[Federal Register Volume 81, Number 144 (Wednesday, July 27, 2016)]
[Notices]
[Pages 49225-49228]
[FR Doc No: 2016-17801]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2016-N-0007]

Generic Drug User Fee--Abbreviated New Drug Application, Prior
Approval Supplement, Drug Master File, Final Dosage Form Facility, and
Active Pharmaceutical Ingredient Facility Fee Rates for Fiscal Year
2017

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing the rates
for abbreviated new drug applications (ANDAs), prior approval
supplements to an approved ANDA (PASs), drug master files (DMFs),
generic drug active pharmaceutical ingredient (API) facilities, and
finished dosage form (FDF) facilities user fees related to the Generic
Drug User Fee Program for fiscal year (FY) 2017. The Federal Food,
Drug, and Cosmetic Act (the FD&C Act), as amended by the Generic Drug
User Fee Amendments of 2012 (GDUFA), authorizes FDA to assess and
collect user fees for certain applications and supplements for human
generic drug products, on applications in the backlog as of October 1,
2012 (only applicable to FY 2013), on FDF and API facilities, and on
type II active pharmaceutical ingredient DMFs to be made available for
reference. This document establishes the fee rates for FY 2017.

FOR FURTHER INFORMATION CONTACT: David Haas, Office of Financial
Management, Food and Drug Administration, 8455 Colesville Rd., COLE-
14202I, Silver Spring, MD 20993-0002,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    Sections 744A and 744B of the FD&C Act (21 U.S.C. 379j-41 and 379j-
42) establish fees associated with human generic drug products. Fees
are assessed on: (1) Certain applications in the backlog as of October
1, 2012 (only applicable to FY 2013); (2) certain types of applications
and supplements for human generic drug products; (3) certain facilities
where APIs and FDFs are produced; and (4) certain DMFs associated with
human generic drug products (see section 744B(a)(1)-(4) of the FD&C
Act).
    For FY 2017, the generic drug fee rates are: ANDA ($70,480), PAS
($35,240), DMF ($51,140), domestic API facility ($44,234), foreign API
facility ($59,234), domestic FDF facility ($258,646), and foreign FDF
facility ($273,646). These fees are effective on October 1, 2016, and
will remain in effect through September 30, 2017.
    Fees for ANDA and PAS will decrease in FY 2017 compared to the FY
2016 fees due to an increase in the number of submissions estimated to
be submitted in FY 2017 compared to the estimated number of submissions
to be submitted in FY 2016. Fees for DMFs will increase in FY 2017
compared to the FY 2016 fee due to a decrease in the number of
submissions estimated to be submitted in FY 2017 compared to the
estimated number of submissions to be submitted in 2016. The fees for
all types of facilities will increase in FY 2017 compared to the FY
2016 fees in due to a decrease in the number of facilities that self-
identified for FY 2017.

II. Fee Revenue Amount for FY 2017

    The base revenue amount for FY 2017 is $299 million, as set in the
statute prior to the inflation and final year adjustments (see section
744B(c)(2) of the FD&C Act). GDUFA directs FDA to use the yearly
revenue amount as a starting point to set the fee rates for each fee
type. For more information about GDUFA, please refer to the FDA Web
site (http://www.fda.gov/gdufa). The ANDA, PAS, DMF, API facility, and
FDF facility fee calculations for FY 2017 are described in this
document.

A. Inflation Adjustment

    GDUFA specifies that the $299 million is to be adjusted for
inflation increases for FY 2017 using two separate adjustments--one for
personnel compensation and benefits (PC&B) and one for non-PC&B costs
(see section 744B(c)(1) of the FD&C Act).
    The component of the inflation adjustment for PC&B costs shall be
one

plus the average annual percent change in the cost of all PC&B paid per
full-time equivalent position (FTE) at FDA for the first three of the
four preceding fiscal years, multiplied by the proportion of PC&B costs
to total FDA costs of human generic drug activities for the first three
of the preceding four fiscal years (see section 744B(c)(1)(A)-(B) of
the FD&C Act).
    Table 1 summarizes the actual cost and total FTE for the specified
fiscal years, and provides the percent change from the previous fiscal
year and the average percent change over the first three of the four
fiscal years preceding FY 2017. The 3-year average is 1.8759 percent.

              Table 1--FDA Personnel Compensation and Benefits (PC&B) Each Year and Percent Change
----------------------------------------------------------------------------------------------------------------
             Fiscal year                     2013               2014               2015          3-Year average
----------------------------------------------------------------------------------------------------------------
Total PC&B..........................     $1,927,703,000     $2,054,937,000     $2,232,304,000  .................
Total FTE...........................             13,974             14,555             15,484  .................
PC&B per FTE........................           $137,949           $141,184           $144,168  .................
% Change from Previous Year.........            1.1690%            2.3451%            2.1136%            1.8759%
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    The statute specifies that this 1.8759 percent should be multiplied
by the proportion of PC&B expended for human generic drug activities
for the first three of the preceding four fiscal years. Table 2 shows
the amount of PC&B and the total amount obligated for human generic
drug activities from FY 2013 through FY 2015.

Table 2--PC&B as a Percent of Fee Revenues Spent on the Process of Human Generic Drug Applications Over the Last
                                                     3 Years
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             Fiscal year                     2013               2014               2015          3-Year average
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PC&B................................       $117,576,760       $171,612,147       $201,116,305  .................
Non-PC&B............................       $149,307,336       $215,469,132       $251,589,013  .................
Total Costs.........................       $266,884,096       $387,081,279       $452,705,318  .................
PC&B percent........................           44.0554%           44.3349%           44.4254%           44.2719%
Non-PC&B percent....................           55.9446%           55.6651%           55.5746%           55.7281%
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    The payroll adjustment is 1.8759 percent multiplied by 44.2719
percent (or 0.8305 percent).
    The statute specifies that the portion of the inflation adjustment
for non-PC&B costs for FY 2017 is the average annual percent change
that occurred in the Consumer Price Index (CPI) for urban consumers
(Washington-Baltimore, DC-MD-VA-WV; not seasonally adjusted; all items;
annual index) for the first three of the preceding four years of
available data multiplied by the proportion of all costs other than
PC&B costs to total costs of human generic drug activities (see section
744B(c)(1)(C) of the FD&C Act). Table 3 provides the summary data for
the percent change in the specified CPI for the Baltimore-Washington
area. The data are published by the Bureau of Labor Statistics and can
be found on their Web site at http://data.bls.gov/cgi-bin/surveymost?cu
by checking the box marked ``Washington-Baltimore All Items, November
1996=100--CUURA311SA0'' and then clicking on the ``Retrieve Data''
button.

