[Federal Register Volume 83, Number 107 (Monday, June 4, 2018)]
[Proposed Rules]
[Pages 25598-25604]
[FR Doc No: 2018-11880]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 892

[Docket No. FDA-2018-N-1553]

Radiology Devices; Reclassification of Medical Image Analyzers

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed order.

-----------------------------------------------------------------------

SUMMARY: The Food and Drug Administration (FDA or the Agency) is
issuing this proposed order to reclassify medical image analyzers
applied to mammography breast cancer, ultrasound breast lesions,
radiograph lung nodules, and radiograph dental caries detection as
postamendments class III (premarket approval) devices (regulated under
product code MYN), into class II (special controls), subject to
premarket notification. FDA is also identifying the proposed special
controls that the Agency believes are necessary to provide a reasonable
assurance of safety and effectiveness of the device. These devices are
intended to direct the clinician's attention to portions of an image
that may reveal abnormalities during interpretation of patient's
radiology images by the clinician. If finalized, this order will
reclassify these types of devices from class III to class II and reduce
regulatory burdens on industry as these types of devices will no longer
be required to submit a premarket approval application (PMA) but can
instead submit a less burdensome premarket notification (510(k)) before
marketing their device.

DATES: Submit either electronic or written comments on the proposed
order by August 3, 2018. Please see section X of this document for the
proposed effective date when the new requirements apply and for the
proposed effective date of a final order based on this proposed order.

ADDRESSES: You may submit comments as follows: Please note that late,
untimely filed comments will not be considered. Electronic comments
must be submitted on or before August 3, 2018. The https://www.regulations.gov electronic filing system will accept comments until
midnight Eastern Time at the end of August 3, 2018. Comments received
by mail/hand delivery/courier (for written/paper submissions) will be
considered timely if they are postmarked or the delivery service
acceptance receipt is on or before that date.

Electronic Submissions

    Submit electronic comments in the following way:
     Federal Rulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments. Comments submitted
electronically, including attachments, to https://www.regulations.gov
will be posted to the docket unchanged. Because your comment will be
made public, you are solely responsible for ensuring that your comment
does not include any confidential information that you or a third party
may not wish to be posted, such as medical information, your or anyone
else's Social Security number, or confidential business information,
such as a manufacturing process. Please note that if you include your
name, contact information, or other information that identifies you in
the body of your comments, that information will be posted on https://www.regulations.gov.
     If you want to submit a comment with confidential
information that you do not wish to be made available to the public,
submit the comment as a written/paper submission and in the manner
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand delivery/Courier (for written/paper
submissions): Dockets Management Staff (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For written/paper comments submitted to the Dockets
Management Staff, FDA will post your comment, as well as any
attachments, except for information submitted, marked and identified,
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All submissions received must include the Docket No.
FDA-2018-N-1553 for ``Radiology Devices; Reclassification of Medical
Image Analyzers.'' Received comments will be placed in the docket and,
except for those submitted as ``Confidential Submissions,'' publicly
viewable at https://www.regulations.gov or at the Dockets Management
Staff between 9 a.m. and 4 p.m., Monday through Friday.
     Confidential Submissions--To submit a comment with
confidential information that you do not wish to be made publicly
available, submit your comments only as a written/paper submission. You
should submit two copies total. One copy will include the information
you claim to be confidential with a heading or cover note that states
``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The Agency will
review this copy, including the claimed confidential information, in
its consideration of comments. The second copy, which will have the
claimed confidential information redacted/blacked out, will be
available for public viewing and posted on https://www.regulations.gov.
Submit both copies to the Dockets Management Staff. If you do not wish
your name and contact information to be made publicly available, you
can provide this information on the cover sheet and not in the body of
your comments and you must identify this information as
``confidential.'' Any information marked as ``confidential'' will not
be disclosed except in accordance with 21 CFR 10.20 and other
applicable disclosure law. For more information about FDA's posting of
comments to public dockets, see 80 FR 56469, September 18, 2015, or
access the information at: https://www.gpo.gov/fdsys/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
    Docket: For access to the docket to read background documents or
the electronic and written/paper comments received, go to https://www.regulations.gov and insert the docket number, found in brackets in
the heading of this document, into the ``Search'' box and follow the
prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane,
Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Robert Ochs, Center for Devices and
Radiological Health, Food and Drug Administration, 10903 New Hampshire
Ave., Bldg. 66, Rm. 4312, Silver Spring, MD 20993-0002,<PHONE_NUMBER>,
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background--Regulatory Authorities

    The Federal Food, Drug, and Cosmetic Act (the FD&C Act), as
amended, establishes a comprehensive system for the regulation of
medical devices intended for human use. Section 513 of the FD&C Act (21
U.S.C. 360c) established three categories (classes) of devices,
reflecting the regulatory controls needed to provide reasonable
assurance of their safety and effectiveness. The three categories of
devices are class I (general controls), class II (special controls),
and class III (premarket approval).
    Devices that were not in commercial distribution prior to May 28,
1976 (generally referred to as postamendments devices), are
automatically classified by section 513(f)(1) of the FD&C Act into
class III without any FDA rulemaking process. Those devices remain in
class III and require premarket approval unless, and until, the device
is reclassified into class I or II, or FDA issues an order finding the
device to be substantially equivalent, in accordance with section
513(i) of the FD&C Act, to a predicate device that does not require
premarket approval. The Agency determines whether new devices are
substantially equivalent to predicate devices by means of premarket
notification procedures in section 510(k) of the FD&C Act (21 U.S.C.
360(k)) and 21 CFR part 807.
    A postamendments device that has been initially classified in class
III under section 513(f)(1) of the FD&C Act may be reclassified into
class I or II under section 513(f)(3) of the FD&C Act. Section
513(f)(3) of the FD&C Act provides that FDA acting by order can
reclassify the device into class I or II on its own initiative, or in
response to a petition from the manufacturer or importer of the device.
To change the classification of the device, the proposed new class must
have sufficient regulatory controls to provide a reasonable assurance
of the safety and effectiveness of the device for its intended use.
    Reevaluation of the data previously before the Agency is an
appropriate basis for subsequent action where the reevaluation is made
in light of newly available regulatory authority (see Bell v. Goddard,
366 F.2d 177, 181 (7th Cir. 1966); Ethicon, Inc. v. FDA, 762 F. Supp.
382, 388-391 (D.D.C. 1991)), or in light of changes in ``medical
science'' (Upjohn v. Finch, 422 F.2d 944, 951 (6th Cir. 1970)). Whether
data before the Agency are old or new, the ``new information'' to
support reclassification

under 513(f)(3) must be ``valid scientific evidence'', as defined in
section 513(a)(3) of the FD&C Act and 21 CFR 860.7(c)(2). (See, e.g.,
General Medical Co. v. FDA, 770 F.2d 214 (D.C. Cir. 1985); Contact Lens
Mfrs. Assoc. v. FDA, 766 F.2d 592 (DC Cir.1985), cert. denied, 474 U.S.
1062 (1986)). FDA relies upon ``valid scientific evidence'' in the
classification process to determine the level of regulation for
devices. To be considered in the reclassification process, the ``valid
scientific evidence'' upon which the Agency relies must be publicly
available. Publicly available information excludes trade secret and/or
confidential commercial information, e.g., the contents of a pending
PMA (see section 520(c) of the FD&C Act (21 U.S.C. 360j(c)).
    In accordance with section 513(f)(3) of the FD&C Act, the Agency is
proposing to reclassify medical image analyzers applied to mammography
breast cancer, ultrasound breast lesions, radiograph lung nodules, and
radiograph dental caries detection from class III into class II on the
basis that there is sufficient information to establish special
controls, in addition to general controls, to provide reasonable
assurance of the safety and effectiveness of the device.
    Section 510(m) of the FD&C Act provides that a class II device may
be exempted from the 510(k) premarket notification requirements, if the
Agency determines that premarket notification is not necessary to
reasonably assure the safety and effectiveness of the device.

II. Regulatory History of the Devices

    This proposed order covers medical image analyzers including
computer-assisted/aided detection (CADe) devices for mammography breast
cancer, ultrasound breast lesions, radiograph lung nodules, and
radiograph dental caries detection that are assigned product code MYN.
These postamendments devices are currently regulated as class III
devices under section 513(f)(1) of the FD&C Act. FDA has experience
reviewing and analyzing data and information for medical image
analyzers since premarket approval of the first device for these uses
in 1998. On June 26, 1998, the Center for Devices and Radiological
Health (CDRH) approved the first CADe device included in this
reclassification order. In the December 30, 1998, Federal Register
notice (63 FR 71930), FDA announced a PMA approval order for R2
Technology, Inc. M 1000 Image Checker and the availability of the
summary of safety and effectiveness data for the device. Since 1998, 11
devices have received premarket approval for the analysis of several
modalities, including mammography, ultrasound, as well as chest and
dental radiographs. Based upon our review experience and consistent
with the FD&C Act and FDA's regulations, FDA believes that these
devices should be reclassified from class III into class II because
there is sufficient information to establish special controls that can
provide reasonable assurance of the device's safety and effectiveness.
    This proposed order does not apply to medical image analyzers/CADe
devices currently classified under Sec.  892.2050 (21 CFR 892.2050),
Picture archiving and communication system. FDA has regulated other
CADe devices intended to aid lung nodule and colon polyp detection from
computed tomography images as class II devices under Sec.  892.2050,
Picture archiving and communication system and assigned the following
product codes:
     NWE (Colon Computed Tomography System, Computer-Aided
Detection);
     OEB (Lung Computed Tomography System, Computer-Aided
Detection);
     OMJ (Chest X-Ray Computer Aided Detection).
    There have been no recalls for class II CADe devices. As of the
date of this proposal, FDA has received three recalls for class III
devices and one Medical Device Report (MDR), however, in the past 10
years only one recall for the class III devices has been received due
to distribution of the CADe device without PMA approval. None of these
recalls were classified as a Class I recall. There were also no MDRs
related to either the class III medical image analyzers or class II
CADe devices in the past 10 years. This evidence suggests that the
safety profiles for existing class III CADe devices are similar to the
class II CADe, and consequently that our regulatory controls applied
should be similar.

