[Federal Register: January 30, 2008 (Volume 73, Number 20)]
[Rules and Regulations]
[Page 5439-5450]
[DOCID:fr30ja08-11]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2005-0145; FRL-8347-3]

Boscalid; Denial of Objections

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final order.

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SUMMARY: In this order, EPA denies objections filed by the Natural
Resources Defense Council (``NRDC'') to a final rule under section 408
of the Federal Food, Drug, and Cosmetic Act (``FFDCA''), (21 U.S.C.
346a), establishing tolerances for the pesticide boscalid on various
leafy greens. NRDC argues that EPA has unlawfully removed the
additional safety factor for the protection of infants and children
required by Food Quality Protection Act of 1996.

FOR FURTHER INFORMATION CONTACT: Tony Kish, Registration Division,
(7505P), Office of Pesticide Programs, Environmental Protection Agency,
1200 Pennsylvania Ave., NW., Washington, DC 20460-0001; telephone
number:<PHONE_NUMBER>; e-mail 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.
Potentially affected entities may include, but are not limited to:
     Crop production (NAICS code 111), e.g., agricultural
workers; greenhouse, nursery, and floriculture workers; farmers.
     Animal production (NAICS code 112), e.g., cattle ranchers
and farmers, dairy cattle farmers, livestock farmers.
     Food manufacturing (NAICS code 311), e.g., agricultural
workers; farmers; greenhouse, nursery, and floriculture workers;
ranchers; pesticide applicators.
     Pesticide manufacturing (NAICS code 32532), e.g.,
agricultural workers; commercial applicators; farmers; greenhouse,
nursery, and floriculture workers; residential users.
    This listing is not intended to be exhaustive, but rather provides
a guide for readers regarding entities that are potentially affected by
this action. Other types of entities not listed in this unit could also
be affected. The North American Industrial Classification System
(NAICS) codes have been provided to assist you and others in
determining whether this action might apply to certain entities. If you
have any questions regarding the applicability of this action to a
particular entity, consult the person listed under FOR FURTHER
INFORMATION CONTACT.

B. How Can I Access Electronic Copies of this Document?

    In addition to accessing an electronic copy of this Federal
Register document through the electronic docket at http://www.regulations.gov
, you may access this Federal Register document

electronically through the EPA Internet under the ``Federal Register''
listings at http://www.epa.gov/fedrgstr. You may also access a

frequently updated electronic version of 40 CFR part 180 through the
Government Printing Office's pilot e-CFR site at http://www.gpoaccess.gov/ecfr
.

C. How Can I Access Electronic Copies of Materials in the Docket?

    EPA has established a docket for this action under docket
identification (ID) number EPA-HQ-OPP-2005-0145. To access the
electronic docket, go to http://www.regulations.gov, select ``Advanced

Search,'' then ``Docket Search.'' Insert the docket ID number where
indicated and select the ``Submit'' button. Follow the instructions on
the regulations.gov web site to view the docket index or access
available documents.

II. Introduction

A. What Action Is the Agency Taking?

    In this order, EPA denies objections filed by the Natural Resources
Defense Council (``NRDC'') to a final rule under section 408 of the
Federal Food, Drug, and Cosmetic Act (``FFDCA''), (21 U.S.C. 346a),
establishing tolerances for the pesticide boscalid on various leafy
greens. (Ref. 1). NRDC argues that EPA must retain an additional ten-
fold (10X) safety factor for the protection of infants and children due
to data showing that juvenile animals are more sensitive than adults.
Retention of this additional safety factor, NRDC contends, shows that
the tolerances are unsafe. Additionally, NRDC contends that EPA's
tolerance decision was arbitrary and capricious because (1) EPA failed
to explain adequately its reason for not applying a 10X safety factor
for infants and children and (2) the safe dose for boscalid established
by EPA is ``clearly contrary to the data . . . .'' (Id. at 3-4, 7-8).

B. What Is the Agency's Authority for Taking This Action?

    The procedure for filing objections to tolerance actions and EPA's
authority

for acting on such objections is contained in section 408(g) of the
FFDCA and regulations at 40 CFR part 178. (21 U.S.C. 346a(g)).

III. Statutory and Regulatory Background

A. Statutory Background

    1. In general. EPA establishes maximum residue limits, or
``tolerances,'' for pesticide residues in food under section 408 of the
FFDCA. (21 U.S.C. 346a). Without such a tolerance or an exemption from
the requirement of a tolerance, a food containing a pesticide residue
is ``adulterated'' under section 402 of the FFDCA and may not be
legally moved in interstate commerce. (21 U.S.C. 331, 342). Monitoring
and enforcement of pesticide tolerances are carried out by the U.S.
Food and Drug Administration and the U.S. Department of Agriculture.
Section 408 was substantially rewritten by the Food Quality Protection
Act of 1996 (``FQPA''), which added the provisions discussed below
establishing a detailed safety standard for pesticides and additional
protections for infants and children.
    EPA also regulates pesticides under the Federal Insecticide,
Fungicide, and Rodenticide Act (``FIFRA''), (7 U.S.C. 136 et seq).
While the FFDCA authorizes the establishment of legal limits for
pesticide residues in food, FIFRA requires the approval of pesticides
prior to their sale and distribution, (7 U.S.C. 136a(a)), and
establishes a registration regime for regulating the use of pesticides.
FIFRA regulates pesticide use in conjunction with its registration
scheme by requiring EPA review and approval of pesticide labels and
specifying that use of a pesticide inconsistent with its label is a
violation of Federal law. (7 U.S.C. 136j(a)(2)(G)). In the FQPA,
Congress integrated action under the two statutes by requiring that the
safety standard under the FFDCA be used as a criterion in FIFRA
registration actions as to pesticide uses which result in dietary risk
from residues in or on food, (7 U.S.C. 136(bb)), and directing that EPA
coordinate, to the extent practicable, revocations of tolerances with
pesticide cancellations under FIFRA. (21 U.S.C. 346a(l)(1)).
    2. Safety standard for pesticide tolerances. A pesticide tolerance
may only be promulgated by EPA if the tolerance is ``safe.'' (21 U.S.C.
346a(b)(2)(A)(i)). ``Safe'' is defined by the statute 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.'' (21 U.S.C. 346a(b)(2)(A)(ii)). Section 408
directs EPA, in making a safety determination, to ``consider, among
other relevant factors- . . . . available information concerning the
aggregate exposure levels of consumers (and major identifiable
subgroups of consumers) to the pesticide chemical residue and to other
related substances, including dietary exposure under the tolerance and
all other tolerances in effect for the pesticide chemical residue, and
exposure from other non-occupational sources.'' (21 U.S.C.
346a(b)(2)(D)(vi)).
    Section 408(b)(2)(C) requires EPA to give special consideration to
risks posed to infants and children. Specifically, this provision
states that EPA ``shall assess the risk of the pesticide chemical based
on available information concerning the special susceptibility of
infants and children to the pesticide chemical residues, including
neurological differences between infants and children and adults, and
effects of in utero exposure to pesticide chemicals . . . .'' (21
U.S.C. 346a(b)(2)(C)(i)(II) and (III)). This provision further directs
that ``[i]n the case of threshold effects, . . . an additional tenfold
margin of safety for the pesticide chemical residue and other sources
of exposure shall be applied for infants and children to take into
account potential pre- and post-natal toxicity and completeness of the
data with respect to exposure and toxicity to infants and children.''
(21 U.S.C. 346a(b)(2)(C)). EPA is permitted to ``use a different margin
of safety for the pesticide chemical residue only if, on the basis of
reliable data, such margin will be safe for infants and children.''
(Id.). The additional safety margin for infants and children is
referred to throughout this order as the ``children's safety factor.''
    3. Procedures for establishing, amending, or revoking tolerances.
Tolerances are established, amended, or revoked by rulemaking under the
unique procedural framework set forth in the FFDCA. Generally, the
rulemaking is initiated by the party seeking to establish, amend, or
revoke a tolerance by means of filing a petition with EPA. (See 21
U.S.C. 346a(d)(1)). EPA publishes in the Federal Register a notice of
the petition filing and requests public comment. (21 U.S.C.
346a(d)(3)). After reviewing the petition, and any comments received on
it, EPA may issue a final rule establishing, amending, or revoking the
tolerance, issue a proposed rule to do the same, or deny the petition.
(21 U.S.C. 346a(d)(4)). Once EPA takes final action on the petition by
either establishing, amending, or revoking the tolerance or denying the
petition, any affected party has 60 days to file objections with EPA
and seek an evidentiary hearing on those objections. (21 U.S.C.
346a(g)(2)). If objections are filed by a party other than the
petitioner, EPA is required to serve a copy of any objections on the
petitioner. (Id.). EPA's final order on the objections is subject to
judicial review. (21 U.S.C. 346a(h)(1)).
    4. Other EPA statutory authority over pesticides. EPA also
regulates pesticides under the Federal Insecticide, Fungicide, and
Rodenticide Act (``FIFRA''), (7 U.S.C. 136 et seq). While the FFDCA
authorizes the establishment of legal limits for pesticide residues in
food, FIFRA requires the approval of pesticides prior to their sale and
distribution, (7 U.S.C. 136a(a)), and establishes a registration regime
for regulating the use of pesticides. FIFRA regulates pesticide use in
conjunction with its registration scheme by requiring EPA review and
approval of pesticide labels and specifying that use of a pesticide
inconsistent with its label is a violation of Federal law. (7 U.S.C.
136j(a)(2)(G)).

