[Federal Register Volume 84, Number 234 (Thursday, December 5, 2019)]
[Rules and Regulations]
[Pages 66616-66620]
[FR Doc No: 2019-26130]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2018-0623; FRL-10000-33]

Propamocarb; Pesticide Tolerances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation establishes tolerances for residues of
propamocarb (also referred to as propamocarb hydrochloride (HCl) in
this document) in or on guava, starfruit, the leafy greens subgroup 4-
16A, the tuberous and corm vegetable subgroup 1C, and the fruiting
vegetable group 8-10. Interregional Research Project Number 4 (IR-4)
requested these tolerances under the Federal Food, Drug, and Cosmetic
Act (FFDCA).

DATES: This regulation is effective December 5, 2019. Objections and
requests for hearings must be received on or before February 3, 2020,
and must be filed in accordance with the instructions provided in 40
CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

ADDRESSES: The docket for this action, identified by docket
identification (ID) number EPA-HQ-OPP-2018-0623, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory
Public Docket (OPP Docket) in the Environmental Protection Agency
Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334,
1301 Constitution Ave. NW, Washington, DC 20460-0001. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>, and the telephone number for the OPP
Docket is<PHONE_NUMBER>. Please review the visitor instructions and
additional information about the docket available at http://www.epa.gov/dockets.

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

I. General Information

A. Does this action apply to me?

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

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

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

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

    Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an
objection to any aspect of this regulation and may also request a
hearing on those objections. You must file your objection or request a
hearing on this regulation in accordance with the instructions provided
in 40 CFR part 178. To ensure proper receipt by EPA, you must identify
docket ID number EPA-HQ-OPP-2018-0623 in the subject line on the first
page of your submission. All objections and requests for a hearing must
be in writing, and must be received by the Hearing Clerk on or before
February 3, 2020. Addresses for mail and hand delivery of objections
and hearing requests are provided in 40 CFR 178.25(b).
    In addition to filing an objection or hearing request with the
Hearing Clerk as described in 40 CFR part 178, please submit a copy of
the filing (excluding any Confidential Business Information (CBI)) for
inclusion in the public docket. Information not marked confidential
pursuant to 40 CFR part 2 may be disclosed publicly by EPA without
prior notice. Submit the non-CBI copy of your objection or hearing
request, identified by docket ID number EPA-HQ-OPP-2018-0623, by one of
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be CBI or other
information whose disclosure is restricted by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please follow the
instructions at http://www.epa.gov/dockets/contacts.html. Additional
instructions on commenting or visiting the docket, along with more
information about dockets generally, is available at http://www.epa.gov/dockets.

II. Summary of Petitioned-For Tolerance

    In the Federal Register of December 21, 2018 (83 FR 65660) (FRL-
9985-67), EPA issued a document pursuant to FFDCA section 408(d)(3), 21
U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP
8E8692) by IR-4, IR-4 Project Headquarters, Rutgers, The State
University of New Jersey, 500 College Road East, Suite 201 W,
Princeton, NJ 08540. The petition requested that 40 CFR part 180 be
amended by establishing tolerances for residues of the propamocarb
(propyl N-[3-(dimethylamino)propyl]carbamate in or on the following raw
agricultural commodities: Guava at 0.05 parts per million (ppm);
starfruit at 0.05 ppm; leafy greens subgroup 4-16A at 150 ppm;
vegetable, tuberous and corm, subgroup 1C at 0.30 ppm; and vegetable,
fruiting, group 8-10 at 4.0 ppm. The petition also requested to amend
40 CFR 180.499 by removing the established tolerances for the residues
of propamocarb in or on lettuce, head at 50 ppm; lettuce, leaf at 90
ppm; potato at 0.30 ppm; and vegetable, fruiting, group 8 at 2.0 ppm.
That document referenced a summary of the petition prepared by Bayer
CropScience, the registrant, which is available in the docket, http://www.regulations.gov. There were no comments received in response to the
notice of filing.
    EPA is establishing tolerances that vary slightly from what was
requested to be consistent with Organization for Economic Cooperation
and Development (OECD) Rounding Class Practice.

III. Aggregate Risk Assessment and Determination of Safety

    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a
tolerance (the legal limit for a pesticide chemical residue in or on a
food) only if EPA

determines that the tolerance is ``safe.'' Section 408(b)(2)(A)(ii) of
FFDCA defines ``safe'' to mean that ``there is a reasonable certainty
that no harm will result from aggregate exposure to the pesticide
chemical residue, including all anticipated dietary exposures and all
other exposures for which there is reliable information.'' This
includes exposure through drinking water and in residential settings
but does not include occupational exposure. Section 408(b)(2)(C) of
FFDCA requires EPA to give special consideration to exposure of infants
and children to the pesticide chemical residue in establishing a
tolerance and to ``ensure that there is a reasonable certainty that no
harm will result to infants and children from aggregate exposure to the
pesticide chemical residue. . . .''
    Consistent with FFDCA section 408(b)(2)(D), and the factors
specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available
scientific data and other relevant information in support of this
action. EPA has sufficient data to assess the hazards of and to make a
determination on aggregate exposure for propamocarb including exposure
resulting from the tolerances established by this action. EPA's
assessment of exposures and risks associated with propamocarb follows.

