9/1/2012.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5153.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-978-000.
    Applicants: Alliance Pipeline L.P.
    Description: September 2012 Auction to be effective 9/1/2012..
    Filed Date: 8/30/12
    Accession Number: 20120830-5158.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Docket Numbers: RP12-979-000.
    Applicants: Trailblazer Pipeline Company LLC.
    Description: Cleanup 2012-08-30 to be effective 9/30/2012.
    Filed Date: 8/30/12.
    Accession Number: 20120830-5163.
    Comments Due: 5 p.m. e.t. 9/11/12.

    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, and service can be found at:
http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other
information, call<PHONE_NUMBER> (toll free). For TTY, call (202) 502-
8659.

    Dated: September 4, 2012.
Nathaniel J. Davis, Sr.,
Deputy Secretary
[FR Doc. 2012-22681 Filed 9-13-12; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 76, Number 234 (Tuesday, December 6, 2011)]
[Notices]
[Page 76157]
[FR Doc No: 2011-31171]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Notice of Commission Staff Attendance

    The Federal Energy Regulatory Commission hereby gives notice that
members of the Commission's staff may attend the following meetings
related to the transmission planning activities of the Midwest
Independent Transmission System Operator, Inc. (MISO):

MISO System Planning Committee of the Board of Directors, December 6,
2011, 4 p.m.-6 p.m., Local Time.
MISO Markets Committee of the Board of Directors, December 7, 2011, 8
a.m.-10 a.m., Local Time.
MISO Advisory Committee, December 7, 2011, 10 a.m.-4 p.m., Local Time.
MISO Board of Directors, December 8, 2011, 8:30 a.m.-10 a.m., Local
Time.

    The above-referenced meetings will be held at: MISO Headquarters,
720 City Center Drive, Carmel, IN 46032.
    The above-referenced meetings are open to the public.
    Further information may be found at www.misoenergy.org.
    The discussions at the meetings described above may address matters
at issue in the following proceedings:

Docket No. ER10-1791, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER11-3728, Midwest Independent Transmission System Operator,
Inc.
Docket No. EL11-56, FirstEnergy Service Company.
Docket No. OA08-53, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-480, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-33, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-188, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER11-4337, Midwest Independent Transmission System Operator,
Inc.
Docket No. EL11-53, Shetek Wind, Inc.
Docket No. ER12-334, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-56, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-342, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER12-280, Midwest Independent Transmission System Operator,
Inc.
Docket No. ER11-4081, Midwest Independent Transmission System Operator,
Inc.

    For more information, contact Christopher Miller, Office of Energy
Markets Regulation, Federal Energy Regulatory Commission at (317) 249-
5936 or<EMAIL_ADDRESS>
    Dated: November 29, 2011.
Kimberly D. Bose,
Secretary.
[FR Doc. 2011-31171 Filed 12-5-11; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register: February 20, 2008 (Volume 73, Number 34)]
[Notices]
[Page 9346]
[DOCID:fr20fe08-87]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

[USCG-2007-0171]

Great Lakes Pilotage Advisory Committee; Vacancies

AGENCY: Coast Guard, DHS.

ACTION: Request for applications.

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SUMMARY: The Coast Guard seeks applications for membership on the Great
Lakes Pilotage Advisory Committee (GLPAC). GLPAC provides advice and
makes recommendations to the Secretary on a wide range of issues
related to pilotage on the Great Lakes, including the rules and
regulations that govern the registration, operating requirements, and
training policies for all U.S. registered pilots. The Committee also
advises on matters related to ratemaking to determine the appropriate
charge for pilot services on the Great Lakes.

DATES: Application forms should reach us on or before June 16, 2008.

ADDRESSES: You may request an application form by writing to Commandant
(CG-54121), U.S. Coast Guard, 2100 Second Street, SW., Washington, DC
20593-0001; by calling<PHONE_NUMBER>; or by faxing<PHONE_NUMBER>. Send
your application in written form to the above street address. This
notice and the application form are available on the Internet at http://dms.dot.gov
.

FOR FURTHER INFORMATION CONTACT: Mr. Rajiv Khandpur, Executive Director
of GLPAC, or Mr. John Bobb, Assistant to the Executive Director,
telephone<PHONE_NUMBER>, fax<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The Great Lakes Pilotage Advisory Committee
(GLPAC) is a Federal advisory committee under 5 U.S.C. App. (Pub. L.
92-463). It advises the Secretary on a wide range of issues related to
pilotage on the Great Lakes.
    GLPAC meets at least once a year at Coast Guard Headquarters,
Washington, DC, or another location selected by the Coast Guard. It may
also meet for extraordinary purposes. Its working groups may meet to
consider specific problems as required.
    One appointment for the vacancy will be made from applicants
representing the interests of vessel operators that contract for Great
Lake pilotage services. To be eligible, applicants should have
particular expertise, knowledge, and experience regarding the
regulations and policies on the pilotage of vessels on the Great Lakes,
and at least 5 years practical experience in maritime operations. GLPAC
members serve for a term of 3 years and may be reappointed for one
additional term. All members serve at their own expense but receive
reimbursement for travel and per diem expenses from the Federal
Government.
    In support of the policy of the Coast Guard on gender and ethnic
diversity, we encourage qualified women and members of minority groups
to apply.

    Dated: February 8, 2008.
W.A. Muilenburg,
Captain, U.S. Coast Guard, Office of Waterways Management.
[FR Doc. E8-3078 Filed 2-19-08; 8:45 am]

BILLING CODE 4910-15-P


[Federal Register Volume 77, Number 242 (Monday, December 17, 2012)]
[Notices]
[Pages 74667-74668]
[FR Doc No: 2012-30275]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2012-N-1203]

Agency Information Collection Activities; Proposed Collection;
Comment Request; Information To Accompany Humanitarian Device Exemption
Applications and Annual Distribution Number Reporting Requirements

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing an
opportunity for public comment on the proposed collection of certain
information by the Agency. Under the Paperwork Reduction Act of 1995
(the PRA), Federal Agencies are required to publish notice in the
Federal Register concerning each proposed collection of information,
including each proposed revision of an existing collection of
information, and to allow 60 days for public comment in response to the
notice. This notice solicits comments on information to accompany
humanitarian device exemption (HDE) applications and the collection of
information regarding the annual distribution number (ADN).