B. Evaluating the Safety of Tolerances Through the Use of Risk
Assessment Including the Use of Safety Factors

    1. In general. The process EPA follows in evaluating FFDCA
petitions to establish tolerances and in determining the safety of the
petitioned-for tolerances includes two steps. First, EPA determines an
appropriate residue level value for the tolerance taking into account
data on levels that can be expected in food. Second, EPA evaluates the
safety of the tolerance relying on toxicity and exposure data and
guided by the statutory definition of ``safe'' and the statutory
requirements concerning risk assessment. Only on completion of the
second step can EPA make a decision on whether a tolerance may be
established. Below, EPA explains in detail, the reasons for this
approach.
    2. Choosing a tolerance value. In the first step of the tolerance
evaluation process (choosing a tolerance value), EPA reviews data from
experimental crop field trials in which the pesticide has been used in
a manner, consistent with the draft FIFRA label, that is likely to
produce the highest residue in the crop in question (e.g., maximum
application rate, maximum number of applications, minimum pre-harvest
interval between last pesticide application and harvest). (Refs. 2 and
3). These crop field trials are generally conducted in several fields
at several geographical locations. (Ref. 3 at pages

5, 7, and Tables 1 and 5). Several samples are then gathered from each
field and analyzed. (Id. at 53). Generally, the results from such field
trials show that the residue levels for a given pesticide use will vary
from as low as non-detectable to measurable values in the parts per
million (ppm) range with the majority of the values falling at the
lower part of the range. EPA uses a statistical procedure to analyze
the field trial results and identify the upper bound of expected
residue values. This upper bound value is used as the tolerance value.
(Ref. 4). (As discussed below, the safety of the tolerance value chosen
is separately evaluated.).
    There are three main reasons for closely linking tolerance values
to the maximum value that could be present from maximum label usage of
the pesticide. First, EPA believes it is important to coordinate its
actions under the two statutory frameworks governing pesticides. (See
61 FR 2378, 2379, January 25, 1996). It would be illogical for EPA to
set a pesticide tolerance under the FFDCA without considering what
action is being taken under FIFRA with regard to registration of that
pesticide use. (Cf. 40 CFR 152.112(g) (requiring all necessary
tolerances to be in place before a FIFRA registration may be granted)).
In coordinating its actions, one basic tenet that EPA follows is that a
grower who applies a pesticide consistent with the FIFRA label
directions should not run the risk that his or her crops will be
adulterated under the FFDCA because the residues from that legal
application exceed the tolerance associated with that use. To further
this goal, crop field trials require application of the pesticide in
the manner most likely to produce maximum residues. Second, choosing
tolerance values based on FIFRA label rates helps to ensure that
tolerance levels are established no higher than necessary. If tolerance
values were selected solely in consideration of health risks, in some
circumstances, tolerance values might be set so as to allow much
greater application rates than necessary for effective use of the
pesticide. This could encourage misuse of the pesticide. Finally,
closely linking tolerance values to FIFRA labels helps EPA to police
compliance with label directions by growers because detection of an
overtolerance residue is indicative of use of a pesticide at levels, or
in a manner, not permitted on the label.
    3. The safety determination--risk assessment. Once a tolerance
value is chosen, EPA then evaluates the safety of the pesticide
tolerance using the process of risk assessment. To assess risk of a
pesticide, EPA combines information on pesticide toxicity with
information regarding the route, magnitude, and duration of exposure to
the pesticide.
    In evaluating a pesticide's potential hazards (e.g., liver effects,
carcinogenicity), EPA examines both short-term (e.g., ``acute'') and
longer-term (e.g., ``chronic'') adverse effects from pesticide
exposure. (Ref. 2 at 8-10). EPA also considers whether the ``effect''
has a threshold - a level below which exposure has no appreciable
chance of causing the adverse effect. For non-threshold effects, EPA
assumes that any exposure to the substance increases the risk that the
adverse effect may occur. At present, EPA only considers one adverse
effect, the chronic effect of cancer, to potentially be a non-threshold
effect. (Ref. 2 at 8-9). Not all carcinogens, however, pose a risk at
any exposure level (i.e., ``a non-threshold effect or risk''). Advances
in the understanding of carcinogenesis have increasingly led EPA to
conclude that some pesticides that cause carcinogenic effects only
cause such effects above a certain threshold of exposure.
    Once the hazard for a durational scenario is identified, EPA must
determine the toxicological level of concern and then compare estimated
human exposure to this level of concern. This comparison is done
through either calculating a safe dose in humans (incorporating all
appropriate safety factors) and expressing exposure as a percentage of
this safe dose (the reference dose (``RfD'') approach) or dividing
estimated human exposure into an appropriately protective dose from the
relevant studies (the margin of exposure (``MOE'') approach). How EPA
determines the level of concern and assesses risk under these two
approaches is explained in more detail below. EPA's general approach to
estimating exposure is also briefly discussed.
    a. Levels of concern and risk assessment--i. threshold effects. In
assessing the risk from a pesticide's threshold effects, EPA evaluates
an array of toxicological studies on the pesticide. In each of these
studies, EPA attempts to identify the lowest observed adverse effect
level (``LOAEL'') and the next lower dose at which there are no
observed adverse affect levels (``NOAEL''). Generally, EPA will use the
lowest NOAEL from the available studies, taking into account the route
and duration of exposure, as a starting point in estimating the level
of concern for humans for a given exposure scenario (e.g., acute oral
exposure). This selected NOAEL is usually referred to as the Point of
Departure. In estimating and describing the level of concern, however,
the Point of Departure is at times manipulated differently depending on
whether the risk assessment addresses dietary or non-dietary exposures.
(Refs. 2 at 3-8; 5 at 8, 52-53; and 6).
    For dietary risks, EPA uses the Point of Departure to calculate a
safe dose or RfD. The RfD is calculated by dividing the Point of
Departure by applicable safety or uncertainty factors. Typically, a
combination of safety or uncertainty factors providing a hundredfold
(100X) margin of safety is used: 10X to account for uncertainties
inherent in the extrapolation from laboratory animal data to humans and
10X for variations in sensitivity among members of the human population
as well as other unknowns. Further, to account for deficiencies in the
database or the results seen in the database, EPA has traditionally
added additional safety factors on a case-by-case basis. The FQPA
amendments to FFDCA section 408 require an additional safety factor of
10X to protect infants and children (to address data completeness and
pre- and post-natal toxicity concerns), unless reliable data support
selection of a different factor. To some extent, the FQPA safety factor
addresses concerns related to the factors driving EPA's traditional use
of additional safety factors.
    In implementing FFDCA section 408, EPA's Office of Pesticide
Programs, also calculates a variant of the RfD referred to as a
Population Adjusted Dose (``PAD''). A PAD is the RfD divided by any
portion of the FQPA children's safety factor that does not correspond
to one of the traditional additional safety factors used in general
Agency risk assessment. (Ref. 5 at 13-16). The reason for calculating
PADs is so that other parts of the Agency, which are not governed by
FFDCA section 408, can, when evaluating the same or similar substances,
easily identify which aspects of a pesticide risk assessment are a
function of the particular statutory commands in FFDCA section 408.
Today, RfDs and PADs are generally calculated for both acute and
chronic dietary risks although traditionally a RfD or PAD was only
calculated for chronic dietary risks. Throughout this document general
references to EPA's calculated safe dose are denoted as a RfD/PAD.
    To quantitatively describe risk using the RfD/PAD approach,
estimated exposure is expressed as a percentage of the RfD/PAD. Dietary
exposures lower than 100 percent of the RfD/PAD are generally not of
concern.

    For non-dietary, and often for combined dietary and non-dietary,
risk assessments of threshold effects, the toxicological level of
concern is not expressed as a safe dose or RfD/PAD but rather as the
margin of exposure (MOE) that is necessary to be sure that exposure to
a pesticide is safe. To calculate the MOE for a pesticide for a given
exposure scenario, the expected human exposure to the pesticide is
divided into the dose identified as the Point of Departure. A safe MOE
is generally considered to be a margin at least as high as the product
of all applicable safety factors for a pesticide. For example, if a
pesticide needs a 10X factor to account for interspecies differences, a
10X factor for intraspecies differences, and a 10X FQPA children's
safety factor, the safe or target MOE would be a value of at least
1,000. In contrast to the RfD/PAD approach, the higher the pesticide's
MOE, the safer the pesticide would be considered. Accordingly, if the
target MOE for a pesticide is 1,000, MOE's for that pesticide exceeding
1,000 would generally not be of concern. Like RfD/PADs, specific MOEs
are calculated for exposures of different durations. For non-dietary
exposures, EPA typically examines short-term, intermediate-term, and
long-term exposures. Additionally, non-dietary exposure often involves
exposures by various routes including dermal, inhalation, and oral.
    The RfD/PAD and MOE approaches are fundamentally equivalent. For a
given risk and given exposure of a pesticide, if the pesticide were
found to be safe under a RfD/PAD analysis it would also pass under the
MOE approach, and vice-versa.
    ii. Non-threshold effects. For risk assessments for non-threshold
effects, EPA does not use the RfD/PAD or MOE approach if quantitation
of the risk is deemed appropriate. Rather, EPA calculates the slope of
the dose-response curve for the non-threshold effects from relevant
studies using a model that assumes that any amount of exposure will
lead to some degree of risk. The slope of the dose-response curve can
then be used to estimate the probability of occurrence of additional
adverse effects as a result of exposure to the pesticide. For non-
threshold cancer risks, EPA generally is concerned if the probability
of increased cancer cases exceed the range of 1 in 1 million.
    b. Estimating human exposure. Equally important to the risk
assessment process as identifying hazards and determining the
toxicological level of concern is estimating human exposure. Under
FFDCA section 408, EPA is concerned not only with exposure to pesticide
residues in food but also exposure resulting from pesticide
contamination of drinking water supplies and from use of pesticides in
the home or other non-occupational settings. (See 21 U.S.C.
346a(b)(2)(D)(vi)). There are two critical variables in estimating
exposure in food:
    i. the types and amount of food that is consumed; and
    ii. the residue levels in that food.
Consumption is estimated by EPA based on scientific surveys of
individuals' food consumption in the United States conducted by the
U.S. Department of Agriculture. (Ref. 2 at 12). Information on residue
levels comes from a range of sources including crop field trials; data
on pesticide reduction due to processing, cooking, and other practices;
information on the extent of usage of the pesticide; and monitoring of
the food supply. (Id. at 17).
    In assessing exposure from pesticide residues in food, EPA, for
efficiency's sake, follows a tiered approach in which it, in the first
instance, conducts its initial, screening-level exposure assessment
using the worst case assumptions that 100 percent of the crop in
question is treated with the pesticide and 100 percent of the food from
that crop contains pesticide residues at the tolerance level. (Id. at
11). When such an assessment shows no risks of concern, EPA's resources
are conserved because a more complex risk assessment is unnecessary and
regulated parties are spared the cost of any additional studies that
may be needed. If, however, a first tier assessment suggests there
could be a risk of concern, EPA then attempts to refine its exposure
assumptions to yield a more realistic picture of residue values through
use of data on the percent of the crop actually treated with the
pesticide and data on the level of residues that may be present on the
treated crop. These latter data are used to estimate what has been
traditionally referred to by EPA as ``anticipated residues.'' Use of
percent crop treated data and anticipated residue information is
appropriate because EPA's worst case assumptions of 100 percent
treatment and residues at tolerance value significantly overstate
residue values. (72 FR 52112, July 18, 2007; 71 FR 43906, 43909-43910,
August 2, 2006).
    In estimating pesticide exposure levels in drinking water, EPA most
frequently uses mathematical water exposure models rather than
pesticide-specific monitoring data. (69 FR 30042, 30058, May 26, 2004).
EPA's models are based on extensive monitoring data and detailed
information on soil properties, crop characteristics, and weather
patterns. These models calculate estimated environmental concentrations
of pesticides using laboratory data that describe how quickly the
pesticide breaks down to other chemicals and how it moves in the
environment (i.e., does it bind to the soil or is it highly water
soluble). Although computer modeling provides an indirect estimate of
pesticide concentrations, these concentrations can be estimated
continuously over long periods of time, and for places that are of most
interest for any particular pesticide. Modeling is a useful tool for
characterizing vulnerable sites, and can be used to estimate peak
concentrations from infrequent, large storms. Whether EPA assesses
pesticide exposure in drinking water through monitoring data or
modeling, EPA uses the higher of the two values from surface and ground
water in assessing overall exposure to the pesticide. In most cases,
pesticide residues in surface water are significantly higher than in
ground water.
    Generally, in assessing residential exposure to pesticides, EPA
relies on its Residential Standard Operating Procedures (``SOPs'').
(Ref. 7). The SOPs establish models for estimating application and
post-application exposures in a residential setting where pesticide-
specific monitoring data is not available. SOPs have been developed for
many common exposure scenarios including pesticide treatment of lawns,
garden plants, trees, swimming pools, pets, and indoor surfaces
including crack and crevice treatments. The SOPs are based on existing
monitoring and survey data including information on activity patterns,
particularly for children. Where available, EPA relies on pesticide-
specific data in estimating residential exposures.