III. Device Description

    This proposed order applies to medical image analyzers including
CADe devices for mammography breast cancer, ultrasound breast lesions,
radiograph lung nodules, and radiograph dental caries detection that
are currently regulated as class III devices as postamendment devices.
These devices are intended to identify, mark, highlight, or in any
other manner direct the clinicians' attention to portions of a
radiology image that may reveal abnormalities during interpretation of
patient radiology images by the clinicians. These devices incorporate
pattern recognition and data analysis capabilities and operate on
previously acquired radiology images, including mammography,
radiograph, and ultrasound. These devices are not intended to replace
the review by a qualified radiologist or to be used for triage.
Furthermore, these devices are not intended to recommend diagnosis of
any diseases.

IV. Proposed Reclassification

    The Radiological Devices Panel (the Panel) convened on March 4-5,
2008 (Ref. 1) and discussed issues relating to how medical image
analyzers including CADe devices are used in clinical decisionmaking,
how the performance of the devices should be evaluated, and the
information needed to determine whether the device provides a
reasonable assurance of its safety and effectiveness. Additional
discussions were held regarding medical image analyzers for mammography
and radiograph applications. Following the 2008 Panel Meeting, FDA
convened a second meeting of the Panel on November 18, 2009. The 2009
Panel Meeting was asked to discuss two proposed draft guidances for the
evaluation of medical image analyzers and the Agency's regulatory
strategy for these devices (Ref. 2). Subsequently, the two draft
guidance documents were finalized by FDA and were made public on July
3, 2012 (Refs. 3 and 4). The guidance document entitled ``Clinical
Performance Assessment: Considerations for Computer-Assisted Detection
Devices Applied to Radiology Images and Radiology Device Data--
Premarket Approval (PMA) and Premarket Notification [510(k)]
Submissions'' provides guidance regarding clinical performance
assessment studies for CADe applied to radiology images and radiology
device data. The guidance document entitled ``Computer-Assisted
Detection Devices Applied to Radiology Images and Radiology Device
Data--Premarket Notification [510(k)] Submissions'' provides guidance
regarding premarket notification (510(k)) submissions for CADe applied
to radiology images and radiology device data. These guidance documents
describe clinical and non-clinical methods to evaluate the safety and
effectiveness of CADe devices, including medical image analyzers
covered by this proposed order. In addition to the two guidance
documents, the Panel's discussion regarding the benefits and risks of
medical image analyzers that were discussed at the 2008 and 2009 Panel
meetings have been taken into consideration by the Agency when
developing the proposed special

controls provided in this proposed order below.
    Since publication of these guidance documents, the Agency has
gained considerable experience in reviewing medical image analyzers
using the methods described in the aforementioned guidance documents.
Further, as part CDRH's 2014-2015 strategic priority ``Strike the Right
Balance Between Premarket and Postmarket Data Collection,'' a
retrospective review of class III devices subject to a PMA was
completed to determine whether or not, based on our current
understanding of the technology, reclassification may be appropriate.
During this retrospective review, FDA determined that sufficient
information exists such that the risks of false positive and false
negative results, misuse, and device failure can be mitigated, to
establish special controls that, together with general controls, can
provide a reasonable assurance of the safety and effectiveness of
medical image analyzers and therefore proposes these devices be
reclassified from class III to class II. On April 29, 2015, FDA
published a notice in the Federal Register entitled ``Retrospective
Review of Premarket Approval Application Devices; Striking the Balance
Between Premarket and Postmarket Data Collection'' in which FDA
announced plans to consider reclassifying medical image analyzers
identified with the MYN product code from class III to class II (80 FR
23798). No adverse comments were received regarding our proposed intent
for MYN.
    In accordance with section 513(f)(3) of the FD&C Act and 21 CFR
part 860, subpart C, FDA is proposing to reclassify postamendments
medical image analyzers, including CADe devices for mammography breast
cancer, ultrasound breast lesions, radiograph lung nodules, and
radiograph dental caries detection, from class III into class II. FDA
believes that there is sufficient information to establish special
controls, in addition to general controls, that would effectively
mitigate the risks to health identified in section V and provide
reasonable assurance of the safety and effectiveness of these devices.
Absent the special controls identified in this proposed order, general
controls applicable to the device are insufficient to provide
reasonable assurance of the safety and effectiveness of the device.
    FDA is proposing to create a separate classification regulation for
medical image analyzer devices that will be reclassified from class III
to II. Under this proposed order, if finalized, the medical image
analyzer devices will be identified as a prescription device. As such,
the prescription device must satisfy prescription labeling requirements
(see Sec.  801.109 (21 CFR 801.109), Prescription devices).
Prescription devices are exempt from the requirement for adequate
directions for use for the layperson under section 502(f)(1) of the
FD&C Act (21 U.S.C. 352) and Sec.  801.5 (21 CFR 801.5), as long as the
conditions of Sec.  801.109 are met. In this proposed order, if
finalized, the Agency has identified the special controls under section
513(a)(1)(B) of the FD&C Act that, together with general controls, will
provide a reasonable assurance of the safety and effectiveness for
medical image analyzer devices.
    Section 510(m) of the FD&C Act provides that FDA may exempt a class
II device from the premarket notification requirements under section
510(k) of the FD&C Act, if FDA determines that premarket notification
is not necessary to provide reasonable assurance of the safety and
effectiveness of the device. For this type of device, FDA has
determined that premarket notification is necessary to provide
reasonable assurance of safety and effectiveness and, therefore, does
not intend to exempt these proposed class II devices from the premarket
notification requirements. Persons who intend to market this type of
device must submit to FDA a 510(k) and receive clearance prior to
marketing the device.
    This proposal, if finalized, will decrease regulatory burden on the
medical device industry and will reduce private costs and expenditures
required to comply with Federal Regulations. Specifically, regulated
industry will no longer have to submit a PMA but can instead submit a
510(k) to the Agency for review prior to marketing their device. A
510(k) is a less-burdensome pathway to market a device which typically
results in a more timely premarket review compared to a PMA and reduces
the regulatory burden on industry in addition to providing more timely
access of these types of devices to patients.

V. Risks to Health

    From the Panel discussions on March 4-5, 2008, and November 18,
2009, along with the peer-reviewed literature (Refs. 5-8) and FDA's
experiences over the years in reviewing submissions for these devices
and similar devices, FDA determined the probable risks to health
associated with medical image analyzers including CADe devices for
mammography breast cancer, ultrasound breast lesions, radiograph lung
nodules, and radiograph dental caries detection are as follows: (1)
False positive results may result in complications, such as incorrect
management of the patient with possible adverse effects, and
unnecessary additional radiology imaging and/or invasive procedures,
such as biopsy; (2) false negative results could result in
complications, including incorrect diagnosis and delay in disease
management; (3) the device could be misused to analyze images from an
unintended patient population or on images acquired with incompatible
imaging hardware or incompatible image acquisition parameters,
resulting in possibly lower device performance; (4) the device could be
misused by not following the appropriate reading protocol, which may
lead to lower sensitivity; and (5) device failure could result in the
absence or delay of device output, or incorrect device output, which
could likewise lead to inaccurate patient assessment.

VI. Summary of the Reasons for Reclassification

    After considering the information above, FDA has determined that
all class III medical image analyzers currently approved by FDA should
be reclassified into class II on the basis that special controls, in
addition to general controls, can be established to provide reasonable
assurance of the safety and effectiveness of the device. FDA believes
that the risks to health associated with medical image analyzers
applied to mammography breast cancer, ultrasound breast lesions,
radiograph lung nodules, and radiograph dental caries detection can be
mitigated with special controls and that these mitigations will provide
a reasonable assurance of its safety and effectiveness. FDA's reasons
for reclassification of these devices are as follows:
     The risk of false positive results and false negative
results can be mitigated by demonstrating, through clinical performance
assessment (e.g., reader studies), that reader performance improves
when using the medical image analyzer. In instances where a medical
image analyzer has the same intended use but has different
technological characteristics compared to the legally marketed device
(predicate), a performance comparison of the predicate and new device
evaluating with the same assessment process on the same dataset that is
representative of the intended population may be sufficient to
demonstrate device safety and effectiveness. The risk of false positive
results and false negative results can be further mitigated by special
controls that require sufficient information in labeling to provide

detailed instructions for use to the user and inform the user of the
expected device performance on a dataset representative of the intended
population.
     The risk associated with misuse of the medical image
analyzers on an unintended population can be mitigated by specifying in
the labeling and indications for use of the device the intended patient
population for which the device has been demonstrated to be effective.
This risk can be further mitigated by special controls that require
informing intended users in the labeling of foreseeable situations in
which the device is likely to fail or not to operate at its expected
performance level.
     The risk associated with misuse of the medical image
analyzer on images acquired from unintended image acquisition hardware
or image acquisition parameters can be mitigated by special controls
that require including in the device labeling specifications for
compatible imaging hardware and imaging protocols.
     The risk resulting from not following the intended reading
protocol can be mitigated by including in the labeling the indications
for use of the device, by providing adequate instructions for use
including a description of the intended reading protocol, and by
special controls requiring that the device labeling provide a detailed
description of user training that addresses appropriate reading
protocols for the device.
     The risk of device failure can be mitigated by requiring
design verification and validation testing, and special controls that
require device operating instructions. This risk can be further
mitigated by special controls that require informing users in the
labeling of foreseeable situations in which the device is likely to
fail or not to operate at its expected performance level.