DATES: Submit either electronic or written comments on the collection
of information by February 15, 2013.

ADDRESSES: Submit electronic comments on the collection of information
to http://www.regulations.gov. Submit written comments on the
collection of information to the Division of Dockets Management (HFA-
305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061,
Rockville, MD 20852. All comments should be identified with the docket
number found in brackets in the heading of this document.

FOR FURTHER INFORMATION CONTACT: Daniel Gittleson, Office of
Information Management, Food and Drug Administration, 1350 Piccard Dr.,
PI50-400B, Rockville, MD 20850,<PHONE_NUMBER>,
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501-3520), Federal
Agencies must obtain approval from the Office of Management and Budget
(OMB) for each collection of information they conduct or sponsor.
``Collection of information'' is defined in 44 U.S.C. 3502(3) and 5 CFR
1320.3(c) and includes Agency requests or requirements that members of
the public submit reports, keep records, or provide information to a
third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A))
requires Federal Agencies to provide a 60-day notice in the Federal
Register concerning each proposed collection of information, including
each proposed revision of an existing collection of information, before
submitting the collection to OMB for approval. To comply with this
requirement, FDA is publishing notice of the proposed collection of
information set forth in this document.
    With respect to the following collection of information, FDA
invites comments on these topics: (1) Whether the proposed collection
of information is necessary for the proper performance of FDA's
functions, including whether the information will have practical
utility; (2) the accuracy of FDA's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility, and clarity of the information to be collected; and (4) ways
to minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques, when
appropriate, and other forms of information technology.

Information To Accompany Humanitarian Device Exemption Applications and
Annual Distribution Number Reporting Requirements (formerly:
Humanitarian Device Exemption Holders, Institutional Review Boards,
Clinical Investigators and FDA Staff Humanitarian Device Exemption
Regulation: Questions and Answers)--(OMB Control Number 0910-0661)--
Revision

    Under section 520(m) (21 U.S.C. 360j(m)) of the Federal Food, Drug,
and Cosmetic Act (the FD&C Act), the FDA is authorized to exempt a
humanitarian use device (HUD) from the effectiveness requirements in
sections 514 and 515 of the FD&C Act (21 U.S.C. 360d and 360e) provided
that the device: (1) Is used to treat or diagnose a disease or
condition that affects fewer than 4,000 individuals in the United
States; (2) would not be available to a person with such a disease or
condition unless the exemption is granted, and there is no comparable
device, other than another HUD approved under this exemption, available
to treat or diagnose the disease or condition; (3) the device will not
expose patients to an unreasonable or significant risk of illness or
injury; and (4) the probable benefit to health from using the device
outweighs the risk of injury or illness from its use, taking into
account the probable risks and benefits of currently available devices
or alternative forms of treatment.
    HUDs approved under an HDE cannot be sold for an amount that
exceeds the costs of research and development, fabrication, and
distribution of the device (i.e., for profit), except in narrow
circumstances. Section 613 of the Food and Drug Administration Safety
and Innovation Act (FDASIA) (Public Law 112-144), signed into law on
July 9, 2012, amended section 520(m) of the FD&C Act. Under section
520(m)(6)(A)(i) of the FD&C Act, as amended by FDASIA, a HUD approved
under an HDE is eligible to be sold for profit if the device meets the
following criteria:
     The device is intended for the treatment or diagnosis of a
disease or condition that occurs in pediatric patients or in a
pediatric subpopulation, and such device is labeled for use in
pediatric patients or in a pediatric subpopulation in which the disease
or condition occurs; or
     The device is intended for the treatment or diagnosis of a
disease or condition that does not occur in pediatric patients or that
occurs in pediatric patients in such numbers that the development of
the device for such patients is impossible, highly impracticable, or
unsafe.
    Section 520(m)(6)(A)(ii) of the FD&C Act, as amended by FDASIA,
provides that the Secretary of Health and Human Services (the
Secretary) will assign an ADN for devices that meet the eligibility
criteria to be permitted to be sold for profit. The ADN is defined as
the number of devices ``reasonably needed to treat, diagnose, or cure a
population of 4,000 individuals in the United States,'' and therefore
shall be based on the following information in a HDE application: the
number of devices reasonably necessary to treat such individuals.

Section 520(m)(6)(A)(iii) of the FD&C Act

    (http://www.fda.gov/RegulatoryInformation/Legislation/FederalFoodDrugandCosmeticActFDCAct/FDCActChapterVDrugsandDevices/default.htm) provides that an HDE holder immediately notify the Agency
if the number of devices distributed during any calendar year exceeds
the ADN. Section 520(m)(6)(C) of the FD&C Act provides that an HDE
holder may petition to modify the ADN if additional information arises.
    On August 5, 2008, FDA issued a guidance entitled ``Guidance for
HDE Holders, Institutional Review Boards (IRBs), Clinical
Investigators, and Food and Drug Administration Staff--Humanitarian
Device Exemption (HDE) Regulation: Questions and Answers'' (http://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/ucm110203.pdf). The guidance was developed and issued
prior to the enactment of FDASIA, and certain sections of this guidance
may no longer be current as a result of FDASIA. The Center for Devices
and Radiological Health and the Center for Biologics Evaluation and
Research are currently working on a draft HDE guidance, that when
finalized, will represent the FDA's current thinking on this topic.
    FDA is requesting OMB approval for the collection of information
required under the statutory mandate of sections 515A (21 U.S.C. 360e-
1) and 520(m) of the FD&C Act as amended.
    FDA estimates the burden of this collection of information as
follows:

                                 Table 1--Estimated Annual Reporting Burden \1\
----------------------------------------------------------------------------------------------------------------
                                                     Number of
Activity/section of FD&C Act (as     Number of     responses per   Total annual   Average burden    Total hours
       amended) or FDASIA           respondents     respondent       responses     per response
----------------------------------------------------------------------------------------------------------------
Pediatric Subpopulation and                    6               1               6             100             600
 Patient Information--515A(a)(2)
 of the FD&C Act................
Exemption from Profit                          3               1               3              50             150
 Prohibition Information--
 520(m)(6)(A)(i) and (ii) of the
 FD&C Act.......................
Request for Determination of                   2               1               2              10              20
 Eligibility Criteria--613(b) of
 FDASIA.........................
ADN Notification--                             1               1               1             100             100
 520(m)(6)(A)(iii) of the FD&C
 Act............................
ADN Modification--520(m)(6)(C)                 5               1               5             100             500
 of the FD&C Act................
                                 -------------------------------------------------------------------------------
    Total.......................  ..............  ..............  ..............  ..............           1,370
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.

    FDA based these estimates on the number of original HDE
applications received in the period between October 1, 2008, and
September 30, 2011. During that time, FDA's Center for Devices and
Radiological Health received 19 original HDE applications, or about 6
per year. FDA estimates that for each year we will receive six HDE
applications and that three of these applications will be indicated for
pediatric use. The request for determination of eligibility criteria is
new under section 613(b) of FDASIA. We estimate that we will receive
approximately two such requests per year. Historically, no companies
have exceeded the ADN; and under FDASIA the ADN has expanded to a
minimum of 4,000. Therefore, FDA estimates that very few or no HDE
holders will notify the Agency that the number of devices distributed
in the year has exceeded the ADN. FDA estimates that five HDE holders
will petition to have the ADN modified due to additional information on
the number of individuals affected by the disease or condition.
    The draft guidance refers also to previously approved collections
of information found in FDA regulations. The collections of information
in 21 CFR part 803 have been approved under OMB control number 0910-
0437; the collections of information in 21 CFR part 812 have been
approved under OMB control number 0910-0078; the collections of
information in 21 CFR part 807, subpart E, have been approved under OMB
control number 0910-0120; the collections of information in 21 CFR part
814, subparts A, B, and C, have been approved under OMB control number
0910-0231; the collection of information in 21 CFR parts 50 and 56 have
been approved under OMB control number 0910-0130; the collections of
information in 21 CFR part 820 have been approved under OMB control
number 0910-0073; the collections of information in 21 CFR part 814,
subpart H, have been approved under OMB control number 0910-0332; and
the collection of information requirements in 21 CFR 10.30 have been
approved under OMB control number 0910-0183.

    Dated: December 11, 2012.
Leslie Kux,
Assistant Commissioner for Policy.
[FR Doc. 2012-30275 Filed 12-14-12; 8:45 am]
BILLING CODE 4160-01-P


[Federal Register: September 16, 2010 (Volume 75, Number 179)]
[Notices]
[Page 56641-56645]
[DOCID:fr16se10-112]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-62885; File No. SR-FINRA-2010-032]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Granting Approval of Proposed Rule Change
Relating to Clearly Erroneous Transactions

I. Introduction

September 10, 2010.

    On June 17, 2010, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''), and Rule 19b-4 thereunder, a proposed
rule change to amend its rules to set forth clearer standards and
curtail its discretion with respect to breaking erroneous trades.\1\
The proposed rule change was published for comment in the Federal
Register on June 28, 2010.\2\ The Commission received nine comment
letters on the proposal.\3\ BATS responded to the comments in a letter
dated August 16, 2010.\4\ This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ Also, on June 17, 2010, each of BATS Exchange, Inc.
(``BATS''), NASDAQ OMX BX, Inc. (``BX''), Chicago Board Options
Exchange, Incorporated (``CBOE''), Chicago Stock Exchange, Inc.
(``CHX''), EDGA Exchange, Inc. (``EDGA''), EDGX Exchange, Inc.
(``EDGX''), International Securities Exchange LLC (``ISE''), The
NASDAQ Stock Market LLC (``Nasdaq''), National Stock Exchange, Inc.
(``NSX''), New York Stock Exchange LLC (``NYSE''), NYSE Amex LLC
(``NYSE Amex''), NYSE Arca, Inc. (``NYSE Arca'') (collectively, the
``Exchanges'') filed similar proposed rule changes with respect to
breaking erroneous trades. See Securities Exchange Act Release Nos.
62330 (June 21, 2010), 75 FR 36725; 62331 (June 21, 2010), 75 FR
36746; 62332 (June 21, 2010), 75 FR 36749; 62333 (June 21, 2010), 75
FR 36759; 62334 (June 21, 2010), 75 FR 36732; 62335 (June 21, 2010),
75 FR 37494; 62336 (June 21, 2010), 75 FR 36743; 62337 (June 21,
2010), 75 FR 36739; 62338 (June 21, 2010), 75 FR 36762; 62339 (June
21, 2010), 75 FR 36765; 62340 (June 21, 2010), 75 FR 36768; and
62342 (June 21, 2010), 75 FR 36752. These proposals also were
approved today. See Securities Exchange Act Release No. 62886 (Sept.
10, 2010).
    \2\ See Securities Exchange Act Release No. 62341 (June 21,
2010), 75 FR 36756.
    \3\ See letter from Peter Ianello, Partner, CSS, LLC, to
Elizabeth Murphy, Secretary, Commission, dated July 15, 2010 (``CSS
Letter''); letter from Gary DeWaal, Senior Managing Director and
Group General Counsel, Newedge USA, LLC, to Elizabeth M. Murphy,
Secretary, Commission, dated July 19, 2010 (``Newedge Letter'');
letter from Karrie McMillan, General Counsel, Investment Company
Institute, to Elizabeth M. Murphy, Secretary, Commission, dated July
19, 2010 (``ICI Letter''); David C. Cushing, Director of Global
Equity Trading, Wellington Management Company, LLP, to Elizabeth M.
Murphy, Secretary, Commission, dated July 19, 2010 (``Wellington
Letter''); letter from John A. McCarthy, General Counsel, GETCO, to
Elizabeth Murphy, Secretary, Commission, dated July 20, 2010
(``GETCO Letter''); letter from Ira P. Shapiro, Managing Director,
BlackRock, Inc., to Elizabeth M. Murphy, Secretary, Commission,
dated July 20, 2010 (``BlackRock Letter''); and letter from Manisha
Kimmel, Executive Director, Financial Information Forum, On behalf
of the FIF Front Office Committee, to Elizabeth M. Murphy,
Secretary, Commission, dated July 21, 2010 (``FIF Letter''); letter
from Ann Vlcek, Managing Director and Associate General Counsel,
Securities Industry and Financial Markets Association, to Elizabeth
M. Murphy, Secretary, Commission, dated July 26, 2010 (``SIFMA
Letter''); and letter from Leonard J. Amoruso, General Counsel,
Knight Capital Group, Inc., to Elizabeth M. Murphy, Secretary,
Commission, dated July 27, 2010 (``Knight Letter'').
    \4\ See letter from Eric J. Swanson, SVP and General Counsel,
BATS, to Elizabeth M. Murphy, Secretary, Commission, dated August
16, 2010 (``BATS Letter'').
---------------------------------------------------------------------------