C. Children's Safety Factor Policy

    As part of implementation of the major changes to FFDCA section 408
included in the FQPA, EPA has issued a number of policy guidance
documents addressing critical science issues. On January 31, 2002, EPA
released its science policy guidance on the children's safety factor.
(Ref. 5) [This policy is hereinafter referred to as the ``Children's
Safety Factor Policy'']. The Children's Safety Factor Policy emphasizes
throughout that EPA interprets the children's safety factor provision
as establishing a presumption in favor of application of an additional
10X safety factor for the protection of infants and children. (Id. at
4, 11, 47, A-6). Further, the policy notes that the children's safety
factor provision permits a different safety factor to be

substituted for this default 10X factor only if reliable data are
available to show that the different factor will protect the safety of
infants and children. (Id.). Given the wealth of data available on
pesticides, however, the policy indicates a preference for making an
individualized determination of a protective safety factor if possible.
(Id. at 11). The policy states that use of the default factor could
under- or over-protect infants and children due to the wide variety of
issues addressed by the children's safety factor. (Id.). Further, the
policy notes that ``[i]ndividual assessments may result in the use of
additional factors greater or less than, or equal to 10X, or no
additional factor at all.'' (Id.).
    In making pesticide-specific assessments regarding the magnitude of
the children's safety factor, the policy stresses the importance of
focusing on the statutory language that ties the children's safety
factor to concerns regarding potential pre- and post-natal toxicity and
the completeness of the toxicity and exposure databases. (Id. at 11-
12). As to the completeness of the toxicity database, the policy
recommends use of a weight-of-the-evidence approach which considers not
only the presence or absence of data generally required under EPA
regulations and guidelines but also the availability of ``any other
data needed to evaluate potential risks to children.'' (Id. at 20). The
policy indicates that the principal inquiry concerning missing data
should center on whether the missing data would significantly affect
calculation of a safe exposure level. (Id. at 22; accord 67 FR 60950,
60955, September 27, 2002) (finding no additional safety factor
necessary for triticonazole despite lack of developmental neurotoxicity
(``DNT'') study because the ``DNT [study] is unlikely to affect the
manner in which triticonazole is regulated.'')). When the missing data
are data above and beyond general regulatory requirements, the policy
states that the weight of evidence would generally only support the
need for an additional safety factor where the data ``is being required
for `cause,' that is, if a significant concern is raised based upon a
review of existing information, not simply because a data requirement
has been levied to expand OPP's general knowledge.'' (Ref. 5 at 23).
    As to potential pre- and post-natal toxicity, the Children's Safety
Factor Policy lists a variety of factors that should be considered in
evaluating the degree of concern regarding any identified pre- or post-
natal toxicity. (Id. at 27-31). As with the completeness of the
toxicity database, the policy emphasizes that the analysis should focus
on whether any identified pre- or post-natal toxicity raises
uncertainty as to whether the RfD/PAD is protective of infants and
children. (Id. at 31). Once again, the presence of pre- or post-natal
toxicity, by itself, is not regarded as determinative as to the
children's safety factor. Rather, the policy stresses the importance of
evaluating all of the data under a weight-of-evidence approach focusing
on the safety of infants and children. (Id.).
    In evaluating the completeness of the exposure database, the policy
explains that a weight-of-the-evidence approach should be used to
determine the confidence level EPA has as to whether the exposure
assessment ``is either highly accurate or based upon sufficiently
conservative input that it does not underestimate those exposures that
are critical for assessing the risks to infants and children.'' (Id. at
32). EPA describes why its methods for calculating exposure through
various routes and aggregating exposure over those routes generally
produce conservative exposure estimates - i.e. health-protective
estimates due to overestimation of exposure. (Id. at 40-43).
Nonetheless, EPA emphasizes the importance of verifying that the
tendency for its methods to overestimate exposure in fact were
adequately protective in each individual assessment. (Id. at 44).

IV. The Challenged Tolerances

    Boscalid is a fungicide used both on agricultural food crops as
well as turf. It has a wide variety of agricultural uses including
berries, nuts, soybeans, and various vegetables. (40 CFR 180.589(a)).
Tolerances have also been established to cover inadvertent residues on
various other crops as a result of rotation of these crops onto fields
previously treated with boscalid. (40 CFR 180.589(d)). On December 20,
2006, EPA promulgated new boscalid tolerances for residues in or on
leafy greens crop subgroup 4A, except head and leaf lettuce, and leafy
petioles crop subgroup 4B. (71 FR 76185, December 20, 2006).
    In promulgating these tolerances, EPA assessed the risk from
boscalid based on aggregate boscalid exposure. Animal studies indicated
that repeat dosing with boscalid resulted in effects in the liver and/
or thyroid in various species. Mechanistic studies indicated that the
thyroid effects were derivative of enzymatic effects on the liver.
(Ref. 8 at 4). The chronic RfD/PAD was based on the results of three
studies that showed similar effects at similar levels. (Id. at 23-24).
The boscalid database showed no effects that were attributable to a
single dose, and thus boscalid was deemed not to pose an acute risk.
Testing involving in utero and/or post-natal exposure of animals showed
no developmental or reproductive effects; however, this testing
resulted in some findings of qualitative or quantitative sensitivity
with regard to body weight effects in the young. EPA concluded there
was low concern regarding these sensitivity findings for various
reasons including that clear NOAELs were identified for these effects
and the effects were transient in nature or inconsistent. EPA assessed
exposure to boscalid in food relying on the worst case assumption that
boscalid residues in all crops to which boscalid may be legally applied
had residues at the tolerance level.
    EPA concluded that chronic exposures to boscalid did not raise
safety concerns because the most highly exposed population subgroup,
children 1-2 years old, had exposures below the PAD or safe dose
(exposure was at 38 percent of the PAD). (71 FR 76188). Short-term
exposures from golf course turf was also judged to be safe having a MOE
of 1,400. (Id.). EPA concluded the cancer risk posed by boscalid was
negligible given the weak evidence of carcinogenicity in animal
studies. (Id. at 76189). In conducting these assessments, EPA
determined that the children's safety factor could be removed because
the database was complete, there was low concern for increased
sensitivity in the young, and exposure had been estimated in a
conservative fashion. (Id. at 76188).