VII. Proposed Special Controls

    FDA believes that the following special controls, in addition to
general controls, are sufficient to mitigate the risks to health
described in section V and provide a reasonable assurance of safety and
effectiveness for these medical image analyzers:
     Design verification and validation must include detailed
descriptions of image analysis algorithms, detailed descriptions of
study protocols and datasets, results from performance testing
demonstrating the device improves reader performance in the intended
use population, standalone performance testing protocols and results,
and appropriate software documentation. Performance testing ensures
that the risk of false positive and false negative results is reduced.
     Labeling for the device must include detailed descriptions
of the following: patient population, the intended reading protocol,
the intended user and user training, device inputs and outputs,
compatible imaging hardware and imaging protocols. In addition, the
labeling for the device must also include applicable warnings,
limitations, precautions, device operating instructions, and a detailed
summary of the performance testing. Detailed instructions for use and
expected device performance on a dataset representative of the intended
population in labeling helps minimize the risk of false positive and
false negative results. Labeling ensures proper use of the device,
including warnings to inform users of foreseeable situations in which
the device is likely to fail or not to operate at its expected
performance level.
    Table 1 shows how FDA believes the special controls set forth in
the proposed order will mitigate each of the risks to health described
in section V.

   Table 1--Risks to Health and Mitigation Measures for Medical Image
                                Analyzers
------------------------------------------------------------------------
                                             Mitigation measures/21 CFR
         Identified risk to health                     section
------------------------------------------------------------------------
False positive results....................  Special controls 1 (21 CFR
                                             892.2070(b)(1)) and 2 (21
                                             CFR 892.2070(b)(2)).
False negative results....................  Special controls 1 (21 CFR
                                             892.2070(b)(1)) and 2 (21
                                             CFR 892.2070(b)(2)).
Device misuse (analyzing images from an     Special control 2 (21 CFR
 unintended patient population, images       892.2070(b)(2)).
 acquired with incompatible imaging
 hardware, or incompatible image
 acquisition parameters) resulting in
 possibly lower device performance.
Device misuse (not following the            Special control 2 (21 CFR
 appropriate reading protocol) which may     892.2070(b)(2)).
 lead to lower sensitivity.
Device failure............................  Special control 2 (21 CFR
                                             892.2070(b)(2)).
------------------------------------------------------------------------

    In addition, FDA is proposing to limit these devices to
prescription use under Sec.  801.109. Prescription devices are exempt
from the requirement for adequate directions for use for the layperson
under section 502(f)(1) of the FD&C Act and Sec.  801.5, as long as the
conditions of Sec.  801.109 are met (referring to 21 U.S.C. 352(f)(1)).
Under Sec.  807.81, the device would continue to be subject to 510(k)
notification requirements.
    If this proposed order is finalized, medical image analyzers
including CADe devices for mammography breast cancer, ultrasound breast
lesions, radiograph lung nodules, and radiograph dental caries
detection will be reclassified into class II. The reclassification will
be codified in Sec.  892.2070. FDA believes that adherence to the
proposed special controls, in addition to the general controls, is
necessary to provide a reasonable assurance of the safety and
effectiveness of the devices. FDA intends to update the guidance
document entitled ``Clinical Performance Assessment: Considerations for
Computer-Assisted Detection Devices Applied to Radiology Images and
Radiology Device Data--Premarket Approval (PMA) and Premarket
Notification [510(k)] Submissions'' to make it consistent with this
reclassification upon finalization of this proposed reclassification
order.

VIII. Analysis of Environmental Impact

    The Agency has determined under 21 CFR 25.34(b) that this action is
of a type that does not individually or cumulatively have a significant
effect on the human environment. Therefore, neither an environmental
assessment nor an environmental impact statement is required.

IX. Paperwork Reduction Act of 1995

    FDA tentatively concludes that this proposed order contains no new
collections of information. Therefore, clearance by the Office of
Management and Budget (OMB) under the Paperwork Reduction Act of 1995
(PRA) (44 U.S.C. 3501-3520) is not required. This

proposed order refers to previously approved collections of information
found in other FDA regulations. These collections of information are
subject to review by OMB under the PRA. The collections of information
in 21 CFR part 807, subpart E have been approved under OMB control
number 0910-0120 and the collections of information in 21 CFR part 801
have been approved under OMB control number 0910-0485.

X. Proposed Effective Date

    FDA proposes that any final order based on this proposed order
become effective 30 days after its date of publication in the Federal
Register.

XI. References

    The following references are on display in the Dockets Management
Staff (see ADDRESSES) and are available for viewing by interested
persons between 9 a.m. and 4 p.m., Monday through Friday; they are also
available electronically at https://www.regulations.gov. FDA has
verified the website addresses, as of the date this document publishes
in the Federal Register, but websites are subject to change over time.

1. Transcript of the FDA Radiological Devices Panel Meeting, March
4-5, 2008 (available at: https://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfAdvisory/results.cfm?panel=24&searchtype=1&month=0&year=&maxrows=10).
2. Transcript of the FDA Radiological Devices Panel Meeting,
November 18, 2009 (available at: https://wayback.archive-it.org/7993/20170404002254/https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/MedicalDevices/MedicalDevicesAdvisoryCommittee/RadiologicalDevicesPanel/UCM197419.pdf).
3. ``Guidance for Industry and Food and Drug Administration Staff--
Computer-Assisted Detection Devices Applied to Radiology Images and
Radiology Device Data--Premarket Notification [510(k)]
Submissions,'' issued July 3, 2012 (https://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/cm187294.pdf).
4. ``Guidance for Industry and FDA Staff--Clinical Performance
Assessment: Considerations for Computer-Assisted Detection Devices
Applied to Radiology Images and Radiology Device Data--Premarket
Approval (PMA) and Premarket Notification [510(k)] Submissions,''
issued July 3, 2012 (https://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/ucm187315.pdf).
5. Dromain, C., B. Boyer, R. Ferr[eacute], et al., ``Computed-Aided
Diagnosis (CAD) in the Detection of Breast Cancer,'' European
Journal of Radiology, 82(3): 417-423 (2013).
6. Fenton, J.J., G. Xing, J.G. Elmore, et al., ``Short-Term Outcomes
of Screening Mammography Using Computer-Aided Detection: A
Population-Based Study of Medicare Enrollees,'' Annals of Internal
Medicine, 158: 580-587 (2013).
7. Gur, D., J.H. Sumkin, H.E. Rockette, et al., ``Changes in Breast
Cancer Detection and Mammography Recall Rates After the Introduction
of a Computer-Aided Detection System,'' Journal of the National
Cancer Institute, 96: 185-190 (2004).
8. Noble M., W. Bruening, S. Uhl, and K. Schoelles, ``Computer-Aided
Detection Mammography for Breast Cancer Screening: Systematic Review
and Meta-Analysis,'' Archives of Gynecology and Obstetrics, 279(6):
881-90 (2009).

List of Subjects in 21 CFR Part 892

    Radiology devices.
    Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, it is
proposed that 21 CFR part 892 be amended as follows:

PART 892--RADIOLOGY DEVICES

0
1. The authority citation for part 892 continues to read as follows:

    Authority:  21 U.S.C. 351, 360, 360c, 360e, 360j, 360l, 371.

0
2. Add Sec.  892.2070 to subpart B to read as follows:

Sec.  892.2070  Medical image analyzer.

    (a) Identification. Medical image analyzers, including computer-
assisted/aided detection (CADe) devices for mammography breast cancer,
ultrasound breast lesions, radiograph lung nodules, and radiograph
dental caries detection, is a prescription device that is intended to
identify, mark, highlight, or in any other manner direct the
clinicians' attention to portions of a radiology image that may reveal
abnormalities during interpretation of patient radiology images by the
clinicians. This device incorporates pattern recognition and data
analysis capabilities and operates on previously acquired medical
images. This device is not intended to replace the review by a
qualified radiologist, and is not intended to be used for triage, or to
recommend diagnosis.
    (b) Classification. Class II (special controls). The special
controls for this device are:
    (1) Design verification and validation must include:
    (i) A detailed description of the image analysis algorithms
including a description of the algorithm inputs and outputs, each major
component or block, and algorithm limitations.
    (ii) A detailed description of pre-specified performance testing
methods and dataset(s) used to assess whether the device will improve
reader performance as intended and to characterize the standalone
device performance. Performance testing includes one or more standalone
tests, side-by-side comparisons, or a reader study, as applicable.
    (iii) Results from performance testing that demonstrate that the
device improves reader performance in the intended use population when
used in accordance with the instructions for use. The performance
assessment must be based on appropriate diagnostic accuracy measures
(e.g., receiver operator characteristic plot, sensitivity, specificity,
predictive value, and diagnostic likelihood ratio). The test dataset
must contain a sufficient number of cases from important cohorts (e.g.,
subsets defined by clinically relevant confounders, effect modifiers,
concomitant diseases, and subsets defined by image acquisition
characteristics) such that the performance estimates and confidence
intervals of the device for these individual subsets can be
characterized for the intended use population and imaging equipment.
    (iv) Appropriate software documentation (e.g., device hazard
analysis; software requirements specification document; software design
specification document; traceability analysis; description of
verification and validation activities including system level test
protocol, pass/fail criteria, and results; and cybersecurity).
    (2) Labeling must include the following:
    (i) A detailed description of the patient population for which the
device is indicated for use.
    (ii) A detailed description of the intended reading protocol.
    (iii) A detailed description of the intended user and user training
that addresses appropriate reading protocols for the device.
    (iv) A detailed description of the device inputs and outputs.
    (v) A detailed description of compatible imaging hardware and
imaging protocols.
    (vi) Discussion of warnings, precautions, and limitations must
include situations in which the device may fail or may not operate at
its expected performance level (e.g., poor image quality or for certain
subpopulations), as applicable.
    (vii) Device operating instructions.
    (viii) A detailed summary of the performance testing, including:
test methods, dataset characteristics, results, and a summary of sub-
analyses on case distributions stratified by relevant

confounders, such as lesion and organ characteristics, disease stages,
and imaging equipment.