II. Background and Description of the Proposal

    On May 6, 2010, the U.S. equity markets experienced a severe
disruption.\5\ Among other things, the prices of a large number of
individual securities suddenly declined by significant amounts in a
very short time period, before suddenly reversing to prices consistent
with their pre-decline levels. This severe price volatility led to a
large number of trades being executed at temporarily depressed prices,
including many that occurred at prices dramatically away from pre-
decline levels. In response, the Exchanges and FINRA exercised their
authority under their clearly erroneous execution rules to break trades
that were effected at prices 60% or more away from pre-decline prices,
using a process that was not sufficiently clear or transparent to
market participants. There are reports that the lack of clear
guidelines for dealing with clearly erroneous transactions under
circumstances such as occurred on May 6, and the lack of transparency
surrounding the Exchanges' and FINRA's decision to break only trades at
least 60% away from the market, added to the confusion and uncertainty
faced by investors on May 6.\6\
---------------------------------------------------------------------------

    \5\ The events of May 6 are described more fully in the report
of the staffs of the Commodity Futures Trading Commission (``CFTC'')
and the Commission, titled Report of the CFTC and SEC to the Joint
Advisory Committee on Emerging Regulatory Issues, ``Preliminary
Findings Regarding the Market Events of May 6, 2010,'' dated May 18,
2010.
    \6\ See, e.g., Written Statement of Leonard J. Amoruso, Senior
Managing Director and General Counsel, Knight Capital Group, Inc.,
Submitted before the CFTC-SEC Advisory Committee on Emerging
Regulatory Issues, Panel Discussion, ``The events of May 6--views
and observations regarding liquidity, trading and the apparent
breakdown of an orderly market,'' dated June 22, 2010.
---------------------------------------------------------------------------

    The Commission is concerned that events such as those that occurred
on May 6 can undermine the integrity of the U.S. securities markets.
Accordingly, it is working on a variety of fronts to assess the causes
and contributing factors of the May 6 market disruption and to fashion
policy responses that will help prevent a recurrence. The Commission
also recognizes the importance of moving quickly to implement steps
that could help limit potential harm from extreme price volatility. On
June 10, 2010, the Commission approved rules, on a pilot basis, that
require the Exchanges to pause trading in securities included in the
S&P 500 Index if the price moves 10% or more in a five-minute
period.\7\ By establishing circuit breakers that uniformly pause
trading in these securities across all markets, the new rules are
designed to facilitate coordinated price discovery and provide time for
investors to trade at rational prices. In addition to the individual
stock trading pause rules, FINRA

worked with the Exchanges to develop proposed amendments to their
clearly erroneous execution rules to provide greater transparency and
certainty to the process of breaking trades.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release Nos. 62251; 75 FR 34183
(June 10, 2010); and 62252, 75 FR 34186 (June 16, 2010).
---------------------------------------------------------------------------

    The current clearly erroneous execution rule sets forth procedures
FINRA must use to break trades. Specifically, the current rule provides
that FINRA will break trades in Exchange-listed stocks only if the
price of the trades exceeds a specified ``Reference Price''--usually
the consolidated last sale--by an amount that equals or exceeds
specified ``Numerical Guidelines.'' The Numerical Guidelines vary
depending on the price of the stock and during the regular trading
session are 10% if the consolidated last sale is $25 or less, 5% if the
consolidated last sale is more than $25 and up to and including $50,
and 3% if the consolidated last sale is more than $50. These
percentages double during pre-open and post-close trading sessions. For
events involving five or more securities, the Numerical Guidelines
currently are 10% during pre-open, regular, and post-close trading
sessions.
    While the current rule does not give FINRA discretion to break
trades that do not exceed the Numerical Guidelines, it does permit
FINRA discretion to select a percentage threshold at which trades will
be broken that is higher than the Numerical Guidelines. As noted above,
on May 6 the Exchanges selected 60% as the threshold for breaking
trades in a process that, from the perspective of market participants,
was not clear or transparent, and led to further uncertainty and
confusion in the market. Thus, the events of May 6 highlight the need
to clarify the clearly erroneous execution review process across all
markets, and reduce the discretion of FINRA to deviate from the
objective standards in its rule when dealing with clearly erroneous
transactions.
    Under the proposed rule change, FINRA will no longer have the
discretion to deviate from the specified percentage threshold at which
trades will be broken in many situations, including those where the
single-stock circuit breakers are applicable and in other larger
``Multi-Stock Events'' involving five or more securities. Under the
proposed rule, a Multi-Stock Event is determined by looking at the
number of securities with potentially erroneous executions occurring
within a period of five minutes or less.
    When an individual stock trading pause is triggered, transactions
could occur before the trading pause is fully implemented on all of the
Exchanges and in the over-the-counter (OTC) market. In such event,
FINRA proposes to review, on its own motion, all transactions
triggering an individual stock trading pause and subsequent
transactions that may occur before the trading pause is in effect.\8\
FINRA would use the price that triggered the trading pause (the
``Trading Pause Trigger Price'') \9\ as the Reference Price and break
trades that are 10% or more away from the Reference Price for stocks
priced $25 or less, 5% or more away from the Reference Price for stocks
priced from $25 to $50, and 3% or more away from the Reference Price
for stocks priced more than $50. If the security is a leveraged
exchange-traded fund (ETF) or exchange-traded note (ETN), these
percentage thresholds would be multiplied by the leverage multiplier.
---------------------------------------------------------------------------