V. NRDC's Objections

    On February 20, 2007, NRDC filed objections to the December 2006
rule establishing tolerances for boscalid on various leafy greens.
(Ref. 1). On May 21, 2007, NRDC supplemented and expanded its
objections by filing comments during the comment period held by EPA on
NRDC's initial objections. (Ref. 9).
    NRDC's objections have two main thrusts: (1) that EPA erred in
removing the children's safety factor given the finding of that young
animals had increased sensitivity to boscalid; and (2) that EPA's
decision is arbitrary and capricious due to a failure to adequately
explain its reasons for removing the children's safety factor and
because EPA's selection of NOAELs and the RfD/PAD ``are clearly
contrary to the data.'' (Ref. 1).
    With regard to increased sensitivity in young animals, NRDC relied
in its objections principally on the EPA

finding in the DNT study that rat pups had decreased body weight and
decreased body weight gain at a dose of 147 milligrams/kilogram of body
weight/day (mg/kg/day) whereas no effects were seen in the maternal
animals even at the highest dose tested (1,442 mg/kg/day). Further,
NRDC cites the rat reproduction study as evidencing increased
sensitivity in rat pups. Given this sensitivity, NRDC argues that it
was wrong for EPA to rely on a study on adult animals to set the RfD/
PAD without retaining the children's safety factor. In addition to
arguing that EPA did not give proper weight to its findings of
increased sensitivity to the young, NRDC claims that EPA analyzed the
data in several studies in a manner that understates the sensitivity of
the young and has selected a RfD/PAD that is under-protective of the
young. (NRDC's arguments on these points are presented in more detail
in Unit VII.A. below.). EPA's allegedly improper analysis is cited as
grounds for retaining the children's safety factor. NRDC claims that if
EPA had retained the children's safety factor it could not have
concluded that the boscalid tolerances are safe.
    NRDC makes no new arguments to justify its claim that EPA's
decision is arbitrary and capricious; rather, NRDC merely cross-
references its earlier assertions regarding EPA's interpretation of
science data.
    In its comments on its objections, NRDC expands on these arguments.
First, it argues that EPA erred in discounting the seriousness of the
increased sensitivity in the DNT and rat reproduction studies. NRDC
claims that EPA's analysis is based on nothing more than speculation.
(Ref. 9 at 2-4). Second, NRDC cites a third study as showing
sensitivity in young animals, the rabbit developmental study, and
argues similarly that EPA has relied on nothing more than speculation
to conclude that the demonstrated sensitivity is of low concern.
Finally, NRDC provides greater detail in support of its argument that
EPA's selection of a RfD/PAD for boscalid is not protective of children
and does not justify removal of the children's safety factor.

VI. Public Comments

    Upon receipt of the objections, EPA provided a copy of the
objections to the tolerance petitioner, BASF Corporation, as required
by the statute. Further, on March 28, 2007, EPA published a notice of
the availability of the objections and established a 60-day comment
period. (72 FR 14551, March 28, 2007). Other than from BASF, EPA
received significant comments only from NRDC - commenting on its own
objections.
    BASF's comments stressed that a complete database had been
submitted on boscalid including neurotoxicity studies that went beyond
the core toxicology database requirements. In addition, BASF asserted
that these studies showed ``no toxicologically meaningful effects [in
young animals] were observed at a dose below one that produced toxicity
to the parental animals.'' (Ref. 10 at 2). BASF contended that effects
in rat pups in the DNT and the two-generation reproduction study that
occurred at doses lower than effects in maternal animals were small
and/or transient decreases in pup body weight. (Id.).
    Because NRDC's comments on its own objections were a
supplementation of its objections, these comments were provided to BASF
and BASF was given a 30-day period for response. (Ref. 11). As to
NRDC's new arguments concerning sensitivity in the young, BASF asserts
that the data did not support that conclusion. As regards the two-
generation reproduction study and the DNT, BASF notes that, although
toxicity in the parental animals was not seen in the DNT study and was
seen only at the high dose in the reproduction study, in the chronic/
carcinogenicity study in rat, where systematic toxicity is examined
more thoroughly, adverse effects were seen at doses corresponding to
the mid and high doses in the DNT and reproduction studies. Thus, BASF
concludes that the findings of adverse effects in the young at the mid
and high doses in the DNT and reproduction studies do not show
increased sensitivity in the young. As to the rabbit developmental
study, BASF argues that, because the effects on the fetuses (increased
number of abortions) occurred at a dose that showed the maternal
animals were under stress (decreased weight gain), the study does not
show increased sensitivity in the fetuses. According to BASF, ``[t]he
rabbit is prone to spontaneously abort as a response to maternal
stress, and feed restriction alone during the gestational period may
trigger abortions in rabbits.'' (Id. at 3). Finally, BASF defends EPA's
use of the NOAEL from the chronic dog study as the Point of Departure
for setting the cRfD/PAD by presenting a ``benchmark dose'' analysis of
the relevant studies. Benchmark dose analysis involves fitting a
mathematical model to the dose response data for the purpose of
estimating the threshold effect level (i.e., the no adverse effect
level) reflecting a selected benchmark response (e.g., 5%, 10%). BASF's
benchmark dose analysis revealed that the NOAEL from the chronic dog
study was lower than the benchmark dose from DNT and two-generation
reproduction studies.

VII. EPA's Response to the Objections

    For the reasons stated below, EPA denies each of NRDC's objections.

A. NRDC's Challenge to EPA's Children's Safety Factor Determination

    NRDC contends that EPA's decision to remove the children's safety
factor was erroneous based on (1) the legal argument that whenever EPA
identifies increased sensitivity in the young it is required to retain
the full 10X children's safety factor; and (2) the scientific claim
that EPA did not have a reasoned basis for its conclusion that the
sensitivity identified in animal studies was of low concern in
evaluating whether the 10X children's safety factor should be retained
or a different factor selected.
    Before reaching the merits of these arguments, one preliminary
matter needs to be addressed. In a prior order on an objection to EPA's
removal of the children's safety factor as to different pesticides, EPA
denied the objection where retention of the children's safety factor
would not have altered EPA's conclusion on the pesticide's safety (72
FR 39318, 39323-39324, July 18, 2007). For boscalid, the retention/
removal decision appears to be critical to the safety determination
because EPA concluded that chronic exposure to boscalid for the highest
exposed population subgroup is at 38 percent of the RfD/PAD. If no
other change is made to the boscalid risk assessment other than
retaining the 10X children's safety factor, then the calculation that
boscalid exposure uses 38 percent of the RfD/PAD for the most highly-
exposed subgroup would increase by a factor of 10. Because of the
conservativeness of the exposure assessment for boscalid (assuming all
foods that may be legally treated bear tolerance level residues),
however, EPA strongly suspects that a more realistic exposure
assessment will not show a risk of concern. Exposure refinements from
the worst case assumptions of all foods containing tolerance level
residues generally reduce exposure estimates by an order of magnitude
or more. (70 FR 46706, 46732, August 10, 2005). Nonetheless, because
EPA has not completed a revised risk assessment for boscalid at this
time, it will address in this order the substance of NRDC's challenge
to EPA's decision on the children's safety factor. It should be noted
that EPA's decision on the children's safety factor for boscalid relied
in part on the conservativeness of EPA's exposure

assessment. This consideration continues to be relevant, even if, at
this point, it does obviate NRDC's objection entirely.
    1. NRDC's legal argument. NRDC argues that, because section 408
``requires that the additional FQPA tenfold safety factor `shall be
applied' to `take into account' `potential pre- and post-natal
toxicity,'' . . . [t]he clear evidence that juveniles are significantly
more vulnerable than adults compels EPA to retain or increase the
default FQPA tenfold safety factor for boscalid.'' (Ref. 1 at 3).
    On repeated occasions EPA has rejected the interpretation that the
children's safety factor provision mandates that the absence of a
particular study or a finding of pre- or post-natal toxicity or
increased sensitivity in the young removes EPA's discretion to choose a
different safety factor. (72 FR 52108, 52115-52117, September 12, 2007;
71 FR 43906, 43919, August 2, 2006). EPA explained its rationale
recently in responding to NRDC objections which made precisely the same
argument in this case:
    The statute does direct EPA to consider ``susceptibility of
infants and children'' to pesticides. (21 U.S.C.
346a(b)(2)(C)(i)(II)). It also states that an additional safety
factor to protect infants and children shall be applied ``to take
into account potential pre- and post-natal toxicity . . . .'' (21
U.S.C. 346a(b)(2)(C)). Nonetheless, in clear and unmistakable
language, Congress decreed that, ``[n]otwithstanding such
requirement for an additional margin of safety'' to take into
account potential pre- and post-natal toxicity, EPA is authorized to
choose a different safety factor if EPA has reliable data showing a
different factor is safe. (Id.). Interpreting the statute as
creating a rigid, per se rule that the identification of sensitivity
in the young removes EPA's discretion to choose a different safety
factor is inconsistent with this language and the flexibility
granted to the Agency.