    Dated: May 29, 2018.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2018-11880 Filed 6-1-18; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register Volume 82, Number 78 (Tuesday, April 25, 2017)]
[Notices]
[Pages 19127-19131]
[FR Doc No: 2017-08287]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80491; File No. SR-DTC-2017-003, SR-NSCC-2017-004, SR-
FICC-2017-007]

Self-Regulatory Organizations; The Depository Trust Company;
National Securities Clearing Corporation; Fixed Income Clearing
Corporation; Notice of Filings of Proposed Rule Changes, as Modified by
Amendments No. 1, To Adopt the Clearing Agency Policy on Capital
Requirements and the Clearing Agency Capital Replenishment Plan

April 19, 2017.
    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 April 6, 2017, The Depository Trust Company (``DTC''), National
Securities Clearing Corporation (``NSCC''), and Fixed Income Clearing
Corporation (``FICC'', and together with DTC and NSCC, the ``Clearing
Agencies''), filed with the Securities and Exchange Commission
(``Commission'') the proposed rule changes. On April 13, 2017, the
Clearing Agencies filed Amendments No. 1 to the proposed rule changes,
which made technical corrections to the page numbers and the Table of
Contents in the Exhibit 5s. The proposed rule changes, as modified by
Amendments No. 1 (hereinafter collectively ``Proposed Rule Changes''),
are described in Items I and II below, which Items have been prepared
primarily by the Clearing Agencies. The Commission is publishing this
notice to solicit comments on the Proposed Rule Changes from interested
persons.
---------------------------------------------------------------------------

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

I. Clearing Agencies' Statements of the Terms of Substance of the
Proposed Rule Changes

    The Proposed Rule Changes would adopt (1) the Clearing Agency
Policy on Capital Requirements (``Capital Policy'' or ``Policy'') of
the Clearing Agencies; and (2) the Clearing Agency Capital
Replenishment Plan (``Capital Replenishment Plan'' or ``Plan'') of the
Clearing Agencies, both described below. The Capital Policy and the
Capital Replenishment Plan would be maintained by the Clearing Agencies
in compliance with Rule 17Ad-22(e)(15), under the Act, as described
below.\3\
---------------------------------------------------------------------------

    \3\ 17 CFR 240.17Ad-22(e)(15). The Commission adopted amendments
to Rule 17Ad-22, including the addition of new section 17Ad-22(e),
on September 28, 2016. See Securities Exchange Act Release No. 78961
(September 28, 2016), 81 FR 70786 (October 13, 2016) (S7-03-14).
Each of the Clearing Agencies is a ``covered clearing agency'' as
defined in Rule 17Ad-22(a)(5) and must comply with new section (e)
of Rule 17Ad-22 by April 11, 2017.
---------------------------------------------------------------------------

    Although the Clearing Agencies would consider the Capital Policy
and the Capital Replenishment Plan to be rules, the Proposed Rule
Changes do not require any changes to the Rules, By-laws and
Organizational Certificate of DTC (``DTC Rules''), the Rulebook of the
Government Securities Division of FICC (``GSD Rules''), the Clearing
Rules of the Mortgage-Backed Securities Division of FICC (``MBSD
Rules''), or the Rules & Procedures of NSCC (``NSCC Rules''), as the
Policy and the Plan would be standalone documents.\4\
---------------------------------------------------------------------------

    \4\ Capitalized terms not defined herein are defined in the DTC
Rules, GSD Rules, MBSD Rules, or NSCC Rules, as applicable,
available at http://dtcc.com/legal/rules-and-procedures.
---------------------------------------------------------------------------

II. Clearing Agencies' Statements of the Purpose of, and Statutory
Basis for, the Proposed Rule Changes

    In their filings with the Commission, the Clearing Agencies
included statements concerning the purpose of and basis for the
Proposed Rule Changes and discussed any comments they received on the
Proposed Rule Changes. The text of these statements may be examined at
the places specified in Item IV below. The Clearing Agencies have
prepared summaries, set forth in sections A, B, and C below, of the
most significant aspects of such statements.

(A) Clearing Agencies' Statements of the Purpose of, and Statutory
Basis for, the Proposed Rule Changes

1. Purpose
    The Clearing Agencies are proposing to adopt the Capital Policy,
which would set forth the manner in which each Clearing Agency
identifies, monitors, and manages its general business risk with
respect to the requirement to hold sufficient liquid net assets
(``LNA'') funded by equity to cover potential general business losses
so the Clearing Agencies can continue operations and services as a
going concern if such losses materialize. The amount of LNA funded by
equity to be held by each of the Clearing Agencies for this purpose
would be defined in the Policy as the General Business Risk

Capital Requirement. The Capital Policy would also address how each
Clearing Agency maintains a portion of retained earnings as LNA funded
by equity as its Credit Risk Capital Requirement, in accordance with
its rules and as a part of its management of credit risk.\5\
---------------------------------------------------------------------------

    \5\ LNA funded by equity held as the Clearing Agencies' Credit
Risk Capital Requirement is held in addition to resources held by
the Clearing Agencies for credit risk in compliance with Rule 17Ad-
22(e)(4), and in addition to resources held by the Clearing Agencies
for liquidity risk in compliance with Rule 17Ad-22(e)(7). 17 CFR
240.17Ad-22(e)(4), (7). Supra note 3.
---------------------------------------------------------------------------

    As described in greater detail below, the Capital Policy would
describe how each Clearing Agency's General Business Risk Capital
Requirement and Credit Risk Capital Requirement fit within the Clearing
Agencies' Capital Framework. The Policy would describe how each
Clearing Agency calculates the appropriate amount of LNA funded by
equity to be held as its General Business Risk Capital Requirement. The
Policy would also describe how each Clearing Agency maintains,
monitors, and manages its total amount of LNA funded by equity.
Finally, the Policy provides for a viable plan for the replenishment of
capital through the Capital Replenishment Plan.
    The Clearing Agencies are also proposing to adopt the Capital
Replenishment Plan as a viable plan for the replenishment of capital by
each Clearing Agency, should its equity fall close to or below the
amount being held as its Total Capital Requirement pursuant to the
Capital Policy. As described in greater detail below, the Capital
Replenishment Plan would identify the circumstances that would trigger
implementation of the Plan; the roles, responsibilities, and guiding
principles for implementation of the Plan; and an overview and
description of each of the tools that may be used to replenish capital.
    Both the Capital Policy and the Capital Replenishment Plan would be
owned and managed by the Treasury group (``Treasury'') of the Clearing
Agencies.\6\ The Boards, or such committees as may be delegated
authority by the Boards from time to time pursuant to their charter,
would review and approve the Capital Policy and the Capital
Replenishment Plan on an annual basis.
---------------------------------------------------------------------------

    \6\ The parent company of the Clearing Agencies is The
Depository Trust & Clearing Corporation (``DTCC''). DTCC operates on
a shared services model with respect to the Clearing Agencies. Most
corporate functions are established and managed on an enterprise-
wide basis pursuant to intercompany agreements under which it is
generally DTCC that provides a relevant service to a Clearing
Agency. Treasury is a part of the Finance Department and is
responsible for carrying out the roles and responsibilities
described in the Capital Policy and Capital Replenishment Plan.
---------------------------------------------------------------------------

Overview of Capital Policy
    The Capital Policy would describe how the General Business Risk
Capital Requirement and the Credit Risk Capital Requirement of each
Clearing Agency, as both are defined in the Policy and described below,
fit within the Clearing Agencies' Capital Framework. The Capital
Framework would include the total amount of capital to be held by each
of the Clearing Agencies in order to (1) comply with regulatory
requirements for general business risk, as its General Business Risk
Capital Requirement,\7\ and (2) maintain a portion of retained earnings
to address credit risks, as its Credit Risk Capital Requirement,
consistent with its rules.\8\ The Total Capital Requirement of each
Clearing Agency would be calculated as the sum of its General Business
Risk Capital Requirement and Credit Risk Capital Requirement.
---------------------------------------------------------------------------

    \7\ 17 CFR 240.17Ad-22(e)(15). Supra note 3.
    \8\ See DTC Rule 4, GSD Rule 4, MBSD Rule 4, and NSCC Rule 4 and
Addendum E. Supra note 4.
---------------------------------------------------------------------------

    In addition to the Total Capital Requirement, the Clearing
Agencies' Capital Framework would also include an additional,
discretionary amount of LNA funded by equity, referred to as a
``Buffer.'' The amount held as Buffer would be periodically reassessed
by Treasury, and would generally equal approximately four to six (4-6)
months of operating expenses for the respective Clearing Agency based
on various factors, including historical fluctuations of LNA and
estimates of potential losses from general business risk.
    Next, the Policy would describe how the Clearing Agencies each
maintain a Credit Risk Capital Requirement, comprised of a portion of
retained earnings, in accordance with their respective rules.\9\ Under
the Policy, these resources would be maintained to address losses due
to a participant default, and held in addition to the LNA funded by
equity held by each of the Clearing Agencies as its General Business
Risk Capital Requirement.
---------------------------------------------------------------------------