    \8\ Such reviews would be limited to transactions that executed
at a price lower than the Trading Pause Trigger Price in the event
of a price decline and higher than the Trading Pause Trigger Price
in the event of a price rise. Where a trading pause was triggered by
a price decline (rise), FINRA shall deem as clearly erroneous all
such transactions that occurred at a price lower (higher) than the
Trading Pause Trigger Price but only if such prices exceeded the
Trading Pause Trigger Price by an amount equal to or exceeding the
Numerical Guidelines.
    \9\ FINRA proposes to use the Trading Pause Trigger Price as the
Reference Price for such clearly erroneous execution reviews of a
transaction triggering a trading pause and the transactions that
occur immediately after such transactions but before the trading
pause is in effect. The Trading Pause Trigger Price reflects a price
calculated by the primary listing market over a rolling five-minute
period and may differ from the execution price of a transaction that
triggered a trading pause. The primary listing market that issued an
individual stock trading pause will determine and communicate to
FINRA the Trading Pause Trigger Price for such stock.
---------------------------------------------------------------------------

    For situations in which a stock is not subject to an individual
stock trading pause (e.g., because the stock is not in the circuit
breaker pilot program, or when the stock is part of the pilot program
but the circuit breaker does not apply because it is the beginning or
end of the day), the trade break rules will differ based on the number
of stocks involved. In the event of Multi-Stock Events involving 20 or
more securities, FINRA proposes to review on its own motion and break
all transactions at prices equal to or greater than 30% away from the
Reference Price in each affected security during the review period
selected. In such event, FINRA may use a Reference Price other than the
consolidated last sale. To ensure consistent application across
markets, FINRA will consult with the Exchanges to determine the
appropriate review period, which may be greater than the period (of
five minutes or less) that triggered the application of this provision,
as well as select one or more specific points in time prior to the
transactions in question and use transaction prices at or immediately
prior to the time(s) selected as the Reference Price(s).
    Similarly, in the event of Multi-Stock Events involving five or
more, but less than twenty, securities, FINRA proposes to review on its
own motion and break all transactions at prices equal to or greater
than 10% away from the Reference Price. In such event, the Reference
Price will generally be the consolidated last sale immediately prior to
the execution(s) under review. However, if there is relevant news
impacting a security, periods of extreme volatility, sustained
illiquidity, or widespread systems issues, FINRA may use a different
Reference Price, where necessary for the maintenance of a fair and
orderly market and the protection of investors, and where it is in the
public interest.
    The current rule provides that FINRA may consider ``Additional
Factors'' \10\ in determining whether to break trades. The proposed
rule change limits the circumstances during which FINRA may consider
those Additional Factors. Specifically, under the proposed rule, FINRA
would only be permitted to consider Additional Factors in the context
of clearly erroneous reviews that do not involve Multi-Stock Events
involving five or more securities or individual stock trading pauses,
as described above. In such event, FINRA would consider the Additional
Factors with a view toward maintaining a fair and orderly market and
the protection of investors and the public interest.
---------------------------------------------------------------------------

    \10\ Additional Factors that FINRA may consider include but are
not limited to: System malfunctions or disruptions, volume and
volatility for the security, derivative securities products that
correspond to greater than 100% in the direction of a tracking
index, news released for the security, whether trading in the
security was recently halted or resumed, whether the security is an
IPO, whether the security was subject to a stock split,
reorganization, or other corporate action, overall market
conditions, pre-opening and post-closing session executions,
validity of consolidated tapes trades and quotes, consideration of
primary market indications, and executions inconsistent with the
trading pattern in the stock.
---------------------------------------------------------------------------

    FINRA has proposed that this rule change be implemented as a pilot
that would end on December 10, 2010.

III. Discussion of Comment Letters and Commission Findings

    The Commission received nine comment letters on the proposed rule
changes filed by FINRA and the Exchanges. Five commenters were
generally supportive of the principles underlying the proposed rule
change, to provide greater transparency and certainty to investors,
market

participants, and the public regarding the handling of clearly
erroneous transactions.\11\ However, these commenters also believed
that the proposed rule change should go further, and offered a number
of suggestions as discussed below. Two commenters generally did not
oppose the proposed rule change, but believed it was ``overly complex
and opaque'' \12\ and does ``not adequately address the most
significant flaws in the current rules.'' \13\ One commenter believed
that trades should only be cancelled in extraordinary circumstances,
stating that the Commission and the SROs should instead consider
alternatives that would prevent the execution of erroneous trades
rather than canceling them after the fact.\14\ Another commenter
supported a ``principles-based approach'' to handling clearly erroneous
trades instead of numerical thresholds, particularly with respect to
transactions involving illiquid stocks and the dissemination of news or
a fundamental change that requires a significant reevaluation of
underlying business conditions.\15\ Additionally, BATS responded to the
comments on the similar proposal by the Exchanges.\16\ These comments
are discussed in greater detail below.
---------------------------------------------------------------------------