(72 FR at 52117). NRDC has raised no arguments in its current
objections which convince EPA to vary from its long-held
interpretation.
    2. NRDC's scientific argument. NRDC makes five claims as to why the
evidence on increased sensitivity in the young is of such significance
that it was inappropriate for EPA to remove the children's safety
factor. NRDC also argues that an alleged lack of reliable data
supporting EPA's derivation of the boscalid RfD/PAD demonstrates that
it was unlawful to remove the children's safety factor. Each claim is
addressed in turn below.
    a. The degree of increased sensitivity seen in the DNT. NRDC claims
that adverse effects on auditory startle reflex were seen at all doses
in the offspring in the DNT study and thus the dose EPA identified as a
NOAEL for the offspring (14 mg/kg/day) is actually a LOAEL. According
to NRDC, this demonstrates a higher degree of sensitivity in the
offspring. NRDC notes that a draft EPA assessment of the DNT study
concluded that there were adverse effects on the auditory startle
reflex in offspring at all tested doses. The final EPA review of the
DNT study took the opposite position: that there was not a significant
effect on the auditory startle reflex at any dose. NRDC argues that
EPA's final review is flawed because EPA misused data on the historical
level of the auditory startle reflex in rat controls in other studies
(``historical control data''). According to NRDC, EPA erred by
comparing historical control data to the results in the treated animals
in the boscalid DNT study to determine if the treated animals varied
from control animals generally. NRDC argues that the only valid use of
historical control data is as a check on whether there is a problem
with the controls in a particular study.
    EPA disagrees with NRDC's analysis and reaffirms its conclusion
that boscalid did not elicit an adverse effect on auditory startle
reflex in the DNT study. In its initial analysis of the DNT, an EPA
reviewer concluded that there were treatment-related decreases in
auditory startle reflex at all doses on post-natal-day (``PND'') 24.
This finding was based on a statistically significant decrease in
auditory startle reflex in males at both the low and high doses in the
first block of five trials and for the average effect over all trials.
The average decrease was greater in the low dose group (24%) than the
high dose group (19%). The mid-dose group had a slightly lower decrease
of 15%. In females, a statistically significant effect was only seen in
the second block of the low and mid-dose groups but no such effect was
seen for the average across blocks. Again, there was no dose-response
effect in that greater decreases were seen at the low dose than at the
mid or high dose. No statistically significant effects on auditory
startle reflex were seen on PND 60. Noting the ``limitations'' in the
data, the EPA reviewer nonetheless tentatively found a treatment-
related effect at all doses.
    In response to this tentative conclusion, the boscalid registrant
submitted historical control data on auditory startle reflex and data
concerning one male pup that died on PND 25. After examining the
historical control data, EPA concluded that the auditory startle reflex
of the controls from the boscalid DNT study were similar to historical
controls and thus the controls from the boscalid study ``should be
considered the primary source for analysis and consideration'' for this
study. (Ref. DER at 30). As to the rat which died, EPA concluded that
it was suffering from an underlying illness unrelated to treatment and
removed its data from the study. As a result, none of the individual
block trials nor the average from all trials for males evidenced a
statistically significant decrease in auditory startle reflex at PND
24. EPA also reanalyzed the statistical significance of the results for
the females and found a statistically significant effect only at the
low dose for the second block. Given the revised finding of a
statistically significant effect in only one block trial (out of five)
at one dose (out of three) in one sex on one day of testing (out of
two) and the lack of a dose response (effects only at the low dose),
EPA concluded that there was no treatment-related effect on auditory
startle reflex.
    NRDC's objection here is denied. As a preliminary matter, EPA would
note that it disagrees with NRDC's claim that historical control data
can only be used for the narrow purpose of evaluating the fitness of a
study's controls. (Refs. 12a, 12b, and 12c). This disagreement,
however, is beside the point because for the boscalid DNT study EPA
used historical control data in precisely the manner that NRDC argues
they should be used. EPA's review of the DNT specifically found that
``[h]istorical control data provided indicated that the mean startle
amplitude on PND 24 for the current study of [boscalid] was similar to
the control means of the submitted studies on PND 24. Therefore the
analysis of this group's relation to treatment groups is valid and
should be considered the primary source for analysis and evaluation.''
(Ref. 13 at 30). Finally, EPA's conclusion that the DNT study showed no
treatment-related effect on auditory startle reflex was based upon a
reasonable evaluation of the data, as demonstrated above.
    b. The sensitivity of DNT Study. NRDC claims that the DNT study is
an insensitive study because it involves examination of only one male
and one female pup per litter and that therefore EPA should have
attached more significance to the finding of increased sensitivity in
the young in that study. NRDC also criticizes the statistical analysis
of the DNT study for only including probability values (``p-values'')
representing confidence levels of 95 percent (p-value of 0.05) and 99
percent (p-value of 0.01). (Basically, a p-value defines the
probability that an observed difference between a control group and a
treatment group is based on

chance alone.). NRDC argues that rather than analyze the data against
the p-values of 0.05 and 0.01, EPA should calculate the ``actual p-
value statistic,'' and thus EPA could use its ``expert judgment on the
significance of the findings, given the limitations of the study.''
(Ref. 1 at 5).
    EPA believes that the significance attached to findings of
sensitivity in a DNT study should be driven primarily by an evaluation
of the results of the study itself. EPA would note that the development
and design of the DNT study underwent an exhaustive independent
scientific peer review as well as public comment process. (Ref. 14).
This process included multiple reviews by EPA's FIFRA Scientific
Advisory Panel and public comment opportunities as well as a scientific
workshop involving outside experts organized expressly to evaluate
developmental neurotoxicity testing issues. (Id.). NRDC's criticisms of
use of reporting statistical significance at the 95 and 99 percent
confidence levels are misplaced. Use of p-values of 0.01 and 0.05 to
document statistically significant differences between treated and
control animal groups is a long-established practice in the scientific
community. (Refs. 15a, 15b, 15c, 15d, and 15e). EPA can calculate
different levels of statistical confidence if for some reason the data
suggest that may be valuable; however, in EPA's judgment no such
reasons were present in the circumstances of the boscalid DNT study.
    c.  Weight-of-the-evidence evaluation of the two-generation
reproduction study in rats. NRDC argues that EPA undervalues the
importance of increased sensitivity identified in the two generation
reproduction study in rats based on nothing more than speculation.
According to NRDC, EPA was just ``guess[ing]'' when it stated that:
``The degree of concern is also low for the quantitative evidence of
susceptibility seen in the 2-generation reproduction study in rats
because the decreases in body weight and body weight gains were seen
primarily in the [second] generation. These may have been due to
exposure of the parental animals to high doses (above the Limit
Dose).'' (Ref. 9 at 2 (citing to 76 FR 76188) (emphasis added by
NRDC)). NRDC also suggests that EPA's ``speculation'' is
``nonsensical'' because if the second generation pups had effects due
to high dose exposures of the parents, then these effects should have
been seen in the first generation pups because their parents had the
same high dose exposures.
    In comments on NRDC's objections, BASF argues that young animals
are not more sensitive to boscalid than adult animals given that adult
animals in the chronic/carcinogenicity study in the rat experienced
adverse effects at similar dose levels as the pups in the two
generation rat study. BASF makes the same contention with regard to the
DNT study. (See Unit VII.A.2.d., below).
    EPA does not believe that the sensitivity evidenced in the pups in
the two-generation reproduction requires retention of the 10X
children's safety factor. As discussed in detail in Unit VII.A.2.f.,
the NOAEL from the chronic dog study used for the Point of Departure in
setting the chronic RfD/PAD for the liver effects is protective of the
body weight effects seen in the second generation male pups at mid and
high doses in the two-generation reproduction study. EPA disagrees with
NRDC that it was somehow improper to take into account that the body
weight effects in the pups in the two-generation reproduction study
were only seen in males and only in the second generation. These
factors bear on significance of the effects seen. Effects seen in only
one sex and only after dosing for two generations are generally
regarded as less significant than effects seen in both sexes and in
both generations of a two-generation study. Moreover, there is other
evidence from the study suggesting that body weight effects in the
young were not entitled to great weight in EPA's weight-of-the-evidence
analysis. First, absolute body weight and bodyweight gain of the male
F2 offspring of treated dams were similar to those of the
offspring of the control dams at birth. Birth is a more sensitive time
point to indicate susceptibility than subsequent time periods. (Refs.
16a, 16b, and 16c). Second, there was a lack of consistency in the
observed body weight decreases (i.e, decreased on days 7 and 21 but not
on days 4 and 17). (Ref. 17 at 20). EPA believes these factors are
important to informing its expert judgment regarding the level of
concern regarding, or the significance of, the increased sensitivity
observed in this study. In any event, EPA's determination that the
chronic RfD/PAD is protective of the pup effects seen in the
reproduction study is alone sufficient to allay any concerns regarding
increased sensitivity and pre- and post-natal toxicity raised by the
two-generation reproduction study.
    NRDC places special emphasis on EPA's suggestion that the body
weight effect may be due to the very high dose given the maternal
animals. EPA's statement on this issue was in error because, as noted,
the body weight effects were seen at both the mid and high doses in the
study in the second generation pups. Nonetheless, for the reasons
described above, identification of a clear NOAEL for body weight
effects and limited nature of the body weight effects (e.g., one sex
only, inconsistent findings at the mid dose), EPA concludes that the
chronic RfD/PAD based on a safety factor of 100X is safe for infants
and children.
    EPA does not agree that BASF has made an appropriate comparison of
the results of the two-generation reproduction study and the chronic/
carcinogenicity study given the substantial difference in time of
exposure to boscalid in the two studies.
    d. Weight-of-the-evidence evaluation of the DNT Study. NRDC argues
that EPA errs in downplaying the significance of the decreased weight
gain in pups seen in the DNT. NRDC states that EPA found there to be
low concern for the decreases in pup body weight on post-natal days 1-4
because no effects on body weight were seen at any other time and the
effects only occurred when the maternal animals were receiving an
extremely high dose (above the Limit Dose) suggesting that pup effects
were derivative of effects on the maternal animals. This reasoning is
attacked by NRDC as mere speculation. NRDC claims that ``the Agency
does not and cannot assert that inadequate weight gain on days 1-4 is
an insignificant adverse effect. Any significant reduction in weight
gain during early development is potentially harmful and may cause
permanent adverse effects.'' (Ref. 9 at 3). Further, NRDC states that
EPA has presented no empirical evidence to support its conclusion that
the high dose to the maternal animals might have been the reason for
the pup effect.
    For similar reasons to those relied upon in rejecting NRDC's
arguments concerning the two-generation reproduction study, EPA does
not believe that the sensitivity evidenced in the pups in the DNT study
requires retention of the 10X children's safety factor. As discussed in
detail in Unit VII.A.2.f., the NOAEL from the chronic dog study used
for the Point of Departure in setting the chronic RfD/PAD for the
liver/thyroid effects is protective of the transient body weight
effects seen in the pups at mid dose and the more severe pup body
weight effects at the high dose in the DNT study. EPA disagrees with
NRDC that it was somehow improper to take into account that the body
weight effects in the mid-dose pups were transient in nature - i.e.,
statistically significant decreases in body weight were seen on post-
natal