A. Toxicological Profile

    EPA has evaluated the available toxicity data and considered its
validity, completeness, and reliability as well as the relationship of
the results of the studies to human risk. EPA has also considered
available information concerning the variability of the sensitivities
of major identifiable subgroups of consumers, including infants and
children.
    Although propamocarb is a carbamate fungicide, it doesn not inhibit
cholinesterase like many other carbamate pesticides, such as N-methyl
carbamates. Neurotoxic effects include decreased motor activity
following acute exposure and vacuolization of the choroid plexus
(ventricles of the brain which produce cerebral spinal fluid) following
subchronic and chronic durations. Other effects observed are indicative
of toxicity to the digestive and gastro-intestinal (GI) tracts in dogs
(chronic erosive gastritis, vacuolization of the salivary gland and
stomach), and the eye (hyporeflectivity of the fundus, retinal
degeneration, and vacuolization of the retinal gland). In all species,
decreased body weights, body-weight gains, and food consumption were
observed following subchronic and chronic exposure.
    Effects in the route-specific dermal and inhalation studies were
primarily portal-of-entry effects. Dermal exposure caused dermal
irritation in rats and rabbits at relatively high doses (greater than
500 mg/kg/day). Inhalation exposure caused labored breathing and the
appearance of red material around the nose. Systemic effects were
observed following inhalation exposure at similar doses that caused
portal-of-entry effects; these included kidney cysts and changes in
hematological parameters.
    There was no evidence of increased quantitative pre- or postnatal
susceptibility in the toxicity database for propamocarb-HCl in rats or
rabbits. There was an increased qualitative susceptibility for
propamocarb-HCl in rats. In the developmental rat studies, fetal
effects included increased death, increased incidences of minor
skeletal anomalies, increased incidences of small fetus, inter-atrial
septal defects, and hemorrhage in the ears, upper GI tract, and
nasopharynx/sinuses. Maternal effects consisted of decreased absolute
body-weights, food consumption, post-implantation loss, and mortality.
In rabbits there was an increased incidence of post-implantation loss
in one of the two available studies, and no fetal effects in the second
study. In the rat 2-generation reproduction studies, offspring effects
consisted of decreased weights in both studies, as well as death,
decreased viability and lactation indices and litter size at the limit
dose (1,000 mg/kg/day) in one study. Parental effects were consistent
with those previously described for adults. Reproductive effects
consisted of increased vacuolization and decreased weight of the
epididymides, decreased sperm counts and motility, and abnormal sperm
morphology.
    The Agency has classified propamocarb-HCl as ``not likely to be
carcinogenic to humans'' by all routes of exposure based upon lack of
evidence of carcinogenicity in rats and mice.
    Specific information on the studies received and the nature of the
adverse effects caused by propamocarb as well as the no-observed-
adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-
level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in the document titled ``Propamocarb Hydrochloride
(HCl). Human Health Risk Assessment for Proposed Uses on Leafy Green
Subgroup 4-16A, Guava, and Starfruit; and Crop Conversions for Fruiting
Vegetable Group 8 to Crop Group 8-10, and Potato to Subgroup 1C
(Tuberous and Corm Vegetables Subgroup)'' on pages 28-33 in docket ID
number EPA-HQ-OPP-2018-0623.

B. Toxicological Points of Departure/Levels of Concern

    Once a pesticide's toxicological profile is determined, EPA
identifies toxicological points of departure (POD) and levels of
concern to use in evaluating the risk posed by human exposure to the
pesticide. For hazards that have a threshold below which there is no
appreciable risk, the toxicological POD is used as the basis for
derivation of reference values for risk assessment. PODs are developed
based on a careful analysis of the doses in each toxicological study to
determine the dose at which no adverse effects are observed (the NOAEL)
and the lowest dose at which adverse effects of concern are identified
(the LOAEL). Uncertainty/safety factors are used in conjunction with
the POD to calculate a safe exposure level--generally referred to as a
population-adjusted dose (PAD) or a reference dose (RfD)--and a safe
margin of exposure (MOE). For non-threshold risks, the Agency assumes
that any amount of exposure will lead to some degree of risk. Thus, the
Agency estimates risk in terms of the probability of an occurrence of
the adverse effect expected in a lifetime. For more information on the
general principles EPA uses in risk characterization and a complete
description of the risk assessment process, see http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/assessing-human-health-risk-pesticide.
    A summary of the toxicological endpoints for propamocarb used for
human risk assessment is discussed in Unit III.B. of the final rule
published in the Federal Register of February 7, 2017 (82 FR 9519)
(FRL-9957-68).