    \11\ See ICI Letter, at 1, FIF Letter, at 1, Newedge Letter, at
1-2, GETCO Letter, at 2, and SIFMA Letter, at 1-2 (also stating its
belief that it is ``critical for the options markets to achieve
consistency in their existing clearly erroneous execution rules
before additional rule changes are implemented * * * ''). See also
BlackRock Letter at 1 (supporting amendments to rules that
contribute to market volatility).
    \12\ See CSS Letter, at 1.
    \13\ See BlackRock Letter, at 1.
    \14\ See Wellington Letter, at 3-4. See also FIF Letter, at 1-2
(supporting trade validation and rejection mechanisms) and GETCO
Letter, at 3 (supporting protections designed to reject clearly
erroneous orders that reach market centers).
    \15\ See Knight Letter, at 3.
    \16\ See BATS Letter. The response from BATS is discussed in
this Order because FINRA's proposed clearly erroneous rule is
similar to those of the Exchanges.
---------------------------------------------------------------------------

A. Comments Recommending Other Comprehensive Approaches

    Some commenters believed that FINRA's rule relating to clearly
erroneous trades should be more definitive, and expressed the view that
the proposed rule change was not sufficiently clear in all cases when
trades would actually be cancelled.\17\ For example, one commenter
noted that FINRA ``appear[s] to be able to cancel trades for many
reasons other than significant price discrepancies--including, for
example, systems malfunctions, news released regarding a security,
whether a security was subject to a stock split or reorganization.''
\18\ This commenter believed FINRA should adopt ``no-bust'' zones for
transactions executed within specified price ranges, and cancel trades
outside of the ``no-bust'' zones absent a compelling public interest to
the contrary.\19\
---------------------------------------------------------------------------

    \17\ See Newedge Letter, at 4-5, and BlackRock Letter, at 2.
    \18\ See Newedge Letter, at 4.
    \19\ Id.
---------------------------------------------------------------------------

    Two commenters questioned whether the proposed rule change would
achieve its stated goals of making the erroneous trade execution review
process more transparent and less arbitrary.\20\ Specifically, these
commenters were concerned that the proposed rule change did not clearly
establish a reference price upon which the Numerical Guidelines would
be based.\21\ They noted that FINRA retains the flexibility in certain
circumstances to use a Reference Price other than the consolidated last
sale, as well as to determine the review period for Multi-Stock Events
involving twenty or more securities.\22\ These commenters believed that
if FINRA retained discretion in these areas, the proposed rule change
may not achieve the goal of making the trade break process more
transparent and less arbitrary,\23\ or could create mass confusion.\24\
---------------------------------------------------------------------------

    \20\ See BlackRock Letter, at 2, and CSS Letter, at 1-2.
    \21\ Id.
    \22\ Id.
    \23\ See BlackRock Letter, at 2.
    \24\ See CSS Letter, at 1-2.
---------------------------------------------------------------------------

    In response to comments made on similar proposals made by the
Exchanges, BATS acknowledged that the proposals do not ``in all
circumstances provide 100% advanced certainty with respect to whether a
particular execution will be deemed to be clearly erroneous,'' but
stated its belief that ``its proposal reflects a significant
improvement * * * over its existing rule.'' \25\ Specifically, BATS
noted that its discretion to utilize ``additional factors'' would now
be limited to instances involving less than five securities under
review and further limited to securities that are not subject to a
single stock circuit breaker.\26\ BATS believed its limited discretion
in this regard is necessary and appropriate for maintaining fair and
orderly markets.\27\
---------------------------------------------------------------------------

    \25\ See BATS Letter, at 1.
    \26\ Id. at 5.
    \27\ Id.
---------------------------------------------------------------------------

    With respect to the concern expressed by some commenters that the
proposed rule change does not clearly establish a reference price upon
which the Numerical Guidelines would be based, BATS, which proposed
similar discretionary provisions, stated that it is ``critical'' for it
to retain some limited discretion to use a different reference price
when applying the clearly erroneous thresholds because ``there are
circumstances under which last sale would be an inappropriate reference
price. * * * '' \28\ BATS noted, however, that this discretion is
limited because its ``rule is designed to generally guide BATS to look
at the last sale as the reference price'' for those securities not
subject to a circuit breaker and its proposal tries to be ``abundantly
clear and objective that if a security is subject to a single stock
circuit breaker, the reference price will be the circuit breaker
trigger price.'' \29\ BATS also noted that the determination of the
point in time from which to derive the reference price on May 6 had
``nothing to do'' with the delay in announcing which trades would be
broken on May 6; rather, the delay was attributable to the time it took
the Exchanges and FINRA to determine the appropriate percentage at
which trades would be broken.\30\
---------------------------------------------------------------------------

    \28\ Id. at 3-4.
    \29\ Id.
    \30\ Id.
---------------------------------------------------------------------------

    The Commission appreciates the suggestions and responses offered by
these commenters to make the process by which FINRA addresses clearly
erroneous executions more certain and transparent by reducing its
discretion. The Commission intends to continue working with FINRA to
further clarify, as appropriate, its process for breaking erroneous
trades that arise in contexts not covered by the proposed rule change,
as well as to continue to evaluate the operations of and potential
refinements to such processes in contexts covered by the proposed rule
change. Nevertheless, the Commission believes that the proposed rule
change represents a productive first step by FINRA in bringing greater
clarity and transparency to the process for breaking clearly erroneous
trades, and that these improvements should not be delayed pending
consideration of further changes.