    \9\ Id.
---------------------------------------------------------------------------

    The Policy would also describe how each Clearing Agency would
determine the appropriate amount of LNA funded by equity to be held as
its General Business Risk Capital Requirement, which would be an amount
sufficient to cover potential general business losses so that the
Clearing Agency can continue operations and services as a going concern
if those losses materialize.\10\ Under the Policy, this amount would be
calculated for each Clearing Agency as the greatest of three separate
calculations--an amount based on that Clearing Agency's general
business risk profile (``Risk-Based Capital Requirement''), an amount
based on the time estimated to execute a recovery or orderly wind-down
of the critical operations of that Clearing Agency (``Recovery/Wind-
down Capital Requirement''), and an amount based on an analysis of that
Clearing Agency's estimated operating expenses for a six (6) month
period (``Operating Expense Capital Requirement''). On an annual basis,
each of these three capital requirements would be measured, and the
General Business Risk Capital Requirement for each Clearing Agency
would be determined as the greatest of these calculations.
---------------------------------------------------------------------------

    \10\ 17 CFR 240.17Ad-22(e)(15). Supra note 3.
---------------------------------------------------------------------------

    Under the Policy, the Risk-Based Capital Requirement of each
Clearing Agency would be calculated by identifying the general business
risk profile of that Clearing Agency through analysis of the Clearing
Agency's business performance, key performance indicators, and market
environment and through comparison of financial performance versus the
entity's budget and forecast.\11\ Treasury would then calculate the
amount necessary to cover those potential general business losses so
the Clearing Agency can continue operations and services if those
losses materialize. The sum of these amounts would constitute that
Clearing Agency's Risk-Based Capital Requirement.
---------------------------------------------------------------------------

    \11\ Under the Policy, business risks that make up a Clearing
Agency's general business risk profile would include, for example,
the risk that revenues decline or expenses grow, the operational
risks of deficiencies in its systems or disruptions to processing
from internal or external events, or investment risk of loss of
financial resources.
---------------------------------------------------------------------------

    The Recovery/Wind-down Capital Requirement of each Clearing Agency
would be determined by that Clearing Agency's Board as the amount it
deems to be sufficient to ensure a recovery or wind-down of critical
operations and services of that Clearing Agency. On an annual basis,
and in order to assist each Board in making its determination, Treasury
would calculate the greatest of (1) the estimated amount sufficient to
ensure a recovery of critical operations and services of the Clearing
Agency; and (2) the estimated amount sufficient to ensure an orderly
wind-down of critical operations and services of the Clearing
Agency.\12\
---------------------------------------------------------------------------

    \12\ Under the Policy, Treasury would make these calculations in
consultation with and reference to the plans maintained by the
Clearing Agencies that are developed by the Clearing Agencies in
compliance with Rule 17Ad-22(e)(3)(ii). 17 CFR 240.17Ad-22(e)(3).
Supra note 3. The Commission granted the Clearing Agencies a
temporary exemption from compliance with the Recovery and Wind-down
plan requirements of the Standards until December 31, 2017. See
Securities Exchange Act Release No. 80378 (April 5, 2017) (File No.
S7-03-14). Until such time as the Clearing Agencies have Recovery
and Wind-down plans that are approved by their Boards in
anticipation of compliance with Rule 17Ad-22(e)(3)(ii), the
Recovery/Wind-down Capital Requirement of each Clearing Agency would
be assumed to be zero. The General Business Risk Capital Requirement
would therefore be the greater of the Risk-Based Capital Requirement
and the Operating Expense Capital Requirement.

---------------------------------------------------------------------------

    Finally, the Operational Expense Capital Requirement of each
Clearing Agency would be determined as the greatest of (i) six (6)
times the average monthly operating expense for that Clearing Agency
over the prior twelve (12) month period, and (ii) a prospective
operating expense estimate based on forecasted expense data.
    As stated above, each of these capital requirements would be
determined on at least an annual basis, and the General Business Risk
Capital Requirement of each Clearing Agency would be the greatest of
the three calculations.
    Finally, the Policy would describe how each Clearing Agency
maintains, monitors and manages its LNA funded by equity held as its
Total Capital Requirement. The Policy would provide that each Clearing
Agency hold LNA funded by equity in an amount to meet its calculated
General Business Risk Capital Requirement in cash and cash equivalents,
which are highly liquid securities or bank deposits. The Policy would
also make clear that LNA funded by equity held to meet each Clearing
Agency's General Business Risk Capital Requirement would be held in
addition to LNA funded by equity as its Credit Risk Capital
Requirement, and also in addition to resources held by that Clearing
Agency in compliance with its regulatory requirements with respect to
credit risk and liquidity risk, as described above.
    The Policy would describe how Treasury would monitor and manage the
LNA funded by equity held by each Clearing Agency so it continues to
hold an amount equal to its Total Capital Requirement. Each Clearing
Agency would manage its general business risks in order to maintain
adequate LNA funded by equity in a number of ways, including (1) taking
steps to maintain an appropriate and sustainable level of
profitability; (2) maintaining the Buffer amount of LNA funded by
equity in addition to its Total Capital Requirement; (3) taking steps
to increase the amount of LNA funded by equity when necessary; and (4)
maintaining a viable plan for the replenishment of equity through the
Capital Replenishment Plan, described below. DTCC also maintains
insurance policies that cover certain potential losses, which are
another tool available to manage the general business risks of the
Clearing Agencies, as described in the Policy.
Overview of Capital Replenishment Plan
    The Capital Replenishment Plan would describe the framework for
each Clearing Agency to replenish LNA funded by equity through the
utilization of one or more ``replenishment tools,'' as described
further below. The circumstances that trigger the Plan would include
(i) when equity being held by a Clearing Agency is at or below an
amount equal to that Clearing Agency's Total Capital Requirement, plus
the equivalent of one (1) month of operating expenses of that Clearing
Agency, as also determined pursuant to the Policy; and (ii) the Board
of a Clearing Agency determines that the Plan should be implemented.
The Plan would identify certain risks that, if realized, may cause
these triggers to occur, including, for example, unexpected declines in
revenue, disruptions to systems or processes that lead to large losses,
or investment risks.
    Treasury would be responsible for implementation of the Plan, in
collaboration with other business areas, as necessary based on the
replenishment tools that are chosen when the Plan is triggered. The
Plan would outline the steps to be taken by Treasury once the Plan is
triggered, which include identifying the total amount of equity that
would be needed for the affected Clearing Agency to meet its Total
Capital Requirement, analyzing that Clearing Agency's financial
outlook, and selecting the appropriate replenishment tools to be
utilized. The Board of the affected Clearing Agency, or such committee
as may be delegated authority by that Board from time to time, would
approve the proposal for implementation of the Plan once it is
triggered, and review a report of each implementation of the Plan when
it is complete. The Plan would also make clear that utilization of each
replenishment tool would require involvement and coordination with
other corporate functions and other policies and procedures, and must
follow the process outlined in the operative documents related to each
tool, as identified in the Plan.
    The Plan would provide Treasury with the necessary flexibility and
discretion, as appropriate, in implementation of the Plan, including
the ability to determine, based on appropriate analysis, the sequence
and combination of replenishment tools to be used in the event the Plan
is triggered. The Plan would also set forth certain guiding principles,
including prioritization of replenishment tools that have sufficient
capacity at the time the Plan is implemented and are able to restore
the affected Clearing Agency's LNA funded by equity to an appropriate
level above its Total Capital Requirement in the shortest possible
timeframe.
    Finally, the Plan would identify the replenishment tools that may
be utilized when the Plan is implemented and the estimated timeframe
for executing each tool. These tools would serve as either (1) bridge
financing, which would provide immediate financing, but should be
considered only an initial step in implementation of the Plan; or (2)
capital replenishment, which would provide the affected Clearing Agency
with the required additional equity on a longer term basis. The
replenishment tools would include either actions taken by DTCC to raise
capital, which would then be contributed to the affected Clearing
Agency, subject to the guiding principles, or actions taken by the
Clearing Agencies to raise capital.
    With respect to those tools that involve actions taken by DTCC, the
Plan would also set forth the conditions under which the Clearing
Agencies would obtain capital through either a contribution or an
intercompany loan. For example, intercompany loans would only be
permitted from DTCC to an affected Clearing Agency if the Clearing
Agency's equity exceeds its amount of LNA. Additionally, while some of
the replenishment tools would involve the incurrence of debt by DTCC,
such funds would be contributed to the affected Clearing Agency as
either equity (as a capital contribution) or as LNA (as an intercompany
loan).
    Actions that may be taken by DTCC would include, for example, (1)
contributing existing prefunded resources to the affected Clearing
Agency; (2) borrowing under an existing line of credit to which DTCC is
a party; (3) making a claim for insurance proceeds, when applicable;
(4) authorizing, issuing and selling shares of common stock of DTCC to
certain DTCC shareholders pursuant to the terms and restrictions set
forth in the DTCC Certificate of Incorporation and the DTCC Fourth
Amended and Restated Shareholders Agreement; \13\ (5)

the issuance or sale of preferred stock by DTCC; or (6) the sale or
divesture of assets or businesses. Actions each Clearing Agency can
take to increase capital would include increasing fees for services,
when appropriate, or decreasing expenses.
---------------------------------------------------------------------------

    \13\ See Securities Exchange Act Release No. 74142 (January 27,
2015), 80 FR 5188 (January 30, 2015); (File Nos. SR-FICC-2014-810;
SR-NSCC-2014-811; SR-DTC-2014-812).
---------------------------------------------------------------------------