days 1-4 but the animals had recovered by day 11. The severity of an
effect aids in evaluation of the dose response curve for a pesticide;
in this case, it indicates that mid dose was not far from the actual no
adverse effect level. In any event, EPA's determination that the
chronic RfD/cPAD is protective of the pup effects seen in the DNT study
is alone sufficient to allay any concerns regarding increased
sensitivity and pre- and post-natal toxicity raised by the DNT study.
    NRDC challenges EPA's reasoning that the effects on pups' body
weight may be due to the maternal animals being exposed above the Limit
Dose. The Limit Dose is regarded as the highest dose possible that can
be given an animal without overwhelming its defense mechanisms. As a
general matter, EPA does not believe NRDC's argument is well-founded
because discounting the weight of effects seen only at or above the
Limit Dose is a well-accepted scientific precept. Here, however, EPA
erred by mentioning the Limit Dose because effects were present in the
pups at the mid dose as well as at the dose that exceeded the Limit
Dose. Nonetheless, for the reasons described above, identification of a
clear NOAEL for body weight effects and limited nature of the body
weight effects (e.g., one sex only, transient nature of effects at the
mid dose), EPA concludes that the RfD/PAD based on a safety factor of
100X is safe for infants and children.
    For the same reason as stated in Unit VII.A.2.c., EPA disagrees
with BASF's comparison of the DNT study and the chronic/carcinogenicity
study.
    e. Weight-of-the-evidence evaluation of the rabbit developmental
study. NRDC claims that EPA wrongfully disregards the qualitative
evidence of increased sensitivity seen in the rabbit developmental
study. According to NRDC, EPA expressed a low degree of concern for
increased abortions or early delivery effects on the young because they
were seen only at the Limit Dose and may have been caused by maternal
stress. NRDC faults EPA for not providing empirical evidence to support
this conclusion and argues that the Limit Dose might not be the maximum
tolerated dose for boscalid in rabbits. This type of ``speculation,''
NRDC claims, cannot meet the ``reliable data'' requirement for choosing
a different children's safety factor.
    NRDC's claims as to the rabbit developmental study, have even less
merit than its arguments as to the two-generation reproduction and DNT
studies. Not only is the chronic RfD/PAD for the thyroid effects
protective of the qualitative sensitivity seen in the rabbit
developmental study but the chronic RfD/cPAD is protective by an order
of magnitude of an effect seen only at a ``limit dose.'' The chronic
RfD/PAD is based on a NOAEL from the chronic dog study of 21.8 mg/kg/
day as compared to the NOAEL for the fetal effects in the rabbit
developmental study of 300 mg/kg/day. The fetal effects (abortions and
early delivery) were seen only at the Limit Dose. (Unlike in the two-
generation reproduction and DNT studies, adverse effects were only seen
in the young at the high dose.). Moreover, the fetal effects were seen
only in the presence of adverse effects in the maternal animals. The
primary adverse effects in the maternal animals were abortions and
early delivery (considered an adverse effect on both maternal animals
and fetuses) but the study evidenced decreased food consumption and
decreased body weight in the maternal animals as well. Although a
definitive conclusion was not reached on whether the food consumption
effects were treatment-related, evaluation of the individual animals
showed that three of the four does that aborted or delivered early
experienced dramatic reductions in food consumption. Given these
results, it was reasonable for EPA to take into account its scientific
expertise with rabbit toxicology studies which indicated that maternal
animals put under stress had a tendency to abort or deliver early.
Based on all of this evidence, EPA rejects NRDC's arguments concerning
the rabbit developmental study and concludes that the qualitative
sensitivity evidenced in the fetuses in the rabbit developmental study
does not require retention of the 10X children's safety factor. (Refs.
18 and 19).
    f. Derivation of the chronic RfD/PAD. NRDC claims that EPA erred in
its selection of a NOAEL to calculate the chronic RfD/PAD by not
relying on the lowest NOAEL from the applicable chronic studies. (Ref.
1 at 5-6). NRDC argues that, because EPA's justification for the RfD/
PAD is allegedly nothing more than speculation, EPA lacks the reliable
data necessary to remove the children's safety factor. (Ref. 9 at 4-5).
    EPA relied on three co-critical studies in selecting a NOAEL for
the chronic RfD/PAD: chronic toxicity in the rat, carcinogenicity in
the rat, and chronic toxicity in the dog. Each of these studies showed
liver effects and the rat studies also evidenced secondary effects on
the thyroid. The NOAELs for the studies tightly bunched between 21.8
and 30 mg/kg/day. EPA selected the 21.8 mg/kg/day NOAEL from the
chronic dog study to calculate the chronic RfD/PAD. EPA considered but
rejected lower NOAELs from three other studies: the 90-day subchronic
toxicity study in the dog; the two-generation reproduction study in the
rat; and the developmental neurotoxicity study. EPA's rationale for not
using the NOAELs from these studies was that the lower NOAELs from
these studies were an artifact of dose selection given the wide range
between NOAEL and LOAEL in the studies and the minimal effects seen at
the LOAEL.
    NRDC challenges EPA's conclusion claiming that EPA has ignored
``effects at significantly lower doses in juvenile animals (2-gen repro
and DNT).'' (Ref. 1 at 4). NRDC also argues that EPA's decision is
speculative because (1) ``EPA does not identify any reliable data to
support its theory that a 10x differential between NOAELs and LOAELs -
as occurred [with the three studies with lower NOAELs] - can never
result from well designed and conducted studies;'' and (2) ``EPA offers
no reliable data to support its assumption that the relationship
between the LOAELs and NOAELs across studies with different designs and
with different test species must always be the same . . . .'' (Ref. 9
at 4).
    NRDC's arguments are without merit. First, NRDC is wrong to contend
that EPA, in setting the chronic RfD/PAD, ignored ``effects at
significantly lower doses in juvenile animals'' in the two-generation
reproduction study and the DNT. EPA based the chronic RfD/PAD on the
chronic dog study. In that study the lowest dose in which adverse
effects were seen was 57.4 mg/kg/day. On the other hand, in the two-
generation reproduction study and the DNT, the lowest doses at which
adverse effects were seen were 101.2 mg/kg/day and 147 mg/kg/day,
respectively. (Ref. 18 at 17). Second, EPA is not contending, nor does
its analysis depend on, the supposition that a ``10x differential
between NOAELs and LOAELs . . . can never result from well designed and
conducted studies.'' The differential between a study's NOAEL and LOAEL
depends on the dose spacing in the study - studies with more and
closely-spaced doses are likely to yield a lower differential than
studies with fewer and widely-spaced doses. EPA is not arguing that it
is inappropriate to design a study with a factor of 10 between doses.
Third, EPA is not contending that the relationship between NOAELs and
LOAELs across studies must always be the same. Rather, EPA concluded
that the data for boscalid indicated that the NOAEL it selected as the
Point of Departure for calculating the chronic

RfD/PAD would be protective of all effects.
    In making this conclusion, EPA relied on several factors. First,
EPA compared the NOAELs and LOAELs of the six chronic studies that had
NOAELs that were relatively close. This exercise is appropriate because
the NOAEL from any one study is, in part, an artifact of the dose
selection process, and does not identify the no adverse effect level
just the level at which no effects were observed in the particular
study. In animal testing, animals are generally dosed at three or four
different levels. The dose levels are fairly widely spread (generally
2X - 10X) so that there is a good chance of identifying both a NOAEL
and a LOAEL. The actual no adverse effect level or lowest adverse
effect level will be somewhere between the identified NOAEL and LOAEL.
When multiple studies produce results in a similar range, they often
can provide valuable information about where the true no adverse effect
and lowest adverse effect levels are. The NOAELs and LOAELs for the six
studies are presented in Table 1.

                         Table 1.--Selected Chronic and Subchronic Studies for Boscalid
----------------------------------------------------------------------------------------------------------------
             Study                NOAEL male/female (m/f) in mg/kg/day            LOAEL m/f in mg/kg/day
----------------------------------------------------------------------------------------------------------------
Chronic toxicity in rats                                        21.9/30                                110/150.3
----------------------------------------------------------------------------------------------------------------
Carcinogenicity in rats                                         23/29.7                              116.1/155.6
----------------------------------------------------------------------------------------------------------------
Chronic toxicity in dogs                                      21.8/22.1                                57.4/58.3
----------------------------------------------------------------------------------------------------------------
Subchronic toxicity in dogs                                         7.6                                     78.1
----------------------------------------------------------------------------------------------------------------
Two-generation reproduction                       10.1/12.3 (offspring)                  101.2/123.9 (offspring)
 study in rats
----------------------------------------------------------------------------------------------------------------
DNT in rats                                              14 (offspring)                          147 (offspring)
----------------------------------------------------------------------------------------------------------------

    Just based on the dose spread alone, the chronic dog study appears
to provide valuable information because it has the tightest spread
between NOAEL and LOAEL.
    Second, EPA considered the effects seen in the studies. The NOAEL/
LOAELs for the chronic rat, carcinogenicity rat, and chronic dog
studies were all based primarily on effects on the liver and/or
thyroid. The other three studies had NOAEL/LOAELs based on decreased
body weight and decreased body weight gain. The first three studies
also demonstrated body weight effects but at the same or higher doses
than the organ effects. Organ effects are generally judged to be of
more serious concern than systemic toxicity as shown through body
weight effects. Given the heightened concern with the liver and thyroid
effects and the fact that body weight effects only occurred at the same
or higher doses, evaluation of the effects seen in the studies also
supported reliance on the NOAEL from the chronic dog study.
    Finally, EPA undertook a one-to-one comparison of the chronic dog
study with the three studies that had a lower NOAEL. Given that the
subchronic dog study was conducted in the same species as the chronic
dog study and that the results of the subchronic dog study were fully
consistent with the chronic dog study (i.e., based on the chronic dog
study it would be expected that 7.6 mg/kg/day would be a NOAEL and 78.1
a LOAEL), the subchronic dog study supported reliance on the NOAEL from
the chronic dog study. Further, the strength of the findings at the
LOAEL in the two-generation reproduction study and the DNT study, did
not suggest that the actual no adverse effect level for the effects
seen in these studies is far below the identified LOAEL. In the two-
generation reproduction and DNT studies, the body weight effects at the
LOAEL were either transient in nature (DNT study), not seen in both
sexes (two-generation reproduction study), or not consistently seen
post-natally (DNT and two-generation reproduction studies). (See Units
VII.A.2.c., VII.A.2.d., and VII.A.2.e.).
    Given the weight-of-the-evidence, EPA concludes it was reasonable
to choose the NOAEL from the chronic dog study in calculating the
chronic RfD/PAD. Contrary to NRDC's contention, this decision is not
based on speculation but on careful consideration of the entire
database - a complete database that provides reliable data on which to
choose a safety factor that is protective of the safety of infants and
children. In any event, EPA would note that selecting the NOAEL from
the DNT study or the two-generation reproduction study would not change
the safety conclusion on the boscalid tolerances even without any
further refinement of the worst case exposure assumptions relied upon
in the tolerance document. EPA estimated exposure was at 38 percent of
the chronic RfD/PAD and a lowering of the chronic RfD/PAD by a factor
of two due to reliance on the two-generation reproduction study (i.e.
using a NOAEL of 10.1 mg/kg/day instead of 21.8 mg/kg/day) would still
show worst case exposure to be below the chronic RfD/PAD.
    BASF, in its comments, presents a benchmark dose analysis of the
DNT and two-generation reproduction studies in support of EPA's
selection of 21.9 mg/kg/day as the Point of Departure. The benchmark
dose calculated by BASF is supportive of EPA's decision in that all of
the benchmark doses covering various endpoints in these two studies
were higher than 21.8 mg/kg/day. Although BASF's description of the
method it used for calculating these benchmark doses appears
scientifically appropriate, BASF has not submitted supporting
documentation for its calculation and EPA has not independently
verified it.
    3. Conclusion on children's safety factor. EPA disagrees both with
NRDC's legal claim that a finding of sensitivity always requires
retention of the children's safety factor and factual assertion that
the particular evidence of increased sensitivity on boscalid requires
such a result. NRDC's legal argument ignores the plain language of the
statute. NRDC's factual argument fails to take into account the entire
database.
    EPA has a complete toxicity database for boscalid. The toxicity
studies for boscalid show it generally to have low mammalian toxicity
and the database reveals no reproductive or developmental concerns,
including no developmental neurotoxic concerns. Data involving the
testing of young animals did show increased quantitative sensitivity in
the young with regard to body weight effects and qualitative