             Table 3--Annual and 3-Year Average Percent Change in CPI for Baltimore-Washington Area
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                Year                         2013               2014               2015          3-Year average
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Annual CPI..........................            152.500            154.847            155.353  .................
Annual Percent Change...............            1.5232%            1.5390%            0.3268%            1.1297%
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    To calculate the inflation adjustment for non-pay costs, we
multiply the 3-year average percent change in the CPI (1.1297 percent)
by the proportion of all costs other than PC&B to total costs of human
generic drug activities obligated. Since 44.2719 percent was obligated
for PC&B as shown in Table 2, 55.7281 percent is the portion of costs
other than PC&B. The non-pay adjustment is 1.1297 percent times 55.7281
percent, or 0.6296 percent.
    To complete the inflation adjustment for FY 2017, we add the PC&B
component (0.8305 percent) to the non-PC&B component (0.6296 percent)
for a total inflation adjustment of 1.4601 percent (rounded) for FY
2017.
    GDUFA provides for this inflation adjustment to be compounded after
FY 2013 (see section 744B(c)(1) of the FD& C Act). This factor for FY
2017 (1.4601 percent) is compounded by adding one to it, and then
multiplying it by the compounded inflation adjustment factor for FY
2016 (1.064759), as published in the Federal Register of August 3, 2015
(80 FR 46015). The result of this multiplication of the inflation
factors for the four years since FY 2013 (1.014601 times 1.064759
percent) becomes the inflation adjustment for FY 2017. For FY 2017, the
inflation adjustment is 8.0306 percent (rounded). We then add one,
making 1.080306. Finally, we multiply the FY 2017 base revenue amount
($299 million) by 1.080306, yielding inflation-adjusted target revenue
of $323,011,000 (rounded to the nearest thousand dollars).

B. Final Year Adjustment

    For FY 2017, the Secretary may, in addition to the inflation
adjustment, further increase the fee revenues and fees established if
such an adjustment is necessary to provide for not more than 3 months
of operating reserves of carryover user fees for human generic drug
activities for the first 3 months of FY 2018. Such fees may only be
used in FY 2018. If such an adjustment is necessary, the rationale for
the amount of the increase shall be contained in the

annual notice establishing fee revenues and fees for FY 2017. If the
Secretary has carryover balances for such activities in excess of 3
months of such operating reserves, the adjustment shall not be made
(see section 744B(c)(2) of the FD&C Act).
    After running analyses on the status of GDUFA's operating reserves
and its estimated balance as of the beginning of FY 2018, FDA estimates
that the GDUFA program will have carryover balances for such activities
in excess of 3 months of such operating reserves, thus FDA will not be
performing a final year adjustment.

III. ANDA and PAS Fees

    Under GDUFA, the FY 2017 ANDA and PAS fees are owed by each
applicant that submits an ANDA or a PAS, on or after October 1, 2016.
These fees are due on the receipt date of the ANDA or PAS. Section
744B(b)(2)(B) specifies that the ANDA and PAS fees will make up 24
percent of the $323,011,000, which is $77,523,000 (rounded to the
nearest thousand dollars), and further specifies that the PAS fee is
equal to half the ANDA fee.
    In order to calculate the ANDA fee, FDA estimated the number of
full application equivalents (FAEs) that will be submitted in FY 2017.
This is done by assuming ANDAs count as one FAE and PASs (supplements)
count as one-half an FAE since the fee for a PAS is one half of the fee
for an ANDA. GDUFA also requires, however, that 75 percent of the fee
paid for an ANDA or PAS filing fee be refunded if the ANDA or PAS is
refused due to issues other than failure to pay fees (section
744B(a)(3)(D) of the FD&C Act). Therefore, an ANDA or PAS that is
considered not to have been received by the Secretary due to reasons
other than failure to pay fees counts as one-fourth of an FAE if the
applicant initially paid a full application fee, or one-eighth of an
FAE if the applicant paid the supplement fee (one half of the full
application fee amount).
    FDA utilized data from ANDAs and PASs submitted from October 1,
2013, to May 31, 2016, to estimate the number of new original ANDAs and
PASs that will incur filing fees in FY 2017. For FY 2017, the Agency
estimates that approximately 891 new original ANDAs and 439 PASs will
be submitted and incur filing fees. Not all of the new original ANDAs
and PASs will be received by the Agency, and some of those not received
will be resubmitted in the same fiscal year. Therefore, the Agency
expects that the FAE count for ANDAs and PASs will be 1,100 for FY
2017.
    The FY 2017 application fee is estimated by dividing the number of
FAEs that will pay the fee in FY 2017 (1,100) into the fee revenue
amount to be derived from application fees in FY 2017 ($77,523,000).
The result, rounded to the nearest $10, is a fee of $70,480 per ANDA.
The PAS fee is one-half that amount, or $35,240, rounded to the nearest
$10.
    The statute provides that those ANDAs that include information
about the production of active pharmaceutical ingredients other than by
reference to a DMF will pay an additional fee that is based on the
number of such active pharmaceutical ingredients and the number of
facilities proposed to produce those ingredients (see section
744B(a)(3)(F) of the FD&C Act). FDA considers that this additional fee
is unlikely to be assessed often; therefore, FDA has not included
projections concerning the amount of this fee in calculating the fees
for ANDAs and PASs.

IV. DMF Fee

    Under GDUFA, the DMF fee is owed by each person that owns a type II
active pharmaceutical ingredient DMF that is referenced, on or after
October 1, 2012, in a generic drug submission by an initial letter of
authorization. This is a one-time fee for each individual DMF. This fee
is due no later than the date on which the first generic drug
submission is submitted that references the associated DMF. Under
section 744B(a)(2)(D)(iii) of the FD&C Act, if a DMF has successfully
undergone an initial completeness assessment and the fee is paid, the
DMF will be placed on a publicly available list documenting DMFs
available for reference. Thus, some DMF holders may choose to pay the
fee prior to the date that it would otherwise be due in order to have
the DMF placed on that list.
    In order to calculate the DMF fee, FDA assessed the volume of DMF
submissions over time. The statistical forecasting methodology of power
regression analysis was selected because this model showed a very good
fit to the distribution of DMF submissions over time. Based on data
representing the total paid DMFs from October 2013 to May 2016 and
projecting a 5-year timeline (October 2013 to September 2018), FDA is
estimating 379 fee-paying DMFs for FY 2017.
    The FY 2017 DMF fee is determined by dividing the DMF target
revenue by the estimated number of fee-paying DMFs in FY 2017. Section
744B(b)(2)(A) specifies that the DMF fees will make up six percent of
the $323,011,000, which is $19,381,000 (rounded to the nearest thousand
dollars). Dividing the DMF revenue amount ($19,381,000) by the
estimated fee-paying DMFs (379), and rounding to the nearest $10,
yields a DMF fee of $51,140 for FY 2017.

V. Foreign Facility Fee Differential

    Under GDUFA, the fee for a facility located outside the United
States and its territories and possessions shall be not less than
$15,000 and not more than $30,000 higher than the amount of the fee for
a facility located in the United States and its territories and
possessions, as determined by the Secretary. The basis for this
differential is the extra cost incurred by conducting an inspection
outside the United States and its territories and possessions. For FY
2017, FDA has determined that the differential for foreign facilities
will be $15,000.