2. Statutory Basis
    The Clearing Agencies believe that the Proposed Rule Changes are
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a registered clearing agency. In
particular, the Clearing Agencies believe that the Capital Policy and
the Capital Replenishment Plan are both consistent with Section
17A(b)(3)(F) of the Act \14\ and Rule 17Ad-22(e)(15), under the
Act,\15\ for the reasons described below.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78q-1(b)(3)(F).
    \15\ 17 CFR 240.17Ad-22(e)(15). Supra note 3.
---------------------------------------------------------------------------

    Section 17A(b)(3)(F) of the Act requires, in part, that the rules
of the Clearing Agencies be designed to promote the prompt and accurate
clearance and settlement of securities transactions, and to assure the
safeguarding of securities and funds which are in the custody or
control of the Clearing Agencies or for which they are responsible.\16\
Together, the Capital Policy and the Capital Replenishment Plan would
be designed to ensure that each of the Clearing Agencies hold
sufficient LNA funded by equity to cover potential general business
losses so that the Clearing Agencies can continue the prompt and
accurate clearance and settlement of securities transactions and can
continue to assure the safeguarding of securities and funds which are
in their custody or control or for which they are responsible if those
losses materialize. Therefore, the Clearing Agencies believe the
Capital Policy and the Capital Replenishment Plan are consistent with
the requirements of Section 17A(b)(3)(F) of the Act.\17\
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78q-1(b)(3)(F).
    \17\ Id.
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(15), under the Act, requires the Clearing Agencies
to establish, implement, maintain and enforce written policies and
procedures reasonably designed to identify, monitor, and manage their
respective general business risk and hold sufficient liquid net assets
funded by equity to cover potential general business losses so that the
Clearing Agencies can continue operations and services as a going
concern if those losses materialize.\18\ The Clearing Agencies believe
that the Capital Policy and the Capital Replenishment Plan are designed
to meet requirements of Rule 17Ad-22(e)(15) for the reasons described
below.
---------------------------------------------------------------------------

    \18\ 17 CFR 240.17Ad-22(e)(15). Supra note 3.
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(15)(i), under the Act, requires the Clearing
Agencies to determine the amount of LNA funded by equity based upon its
general business risk profile and the length of time required to
achieve a recovery or orderly wind-down, as appropriate, of its
critical operations and services if such action is taken.\19\ Pursuant
to the Policy, each Clearing Agency's General Business Risk Capital
Requirement, or the amount of LNA funded by equity determined by the
Clearing Agency to be sufficient to cover potential general business
losses, would be calculated as the greatest of (1) an amount calculated
based on the Clearing Agency's general business risk profile, defined
as its Risk-Based Capital Requirement, (2) an amount based on the time
estimated to execute a recovery or orderly wind-down of the critical
operations of the Clearing Agency, defined as its Recovery/Wind-down
Capital Requirement, and (3) an amount based on an analysis of the
Clearing Agency's estimated operating expenses for a six (6) month
period, defined as its Operating Expense Capital Requirement. By
providing that each Clearing Agency calculate its General Business Risk
Capital Requirement as the greatest of these three calculated amounts,
the Clearing Agencies believe the Capital Policy is consistent with
Rule 17Ad-22(e)(15)(i).\20\
---------------------------------------------------------------------------

    \19\ 17 CFR 240.17Ad-22(e)(15)(i). Supra note 3.
    \20\ Id.
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(15)(ii), under the Act, requires, in part, that the
Clearing Agencies hold LNA funded by equity equal to the greater of
either (x) six months of the covered clearing agency's current
operating expenses, or (y) the amount determined by the board of
directors to be sufficient to ensure a recovery or orderly wind-down of
critical operations and services of the covered clearing agency.\21\ As
described above, the Policy would provide that each Clearing Agency
hold LNA funded by equity in an amount that is the greatest of its
Risk-Based Capital Requirement, its Recovery/Wind-down Capital
Requirement, or its Operating Expense Capital Requirement. The
Recovery/Wind-down Capital Requirement of each Clearing Agency would be
defined in the Policy as an amount determined by that Clearing Agency's
Board to be sufficient to ensure a recovery or orderly wind-down of
critical operations and services of that Clearing Agency. Therefore,
the Clearing Agencies believe the Capital Policy is consistent with
Rule 17Ad-22(e)(15)(ii).\22\
---------------------------------------------------------------------------

    \21\ 17 CFR 240.17Ad-22(e)(15)(ii). Supra note 3.
    \22\ Id.
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(15)(ii) further requires, in part, that the LNA
funded by equity held by the Clearing Agencies pursuant to Rule 17Ad-
22(e)(15)(ii) shall be (A) in addition to resources held to cover
participant defaults or other credits and liquidity risks; and (B) of
high quality and sufficiently liquid to allow the covered clearing
agency to meet its current and projected operating expenses under a
range of scenarios, including in adverse market conditions.\23\ The
Capital Policy would identify the General Business Risk Capital
Requirement of each Clearing Agency as a separate component of that
Clearing Agency's Capital Framework, and would provide that LNA funded
by equity held by each Clearing Agency as its General Business Risk
Capital Requirement be held in addition to (1) LNA funded by equity
held as that Clearing Agency's Credit Risk Capital Requirement; (2)
resources held by that Clearing Agency in compliance with Rule 17Ad-
22(e)(4) for credit risk (which resources are also held in addition to
that Clearing Agency's Credit Risk Capital Requirement); \24\ and (3)
resources held by that Clearing Agency in compliance with Rule 17Ad-
22(e)(7) for liquidity risk.\25\ Additionally, the Capital Policy would
provide that the LNA funded by equity being held by each Clearing
Agency to meet its Total Capital Requirement be held in cash and cash
equivalents, which are highly liquid securities or bank deposits.
Therefore, the Clearing Agencies believe the Capital Policy is
consistent with Rule 17Ad-22(e)(15)(ii)(A) and (B).\26\
---------------------------------------------------------------------------

    \23\ 17 CFR 240.17Ad-22(e)(15)(ii)(A), (B). Supra note 3.
    \24\ 17 CFR 240.17Ad-22(e)(4). Supra note 3.
    \25\ 17 CFR 240.17Ad-22(e)(7). Supra note 3.
    \26\ 17 CFR 240.17Ad-22(e)(15)(ii)(A), (B). Supra note 3.
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(15)(iii), under the Act, requires the Clearing
Agencies to maintain a viable plan, approved by the Boards and updated
at least annually, for raising additional equity should its equity fall
close to or below the amount required under Rule 17Ad-
22(e)(15)(ii).\27\ As described above, the Capital Replenishment Plan
would be a viable plan describing the procedures by which each of the
Clearing Agencies would replenish capital, should its capital fall
close to or below its Total Capital Requirement. Therefore, the
Clearing Agencies believe the Capital

Replenishment Plan is consistent with Rule 17Ad-22(e)(15)(iii).\28\
---------------------------------------------------------------------------

    \27\ 17 CFR 240.17Ad-22(e)(15)(iii). Supra note 3.
    \28\ Id.
---------------------------------------------------------------------------

(B) Clearing Agencies' Statements on Burden on Competition

    Each of the Clearing Agencies believes that neither the Capital
Policy nor the Capital Replenishment Plan would have any impact, or
impose any burden, on competition because the Proposed Rule Changes
would implement the Policy and the Plan as rules within the meaning of
Rule 19b-4 under the Act.\29\ The Policy and the Plan have been
developed and documented in order to satisfy the regulatory
requirements set forth above, and they generally reflect existing tools
and existing internal procedures. Existing tools that would have a
direct impact on the rights, responsibilities or obligations of members
or participants of the Clearing Agencies are reflected in the Clearing
Agencies' existing rules.\30\ Accordingly, the Policy and the Plan
themselves are documents intended to enhance the Clearing Agencies'
internal management and regulatory compliance and therefore do not have
any impact, or impose any burden, on competition.
---------------------------------------------------------------------------

    \29\ 17 CFR 240.19b-4.
    \30\ Supra note 4.
---------------------------------------------------------------------------

(C) Clearing Agencies' Statements on Comments on the Proposed Rule
Changes Received From Members, Participants, or Others

    The Clearing Agencies have not solicited or received any written
comments relating to this proposal. The Clearing Agencies will notify
the Commission of any written comments received by the Clearing
Agencies.

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the clearing agency consents, the Commission will:
    (A) by order approve or disapprove such Proposed Rule Changes, or
    (B) institute proceedings to determine whether the Proposed Rule
Changes should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the Proposed Rule
Changes are 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 email to<EMAIL_ADDRESS>Please include
File Number SR-DTC-2017-003, SR-NSCC-2017-004 or SR-FICC-2017-007 on
the subject line.