sensitivity in one developmental study. Clear NOAELs were identified
for all of these effects. Moreover, the body weight effects at the
LOAELs in these studies were either transient or inconsistent and
qualitative sensitivity occurred at the Limit Dose in the presence of
maternal toxicity. EPA reasonably concluded that using the NOAEL from
the chronic dog study was protective of all of the effects seen in the
developmental and reproduction studies. That the chronic dog study only
involved the testing of adult dogs does not raise concerns for the
young because, as noted, EPA found the NOAEL from that study to be
protective of the effects seen in all studies with the young, and the
effects of concern in the dog study, increased liver weights and
hepatic enzyme induction, are not common developmental concerns. In any
event, when rats were exposed to boscalid pre- and post-natally as well
as into adulthood in the two generation reproduction study, increased
liver weights were only seen at the Limit Dose. Thus, increased
sensitivity to liver effects in the young is not a concern. Finally,
EPA has conservatively estimated human exposure to boscalid, relying on
worst case exposures in food (assuming all registered crops contain
residues at the tolerance level), and conservative models as well as
pesticide-specific data in estimating exposure from residues in
drinking water and from residential uses. Based on consideration of all
of these data, EPA reasonably concluded it had reliable data showing
that infants and children would be safe without application of an
additional 10X safety factor.

B. NRDC's Claim That EPA's Decision is Arbitrary and Capricious

    NRDC argues that EPA's tolerance decision on boscalid was arbitrary
and capricious because (1) EPA failed to adequately explain its safety
factor decision; and (2) ``[t]he NOAELs and cPAD established by EPA for
boscalid are clearly contrary to the data . . . .'' (Ref. 1 at 7-8). In
the section of its objections addressing this claim, NRDC provides
nothing in support of its assertion that EPA provided insufficient
explanation for its children's safety factor determination. Presumably,
NRDC is referring to the aspects of the children's safety factor
determination challenged in an earlier portion of its objections and
addressed by EPA in Unit VII.A. of this order. Thus, EPA relies on Unit
VII.A. as responsive to NRDC's arbitrary and capricious claim as to the
children's safety factor decision, and denies the objection for the
reasons there stated. Similarly, to the extent NRDC is arguing that
EPA's selection of a NOAEL in the DNT study or its selection of the
NOAEL from the chronic dog study as the Point of Departure for deriving
the chronic RfD/PAD were arbitrary and capricious, EPA denies this
objection for the reasons contained in Units VII.A.2.a. and VII.A.2.f.

VIII. Regulatory Assessment Requirements

    As indicated previously, this action announces the Agency's final
order regarding objections filed under section 408 of FFDCA. As such,
this action is an adjudication and not a rule. The regulatory
assessment requirements imposed on rulemaking do not, therefore, apply
to this action.

IX. Submission to Congress and the Comptroller General

    The Congressional Review Act, (5 U.S.C. 801 et seq.), as added by
the Small Business Regulatory Enforcement Fairness Act of 1996, does
not apply because this action is not a rule for purposes of 5 U.S.C.
804(3).

X. References

    1. NRDC, ``Objection To The Establishment Of Tolerances For
Pesticide Chemical Residues Of Boscalid Docket Id No. EPA-HQ-OPP-2005-
0145'' (February 20, 2007).
    2. Office of Pesticide Programs, U.S. EPA, ``Available Information
on Assessing Pesticide Exposure From Food: A User's Guide'' (June 21,
2000).
    3. U.S. EPA, ``Residue Chemistry Test Guidelines: OPPTS 860.1500
Crop Field Trials'' (August 1996).
    4. Office of Pesticide Programs, U.S. EPA and Pest Regulatory
Management Agency, Health Canada, ``NAFTA Guidance Document for
Guidance for Setting Pesticide Tolerances Based on Field Trial Data ''
(September 28, 2005).
    5. Office of Pesticide Programs, U.S. EPA, ``Determination of the
Appropriate FQPA Safety Factor(s) in Tolerance Assessment'' (January
31, 2002).
    6. Office of Pesticide Programs, U.S. EPA, ``The Use of Data on
Cholinesterase Inhibition for Risk Assessments of Organophosphorous and
Carbamate Pesticides'' (August 18, 2000).
    7. Office of Pesticide Programs, U.S. EPA, Versar Corporation,
``Standard Operating Procedures (SOPs) for Residential Exposure
Assessments'' (Draft, December 19, 1997).
    8. Office of Prevention, Pesticides and Toxic Substances, U. S.
EPA, Memorandum from Yan Donovan to Dennis McNeilly/R.Keigwin,
``PP 1F06313 --Human Health Risk Assessment for New Fungicide
BAS 510 F (Common Name: Boscalid) -- Proposal for Tolerances for
Residues in/on Numerous Crops and Livestock Commodities'' (September 8,
2003).
    9. NRDC, ``Objection to the Establishment of Tolerances for
Pesticide Chemical Residues of Boscalid'' (May 21, 2007.
    10. BASF, ``Docket ID Number EPA-HQ-OPP-2005-0145: BASF Response to
NRDC Objection to Boscalid Pesticide Tolerances'' (May 29, 2007).
    11. Email Communication, Bryant Crowe, U.S. EPA to Khalid Akkari,
BASF, ``Notification: Boscalid - Objections'' (July 10, 2007).
    12a. W. Kaufmann. 2003. ``Current Status of Developmental
Neurotoxicity: An Industry Perspective.'' Toxicology Letters, 140-141;
pages 161-169.
    12b. U. Deschl, B. Kittle et al. 2002. ``The value of historical
control data-scientific advantages for pathologists, industry and
agencies.'' Toxicologic Patholology, Vol. 30, number 1, pages 80-87.
    12c. J.K. Haseman. 1995. ``Data Analysis: Statistical Analysis and
Use of Historical Control Data.'' Regulatory Toxicology and
Pharmacology, Vol. 21, pages 52-59.
    13. Health Effects Division, Office of Pesticide Programs, US EPA,
``Data Evaluation Record: Developmental Neurotoxicity Study - Rat; BAS
910 F'' (Date) (EPA Reviewer: William F. Sette).
    14. U.S. EPA, ``Response to Petition to Compel the U.S. EPA to
Repeal Its Test Guidelines for Developmental Neurotoxicity'' (January
3, 2005) (available at ``http://docket.epa.gov/edkpub/do /

EDKStaffCollection DetailView?objectId =0b0007d480525f44)''.
    15a. H.L. Adler and E. B. Roessler 1977. ``Introduction to
Probability and Statistics.'' 6th ed. H. Freeman. New York. 1977.
    15b. S. Gad and C.S. Weil. ``Statistics and Experimental Design for
the Toxicologist.'' Telford Press, NJ. 1986.
    15c. M. Hollander and D.A. Wolfe. ``Non parametric Statistical
Methods.'' John Wiely & Sons. New York. 1973.
    15d. R.R. Holson et al., 2007. ``Statistical Issues and Techniques
Appropriate for Developmental Neurotoxicity Testing.'' Neurotoxicology
and Teratology.
    15e. Haseman, Joseph K. 1981. ``Statistical Issues in the Design,
Analysis and Interpretation of Animal Carcinogenicity Studies.'' In:
Environmental Health Perspectives, Vol. 58, pp. 385-392.
    16a. U.S. Environmental Protection Agency. ``Guidelines for
Reproductive

Toxicity Risk Assessment.'' Federal Register 61: 56274-56322.
    16b. U.S. Environmental Protection Agency. ``Guidelines for
Developmental Toxicity Risk Assessment.'' Federal Register. 56: 63798-
63826.
    16c. ``An Evaluation and Interpretation of Reproductive Endpoints
For Human Health Risk Assessment.'' International Life Science
Institute. Health and Environmental Sciences Institute. Developmental
and Reproductive Toxicity Committee. November 1998.
    17. Health Effects Division, Office of Pesticide Programs, US EPA,
``Data Evaluation Record: Reproduction and Fertility Effects Study -
Rat; BAS 910 F'' (March 23, 2002) (EPA Reviewer: Alan Levy).
    18. Office of Prevention, Pesticides and Toxic Substances, U. S.
EPA, Memorandum from Alan Levy to Yan Donovan, ``BAS 510 F - Report of
the Hazard Identification Assessment Review Committee'' (March 7,
2003).
    19. Health Effects Division, Office of Pesticide Programs, US EPA,
``Data Evaluation Record: Prenatal Developmental Toxicity Study -
Rabbit; BAS 910 F'' (March 23, 2002) (EPA Reviewer: Alan Levy).