C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary
exposure to propamocarb, EPA considered exposure under the petitioned-
for tolerances as well as all existing propamocarb tolerances in 40 CFR
180.499. EPA assessed dietary exposures from propamocarb in food as
follows:
    i. Acute exposure. Quantitative acute dietary exposure and risk
assessments are performed for a food-use pesticide, if a toxicological
study has indicated the possibility of an effect of concern occurring
as a result of a 1-day or single exposure.
    Such effects were identified for propamocarb. In estimating acute
dietary exposure, EPA used food consumption information from the

United States Department of Agriculture (USDA) 2003-2008 National
Health and Nutrition Examination Survey, What We Eat in America,
(NHANES/WWEIA). As to residue levels in food, EPA used tolerance-level
residues and assumed 100 percent crop treated (PCT) for all
commodities.
    ii. Chronic exposure. In conducting the chronic dietary exposure
assessment, EPA used the food consumption data from the USDA 2003-2008
NHANES/WWEIA. As to residue levels in food, EPA used tolerance-level
residues and assumed 100 PCT for all commodities.
    iii. Cancer. Based on the data summarized in Unit III.A., EPA has
concluded that propamocarb does not pose a cancer risk to humans.
Therefore, a dietary exposure assessment for the purpose of assessing
cancer risk is unnecessary.
    iv. Anticipated residue and PCT information. EPA did not use
anticipated residue or PCT information in the dietary assessment for
propamocarb. Tolerance level residues and 100 PCT were assumed for all
food commodities.
    2. Dietary exposure from drinking water. The Agency used screening
level water exposure models in the dietary exposure analysis and risk
assessment for propamocarb in drinking water. These simulation models
take into account data on the physical, chemical, and fate/transport
characteristics of propamocarb. Further information regarding EPA
drinking water models used in pesticide exposure assessment can be
found at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/about-water-exposure-models-used-pesticide.
    Based on the Surface Water Concentration Calculator (SWCC) and
Pesticide Root Zone Model Ground Water (PRZM GW), the estimated
drinking water concentrations (EDWCs) of propamocarb for acute
exposures are 4,860 parts per billion (ppb) for surface water and 73
ppb for ground water. The EDWCs of propamocarb for chronic exposures
are 385 ppb for surface water and 70 ppb for ground water.
    Modeled estimates of drinking water concentrations were directly
entered into the dietary exposure model. For the acute dietary risk
assessment, the water concentration value of 4,860 ppb was used to
assess the contribution to drinking water. For the chronic dietary risk
assessment, the water concentration of value 385 ppb was used to assess
the contribution to drinking water.
    3. From non-dietary exposure. The term ``residential exposure'' is
used in this document to refer to nonoccupational, non-dietary exposure
(e.g., for lawn and garden pest control, indoor pest control,
termiticides, and flea and tick control on pets). Propamocarb is
registered for use on golf course turf, which may result in dermal
post-application exposures. No dermal hazard was identified in the
toxicity database, so there is no need to conduct a quantitative
residential exposure assessment.
    4. Cumulative effects from substances with a common mechanism of
toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when
considering whether to establish, modify, or revoke a tolerance, the
Agency consider ``available information'' concerning the cumulative
effects of a particular pesticide's residues and ``other substances
that have a common mechanism of toxicity.''
    Unlike other pesticides for which EPA has followed a cumulative
risk approach based on a common mechanism of toxicity, EPA has not made
a common mechanism of toxicity finding as to propamocarb-HCl and any
other substances and propamocarb-HCl does not appear to produce a toxic
metabolite produced by other substances. Although a carbamate,
propamocarb-HCl is not an N-methyl carbamate and does not cause
cholinesterase inhibition. Thus, it was not included in the N-methyl
carbamate cumulative risk assessment. For the purposes of this action,
therefore, EPA has not assumed that propamocarb-HCl has a common
mechanism of toxicity with other substances.

D. Safety Factor for Infants and Children

    1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA
shall apply an additional tenfold (10X) margin of safety for infants
and children in the case of threshold effects to account for prenatal
and postnatal toxicity and the completeness of the database on toxicity
and exposure unless EPA determines based on reliable data that a
different margin of safety will be safe for infants and children. This
additional margin of safety is commonly referred to as the FQPA Safety
Factor (SF). In applying this provision, EPA either retains the default
value of 10X, or uses a different additional safety factor when
reliable data available to EPA support the choice of a different
factor.
    2. Prenatal and postnatal sensitivity. There was no evidence of
increased quantitative pre- or postnatal susceptibility in the toxicity
database for propamocarb-HCl in rats or rabbits. There was an increased
qualitative susceptibility for propamocarb-HCl in rats. In the
developmental rat studies, fetal effects included increased death,
increased incidences of minor skeletal anomalies, increased incidences
of small fetus, inter-atrial septal defects, and hemorrhage in the
ears, upper GI tract, and nasopharynx/sinuses. Maternal effects
consisted of decreased absolute body-weights, food consumption, post-
implantation loss, and mortality. In rabbits there was an increased
incidence of post-implantation loss in one of the two available
studies, and no fetal effects in the second study. In the rat 2-
generation reproduction studies, offspring effects consisted of
decreased weights in both studies, as well as death, decreased
viability and lactation indices and litter size at the limit dose
(1,000 mg/kg/day) in one study. Parental effects were consistent with
those previously described for adults. Reproductive effects consisted
of increased vacuolization and decreased weight of the epididymides,
decreased sperm counts and motility, and abnormal sperm morphology.
    3. Conclusion. EPA has determined that reliable data show the
safety of infants and children would be adequately protected if the
FQPA SF were reduced to 1X. That decision is based on the following
findings:
    i. The toxicity database for propamocarb is complete.
    ii. There are two guidelines acute neurotoxicity (ACN) and two
subchronic neurotoxicity (SCN) studies for propamocarb-HCl. There was
evidence of neurotoxicity (decreased motor activity and vacuolization
of the choroid plexus) in several studies following propamocarb-HCl
exposure, including the ACN and SCN studies; however, concern is low
since the effects are well-characterized with clear NOAEL/LOAEL values
and the selected endpoints are protective of the observed effects.
    iii. There is no evidence of increased quantitative pre- or post-
natal susceptibility following exposure to propamocarb-HCl. There is
evidence of increased qualitative susceptibility in one of the rat
studies in the database; however, concern for these effects is low
because: (1) The effects are well characterized, (2) clear NOAELs were
established, (3) the endpoints selected are protective of these
effects, and (4) the effects were seen in the presence of maternal/
parental toxicity.
    iv. There are no residual uncertainties identified in the exposure
databases. The dietary food exposure assessments were performed based
on 100 PCT and tolerance-level residues. EPA made conservative
(protective) assumptions in the ground and surface water modeling