VI. FDF Facility Fee

    Under GDUFA, the annual FDF facility fee is owed by each person
that owns a facility which is identified, or intended to be identified,
in at least one generic drug submission that is pending or approved to
produce one or more finished dosage forms of a human generic drug.
These fees are due no later than the first business day on or after
October 1 of each such year. Section 744B(b)(2)(C) of the FD&C Act
specifies that the FDF facility fee revenue will make up 56 percent of
$323,011,000, which is $180,886,000 (rounded to the nearest thousand
dollars).
    In order to calculate the FDF fee, FDA used data submitted by
generic drug facilities through the self-identification process
mandated in the GDUFA statute and specified in a Notice of Requirement
published on October 2, 2012 (77 FR 60125). The total number of FDF
facilities identified through self-identification was 675. Of the total
facilities identified as FDF, there were 255 domestic facilities and
420 foreign facilities. The foreign facility fee differential is
$15,000. In order to calculate the fee for domestic facilities, we must
first subtract the fee revenue that will result from the foreign
facility fee differential. We take the foreign facility differential
($15,000) and multiply it by the number of foreign facilities (420) to
determine the total fees that will result from the foreign facility
differential. As a result of that calculation the foreign fee
differential will make up $6,300,000 of the total FDF fee revenue.
Subtracting the foreign facility differential fee revenue ($6,300,000),
from the total FDF facility target revenue ($180,886,000) results in a
remaining fee revenue balance of $174,586,000. To determine the

domestic FDF facility fee, we divide the $174,586,000 by the total
number of facilities (675) which results in a domestic FDF facility fee
of $258,646. The foreign FDF facility fee is $15,000 more than the
domestic FDF facility fee, or $273,646.

VII. API Facility Fee

    Under GDUFA, the annual API facility fee is owed by each person
that owns a facility which produces, or which is pending review to
produce, one or more active pharmaceutical ingredients identified, or
intended to be identified, in at least one generic drug submission that
is pending or approved or in a Type II active pharmaceutical ingredient
drug master file referenced in such generic drug submission. These fees
are due no later than the first business day on or after October 1 of
each such year. Section 744B(b)(2)(D) of the FD&C Act specifies that
the API facility fee will make up 14 percent of $323,011,000 in fee
revenue, which is $45,221,000 (rounded down to the nearest thousand
dollars).
    In order to calculate the API fee, FDA used data submitted by
generic drug facilities through the self-identification process
mandated in the GDUFA statute and specified in a Notice of Requirement
published on October 2, 2012. The total number of API facilities
identified through self-identification was 789. Of the total facilities
identified as API facilities, there were 101 domestic facilities and
688 foreign facilities. The foreign facility differential is $15,000.
In order to calculate the fee for domestic facilities, we must first
subtract the fee revenue that will result from the foreign facility fee
differential. We take the foreign facility differential ($15,000) and
multiply it by the number of foreign facilities (688) to determine the
total fees that will result from the foreign facility differential. As
a result of that calculation, the foreign fee differential will make up
$10,320,000 of the total API fee revenue. Subtracting the foreign
facility differential fee revenue ($10,320,000) from the total API
facility target revenue ($45,221,000) results in a remaining balance of
$34,901,000. To determine the domestic API facility fee, we divide the
$34,901,000 by the total number of facilities (789) which gives us a
domestic API facility fee of $44,234. The foreign API facility fee is
$15,000 more than the domestic API facility fee, or $59,234.

VIII. Fee Schedule for FY 2017

    The fee rates for FY 2017 are set out in Table 4.

                    Table 4--Fee Schedule for FY 2017
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                                                           Fee rates for
                      Fee category                            FY 2017
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Applications:
  Abbreviated New Drug Application (ANDA)...............         $70,480
  Prior Approval Supplement (PAS) to an ANDA............          35,240
Drug Master File (DMF)..................................          51,140
Facilities:
  Active Pharmaceutical Ingredient (API)--Domestic......          44,234
  API--Foreign..........................................          59,234
  Finished Dosage Form (FDF)--Domestic..................         258,646
  FDF--Foreign..........................................         273,646
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IX. Fee Payment Options and Procedures

    The new fee rates are effective October 1, 2016. To pay the ANDA,
PAS, DMF, API facility, and FDF facility fee, you must complete a
Generic Drug User Fee Cover Sheet, available at http://www.fda.gov/gdufa, and generate a user fee identification (ID) number. Payment must
be made in U.S. currency drawn on a U.S. bank by electronic check,
check, bank draft, U.S. postal money order, or wire transfer. The
preferred payment method is online using electronic check (Automated
Clearing House (ACH) also known as eCheck) or credit card (Discover,
VISA, MasterCard, American Express). Secure electronic payments can be
submitted using the User Fees Payment Portal at https://userfees.fda.gov/pay. Once you search for your invoice, click ``Pay
Now'' to be redirected to Pay.gov. Note that electronic payment options
are based on the balance due. Payment by credit card is available for
balances less than $25,000. If the balance exceeds this amount, only
the ACH option is available. Payments must be drawn on U.S. bank
accounts as well as U.S. credit cards.
    FDA has partnered with the U.S. Department of the Treasury to
utilize Pay.gov, a Web-based payment application, for online electronic
payment. The Pay.gov feature is available on the FDA Web site after
completing the Generic Drug User Fee Cover Sheet and generating the
user fee ID number.
    Please include the user fee ID number on your check, bank draft, or
postal money order and make payable to the order of the Food and Drug
Administration. Your payment can be mailed to: Food and Drug
Administration, P.O. Box 979108, St. Louis, MO 63197-9000. If checks
are to be sent by a courier that requests a street address, the courier
can deliver checks to: U.S. Bank, Attention: Government Lockbox 979108,
1005 Convention Plaza, St. Louis, MO 63101. (Note: This U.S. Bank
address is for courier delivery only. If you have any questions
concerning courier delivery contact the U.S. Bank at<PHONE_NUMBER>. This
telephone number is only for questions about courier delivery). Please
make sure that the FDA post office box number (P.O. Box 979108) is
written on the check, bank draft, or postal money order.
    If paying by wire transfer, please reference your unique user fee
ID number when completing your transfer. The originating financial
institution may charge a wire transfer fee. Please ask your financial
institution about the wire transfer fee and include it with your
payment to ensure that your fee is fully paid. The account information
is as follows: U.S. Department of Treasury, TREAS NYC, 33 Liberty St.,
New York, NY 10045, account number: 75060099, routing number:
021030004, SWIFT: FRNYUS33, Beneficiary: FDA, 8455 Colesville Rd., 14th
Floor, Silver Spring, MD 20993-0002. The tax identification number of
FDA is 53-0196965.

    Dated: July 22, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016-17801 Filed 7-26-16; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register Volume 78, Number 118 (Wednesday, June 19, 2013)]
[Proposed Rules]
[Pages 36738-36742]
[FR Doc No: 2013-14602]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

49 CFR Part 233

[Docket No. FRA-2012-0104, Notice No. 1]
RIN 2130-AC44

Signal System Reporting Requirements

AGENCY: Federal Railroad Administration (FRA), Department of
Transportation (DOT).

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: As part of a paperwork reduction initiative, FRA is proposing
to eliminate the regulatory requirement that each carrier must file
with FRA a signal system status report every five years. FRA believes
the report is no longer necessary because advances in technology have
made it possible for more updated information regarding railroad signal
systems to be available to FRA through alternative sources. Separately,
FRA is proposing to amend the criminal penalty provision in the Signal
System Reporting Requirements by updating an outdated statutory
citation.

DATES: Written comments must be received by August 19, 2013. Comments
received after that date will be considered to the extent possible
without incurring additional delay or expense.
    FRA anticipates being able to resolve this rulemaking without a
public, oral hearing. However, if FRA receives a specific request for a
public, oral hearing prior to July 19, 2013, one will be scheduled, and
FRA will publish a supplemental notice in the Federal Register to
inform interested parties of the date, time, and location of any such
hearing.