List of Subjects in 40 CFR Part 180

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

    Dated: January 17, 2008.
Debra Edwards,
Director, Office of Pesticide Programs.
[FR Doc. E8-1523 Filed 1-29-08; 8:45 am]

BILLING CODE 6560-50-S


[Federal Register: April 2, 2007 (Volume 72, Number 62)]
[Notices]
[Page 15742-15744]
[DOCID:fr02ap07-123]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55541; File No. SR-NSX-2007-01]

Self-Regulatory Organizations; National Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
and Amendment No. 1 Thereto to Modify Fees for Transactions Executed
Through NSTS and ITS Plans

March 27, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 5, 2007, the National Stock Exchange, Inc. (``NSX'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been substantially prepared by the
Exchange. On March 19, 2007, NSX submitted Amendment No. 1 to the
proposed rule change. NSX has filed the proposal pursuant to Section
19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which
renders the proposal effective upon filing with the Commission. The
Commission is publishing this notice to solicit comments on the
proposed rule change, as amended, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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

    The Exchange is proposing various amendments to its fees for
transactions executed through National Securities Trading System
(``NSTS''), the Exchange's legacy trading system, so that this fee
schedule will correspond more closely to the existing fees for
transactions executed through NSX BLADE, the Exchange's new trading
platform. These amendments involve proposed changes to old NSX Rule
11.10(A) (which is applicable to NSTS transactions), and the associated
NSTS Fee Schedule. The Exchange is also proposing corresponding changes
to its Fee Schedule applicable to transactions under the Intermarket
Trading System Plan and/or the Plan for the purpose of Creating and
Operating an Intermarket Communications Linkage (``ITS Plans'') for
transactions executed through the ITS Plans (``ITS Transactions''). The
text of the proposed rule change is available at NSX, the Commission's
Public Reference Room, and http://www.nsx.com.

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

    In its filing with the Commission, NSX 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. NSX 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
Background
    The Exchange has created a new state of the art trading platform,
known as NSX BLADE, which utilizes a strict price/time priority system
as the ultimate replacement for NSTS. The Exchange is in the midst of
phasing in NSX BLADE. NSX BLADE was launched on October 23, 2006. As of
the date of the initial filing of this proposed rule change, all Tape
``C'' securities have been phased into NSX BLADE from NSTS, and the
Exchange plans to transition all Tape ``A'' and Tape ``B'' securities
from NSTS to NSX BLADE in the near future.
    During this transitional period of phasing in various securities to
NSX BLADE, the Exchange will be operating both NSTS and NSX BLADE.
Until such securities are phased into NSX BLADE, Tape ``A'' and ``B''
securities will continue to be traded via NSTS.
Rule Set
    During this transitional period of phasing in various securities to
NSX BLADE, the Exchange is operating both NSTS and NSX BLADE.
Accordingly, the Exchange is operating under two sets of rules during
this phase-in period. All transactions in NSTS are operating under the
rules pertaining to NSTS (old Rule 11.9 (National Securities Trading
System) and old Rule 11.10 (National Securities Trading System Fees)
and any associated Fee Schedule) while all transactions in NSX BLADE
are operating under the NSX BLADE trading rules approved in SR-NSX-
2006-03 and the new fee rules in Chapter XVI of the Exchange Rules.
When the phase-in is complete and NSTS is no longer operational, old
Rules 11.9 and 11.10 (and any associated NSTS Fee Schedule) will be
extinguished. The Exchange has issued a Notice to ETP Holders to advise
them of the different trading systems and rules and fees applicable to
each,\5\ and will issue a Notice advising them of the fee changes with
this rule change. During this interim period, the Exchange has created
a Fee Schedule applicable to NSTS Rules (``NSTS Fee Schedule'') under
the authority of NSX Rule 16.1.\6\ Further, while the Fee Schedule for
ITS Transactions is identical to the Fee Schedule for identical
transactions entered in NSTS, the Exchange has decided to create a Fee
Schedule for ITS Transactions to make it easier for parties to identify
the specific fees associated with the ETP Holder's transactions.
---------------------------------------------------------------------------

    \5\ Regulatory Circular 06-011, issued on October 19, 2006.
    \6\ On November 14, 2006, a new NSTS Fee Schedule became
effective. See Securities Exchange Act Release No. 54753 (November
14, 2006), 71 FR 67678 (November 22, 2006) (SR-NSX-2006-14).
---------------------------------------------------------------------------

Fee Proposal

    In the instant rule filing, the Exchange is proposing amendments to
old Rule 11.10(A) and the associated NSTS Fee Schedule relating to
transactions in Tape ``A'' and ``B'' securities on NSTS, and is
proposing corresponding amendments to its Fee Schedule for ITS
Transactions. As amended, old Rule 11.10(A) and the associated NSTS Fee
Schedule would provide for an execution fee of $0.0030 per share for
removing liquidity from NSTS (in other words, a charge for taking
liquidity against an order in NSTS), and a rebate of $0.0030 per share
executed for adding liquidity into NSTS (in other words, a rebate for
the addition of liquidity to NSTS, provided that it results in an
execution through NSTS). Thus, ETP Holders taking liquidity against an
order in NSTS will be charged a fee of $0.0030 per share executed, and
ETP Holders providing liquidity into NSTS will be paid a rebate of
$0.0030 per share executed. In connection with this rule change,
language is also proposed to be added to the NSTS Fee Schedule stating
that with respect to ITS Transactions executed through NSTS, the
Exchange will pay the applicable liquidity provider rebate only after
it receives payment of the liquidity taker fee applicable to the
execution.
    This liquidity taker fee and liquidity provider rebate are proposed
to replace the current transaction fees applicable to transactions in
Tape ``A'' and ``B'' securities on NSTS. Currently, old Rule 11.10(A)
provides for a variety of fees for executions in Tape ``A'' securities,
and the NSTS Fee Schedule provides for

a $0.0030 per share liquidity taker fee and a $0.0027 per share
liquidity provider rebate for executions in Tape ``B'' securities.
These fees and rebates are proposed to be removed and replaced with the
fee structure described herein.\7\ In connection with this filing, the
Exchange also proposes to remove $50,000 monthly transaction fee cap
for transactions on NSTS that is currently provided for in old Rule
11.10(A)(i), and the quotation fee that is currently provided for in
old Rule 11.10(A)(s). The Exchange is proposing these changes to its
fees for NSTS transactions in order to harmonize its NSTS fees with the
fees applicable to transactions executed through NSX BLADE. One of the
proposed changes described above--the proposed new language in the NSTS
Fee Schedule relating to the timing of liquidity provider rebate
payments on ITS Transactions--is a policy change and, as of the date of
the initial filing of this rule change, similar language was not
contained in the Fee Schedule applicable to transactions executed
through NSX BLADE.
---------------------------------------------------------------------------

    \7\ All Tape ``C'' securities have been transitioned to NSX
BLADE, so there will be no Tape ``C'' transactions on NSTS.
---------------------------------------------------------------------------

    The liquidity taker fee and liquidity provider rebate described
above are contained in the NSTS Fee Schedule. The NSTS Fee Schedule
supplements the fees and rebates contained in old NSX Rule 11.10. If
the NSTS Fee Schedule does not contravene any fees stated in old NSX
Rule 11.10, the ETP Holder effecting a transaction via NSTS will be
charged the fees noted in old NSX Rule 11.10.
    Changes are also being proposed to the Fee Schedule for ITS
Transactions, to provide for a corresponding $0.0030 per share
liquidity taker fee for ITS Transactions executed through NSTS. Thus
ETP Holders taking liquidity will be charged under the NSTS Fee
Schedule, and executions through an ITS Plan will be charged under the
Fee Schedule for ITS Transactions (although the rates of the two
execution fees are identical). The Exchange bills non-ETP Holders using
the facilities of the Exchange for ITS Transactions under the Fee
Schedule for ITS Transactions.
    Pursuant to NSX Rule 16.1(c), the Exchange will ``provide ETP
Holders with notice of all relevant dues, fees, assessments and charges
of the Exchange.'' ETP Holders and others, including self-regulatory
organizations that are the subject of exchange-to-exchange billing,
using the Exchange will be advised of these fees through the Exchange's
Web site. In addition, ETP Holders will, simultaneously with this
filing, be notified through the issuance of a Regulatory Circular of
the changes to the Fee Schedules applicable to transactions through
NSTS and the ITS Plans.
    The fees have been designed in this manner in order to ensure that
the Exchange can continue to fulfill its obligations under the Act.
2. Statutory Basis
    NSX believes that the proposed rule change is consistent with the
provisions of Section 6 of the Act,\8\ in general, and with Sections
6(b)(4) of the Act,\9\ in particular, in that the proposal provides for
the equitable allocation of reasonable dues, fees, and other charges.
In addition, NSX believes that the proposed rule change furthers the
objectives of Section 6(b)(1) of the Act \10\ in that it helps to
assure that the Exchange is so organized and has the capacity to be
able to carry out the purposes of the Act and to comply, and to enforce
compliance by its ETP Holders with the Act.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
result in 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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \11\ and subparagraph (f)(2) of Rule 19b-4
thereunder \12\ because it establishes or changes a due, fee, or other
charge applicable only to a member imposed by the self-regulatory
organization. Accordingly, the proposal is effective upon Commission
receipt of the filing. At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.\13\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \12\ 17 CFR 240.19b-4(f)(2).
    \13\ 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-
day period within which the Commission may summarily abrogate the
proposal, the Commission considers the period to commence on March
19, 2007, the date on which the Exchange submitted Amendment No. 1.
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

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

File Number SR-NSX-2007-01 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-NSX-2007-01. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all

written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room. Copies of the filing
also will be available for inspection and copying at the principal
office of NSX. 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-NSX-
2007-01 and should

be submitted on or before April 23, 2007.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------

    \14\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-5984 Filed 3-30-07; 8:45 am]

BILLING CODE 8010-01-P