B. Comments Recommending Alternative Approaches

    Four commenters were of the view that, rather than breaking
erroneous trades, FINRA should allow the trades to stand and adjust the
price in line with the market.\31\ These commenters were particularly
concerned about the risk, when trades are broken, that market
participants suddenly may find themselves exposed on one side of the

market when they thought they had a hedged position.\32\ As one
commenter stated, ``[t]his uncertainty is even more problematic during
periods of heightened volatility in the markets, when liquidity may be
reduced as some market participants limit their trading until they are
able to determine their positions, or volatility may increase further
because of speculative hedging in an attempt to protect unknown
positions.'' \33\ These commenters believed that a price adjustment
process would substantially reduce the uncertainty created by the
potential for broken trades, and thus would be a better way to address
erroneous executions.\34\
---------------------------------------------------------------------------

    \31\ See GETCO Letter, at 3, Newedge Letter, at 5, BlackRock
Letter, at 2, and Knight Letter, at 2.
    \32\ Id.
    \33\ See GETCO Letter, at 3.
    \34\ See GETCO Letter, at 3, Newedge Letter, at 5, BlackRock
Letter, at 2, and Knight Letter, at 2.
---------------------------------------------------------------------------

    Other commenters urged alternatives to clearly erroneous execution
rules. For example, one commenter believed that the proposed rule would
``provide market participants more certainty as to whether or not their
trades will stand in the event of market volatility,'' but urged the
Commission to move to a ``futures-style limit up/down functionality''
as a better alternative to the circuit breaker trading halt
approach.\35\ This commenter argued that the limit up/limit down
approach ``would virtually eliminate clearly erroneous trades.'' \36\
Another commenter also believed that the Commission should consider a
``limit up/limit down approach or hybrid approach.'' \37\ Other
commenters suggested alternative procedures, systems or rules to
prevent erroneous trades from occurring, such as by rejecting orders
that are materially away from the market.\38\
---------------------------------------------------------------------------

    \35\ See GETCO Letter, at 2-3.
    \36\ See GETCO Letter, at 3.
    \37\ See SIFMA Letter, at 2.
    \38\ See FIF Letter, at 2, Wellington Letter, at 2-4, and SIFMA
Letter, at 2. See also CSS Letter, at 2 (suggesting that circuit
breakers for individual stocks based off of a percentage change from
the previous day's closing price (or the opening price to allow for
the dissemination of overnight news) would eliminate the need for
erroneous trade rules).
---------------------------------------------------------------------------

    The Commission appreciates the suggestions offered by these
commenters to make more fundamental changes to the way in which FINRA
addresses clearly erroneous executions. In the coming months, the
Commission expects to continue to work with the markets and market
participants on ways to reduce the occurrence of erroneous trades and
improve the method by which they are resolved, as well as on
enhancements to the mechanisms for addressing excessive market
volatility, such as those that currently are reflected in the single-
stock circuit breaker pilot. As noted above, however, the Commission
believes that the proposed rule change represents a productive first
step by FINRA in bringing greater clarity and transparency to the
process for breaking clearly erroneous trades, and that these
improvements should not be delayed pending consideration of more far-
reaching initiatives.

C. Other Comments

    One commenter was concerned that the proposed rule change was not
clear as to how news or information regarding the review and
cancellation of clearly erroneous trades would be disseminated to the
markets.\39\ This commenter believed that the proposed rule should
require FINRA to disseminate this information quickly and in a non-
discriminatory fashion to market participants in order to minimize the
market impact and not favor any one group of market participants over
another.\40\ In its response letter with respect to its proposal, BATS
stated that it e-mails members with respect to clearly erroneous
reviews and determinations according to a consistent and well
established protocol that, according to BATS, strikes an appropriate
balance between notifying members of significant market events and
avoiding notifications every time a transaction is reviewed as
potentially clearly erroneous.\41\ In addition, BATS believes that the
existing requirement that an SRO promptly notify affected members of
clearly erroneous reviews and determinations is sufficient.\42\ BATS
also stated that communication between the exchanges and members should
remain flexible as such methods are constantly changing.\43\ BATS
indicated that it is not aware of discrimination amongst participants
with respect to the dissemination of information in relation to clearly
erroneous reviews and believes that the ``anti-discrimination
requirements of the Act would sufficiently restrain''
discrimination.\44\
---------------------------------------------------------------------------

    \39\ See Newedge Letter, at 6.
    \40\ Id.
    \41\ See BATS Letter, at 2.
    \42\ Id.
    \43\ Id.
    \44\ Id.
---------------------------------------------------------------------------

    Another commenter believed that the Commission should require FINRA
to clarify the application of the clearly erroneous execution rule when
an event causes the price to cross to a different specified percentage
threshold for breaking trades. Specifically, the commenter asked, ``if
a market decline triggers the CEE rules intra-day with respect to a
stock that was priced at $25.01, so the CEE price is below $25, the
proposed amendments do not explain at what price trading would be
calculated for the next application of the CEE rules. Would it be at 5
percent for stocks between $25 and $50 or 10 percent for stocks priced
less than $25?'' \45\ That commenter also expressed concern that the
proposed rule change might provide an opportunity for market
participants to manipulate events involving multiple stocks that are
not subject to the single-stock circuit breakers. This might occur, for
example, when an event subject to a 10% threshold (e.g., involving 20
securities) could be forced into the 30% threshold category (e.g., by
manipulating the 21st security and causing an erroneous trade), by a
market participant seeking the flexibility to trade at wider spreads
with respect to all impacted securities.\46\
---------------------------------------------------------------------------

    \45\ See ICI Letter, at 3.
    \46\ Id.
---------------------------------------------------------------------------

    Another commenter noted that, when an individual stock trading
pause is triggered, trades will be broken at specified percentages away
from the Trading Pause Trigger Price.\47\ According to this commenter,
this calculation ``has the practical effect of doubling the clearly
erroneous price window for most U.S. equity securities and is a
significant expansion of the window for certain securities.'' \48\ This
commenter suggested using more conservative parameters such as the
greater of 2% or $0.05 from the Trading Pause Trigger Price or,
alternatively, using the Trading Pause Trigger Price, in addition to a
comparison to the last sale, as part of an analysis for clearly
erroneous trades.'' \49\ This commenter also favored providing FINRA
discretion to break trades after the deadlines specified in its rule in
extraordinary circumstances.\50\
---------------------------------------------------------------------------