ADDRESSES: You may submit comments related to Docket No. FRA-2012-0104,
Notice No. 1, by any one of the following methods:
     Fax: 1-202-493-2251;
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590;
     Hand Delivery: U.S. Department of Transportation, Docket
Operations, West Building Ground Floor, Room W12-140, 1200 New Jersey
Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays; or
     Web site: Electronically through the Federal eRulemaking
Portal, http://www.regulations.gov. Follow the online instructions for
submitting comments.
    Instructions: All submissions must include the agency name, docket
name, and docket number or Regulatory Identification Number (RIN) for
this rulemaking. Note that all comments received will be posted without
change to http://www.regulations.gov, including any personal
information provided. Please see the Privacy Act heading in the
SUPPLEMENTARY INFORMATION section of this document for Privacy Act
information related to any submitted comments or materials.
    Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov at any time or to
the U.S. Department of Transportation, Docket Operations, M-30, West
Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE.,
Washington, DC, between 9 a.m. and 5

p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Sean Crain, Electronic Engineer,
Signal and Train Control Division, Office of Railroad Safety, FRA, 1200
New Jersey Avenue SE., W35-226, Washington, DC 20590 (telephone: (202)
493-6257<EMAIL_ADDRESS>or Stephen N. Gordon, Trial Attorney,
Office of Chief Counsel, FRA, 1200 New Jersey Avenue SE., W31-209,
Washington, DC 20590 (telephone:<PHONE_NUMBER>),
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Explanation of Proposed Regulatory Action

A. Elimination of the Signal System Five-[Y]ear Report

    On May 14, 2012, President Obama issued Executive Order (E.O.)
13610--Identifying and Reducing Regulatory Burdens, which seeks ``to
modernize our regulatory system and to reduce unjustified regulatory
burdens and costs.'' See 77 FR 28469. The Executive Order directs each
executive agency to conduct retrospective reviews of its regulatory
requirements to identify potentially beneficial modifications to
regulations. Executive agencies are to ``give priority, consistent with
the law, to those initiatives that will produce significant
quantifiable monetary savings or significant quantifiable reductions in
paperwork burdens while protecting public health, welfare, safety and
our environment.'' See id. at 28470.
    FRA has initiated a review of its existing regulations in
accordance with E.O. 13610 and the Paperwork Reduction Act of 1995, 44
U.S.C. 3501 et seq., with the goal of identifying regulations that can
be amended or eliminated, thereby reducing the paperwork and reporting
burden on carriers that are subject to FRA jurisdiction. One area where
FRA believes it can help reduce the railroad industry's reporting
burden is by eliminating the Signal System Five-Year reporting
requirement. See 49 CFR 233.9.
    Section 233.9 currently requires each carrier to complete and
submit an FRA Form F6180.47, Signal System Five-Year Report, in
accordance with the instructions and definitions on the form. The
information reported on FRA Form F6180.47 is intended to update FRA on
the status of a railroad's signal system. It historically has been used
to monitor changes in the types of signal systems installed and the
methods of operation used on the Nation's railroads.
    Prior to 1997, carriers were required to submit a Signal System
Annual Report by April 15 of each year. However, based on a regulatory
review, FRA extended the reporting requirement to every five years
rather than annually. See 61 FR 33871 (July 1, 1996). FRA determined
that a five-year reporting period would significantly reduce the
reporting burden on the railroads while still meeting the informational
needs of the government. Therefore, in July 1996, FRA amended Sec.
233.9 to require that ``[n]ot later than April 1, 1997 and every 5
years thereafter, each carrier shall file with FRA a signal system
status report ``Signal System Five-[Y]ear Report'' on a form to be
provided by FRA in accordance with instructions and definitions
provided on the report.''
    For the 2012 reporting period, FRA transitioned the Signal System
Five-Year Report form into an electronic format. The electronic form
required all of the same information as the paper form but could be
submitted via the Internet. The form was due to be submitted by no
later than April 1, 2012, and pertained to signal systems in service on
or after January 1, 2012. The next five-year report is not due until
April 2017. The present rulemaking would eliminate the reporting
requirement in its entirety for April 2017 and thereafter.
    FRA believes that the Signal System Five-Year Report is no longer
necessary for several reasons. The data collected in the Signal System
Five-Year Report can quickly become outdated. Railroads normally modify
signal systems far more frequently than once every five years. Indeed,
FRA has generally found that signal system modifications occur with
such frequency under 49 CFR Sec. Sec.  235.5 and 235.7, that the Signal
System Five-Year Report often is out-of-date by the time it is received
by FRA.
    Moreover, FRA has other viable means to monitor a carrier's signal
system. It is better able to monitor the status of a railroad signal
system through the use of more frequently collected agency data--such
as the Block Signal Application, see 49 CFR 235.5--which provide the
agency much more detailed and useful information. The development and
expansion of electronic reporting methods also allow railroads to more
frequently report to FRA information similar to that which is captured
in the Signal System Five-Year Report. This ability gives FRA a better
``real-time'' understanding of a carrier's signal system than the
agency can get from a report that is filed once every five years. As a
result, FRA currently relies on the more up-to-date sources for signal
system data and has little use for the information collected in the
Signal System Five-Year Report.
    Finally, the railroad industry and the general public do not appear
to derive any useful benefit or information from the Signal System
Five-Year Report. The feedback FRA has received from the industry and
the general public indicates that, as expected, the data contained in
the report was not useful in providing up-to-date information about
railroad signal systems. As a result, FRA is confident that eliminating
the report will not result in the railroad industry or the general
public being less informed about railroad signal systems.

B. Updating U.S. Code Citations in Part 233

    Administrative amendments are sometimes necessary to address
citations that have become outdated due to the actions of Congress.
This is particularly true when the basis for a legal requirement is
moved to a different title, chapter, or section of the U.S. Code.
Federal regulations do not ``auto-correct'' for these types of changes.
Therefore, it is incumbent on agencies to monitor their regulations and
make appropriate changes whenever feasible. FRA has identified a
citation in 49 CFR 233.13(b)--referencing 49 U.S.C. 438(e)--that should
be amended for this reason, and proposes to make that amendment in this
rulemaking.
    The subject statutory provision arises out of the former Federal
Railroad Safety Act of 1970 (FRSA), which was enacted on October 16,
1970. See Public Law 91-458. Section 209 of the FRSA, as originally
enacted, contained a civil penalty provision that was codified at 45
U.S.C. 438. While the statute did not contain a criminal penalty
provision when it was first enacted, Congress eventually determined
that there may be situations where criminal penalties are warranted for
violations of the law. Accordingly, the FRSA was amended on October 10,
1980. See Public Law 96-423. Among other things, the 1980 amendment
added paragraph (e) to section 209, establishing that criminal
penalties may be assessed against any person who knowingly and
willfully makes a false entry in a required record or report; destroys,
mutilates, changes, or otherwise falsifies a required record or report;
fails to enter specified facts or transactions in a required record or
report; makes, prepares, or preserves a record or report in violation
of an applicable regulation or order; or files a false record or report
with the Secretary of Transportation. This revision to the FRSA was
codified at 45 U.S.C. 438(e).
    In 1984, FRA amended its Signal and Train Control Regulations,
including 49 CFR Part 233. See 49 FR 3374 (Jan. 26, 1984). Section
233.13(b) was amended

at this time to read ``[w]hoever knowingly and willfully--[f]iles a
false report or other document required to be filed by this part is
subject to a $5,000 fine and 2 years imprisonment as prescribed by 49
U.S.C. 522(a) and section 209(e) of the Federal Railroad Safety Act of
1970, as amended (45 U.S.C. 438(e)).'' This language reflected the
added statutory authority that Congress provided in its 1980 amendment
to the FRSA.
    Congress, however, was not done making changes that applied to
section 209(e) of the FRSA. In 1994, Congress enacted a law to
``revise, codify, and enact without substantive change certain general
and permanent laws, related to transportation'' under title 49 of the
U.S. Code. See Public Law 101-272. As a result, most Federal railroad
safety laws were moved from title 45 to title 49. This included the
criminal penalty provision of the FRSA, which was repealed at 45 U.S.C.
438(e) and recodified at 49 U.S.C. 21311. This statutory change
rendered the citation in 49 CFR 233.13(b) outdated, and FRA has not,
prior to this date, sought to amend the regulatory provision. Given
that FRA has begun the present rulemaking addressing part 233, it views
now as an appropriate time to update the citation in paragraph (b) of
section 233.13.