Paper Comments

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

All submissions should refer to File Number SR-DTC-2017-003, SR-NSCC-
2017-004 or SR-FICC-2017-007. One of these file numbers should be
included on the subject line if email 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 Changes that are filed with the
Commission, and all written communications relating to the Proposed
Rule Changes 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 Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street NE., Washington,
DC 20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Clearing Agencies, and on
DTCC's Web site (http://dtcc.com/legal/sec-rule-filings.aspx). 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-DTC-2017-003, SR-NSCC-2017-
004 or SR-FICC-2017-007, and should be submitted on or before May 16,
2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08287 Filed 4-24-17; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 62 (Thursday, March 31, 2016)]
[Notices]
[Page 18622]
[FR Doc No: 2016-07235]

-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. OR16-13-000]

Saddlehorn Pipeline Company, LLC; Notice of Petition for
Declaratory Order

    Take notice that on March 22, 2016, pursuant to Rule 207(a)(2) of
the Federal Energy Regulatory Commission's (Commission) Rules of
Practice and Procedure, 18 CFR 385.207(a)(2) (2015), Saddlehorn
Pipeline Company, LLC (Saddlehorn), filed a petition for a declaratory
order concerning the supplemental open season that Saddlehorn conducted
from December 2015 to January 2016, to accommodate the restructuring of
the original Saddlehorn project into an undivided joint interest
pipeline with Grand Mesa Pipeline, LLC, all as more fully explained in
the petition.
    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211, 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as appropriate. Such notices,
motions, or protests must be filed on or before the comment date.
Anyone filing a motion to intervene or protest must serve a copy of
that document on the Petitioner.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper using the ``eFiling'' link at http://www.ferc.gov. Persons unable to file electronically should submit an
original and 5 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street NE., Washington, DC
20426.
    This filing is accessible on-line at http://www.ferc.gov, using the
``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive email
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please email
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.
    Comment Date: 5:00 p.m. Eastern time on April 15, 2016.

    Dated: March 22, 2016.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2016-07235 Filed 3-30-16; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register: September 19, 2008 (Volume 73, Number 183)]
[Notices]
[Page 54417]
[DOCID:fr19se08-76]

-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[FEMA-1776-DR]

Kansas; Amendment No. 2 to Notice of a Major Disaster Declaration

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: This notice amends the notice of a major disaster declaration
for the State of Kansas (FEMA-1776-DR), dated July 9, 2008, and related
determinations.

DATES: Effective Date: September 12, 2008.

FOR FURTHER INFORMATION CONTACT: Peggy Miller, Disaster Assistance
Directorate, Federal Emergency Management Agency, 500 C Street, SW.,
Washington, DC 20472,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration
for the State of Kansas is hereby amended to include the following
areas among those areas determined to have been adversely affected by
the catastrophe declared a major disaster by the President in his
declaration of July 9, 2008.

    Barton, Ellsworth, Kingman, and Lane Counties for Public
Assistance.

(The following Catalog of Federal Domestic Assistance Numbers (CFDA)
are to be used for reporting and drawing funds: 97.030, Community
Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling;
97.033, Disaster Legal Services; 97.034, Disaster Unemployment
Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048,
Disaster Housing Assistance to Individuals and Households in
Presidentially Declared Disaster Areas; 97.049, Presidentially
Declared Disaster Assistance--Disaster Housing Operations for
Individuals and Households; 97.050, Presidentially Declared Disaster
Assistance to Individuals and Households--Other Needs; 97.036,
Disaster Grants--Public Assistance (Presidentially Declared
Disasters); 97.039, Hazard Mitigation Grant.)

R. David Paulison,
Administrator, Federal Emergency Management Agency.
[FR Doc. E8-21953 Filed 9-18-08; 8:45 am]

BILLING CODE 9110-10-P


[Federal Register Volume 79, Number 226 (Monday, November 24, 2014)]
[Proposed Rules]
[Pages 69786-69787]
[FR Doc No: 2014-27501]

=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R10-OAR-2010-1071; FRL-9919-37-Region 10]

Approval and Promulgation of Implementation Plans; State of
Washington; Regional Haze State Implementation Plan; Federal
Implementation Plan for Best Available Retrofit Technology for Alcoa
Intalco Operations, Tesoro Refining and Marketing, and Alcoa Wenatchee

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: On June 11, 2014, the Environmental Protection Agency (EPA)
published a final rule in the Federal Register concerning, in part,
promulgation of a Federal Implementation Plan (FIP) provision for
regional haze in the State of Washington. This action identifies and
corrects an error in that action by adding the factor to convert from
tons of sulfur dioxide (SO2) to pounds of SO2
that was inadvertently left out of the amendatory instructions for the
FIP for the Alcoa Wenatchee Works.

DATES: Comments must be received on or before December 24, 2014.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R10-
OAR-2010-1071, by any of the following methods:
     www.regulations.gov: Follow the on-line instructions for
submitting comments.
     Email<EMAIL_ADDRESS>     Mail: Steve Body, U.S. EPA Region 10, Office of Air, Waste
and Toxics, AWT-150, 1200 Sixth Avenue, Suite 900, Seattle, WA 98101
     Hand Delivery/Courier: U.S. EPA Region 10, 1200 Sixth
Avenue, Suite 900, Seattle, WA 98101. Attention: Steve Body, Office of
Air, Waste and Toxics, AWT-150. Such deliveries are only accepted
during normal hours of operation, and special arrangements should be
made for deliveries of boxed information.

Please see the direct final rule which is located in the Rules section
of this Federal Register for detailed instructions on how to submit
comments.

FOR FURTHER INFORMATION CONTACT: Steve Body at telephone number: (206)
553-0782, email address<EMAIL_ADDRESS>or the above EPA, Region
10 address.

SUPPLEMENTARY INFORMATION: For further information, please see the
direct final action, of the same title, which is located in the Rules
section of this Federal Register. The EPA is correcting an error made
in a final rule (79 FR 33438, June 11, 2014) by adding the conversion
factor from tons to pounds of SO2 to 40 CFR
52.2502(b)(1)(i). The EPA is making this correction without prior
proposal because the EPA views this as a noncontroversial revision and
anticipates no adverse comments. A detailed rationale for the action is
set forth in the preamble to the direct final rule. If the EPA receives
no adverse comments, the EPA will not take further action on this
proposed rule.
    If the EPA receives adverse comments, the EPA will withdraw the
direct final rule and it will not take effect. The EPA will address all
public comments in a subsequent final rule based on this proposed rule.
The EPA will not institute a second comment period on this action. Any
parties interested in commenting on this action should do so at this
time. Please note that if we receive adverse comment on an amendment,
paragraph, or section of this rule and if that provision may be severed
from the remainder of the rule, the EPA may adopt as final those
provisions of the rule that are not the subject of an adverse comment.

    Dated: October 27, 2014.
Michelle Pirzadeh,
Acting Regional Administrator, Region 10.
[FR Doc. 2014-27501 Filed 11-21-14; 8:45 am]
BILLING CODE 6560-50-P


	ENVIRONMENTAL PROTECTION AGENCY

	40 CFR Part 52

	[EPA-R03-OAR-2008-0097; FRL-        ]

Approval and Promulgation of Air Quality Implementation Plans;
Pennsylvania; Section 110(a)(1) 8-Hour Ozone Maintenance Plan and 2002
Base-Year Inventory for the Wayne County Area

AGENCY:  Environmental Protection Agency (EPA).

ACTION:  Proposed rule

SUMMARY:  EPA is proposing to approve a State Implementation Plan (SIP)
revision submitted by the Commonwealth of Pennsylvania.  The
Pennsylvania Department of Environmental Protection (PADEP) submitted a
SIP revision consisting of a maintenance plan that provides for
continued attainment of the 8-hour ozone national ambient air quality
standard (NAAQS) for at least 10 years after the April 30, 2004
designations, as well as, a 2002 base-year inventory for the Wayne
County Area.  EPA is proposing approval of the maintenance plan and the
2002 base-year inventory in accordance with the requirements of the
Clean Air Act (CAA).

DATES: Written comments must be received on or before [insert date 30
days from date of publication].

ADDRESSES:  Submit your comments, identified by Docket ID Number
EPA-R03-OAR-2008-0097 by one of the following methods:

 www.regulations.gov.  Follow the on-line instructions for submitting
comments.

     B.    E-mail<EMAIL_ADDRESS>
     C.    Mail:   EPA-R03-OAR-2008-0097, Cristina Fernandez, Chief, Air
Quality Planning Branch, Mailcode 3AP21, U.S. Environmental Protection
Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103.

     D.   Hand Delivery:  At the previously-listed EPA Region III
address.  Such deliveries are only accepted during the Docket(s normal
hours of operation, and special arrangements should be made for
deliveries of boxed information.

Instructions:  Direct your comments to Docket ID No.
EPA-R03-OAR-2008-0097.  EPA's policy is that all comments received will
be included in the public docket without change, and may be made
available online at www.regulations.gov, including any personal
information provided, unless the comment includes information claimed to
be Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through www.regulations.gov or
e-mail.  The www.regulations.gov website is an (anonymous access(
system, which means EPA will not know your identity or contact
information unless you provide it in the body of your comment.  If you
send an e-mail comment directly to EPA without going through
www.regulations.gov, your e-mail address will be automatically captured
and included as part of the comment that is placed in the public docket
and made available on the Internet.  If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment and with any disk or CD-ROM you
submit.  If EPA cannot read your comment due to technical difficulties
and cannot contact you for clarification, EPA may not be able to
consider your comment.  Electronic files should avoid the use of special
characters, any form of encryption, and be free of any defects or
viruses.

Docket:  All documents in the electronic docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute.  Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form.  Publicly available docket
materials are available either electronically in www.regulations.gov or
in hard copy during normal business hours at the Air Protection
Division, U.S. Environmental Protection Agency, Region III, 1650 Arch
Street, Philadelphia, Pennsylvania 19103.  Copies of the State submittal
are available at Pennsylvania Department of Environmental Protection,
Bureau of Air Quality Control, P.O. Box 8468, 400 Market Street,
Harrisburg, Pennsylvania 17105.

FOR FURTHER INFORMATION CONTACT: Gregory Becoat,<PHONE_NUMBER>, or by
e-mail at<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:  On December 17, 2007, PADEP formally
submitted for approval, under section 110(a)(1) of the CAA, a SIP
revision for the 8-hour ozone maintenance plan and the 2002 base-year
inventory for the Wayne County Area.