used to assess exposure to propamocarb in drinking water. These
assessments will not underestimate the exposure and risks posed by
propamocarb.

E. Aggregate Risks and Determination of Safety

    EPA determines whether acute and chronic dietary pesticide
exposures are safe by comparing aggregate exposure estimates to the
acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA
calculates the lifetime probability of acquiring cancer given the
estimated aggregate exposure. Short-, intermediate-, and chronic-term
risks are evaluated by comparing the estimated aggregate food, water,
and residential exposure to the appropriate PODs to ensure that an
adequate MOE exists.
    1. Acute risk. Using the exposure assumptions discussed in this
unit for acute exposure, the acute dietary exposure from food and water
to propamocarb will occupy 42% of the aPAD for all infants, the
population group receiving the greatest exposure.
    2. Chronic risk. Using the exposure assumptions described in this
unit for chronic exposure, EPA has concluded that chronic exposure to
propamocarb from food and water will utilize 53% of the cPAD for
females 13 to 49 years old, the population group receiving the greatest
exposure. Based on the explanation in Unit III.C.3., regarding
residential use patterns, chronic residential exposure to residues of
propamocarb is not expected.
    3. Short- and Intermediate-term risk. Short- and intermediate-term
aggregate exposure takes into account short- and intermediate-term
residential exposure plus chronic exposure to food and water
(considered to be a background exposure level).
    A short- and intermediate-term oral adverse effect was identified;
however, propamocarb is not registered for any use patterns that would
result in either short- or intermediate-term oral residential exposure.
Short- and intermediate-term risk is assessed based on short- and
intermediate-term residential exposure plus chronic dietary exposure.
Because there is no short- or intermediate-term oral residential
exposure and chronic dietary exposure has already been assessed under
the appropriately protective cPAD (which is at least as protective as
the POD used to assess short- or intermediate-term risk), no further
assessment of short- or intermediate-term risk is necessary, and EPA
relies on the chronic dietary risk assessment for evaluating short- and
intermediate-term risk for propamocarb.
    5. Aggregate cancer risk for U.S. population. Based on the lack of
evidence of carcinogenicity in two adequate rodent carcinogenicity
studies, propamocarb is not expected to pose a cancer risk to humans.
    6. Determination of safety. Based on these risk assessments, EPA
concludes that there is a reasonable certainty that no harm will result
to the general population, or to infants and children from aggregate
exposure to propamocarb residues.

IV. Other Considerations

A. Analytical Enforcement Methodology

    An adequate gas chromatography/nitrogen-phosphorus detection (GC/
NPD) method is available for enforcing the proposed tolerances. The
method has undergone a successful independent laboratory validation and
petition method validation and is currently listed in the Pesticide
Analytical Manual (PAM) Vol. II.

B. International Residue Limits

    In making its tolerance decisions, EPA seeks to harmonize U.S.
tolerances with international standards whenever possible, consistent
with U.S. food safety standards and agricultural practices. EPA
considers the international maximum residue limits (MRLs) established
by the Codex Alimentarius Commission (Codex), as required by FFDCA
section 408(b)(4). The Codex Alimentarius is a joint United Nations
Food and Agriculture Organization/World Health Organization food
standards program, and it is recognized as an international food safety
standards-setting organization in trade agreements to which the United
States is a party. EPA may establish a tolerance that is different from
a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain
the reasons for departing from the Codex level.
    Codex does not have maximum residue limits (MRLs) for guava and
starfruit so harmonization is not an issue.
    Codex does have MRLs for leaf and head lettuce at 100 ppm which is
different than the U.S. tolerance being established on the leafy greens
subgroup 4-16A. EPA is not harmonizing the U.S. tolerance with the
Codex MRL because based on available residue data and using the OECD
MRL calculation procedure, the tolerance value should be 150 ppm. EPA
uses the OECD MRL calculation procedure in order to ensure that the
tolerance value is not underestimated.
    Codex has MRLs on eggplant at 0.3 ppm, bell pepper at 3 ppm and
tomato at 2 ppm. The U.S. tolerance of 4 ppm on the fruiting vegetable
group 8-10 is not harmonized with the Codex MRLs for the individual
crops. Because EPA has data supporting the establishment of the crop
groups and no data that indicate a need to establish separate
individual commodities, the effect is that tolerances for individual
commodities are not harmonized with Codex MRLs.
    Codex has a potato MRL established 0.3 ppm and is harmonized with
the U.S. tolerance of 0.3 ppm on the tuberous and corm vegetable
subgroup 1C.