II. Section-by-Section Analysis

Part 233--Signal System Reporting Requirements

Section 233.9 Reports
    FRA proposes eliminating the Signal System Five-Year Report
required by this section and reserving the section for future use.
Eliminating this reporting requirement will reduce the railroad
industry's paperwork burden in a way that does not endanger the public
health, welfare, and safety or our environment. FRA has identified
three specific reasons supporting the elimination of this reporting
requirement. First, the information contained in the Signal System
Five-Year Report quickly becomes obsolete. Second, FRA is better able
to determine the status of a railroad's signal system through other
more frequently collected types of information. Third, the report does
not generally appear to contain information that is useful to the
railroad industry or the general public.
Section 233.13 Criminal Penalty
    FRA proposes making an administrative change to paragraph (b) of
this section to correct an out-of-date citation to the U.S. Code.
Paragraph (b) provides that it is unlawful to knowingly and willfully
file a false report required by part 233. Such conduct is punishable
with a fine of $5000 and up to two years imprisonment. The paragraph
cites to 45 U.S.C. 438(e) as statutory support for the criminal
penalties; however, this statutory provision was repealed and
recodified under a different title of the U.S. Code as part of a
reorganization of the Federal railroad safety statutes by Congress. The
provision is currently housed at 49 U.S.C. 21311. The proposed
amendment would correct the outdated citation in paragraph (b) by
replacing 45 U.S.C. 438(e) with 49 U.S.C. 21311.
Appendix A to Part 233--Schedule of Civil Penalties
    Appendix A to part 233 contains a schedule of civil penalties for
use in connection with this part. Because such penalty schedules are
statements of agency policy, notice and comment are not required prior
to their issuance. See 5 U.S.C. 553(b)(3)(A). Nevertheless, FRA intends
to amend this appendix in issuing the final rule to remove and reserve
the entry for Sec.  233.9, in accordance with this proposal.

III. Regulatory Impact

A. Executive Order 12866 and 13563 and DOT Regulatory Policies and
Procedures

    This rulemaking proposes eliminating the requirement in 49 CFR
233.9 that each railroad file with FRA a Signal System Five-Year
Report. The proposed rule has been evaluated in accordance with
existing policies and procedures. It is not considered a significant
regulatory action under E.O. 12866 and E.O. 13563. This rule also is
not significant under the DOT Regulatory Policies and Procedures. 44 FR
11034 (Feb. 26, 1979). A regulatory impact analysis addressing the
economic impact of this proposed rule has been prepared and placed in
the docket.
    As part of the regulatory evaluation, FRA has explained the
benefits of this proposed rule and provided monetized assessments of
the value of such benefits. The proposed rule would eliminate the cost
associated with submitting a Signal System Five-Year Report. Each
railroad currently expends approximately one hour of labor to prepare
and submit the report to FRA every five years. For the 20-year period
analyzed, the estimated cost savings would be $234,265. The present
value of this is $113,929 (using a 7 percent discount rate). This
regulation only reduces the burden on railroads; it does not impose any
additional costs. Therefore, the net benefit of this proposed
rulemaking would be $113,929 (present value, 7 percent). FRA requests
comments on all aspects of this regulatory evaluation and its
conclusions.

B. Regulatory Flexibility Determination

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et seq., and
E.O. 13272, 67 FR 53461 (Aug. 16, 2002), require agency review of
proposed and final rules to assess their impact on small entities. An
agency must prepare an initial regulatory flexibility analysis (IRFA)
unless it determine and certifies that a rule, if promulgated, would
not have a significant impact on a substantial number of small
entities. Pursuant to the Regulatory Flexibility Act of 1980, 5 U.S.C.
605(b), the FRA Administrator certifies that this proposed rule would
not have a significant economic impact on a substantial number of small
entities. This proposed rule would affect all railroads, including
small railroads. However, the effect on these railroads would be purely
beneficial and not significant, as it would reduce their labor burden
by eliminating the need to file a Signal System Five-Year Report.
    ``Small entity'' is defined in 5 U.S.C. 601 as including a small
business concern that is independently owned and operated, and is not
dominant in its field of operation. The U.S. Small Business
Administration (SBA) has authority to regulate issues related to small
businesses, and stipulates in its size standards that a ``small
entity'' in the railroad industry is a for profit ``line-haul
railroad'' that has fewer than 1,500 employees, a ``short line
railroad'' with fewer than 500 employees, or a ``commuter rail system''
with annual receipts of less than seven million dollars. See ``Size
Eligibility Provisions and Standards,'' 13 CFR Part 121, subpart A.
Additionally, 5 U.S.C. 601(5) defines as ``small entities'' governments
of cities, counties, towns, townships, villages, school districts, or
special districts with populations less than 50,000. Federal agencies
may adopt their own size standards for small entities, in consultation
with SBA and in conjunction with public comment. Pursuant to that
authority, FRA has published a final statement of agency policy that
formally establishes ``small entities'' or ``small businesses'' as
being railroads, contractors, and hazardous materials shippers that
meet the revenue requirements of a Class III railroad as set forth in
49 CFR 1201.1-1, which is $20 million or less in inflation-adjusted
annual revenues, and commuter railroads or small governmental
jurisdictions that serve populations of

50,000 or less. See 68 FR 24891 (May 9, 2003), codified at appendix C
to 49 CFR Part 209. The $20-million limit is based on the Surface
Transportation Board's revenue threshold for a Class III railroad.
Railroad revenue is adjusted for inflation by applying a revenue
deflator formula in accordance with 49 CFR 1201.1-1. FRA is using this
definition for this rulemaking.
    FRA estimates that there are 719 Class III railroads, all of which
would be affected by this proposed rule. However, the impact on these
small railroads would not be significant. FRA estimates that each
report takes approximately one labor hour to prepare and submit to FRA.
The elimination of this reporting requirement would save each railroad
one hour of labor every five years. Therefore, this proposed rule would
have a positive effect on these railroads, saving each railroad
approximately $307 (non-discounted) in labor costs over the 20-year
analysis. Since this amount is extremely small and entirely beneficial,
FRA concludes that this proposed rule would not have a significant
impact on these railroads.
    Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 601(b), FRA
certifies that this proposed rule would not have a significant impact
on a substantial number of small entities. Although a substantial
number of small railroads would be affected by the proposed rule, the
impact on these entities would be minimal and positive. FRA requests
comments on all aspects of this certification.