I.  Background

Section 110(a)(1) of the CAA requires that states submit to EPA plans to
maintain the NAAQS promulgated by EPA.  EPA interprets this provision to
require that areas that were maintenance areas for the 1-hour ozone
NAAQS, but attainment for the 8-hour ozone NAAQS, submit a plan to
demonstrate the continued maintenance of the 8-hour ozone NAAQS.

On May 20, 2005, EPA issued guidance that applies to areas that are
designated unclassifiable/attainment for the 8-hour ozone standard.  The
purpose of this guidance is to address the maintenance requirements in
section 110(a)(1) of the CAA, and to assist the states in the
development of a SIP.  The components from EPA’s guidance include:

(1) An attainment emissions inventory, which is based on actual
“typical summer day” emissions of volatile organic compounds (VOCs)
and nitrogen oxides (NOx) for a 10-year maintenance period, from a
base-year chosen by the state; (2) a maintenance demonstration, which
demonstrates how the area will remain in compliance with the 8-hour
ozone standard for a period of 10 years following the effective date of
designation unclassifiable/attainment (June 15, 2004); (3) an ambient
air monitoring network, which will be in continuous operation in
accordance with 40 CFR Part 58 to verify maintenance of the 8-hour ozone
standard; (4) a contingency plan, that will ensure that in the event of
a violation of the 8-hour ozone NAAQS, measures will be implemented as
promptly as possible; (5) a verification of continued attainment,
indicating how the state intends on tracking the progress of the
maintenance plan.

II.   Summary of SIP Revision

The Commonwealth of Pennsylvania has requested approval of its 8-hour
ozone maintenance plan and 2002 base-year inventory for the Wayne County
Area.  The PADEP 8-hour ozone maintenance plan addresses the five
components of EPA’s May 20, 2005 guidance, which pertains to the
maintenance requirements in section 110(a)(1) of the CAA.

Attainment Emission Inventory:  An attainment emissions inventory
includes emissions during the time period associated with the monitoring
data showing attainment.  PADEP has provided an emissions inventory for
VOCs and NOx, using 2002 as the base-year from which to project
emissions.  The 2002 inventory is consistent with EPA guidance, is based
on actual “typical summer day” emissions of VOCs and NOx, and
consists of a list of sources and their associated emissions.  PADEP
prepared comprehensive VOCs and NOx emissions inventories for the Wayne
County Area.  In the maintenance plan, PADEP included information on the
man-made sources of ozone precursors, VOCs and NOx (e.g., “stationary
sources,” “stationary area sources,” “highway vehicles,” and
“nonroad sources”).

Pennsylvania projected emissions for beyond 10 years from the effective
date of the April 30, 2004 designations for the 8-hour ozone standard.
PADEP has developed an emissions inventory for ozone precursors for the
year 2002, 2009, and 2018.  Tables 1 and 2 show the VOCs and NOx
emissions reduction summary for 2002, 2009, and 2018.

Table 1. - VOC Emissions Summary:  2002, 2009 and 2018

(tons per summer day)

Major Source Category	2002	2009	2018

Stationary Point Sources*	0.00	0.00	0.00

Stationary Area Sources	3.12	2.80	2.92

Highway Vehicles	2.54	1.66	0.96

Nonroad Sources	7.61	8.66	6.10

TOTAL	13.27	13.12	9.98

                                  * Values are greater than zero.
Values appear as zero due to rounding.

Table 2. - NOx Emissions Summary:  2002, 2009 and 2018

(tons per summer day)

Major Source Category	2002	2009	2018

Stationary Point Sources	0.10	0.10	0.10

Stationary Area Sources	0.32	0.34	0.36

Highway Vehicles	4.20	2.60	1.12

Nonroad Sources	1.46	1.35	0.99

TOTAL	6.08	4.39	2.57

EPA believes Pennsylvania has demonstrated that the VOCs and NOx
emissions in the Wayne County Area will improve due to permanent and
enforceable reductions in emissions resulting from implementation of the
SIP, federal measures, and other state-adopted measures.

Maintenance demonstration:  As Table 1 and 2 indicate, the Wayne County
Attainment Area plan shows maintenance of the 8-hour ozone NAAQS by
demonstrating that future emissions of VOCs and NOx remain at or below
the 2002 base-year emissions levels through the year 2018.

Based upon the comparison of the projected emissions and the 2002
base-year inventory emissions, along federal and state measures, EPA
concludes that PADEP successfully demonstrates that the 8-hour ozone
standard will be maintained in the Wayne County Area. Further details of
Wayne County Attainment Area’s 8-hour ozone maintenance demonstration
can be found in a Technical Support Document (TSD) prepared for this
rulemaking.

Ambient Air Quality Monitoring:  With regard to the ambient air
monitoring component of the maintenance plan, Pennsylvania commits to
continue operating its current air quality monitoring stations in
accordance with 40 CFR Part 58, to verify the attainment status of the
area, with no reductions in the number of sites from those in the
existing network unless pre-approved by EPA.

Contingency Plan:  Section 110(a)(1) of the CAA requires that the state
develop a contingency plan which will ensure that any violation of a
NAAQS is promptly corrected.  The purpose of the contingency plan is to
adopt measures, outlined in the maintenance plan, in order to assure
continued attainment in the event of a violation of the 8-hour ozone
NAAQS.  The maintenance plan should identify the events that would
“trigger” the adoption and implementation of a contingency
measure(s), the contingency measure(s) that would be adopted and
implemented, and the schedule indicating the time frame by which the
state would adopt and implement the measure(s).

Since the Wayne County Area does not have a monitor, contingency
measures will be considered if for two consecutive years the fourth
highest 8-hour ozone concentrations at the design monitor for the
Scranton-Wilkes-Barre Area are above 84 parts per billion (ppb).  If
this trigger point occurs, PADEP will evaluate whether additional local
emission control measures should be implemented in Wayne County in order
to prevent a violation of the air quality standard.  PADEP will analyze
the conditions leading to the excessive ozone levels and evaluate what
measures might be most effective in correcting the excessive ozone
levels.  PADEP will also analyze the potential emissions effect of
federal, state, and local measures that have been adopted but not yet
implemented at the time the excessive ozone levels occurred.  PADEP will
then begin the process of implementing the contingency measures outlined
in their maintenance plan.

Verification of continued attainment:  PADEP will track the attainment
status of the 8-hour ozone NAAQS for Wayne County by reviewing air
quality at the design monitor for the Scranton-Wilkes-Barre Area and
emissions data during the maintenance period.  An annual evaluation of
vehicle miles traveled and emissions reported from stationary sources
will be performed and compared to the assumptions about the factors used
in the maintenance plan. PADEP will also evaluate the periodic (every
three years) emission inventories prepared under EPA’s Consolidated
Emission Reporting Regulation (40 CFR 51, Subpart A) for any
unanticipated increases.  Based on these evaluations, PADEP will
consider whether any further emission control measures should be
implemented.

III.   Proposed Action

EPA is proposing to approve the maintenance plan and the 2002 base-year
inventory for the Wayne County Area, submitted on December 17, 2007, as
revisions to the Pennsylvania SIP.  EPA is proposing to approve the
maintenance plan and 2002 base-year inventory for the Wayne County Area
because it meets the requirements of section 110(a)(1) of the CAA.  EPA
is soliciting public comments on the issues discussed in this document.
These comments will be considered before taking final action.

IV. Statutory and Executive Order Reviews

Under the CAA, the Administrator is required to approve a SIP submission
that complies with the provisions of the Act and applicable Federal
regulations.  42 U.S.C. 7410(k); 40 CFR 52.02(a).  Thus, in reviewing
SIP submissions, EPA’s role is to approve state choices, provided that
they meet the criteria of the CAA.  Accordingly, this action merely
proposes to approve state law as meeting Federal requirements and does
not impose additional requirements beyond those imposed by state law.
For that reason, this proposed action:

is not a "significant regulatory action” subject to review by the
Office of Management and Budget under Executive Order 12866 (58 FR
51735, October 4, 1993);

does not impose an information collection burden under the provisions of
the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

is certified as not having a significant economic impact on a
substantial number of small entities under the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.);

does not contain any unfunded mandate or significantly or uniquely
affect small governments, as described in the Unfunded Mandates Reform
Act of 1995 (Public Law 104-4);

does not have Federalism implications as specified in Executive Order
13132 (64 FR 43255, August 10, 1999);

is not an economically significant regulatory action based on health or
safety risks subject to Executive Order 13045 (62 FR 19885, April 23,
1997);

is not a significant regulatory action subject to Executive Order 13211
(66 FR 28355, May 22, 2001);

is not subject to requirements of Section 12(d) of the National
Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note)
because application of those requirements would be inconsistent with the
CAA; and

does not provide EPA with the discretionary authority to address, as
appropriate, disproportionate human health or environmental effects,
using practicable and legally permissible methods, under Executive Order
12898 (59 FR 7629, February 16, 1994).

In addition, this proposed rule to approve the maintenance plan and the
2002 base-year inventory for the Wayne County Area in the Commonwealth
of Pennsylvania does not have tribal implications as specified by
Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP
is not approved to apply in Indian country located in the state, and EPA
notes that it will not impose substantial direct costs on tribal
governments or preempt tribal law.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Nitrogen dioxide,
Ozone, Reporting and recordkeeping requirements, Volatile organic
compounds.

Authority: 42 U.S.C. 7401 et seq.

_____April 3, 2008___________
__________/s/__________________

Dated:
          William T. Wisniewski, Acting

               Regional Administrator,

               Region III.

 PAGE

 PAGE   2

 PAGE  3

 PAGE  10