V. Conclusion

    Therefore, tolerances are established for residues of propamocarb
(propyl N-[3-(dimethylamino)propyl]carbamate in or on guava at 0.05
ppm; leafy greens subgroup 4-16A at 150 ppm; starfruit at 0.05 ppm;
vegetable, fruiting, group 8-10 at 4 ppm; and vegetable, tuberous and
corm, subgroup 1C at 0.3 ppm.
    Additionally, the following tolerances are withdrawn from 40 CFR
180.499 as unnecessary due to the newly established tolerances:
Lettuce, head at 50 ppm; lettuce, leaf at 90 ppm; potato at 0.30 ppm;
and vegetable, fruiting, group 8 at 2.0 ppm.

VI. Statutory and Executive Order Reviews

    This action establishes tolerances under FFDCA section 408(d) in
response to a petition submitted to the Agency. The Office of
Management and Budget (OMB) has exempted these types of actions from
review under Executive Order 12866, entitled ``Regulatory Planning and
Review'' (58 FR 51735, October 4, 1993). Because this action has been
exempted from review under Executive Order 12866, this action is not
subject to Executive Order 13211, entitled ``Actions Concerning
Regulations That Significantly Affect Energy Supply, Distribution, or
Use'' (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled
``Protection of Children from Environmental Health Risks and Safety
Risks'' (62 FR 19885, April 23, 1997), nor is it considered a
regulatory action under Executive Order 13771, entitled ``Reducing
Regulations and Controlling Regulatory Costs'' (82 FR 9339, February 3,
2017). This action does not contain any information collections subject
to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
et seq.), nor does it require any special considerations under
Executive Order 12898, entitled ``Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income

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

VII. Congressional Review Act

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

List of Subjects in 40 CFR Part 180

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

    Dated: October 25, 2019.
Daniel Rosenblatt,
Acting Director, Registration Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

PART 180--[AMENDED]

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

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

0
2. In Sec.  180.499(a):
0
a. Remove ``the following table'' and ``the following tolerance
levels'' and add ``table 1 to this paragraph (a)'' and ``the tolerance
levels in table 1 to this paragraph (a)'' in their places,
respectively; and
0
b. Revise the table.
    The revision reads as follows:

Sec.  180.499  Propamocarb; tolerances for residues.

    (a) * * *

                        Table 1 to Paragraph (a)
------------------------------------------------------------------------
                                                               Parts per
                          Commodity                             million
------------------------------------------------------------------------
Guava.......................................................        0.05
Leafy greens subgroup 4-16A.................................         150
Starfruit...................................................        0.05
Tomato, paste...............................................         5.0
Vegetable, cucurbit, group 9................................         1.5
Vegetable, fruiting, group 8-10.............................           4
Vegetable, tuberous and corm, subgroup 1C...................         0.3
------------------------------------------------------------------------

* * * * *
[FR Doc. 2019-26130 Filed 12-4-19; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register: November 14, 2008 (Volume 73, Number 221)]
[Notices]
[Page 67508-67509]
[DOCID:fr14no08-78]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OECA-2007-0466; FRL-8740-7]

Agency Information Collection Activities; Submission to OMB for
Review and Approval; State Review Framework; EPA ICR Number 2185.03,
OMB Control No. 2020-0031

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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

SUMMARY: In compliance with the Paperwork Reduction Act (PRA)(44 U.S.C.
3501 et seq.), this document announces that an Information Collection
Request (ICR) has been forwarded to the Office of Management and Budget
(OMB) for review and approval. This is a request to renew an existing
approved collection. The ICR, which is abstracted below, describes the
nature of the information collection and its estimated burden and cost.

DATES: Additional comments may be submitted on or before December 15,
2008.