C. Federalism

    Executive Order 13132, ``Federalism'', 64 FR 43255 (Aug. 10, 1999),
requires FRA to develop an accountable process to ensure ``meaningful
and timely input by State and local officials in the development of
regulatory policies that have federalism implications.'' ``Policies
that have federalism implications'' are defined in the Executive Order
to include regulations that have ``substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government.'' Under E.O. 13132, the agency may not
issue a regulation with federalism implications that imposes
substantial direct compliance costs and that is not required by
statute, unless the Federal government provides the funds necessary to
pay the direct compliance costs incurred by State and local
governments, the agency consults with State and local governments, or
the agency consults with State and local government officials early in
the process of developing the regulation. Where a regulation has
federalism implications and preempts State law, the agency seeks to
consult with State and local officials in the process of developing the
regulation.
    This NPRM has been analyzed in accordance with the principles and
criteria contained in E.O. 13132. FRA has determined that, if adopted,
the proposed rule would not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. In addition, FRA has determined that this
proposed rule will not impose substantial direct compliance costs on
State and local governments. Therefore, the consultation and funding
requirements of E.O. 13132 do not apply.
    However, this proposed rule could have preemptive effect by
operation of law under certain provisions of the Federal railroad
safety statutes, specifically the former Federal Railroad Safety Act of
1970 (FRSA), repealed and recodified at 49 U.S.C. 20106, and the former
Signal Inspection Act of 1937, repealed and recodified at 49 U.S.C.
20501-20505. See Pub. L. 103-272 (July 5, 1994). The former FRSA
provides that States may not adopt or continue in effect any law,
regulation, or order related to railroad safety or security that covers
the subject matter of a regulation prescribed or order issued by the
Secretary of Transportation (with respect to railroad safety matters)
or the Secretary of Homeland Security (with respect to railroad
security matters), except when the State law, regulation, or order
qualifies under the ``local safety or security hazard'' exception to
section 20106.
    In sum, FRA has analyzed this proposed rule in accordance with the
principles and criteria contained in E.O. 13132. As explained above,
FRA has determined that this proposed rule has no federalism
implications, other than the possible preemption of State laws under
the former FRSA. Accordingly, FRA has determined that preparation of a
federalism summary impact statement for this proposed rule is not
required.

D. International Trade Impact Assessment

    The Trade Agreement Act of 1979, Public Law 96-39, 93 Stat. 144
(July 26, 1979), prohibits Federal agencies from engaging in any
standards or related activities that create unnecessary obstacles to
the foreign commerce of the United States. Legitimate domestic
objectives, such as safety, are not considered unnecessary obstacles.
The statute also requires consideration of international standards and
where appropriate, that they be the basis for U.S. standards. This
rulemaking is purely domestic in nature and is not expected to affect
trade opportunities for U.S. firms doing business overseas or for
foreign firms doing business in the United States.

E. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501, et
seq., Federal agencies must obtain approval from the Office of
Management and Budget for each collection of information they conduct,
sponsor, or require through regulations. FRA has carefully reviewed the
proposed rule and any potential PRA implications. Since the present
rulemaking would eliminate the reporting requirement associated with
Sec.  233.9 in its entirety for April 2017 and thereafter, there is no
change to the currently approved burden under OMB No. 2130-0006.
    Organizations and individuals desiring to obtain a copy of the
above currently approved collection of information should contact Mr.
Robert Brogan or Ms. Kimberly Toone via mail at FRA, 1200 New Jersey
Ave. SE., Third Floor, Washington, DC 20590. Copies may also be
obtained by telephoning Mr. Brogan at<PHONE_NUMBER> or Ms. Toone at
(202) 493-6132. (These numbers are not toll-free). Additionally, copies
may be obtained via email by contacting Mr. Brogan or Ms. Toone at the
following addresses<EMAIL_ADDRESS><EMAIL_ADDRESS>
F. Compliance with the Unfunded Mandates Reform Act of 1995

    Pursuant to Section 201 of the Unfunded Mandates Reform Act of
1995, Pub. L. 104-4, 2 U.S.C. 1531, each Federal agency ``shall, unless
otherwise prohibited by law, assess the effects of Federal regulatory
actions on State, local, and tribal governments, and the private sector
(other than to the extent that such regulations incorporate
requirements specifically set forth in law).'' Section 202 of the Act,
see 2 U.S.C. 1532, further requires that ``before promulgating any
general notice of proposed rulemaking that is likely to result in the
promulgation of any rule that includes any Federal mandate that may
result in expenditure by State, local, and tribal governments, in the
aggregate, or by the private sector, of $100,000,000 or more (adjusted
annually for inflation) in any 1 year, and before promulgating any
final rule for

which a general notice of proposed rulemaking was published, the agency
shall prepare a written statement'' detailing the effect on State,
local, and tribal governments and the private sector. The proposed rule
would not result in the expenditure, in the aggregate, of $100,000,000
or more (adjusted for inflation) in any one year, and thus preparation
of such a statement is not required.

G. Environmental Assessment

    FRA has evaluated this proposed rule in accordance with its
``Procedures for Considering Environmental Impacts'' (FRA's
Procedures), 64 FR 28545 (May 26, 1999), as required by the National
Environmental Policy Act, 42 U.S.C. 4321 et seq., other environmental
statutes, Executive Orders, and related regulatory requirements. FRA
has determined that this proposed rule is not a major FRA action
(requiring the preparation of an environmental impact statement or
environmental assessment) because it is categorically excluded from
detailed environmental review pursuant to section 4(c)(20) of FRA's
Procedures. See 64 FR 28547 (May 26, 1999).
    In accordance with section 4(c) and (e) of FRA's Procedures, the
agency has further concluded that no extraordinary circumstances exist
with respect to this regulation that might trigger the need for a more
detailed environmental review. As a result, FRA finds that this
proposed rule is not a major Federal action significantly affecting the
quality of the human environment.

H. Energy Impact

    Executive Order 13211 requires Federal agencies to prepare a
Statement of Energy Effects for any ``significant energy action.'' See
66 FR 28355 (May 22, 2001). Under the Executive Order, a ``significant
energy action'' is defined as ``any action by an agency (normally
published in the Federal Register) that promulgates or is expected to
lead to the promulgation of a final rule or regulation, including
notices of inquiry, advance notices of proposed rulemaking, and notices
of proposed rulemaking: (1)(i) [t]hat is a significant regulatory
action under Executive Order 12866 or any successor order, and (ii) is
likely to have a significant adverse effect on the supply,
distribution, or use of energy; or (2) that is designated by the
Administrator of the Office of Information and Regulatory Affairs as a
significant energy action.'' FRA has evaluated this NPRM in accordance
with E.O. 13211. FRA has determined that this NPRM is not likely to
have a significant adverse effect on the supply, distribution, or use
of energy. Consequently, FRA has determined that this NPRM is not a
``significant energy action'' within the meaning of E.O. 13211.

I. Privacy Act

    FRA wishes to inform all potential commenters that anyone is able
to search the electronic form of all comments received into any agency
docket by the name of the individual submitting the comment (or signing
the comment, if submitted on behalf of an association, business, labor
union, etc.). You may review DOT's complete Privacy Act Statement in
the Federal Register published on April 11, 2000, see 65 FR 19477-78,
or you may visit http://www.regulations.gov/#!privacyNotice.

List of Subjects in 49 CFR Part 233

    Penalties, Railroad safety, Reporting and recordkeeping
requirements.