    \47\ See SIFMA Letter, at 2-3.
    \48\ Id.
    \49\ Id.
    \50\ Id.
---------------------------------------------------------------------------

    With respect to the dissemination of information regarding the
review and resolution of clearly erroneous trades, the Commission
understands that the practice of FINRA is to promptly notify
participants that specified trades are under review and, once that
review is complete, to describe the resolution thereof. Although the
Commission believes prompt communication by e-mail, phone, website or
otherwise concerning erroneous trade reviews should generally assure
dissemination in a non-discriminatory fashion, as noted above, it
intends to continue to work with FINRA on additional ways to

improve the transparency of this process.
    With respect to an event that causes the price to cross to a
different specified percentage threshold for breaking trades, the
Commission believes that the proposal is sufficiently clear regarding
the applicability of the new rule. As to the specific example provided
by the commenter, under the proposed rule, if a stock triggers a
trading pause, the Trading Pause Trigger Price would be used as the
Reference Price. The Trading Pause Trigger Price is calculated by the
listing market over a rolling five minute period. If the Trading Pause
Trigger Price is calculated at a level below $25.00, as identified in
the example, then the 10% threshold would apply to clearly erroneous
execution reviews of the Trigger Trade and other transactions that
occur immediately after a Trigger Trade but before the trading pause is
fully implemented across markets. If another series of transactions
trigger a second trading pause, the review process set forth in the
rule would be repeated and a new Reference Price would be calculated to
determine the appropriate percentage threshold.
    With respect to the potential for market participants to engage in
manipulation in order to achieve a higher trade break percentage
threshold, the Commission emphasizes that it will vigorously pursue
instances of illegal market manipulation. In addition, during the pilot
period, the Commission will work with FINRA to review the operation of
the amended rule, and make improvements as warranted, including if it
appears the selected percentage thresholds create distortions or incent
improper or illegal behavior.
    With respect to the chosen parameters, the Commission notes that
the parameters that were selected were the product of a coordinated and
deliberate effort by FINRA and the Exchanges to improve the handling of
clearly erroneous trades. Regarding the specific comment expressing
concern that breaking trades only when they are 10%, 5% or 3% away from
the Trading Pause Trigger Price has the practical effect of doubling
the trading pause parameters, the Commission notes that, as an initial
matter, implementation of the individual stock trading pause should
prevent most trades from occurring at prices outside of the Trading
Pause Trigger Price. To the extent trades occur outside of such price
before the trading pause is fully applied across all markets, the
Commission believes that it is appropriate to break these ``leakage''
trades only when they are a meaningful percentage away from the Trading
Pause Trigger Price. This is consistent with the traditional approach
of the Exchanges and FINRA to take the more extreme step of breaking a
trade only in cases where it occurs at a price sufficiently away from
the current market price that the parties should have been on notice it
may be ``clearly erroneous.'' Of course, the pilot program may indicate
that different parameters are better to accomplish the stated goals. If
so, the parameters could be changed as part of the overall initiative.
The Commission will further study and consider the examples and
suggestions offered by the commenters during the pilot period.

D. Commission Findings

    The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to FINRA. In particular, the Commission finds
that the proposed rule change is consistent with the requirements of
Section 15A(b)(6) of the Act,\51\ which, among other things, requires
that the rules of FINRA be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, 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.
---------------------------------------------------------------------------

    \51\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

    In the Commission's view, the proposed rule change will help assure
that the determination of whether a clearly erroneous trade has
occurred will be based on clear and objective criteria, and that the
resolution of the incident will occur promptly through a transparent
process. The proposed rule change also should help assure consistent
results in handling erroneous trades across the U.S. markets, thus
furthering fair and orderly markets, the protection of investors and
the public interest. Finally, the Commission notes that the proposed
rule change is being implemented on a pilot basis so that the
Commission and FINRA can monitor the effects of the pilot on the
markets and investors, and consider appropriate adjustments, as
necessary.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\52\ that the proposed rule change (SR-FINRA-2010-032), be, and
hereby is, approved.
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 78s(b)(2).

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-23075 Filed 9-15-10; 8:45 am]
BILLING CODE 8010-01-P


[Federal Register Volume 79, Number 218 (Wednesday, November 12, 2014)]
[Notices]
[Page 67210]
[FR Doc No: 2014-26818]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

Sunshine Act Meeting

    Notice is hereby given, pursuant to the provisions of the
Government in the Sunshine Act, Public Law 94-409, that the Securities
and Exchange Commission will hold a Closed Meeting on Thursday,
November 13, 2014 at 2:00 p.m.
    Commissioners, Counsel to the Commissioners, the Secretary to the
Commission, and recording secretaries will attend the Closed Meeting.
Certain staff members who have an interest in the matters also may be
present.
    The General Counsel of the Commission, or her designee, has
certified that, in her opinion, one or more of the exemptions set forth
in 5 U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) and 17 CFR
200.402(a)(3), (5), (7), 9(ii) and (10), permit consideration of the
scheduled matter at the Closed Meeting.
    Commissioner Aguilar, as duty officer, voted to consider the items
listed for the Closed Meeting in closed session.
    The subject matter of the Closed Meeting will be:

Institution and settlement of injunctive actions;
Institution settlement of administrative proceedings;
Other matters relating to enforcement proceedings.

    At times, changes in Commission priorities require alterations in
the scheduling of meeting items.
    For further information and to ascertain what, if any, matters have
been added, deleted or postponed, please contact the Office of the
Secretary at<PHONE_NUMBER>.

    Dated: November 6, 2014.
Brent J. Fields,
Secretary.
[FR Doc. 2014-26818 Filed 11-7-14; 11:15 am]
BILLING CODE 8011-01-P