ADDRESSES: Submit your comments, referencing Docket ID No. EPA-HQ-OECA-
2007-0466 to (1) EPA online using http://www.regulations.gov (our
preferred method), by e-mail to<EMAIL_ADDRESS>or by mail to:
EPA Docket Center, Environmental Protection Agency, Enforcement and
Compliance Docket, Environmental Protection Agency, Mailcode: 2201T,
1200 Pennsylvania Ave., NW., Washington, DC 20460, and (2) OMB by mail
to: Office of Information and Regulatory Affairs, Office of Management
and Budget (OMB), Attention: Desk Officer for EPA, 725 17th Street,
NW., Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Chad Carbone, Office of Enforcement
and Compliance Assurance, Office of Compliance, MC: 2221A,
Environmental Protection Agency, 1200 Pennsylvania Ave., NW.,
Washington, DC 20460; telephone number:<PHONE_NUMBER>; fax number: 202-
564-0027; e-mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: EPA has submitted the following ICR to OMB
for review and approval according to the procedures prescribed in 5 CFR
1320.12. On July 14, 2008 (73 FR 40336), EPA sought comments on this
ICR pursuant to 5 CFR 1320.8(d). EPA received no comments. Any
additional comments on this ICR should be submitted to EPA and OMB
within 30 days of this notice. EPA has established a public docket for
this ICR under Docket ID No. EPA EPA-HQ-OECA-2007-0466, which is
available for online viewing at http://www.regulations.gov, or in
person viewing at the Enforcement and Compliance Docket in the EPA
Docket Center (EPA/DC), EPA West, Room 3334, 1301 Constitution Ave.,
NW., Washington, DC. The EPA/DC Public Reading Room is open from 8 a.m.
to 4:30 p.m., Monday through Friday, excluding legal holidays. The
telephone number for the Reading Room is<PHONE_NUMBER>, and the
telephone number for the Enforcement and Compliance Docket. Docket is
202-566-1927. Use EPA's electronic docket and comment system at http://
www.regulations.gov, to submit or view public comments, access the
index listing of the contents of the docket, and to access those
documents in the docket that are available electronically. Once in the
system, select ``docket search,'' then key in the docket ID number
identified above. Please note that EPA's policy is that public
comments, whether submitted electronically or in paper, will be made
available for public viewing at http://www.regulations.gov as EPA
receives them and without change, unless the comment contains
copyrighted material, confidential business information (CBI), or other
information whose public disclosure is restricted by statute. For
further information about the electronic docket, go to http://
www.regulations.gov.
    Title: State Review Framework.
    ICR numbers: EPA ICR No. 2185.03, OMB Control No. 2020-0031.
    ICR Status: This ICR is scheduled to expire on November 30, 2008.
Under OMB regulations, the Agency may continue to conduct or sponsor
the collection of information while this submission is pending at OMB.
An Agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information, unless it displays a currently
valid OMB control number. The OMB control numbers for EPA's regulations
in title 40 of the CFR, after appearing in the Federal Register when
approved, are listed in 40 CFR part 9, are displayed either by
publication in the Federal Register or by other appropriate means, such
as on the related collection instrument or form, if applicable. The
display of OMB control numbers in certain EPA regulations is
consolidated in 40 CFR part 9.
    Abstract: The State Review Framework (``Framework'') is an
oversight tool designed to assess state performance in enforcement and
compliance assurance. The Framework's goal is to evaluate state
performance by examining existing data to provide a consistent level of
oversight and develop a uniform mechanism by which EPA Regions, working
collaboratively with their states, can ensure that state environmental
agencies are consistently implementing the national compliance and
enforcement program in order to meet agreed-upon goals. Furthermore,
the Framework is designed to foster dialogue on enforcement and
compliance performance between the states that will enhance
relationships and increase feedback, which will in turn lead to
consistent program management and improved environmental results. This
amendment will allow EPA to collect information from enforcement and
compliance files reviewed during routine on-site visits of state or
local agency offices that will assist in the evaluation of the State
Review Framework implementation from FY 2009 to the end of FY 2011.
Also, this request will allow EPA to make inquiries to assess the State
Review Framework process, including

the consistency achieved among the EPA Regions and states, the
resources required to conduct the reviews, and the overall
effectiveness of the program.
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.
    Burden Statement: The annual public reporting and recordkeeping
burden for this collection of information is estimated to average 612
hours per response. Burden means the total time, effort, or financial
resources expended by persons to generate, maintain, retain, or
disclose or provide information to or for a Federal agency. This
includes the time needed to review instructions; develop, acquire,
install, and utilize technology and systems for the purposes of
collecting, validating, and verifying information, processing and
maintaining information, and disclosing and providing information;
adjust the existing ways to comply with any previously applicable
instructions and requirements which have subsequently changed; train
personnel to be able to respond to a collection of information; search
data sources; complete and review the collection of information; and
transmit or otherwise disclose the information.
    Respondents/Affected Entities: 50 states and 4 territories.
    Estimated Number of Respondents: 54.
    Frequency of Response: Once every four years.
    Estimated Total Annual Hour Burden: 11,016.
    Estimated Total Annual Cost: $357,684, includes $0 annualized
capital or O&M costs.
    Changes in the Estimates: There is an increase of 5,894 hours in
the total estimated burden currently identified in the OMB Inventory of
Approved ICR Burdens. This increase is based on EPA's recent experience
with administering the program, an estimated increase in the number of
respondents during the next cycle, and its work with the states to try
to improve the value and utilization of the elements and metrics by
which state environmental programs are measured.

    Dated: November 6, 2008.
John Moses,
Acting Director, Collection Strategies Division.
 [FR Doc. E8-27111 Filed 11-13-08; 8:45 am]

BILLING CODE 6560-50-P


[Federal Register Volume 82, Number 248 (Thursday, December 28, 2017)]
[Notices]
[Page 61658]
[FR Doc No: 2017-28052]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

Agency Information Collection Activities: Requests for Comments;
Clearance of Renewed Approval of Information Collection: Certification:
Air Carriers and Commercial Operators

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice and request for comments.

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SUMMARY: In accordance with the Paperwork Reduction Act of 1995, FAA
invites public comments about our intention to request the Office of
Management and Budget (OMB) approval to renew an information
collection. This collection involves air carrier and commercial
operator certificate holders. The information collected will be used to
ensure regulatory compliance.

DATES: Written comments should be submitted by February 26, 2018.

ADDRESSES: Send comments to the FAA at the following address: Barbara
Hall, Federal Aviation Administration, ASP-110, 10101 Hillwood Parkway,
Fort Worth, TX 76177.
    Public Comments Invited: You are asked to comment on any aspect of
this information collection, including (a) Whether the proposed
collection of information is necessary for FAA's performance; (b) the
accuracy of the estimated burden; (c) ways for FAA to enhance the
quality, utility and clarity of the information collection; and (d)
ways that the burden could be minimized without reducing the quality of
the collected information. The agency will summarize and/or include
your comments in the request for OMB's clearance of this information
collection.