The Proposal

    In consideration of the foregoing, FRA proposes to amend part 233
of chapter II, subtitle B of title 49 of the Code of Federal
Regulations as follows:

PART 233--[AMENDED]

0
1. The authority citation for part 233 is revised to read as follows:

    Authority: 49 U.S.C. 20103, 20107, 20501-20505, 21311; 28 U.S.C.
2461, note; and 49 CFR 1.89.

Sec.  233.9  [Removed and reserved]

0
2. Section 233.9 is removed and reserved.

Sec.  233.13  [Amended]

0
3. Amend Sec.  233.13 in paragraph (b) by removing the citation ``45
U.S.C. 438(e)'' and adding ``49 U.S.C. 21311'' in its place.

Appendix A to Part 233--[Amended]

    4. Appendix A is amended by removing and reserving the entry for
``Sec.  233.9 Annual reports''.

    Issued in Washington, DC on June 7, 2013.
Joseph C. Szabo,
Administrator, Federal Railroad Administration.
[FR Doc. 2013-14602 Filed 6-18-13; 8:45 am]
BILLING CODE 4910-06-P


[Federal Register: July 23, 2007 (Volume 72, Number 140)]
[Notices]
[Page 40188-40191]
[DOCID:fr23jy07-90]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56070; File No. SR-NYSEArca-2007-60]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change and Amendment No. 1 Thereto Relating to
Amendments to Arca Equities Rule 12 To Provide Guidance Regarding New
and Pending Arbitration Claims in Light of the Consolidation of NYSE
Regulation Into NASD DR

July 13, 2007.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that on June 26, 2007, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the Securities and Exchange Commission the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by NYSE Arca. On July 13, 2007, the NYSEArca
filed Amendment No. 1 to the proposed rule change.\4\ The Commission is
publishing this notice to solicit comments on the proposed rule change,
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ In Amendment No. 1, which supplemented the original filing,
the Exchange clarified the applicability of NYSE Arca Equities Rule
12 as it was in effect on or prior to January 31, 2007.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    NYSE Arca, through its subsidiary NYSE Arca Equities, Inc. (``NYSE
Arca Equities'' or ``Corporation''), proposes to amend NYSE Arca
Equities Rule 12.
    NYSE Regulation, Inc. (``NYSE Regulation'') administers an
arbitration program for NYSE Arca Equities. As part of the
consolidation of the member firm regulation function of NYSE Regulation
with the National Association of Securities Dealers, Inc. (``NASD''),
NYSE Regulation will cease to provide an arbitration program, and its
existing arbitration department (``NYSE Arbitration'') will be
consolidated with that of NASD Dispute Resolution, Inc. (``NASD DR'').
    The proposed amendments provide that: (i) All arbitrations filed
with NYSE Arca Equities after January 31, 2007 and prior to the later
of the effective date of the consolidation or approval of this proposed
rule change (the ``Effective Date''), shall continue to be governed by
the Code of Arbitration contained in the 600 series of the New York
Stock Exchange LLC Rules (``NYSE Arbitration Rules''); (ii)
arbitrations filed on or prior to January 31, 2007 shall continue to be
governed by NYSE Arca Equities Rule 12 as it was in effect on or prior
to January 31, 2007; and (iii) from and after the Effective Date,
disputes between NYSE Arca Equity Trading Permit (``ETP'') holders,
associated persons, and/or their customers will be arbitrated under the
NASD DR Codes of Arbitration Procedure. The text of the proposed rule
change is set forth below. Proposed new language is in italic; proposed
deletions are in brackets.
* * * * *

Rule 12 Arbitration

    (a) General. All arbitrations filed with the Corporation after
January 31, 2007 and prior to [insert later of effective date of the
consolidation or approval of this proposed rule change] shall be
governed by the Code of Arbitration contained in the 600 series of the
New York Stock Exchange, L.L.C. Rules (``NYSE Arbitration Rules''), as
the same may be

in effect from time to time, except that arbitrations filed on or prior
to January 31, 2007 shall be governed by NYSE Arca Equities Rule 12 as
it was in effect on or prior to January 31, 2007 [as may be specified
in this Rule 12]. The term ``member'' as used in this Rule 12 and in
the NYSE Arbitration Rules shall mean and refer to ETP Holders. From
and after [insert later of effective date of the consolidation or
approval of this proposed rule change] (i) any dispute, claim or
controversy between or among ETP Holders and/or associated persons
shall be arbitrated pursuant to the NASD Dispute Resolution, Inc.
(``NASD DR'') Codes of Arbitration Procedure; and, (ii) any dispute,
claim or controversy between a customer or non-member and an ETP Holder
and/or associated person arising in connection with the business of
such ETP Holder and/or in connection with the activities of an
associated person, shall be arbitrated pursuant to NASD DR Codes of
Arbitration Procedure as provided by any duly executed and enforceable
written agreement, or upon demand of the customer or non-member. Such
obligation to arbitrate shall extend only to those matters that are
permitted to be arbitrated under NASD DR Codes of Arbitration
Procedure.
    (b) Referrals. The Corporation may receive, investigate and take
disciplinary action with respect to any referral it receives from a
NASD DR arbitrator of any matter which comes to the attention of such
arbitrator during and in connection with the arbitrator's participation
in a proceeding, either from the record of the proceeding or from
material or communications related to the proceeding, that the
arbitrator has reason to believe may constitute a violation of the
Corporation's Rules or the federal securities laws.
    (c) Failure to Arbitrate or to Pay an Arbitration Award. Any ETP
Holder and/or associated person who fails to submit to arbitration a
matter required to be arbitrated pursuant to this Rule, or that fails
to honor an arbitration award made pursuant to the NASD DR Codes of
Arbitration Procedure, or made under the auspices of any other self-
regulatory organization, shall be subject to disciplinary proceedings
in accordance with NYSE Arca Equities Rule 10.
    (d) Other Actions. The submission of any matter to arbitration as
provided for under this Rule shall in no way limit or preclude any
right, action or determination by the Corporation that it would
otherwise be authorized to adopt, administer or enforce.
    [(b) Jurisdiction. Any dispute, claim or controversy arising out of
or in connection with the business of any member of the Corporation, or
arising out of the employment or termination of employment of
associated person(s) with any member may be arbitrated under this Rule
12 except that: (1) A dispute, claim, or controversy alleging
employment discrimination (including a sexual harassment claim) in
violation of a statute may only be arbitrated if the parties have
agreed to arbitrate it after the dispute arose; and (2) any type of
dispute, claim, or controversy that is not permitted to be arbitrated
under the NYSE Arbitration Rules, such as class action claims, shall
not be eligible for arbitration under this Rule 12.
    (c) Predispute Arbitration Agreements. The requirements of NYSE
Arbitration Rules shall apply to predispute arbitration agreements
between the Corporation's members and/or associated persons and their
customers.
    (d) Referrals. If any matter comes to the attention of an
arbitrator during and in connection with the arbitrator's participation
in a proceeding, either from the record of the proceeding or from
material or communications related to the proceeding, that the
arbitrator has reason to believe may constitute a violation of the
Corporation's Rules or the federal securities laws, the arbitrator may
refer the matter to NYSE Regulation, Inc. for disciplinary
investigation.
    (e) Payment of Awards. Any member or associated person who fails to
honor an award of arbitrators appointed in accordance with this Rule 12
shall be subject to disciplinary proceedings in accordance with Rule 10
(Disciplinary Proceedings, Other Hearings, and Appeals).
    (f) Other Actions. The submission of any matter to arbitration
under this Chapter shall in no way limit or preclude any right, action
or determination by the Corporation that it would otherwise be
authorized to adopt, administer or enforce.]
* * * * *

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

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

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

1. Purpose
    The purpose of the proposed rule change is to provide guidance
regarding both new and pending arbitration claims in light of the
consolidation of the member firm regulation function of NYSE Regulation
into NASD DR.\5\ NYSE Arbitration currently administers an arbitration
program for NYSE Arca Equities, governed by what is referred to as
``Rule 12.'' \6\
---------------------------------------------------------------------------

    \5\ The NYSE has proposed a separate filing related to the
consolidation of NYSE Arbitration into NASD DR. See Securities
Exchange Act Release No. 55818 (May 25, 2007), 72 FR 30898 (June 4,
2007) (SR-NYSE 2007-48). On June 21, 2007, the NYSE filed Amendment
No. 1 to this proposed rule change. See Securities Exchange Act
Release No. 56015 (July 5, 2007), 72 FR 37811 (July 11, 2007).
    \6\ Although Rule 12 has subsequently been amended, for purposes
of administering NYSE Arca Equities arbitrations filed on or prior
to January 31, 2007, NYSE Arbitration follows Rule 12 as it was in
effect on that date.
---------------------------------------------------------------------------

    As part of the consolidation of NYSE Regulation with NASD,\7\ NYSE
Regulation will cease to administer an arbitration program, and its
existing arbitration department will be consolidated with NASD DR. As a
result, on and after the date of the consolidation, all arbitration
claims filed prior to the Effective Date, and previously subject to
Rule 12 or NYSE Regulation rules, will be administered by NASD DR
pursuant to a Regulatory Services Agreement with the New York Stock
Exchange LLC (``NYSE'').
---------------------------------------------------------------------------

    \7\ Additional information regarding the consolidation may be
found in: SR-NASD-2007-23 (March 19, 2007) concerning proposed
amendments to the By-Laws of NASD to implement governance and
related changes to accommodate the consolidation of the member firm
regulatory functions of NASD and NYSE Regulation, Inc.; and SR-NYSE-
2007-22 (February 27, 2007) concerning proposed amendments to
several NYSE rules which, among other matters, harmonize the rules
with corresponding NASD regulatory requirements.
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    The rules governing the administration of any particular
arbitration will depend on the date the case was filed. This will
ensure that any person that filed an arbitration under a particular set
of arbitration rules will continue to have the case administered
pursuant to those rules through to the case's conclusion. There are two
categories of cases. First, NYSE Arca Equities cases filed on or prior
to January 31, 2007 are and would continue to be governed by Rule 12 as
it was in effect on that date. Second, NYSE Arca Equities cases filed
after January 31, 2007, but prior to the

Effective Date will continue to be governed by existing NYSE Regulation
arbitration rules.\8\
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    \8\ See Securities Exchange Act Release No. 55142 (January 19,
2007), 72 FR 3898 (January 26, 2007) (SR-NYSEArca-2006-54) and
Securities Exchange Act Release No. 55141 (January 19, 2007), 72 FR
3897 (January 26, 2007) (SR-NYSEArca-2006-55).
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    NYSE Arca Equities Rule 12, as amended, would provide detailed
guidance concerning claims involving ETP Holders and/or associated
persons that are asserted on and after the Effective Date.\9\ First,
any dispute, claim or controversy between or among ETP Holders and/or
associated persons shall be arbitrated pursuant to the NASD DR Codes of
Arbitration Procedure. Second, any dispute, claim or controversy
between a customer or a non-member and an ETP Holder and/or associated
person arising in connection with the business of such ETP Holder and/
or in connection with the activities of an associated person, shall be
arbitrated pursuant to NASD DR Codes of Arbitration Procedure as
provided by any duly executed and enforceable written agreement, or
upon the demand of the customer or non-member. This obligation to
arbitrate shall extend only to those matters that are permitted to be
arbitrated under NASD DR Codes of Arbitration Procedure.
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    \9\ It is proposed that the provisions in the current Rule
12(b)-(f) be deleted because these sections would be replaced by the
proposed Rule 12 provisions described herein.
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    In almost all cases the change from NYSE rules or NYSE Arca
Equities rules to NASD DR arbitration rules should not result in
material, substantive differences to persons participating in the
arbitration process. However, one difference is the treatment of
employment discrimination claims. NASD DR rules provide that any claim
alleging employment discrimination, including any sexual harassment
claims, in violation of a statute, will be eligible for arbitration
pursuant to either a pre-dispute or a post-dispute agreement to
arbitrate. In contrast, NYSE Rule 600(f), NYSE Rule 347(b) and current
NYSE Arca Equities Rule 12(b) permit claims to be arbitrated only when
the parties have agreed to arbitrate the claim after it has arisen.
    Proposed Rule 12(b) would explicitly retain NYSE Arca Equities'
enforcement authority related to arbitration. In appropriate cases,
arbitrators would refer to NYSE Arca Equities potential violations of
NYSE Arca Equities' rules or the federal securities laws that come to
their attention during and in connection with a proceeding. Rule 12(b)
would specify that NYSE Arca Equities would retain the ability to take
action based on such referrals that may come from arbitrators in cases
being arbitrated at NASD DR.
    Proposed Rule 12(c) also would provide that any ETP Holder and/or
associated person of any ETP Holder, that fails to honor an award of
arbitrators rendered under the NASD DR Codes of Arbitration Procedure,
or under the auspices of any other self-regulatory organization, shall
be subject to disciplinary proceedings in accordance with NYSE Arca
Equities Rule 10. Proposed Rule 12(c) also would specify that failure
to submit a matter to arbitration as required by Rule 12 also would
subject the ETP Holder and/or associated person to Exchange
disciplinary action.
    Proposed Rule 12(d) would also specify that the submission of any
matter to arbitration as provided for under the Rule shall in no way
limit or preclude any right, action or determination by NYSE Arca
Equities that it would otherwise be authorized to adopt, administer or
enforce.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the requirements of Section 6(b)(5) \10\ of the Act, which
requires, among other things, that the rules of an Exchange be designed
to promote just and equitable principles of trade and to protect
investors and the public interest. The proposed rule change will
streamline the arbitration process and, after a transitional period,
provide for a unified and more efficient arbitration forum with one set
of arbitration rules and administrative procedures. This will allow
resources to be devoted to maintaining and improving the NASD DR
program, rather than splitting resources among duplicative programs. As
a result of these improvements, the proposed rule change will better
protect investors and the public interest.
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    \10\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

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

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

    The Exchange has neither solicited nor received written comments on
the proposed rule change.

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

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send e-mail to<EMAIL_ADDRESS>Please include File

Number SR-NYSEArca-2007-60 on the subject line.

Paper Comments

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

    All submissions should refer to File Number SR-NYSEArca-2007-60.
This file number should be included on the subject line if e-mail is
used. To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments,

all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room, 100 F Street,
NE., Washington,

DC 20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of such filing also will be available for inspection and
copying at the principal office of NYSE Arca. All comments received
will be posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEArca-2007-60 and should be submitted
on or before August 13, 2007.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-14166 Filed 7-20-07; 8:45 am]

BILLING CODE 8010-01-P