FOR FURTHER INFORMATION CONTACT: Barbara Hall by email at:
[email protected]; phone:<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:
    OMB Control Number: 2120-0593.
    Title: Certification: Air Carriers and Commercial Operators.
    Form Numbers: FAA Form 8400-6.
    Type of Review: Renewal of an information collection.
    Background: The request for clearance reflects requirements
necessary under parts 135, 121, and 125 to comply with part 119. The
FAA will use the information it collects and reviews to ensure
compliance and adherence to regulations and, if necessary, to take
enforcement action on violators of the regulations.
    Respondents: Approximately 2,177 air carriers and commercial
operators.
    Frequency: Information is collected on occasion.
    Estimated Average Burden per Response: 2.45 hours.
    Estimated Total Annual Burden: 8,862 hours.

    Issued in Fort Worth, TX, on December 19, 2017.
Barbara L. Hall,
FAA Information Collection Clearance Officer, Performance, Policy, and
Records Management Branch, ASP-110.
[FR Doc. 2017-28052 Filed 12-27-17; 8:45 am]
 BILLING CODE 4910-13-P


[Federal Register Volume 86, Number 68 (Monday, April 12, 2021)]
[Notices]
[Pages 19061-19063]
[FR Doc No: 2021-07454]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91491; File No. SR-OCC-2021-801]

Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of No Objection To Advance Notice Relating to OCC's
Establishment of Persistent Minimum Skin-in-the-Game

April 7, 2021.

I. Introduction

    On February 10, 2021, the Options Clearing Corporation (``OCC'')
filed with the Securities and Exchange Commission (``Commission'')
advance notice SR-OCC-2021-801 (``Advance Notice'') pursuant to Section
806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, entitled Payment, Clearing and Settlement
Supervision Act of 2010 (``Clearing Supervision Act'') \1\ and Rule
19b-4(n)(1)(i) \2\ under the Securities Exchange Act of 1934
(``Exchange Act'') \3\ to establish a persistent minimum level of skin-
in-the-game that OCC would contribute to cover default losses or
liquidity shortfalls.\4\ The Advance Notice was published for public
comment in the Federal Register on March 1, 2021,\5\ and the Commission
has received comments regarding the changes proposed in the Advance
Notice.\6\ The Commission is hereby providing notice of no objection to
the Advance Notice.
---------------------------------------------------------------------------

    \1\ 12 U.S.C. 5465(e)(1).
    \2\ 17 CFR 240.19b-4(n)(1)(i).
    \3\ 15 U.S.C. 78a et seq.
    \4\ See Notice of Filing infra note 5, at 86 FR 12057.
    \5\ Securities Exchange Act Release No. 91184 (Feb. 23, 2021),
86 FR 12057 (Mar. 1, 2021) (File No. SR-OCC-2021-801) (``Notice of
Filing''). On February 10, 2021, OCC also filed a related proposed
rule change (SR-OCC-2021-003) with the Commission pursuant to
Section 19(b)(1) of the Exchange Act and Rule 19b-4 thereunder
(``Proposed Rule Change''). 15 U.S.C. 78s(b)(1) and 17 CFR 240.19b-
4, respectively. In the Proposed Rule Change, which was published in
the Federal Register on March 2, 2021, OCC seeks approval of
proposed changes to its rules necessary to implement the Advance
Notice. Securities Exchange Act Release No. 91199 (Feb. 24, 2021),
86 FR 12237 (Mar. 2, 2021) (File No. SR-OCC-2021-003). The comment
period for the related Proposed Rule Change filing closed on March
23, 2021.
    \6\ Comments on the Advance Notice are available at https://www.sec.gov/comments/sr-occ-2021-801/occ2021801.htm.
    Since the proposal contained in the Advance Notice was also
filed as a proposed rule change, all public comments received on the
proposal are considered regardless of whether the comments are
submitted on the Proposed Rule Change or the Advance Notice.
Comments on the Proposed Rule Change are available at https://www.sec.gov/comments/sr-occ-2021-003/srocc2021003.htm.
---------------------------------------------------------------------------

II. Background \7\
---------------------------------------------------------------------------

    \7\ Capitalized terms used but not defined herein have the
meanings specified in OCC's Rules and By-Laws, available at https://www.theocc.com/about/publications/bylaws.jsp.
---------------------------------------------------------------------------

    ``Skin-in-the-game,'' as a component of financial risk management,
entails a covered clearing agency choosing, upon the occurrence of a
default or series of defaults and application of all available assets
of the defaulting participant(s), to apply its own capital contribution
to the relevant clearing or guaranty fund in full to satisfy any
remaining losses prior to the application of any (a) contributions by
non-defaulting members to the clearing or guaranty fund, or (b)
assessments that the covered clearing agency require non-defaulting
participants to contribute following the exhaustion of such
participant's funded contributions to the relevant clearing or guaranty
fund.\8\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 78961 (Sep. 28,
2016), 81 FR 70786, 70806 (Oct. 13, 2016) (S7-03-14) (``Covered
Clearing Agency Standards'').
---------------------------------------------------------------------------

    OCC's skin-in-the-game component of its financial risk management
regime is described in its current rules, which provide for the use of
OCC's own capital to mitigate losses arising out of a Clearing Member
default.\9\ Specifically, OCC's rules provide for the offsetting of
default losses remaining after the application of a defaulted Clearing
Member's margin deposits and Clearing Fund contributions with OCC's
capital in excess of 110 percent of the Target Capital Requirement at
the time of the default.\10\ OCC's rules also provide for charging
losses remaining after the application of OCC's excess capital to OCC
senior management's deferred compensation \11\ as well as non-
defaulting Clearing Members.\12\
---------------------------------------------------------------------------

    \9\ See Securities Exchange Release No. 88029 (Jan. 24, 2020),
85 FR 5500, 5502 (Jan. 30, 2020) (File No. SR-OCC-2019-007) (``CMP
Approval Order'').
    \10\ See OCC Rule 1006(e), available at https://www.theocc.com/getmedia/9d3854cd-b782-450f-bcf7-33169b0576ce/occ_rules.pdf (last
visited Mar. 16, 2021). See also CMP Approval Order at 5502.
    \11\ Such deferred compensation is in trust with respect to
OCC's Executive Deferred Compensation Plan (``EDCP''). See OCC Rule
101(e)(1), available at available at https://www.theocc.com/getmedia/9d3854cd-b782-450f-bcf7-33169b0576ce/occ_rules.pdf (last
visited Mar. 16, 2021). The specific EDCP funds that comprise a
portion of OCC's skin-in-the-game are referred to in OCC's rules as
the ``EDCP Unvested Balance.'' See id.
    \12\ See OCC Rule 1006(b), available at https://www.theocc.com/getmedia/9d3854cd-b782-450f-bcf7-33169b0576ce/occ_rules.pdf (last
visited Mar. 16, 2021). See also CMP Approval Order at 5502. The
application the EDCP Unvested Balance in parallel with non-
defaulting Clearing Members' Clearing Fund contributions would
necessarily occur before assessments related to the exhaustion of
OCC's Clearing Fund.
---------------------------------------------------------------------------

    OCC reviewed feedback received in connection with the initial
filing of its current rules, relevant papers from

industry participants and stakeholders concerning skin-in-the-game, and
regulatory regimes in jurisdictions outside the United States.\13\
OCC's current rules do not, however, dedicate OCC's excess capital for
use solely as skin-in-the-game, or guaranty that OCC maintain a minimum
amount of skin-in-the-game.\14\
---------------------------------------------------------------------------

    \13\ See Notice of Filing, 86 FR at 12058-59. For example, OCC
is cognizant of the European Market Infrastructure Regulation's
expectation that skin-in-the-game be a minimum of 25 percent of the
central counterparty's regulatory capital requirement. See Notice of
Filing, 86 FR at 12059.
    \14\ See Notice of Filing, 86 FR at 12060.
---------------------------------------------------------------------------

    Establishing the Minimum Corporate Contribution. OCC proposes to
establish a persistent minimum level of skin-in-the-game that OCC would
contribute to cover default losses or liquidity shortfalls. Such skin-
in-the-game would consist of a minimum amount of OCC's own pre-funded
resources that OCC would contribute prior to charging a loss to the
Clearing Fund (the ``Minimum Corporate Contribution'') and the EDCP
Unvested Balance.\15\ As proposed, funds comprising the Minimum
Corporate Contribution would be excluded from OCC's liquid net assets
funded by equity (``LNAFBE'') for purposes of meeting OCC's Target
Capital Requirement to ensure that OCC may maintain the Minimum
Corporate Contribution exclusively for default management.\16\
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    \15\ OCC does not propose altering its rules regarding the use
or sizing of the EDCP Unvested Balance.
    \16\ In addition to the Minimum Corporate Contribution, OCC
would continue to commit its LNAFBE greater than 110 percent of its
Target Capital Requirement prior to charging a loss to the Clearing
Fund. As proposed, OCC would apply the Minimum Corporate
Contribution to address default losses before applying its excess
LNAFBE.
---------------------------------------------------------------------------

    OCC proposes to define the Minimum Corporate Contribution to mean
the minimum level of OCC's own funds maintained exclusively to cover
credit losses or liquidity shortfalls, the level of which OCC's Board
of Directors (the ``Board'') shall determine from time to time. To
facilitate implementation of OCC's proposal, the Board approved an
initial Minimum Corporate Contribution at such a level that OCC's total
skin-in-the-game (i.e., the sum of the Minimum Corporate Contribution
and OCC's current EDCP Unvested Balance) would equal 25 percent of
OCC's Target Capital Requirement. OCC stated that, in setting the
initial Minimum Corporate Contribution, the Board considered factors
including, but not limited to, the regulatory requirements in each
jurisdiction in which OCC is registered or in which OCC is actively
seeking recognition, the amount similarly situated central
counterparties commit of their own resources to address participant
defaults, the EDCP Unvested Balance, OCC's LNAFBE greater than 110
percent of its Target Capital Requirement, projected revenue and
expenses, and other projected capital needs.\17\
---------------------------------------------------------------------------

    \17\ See Notice of Filing, 86 FR at 12060.
---------------------------------------------------------------------------

    Replenishing the Minimum Corporate Contribution. OCC proposes that,
in the event it were to apply a portion of the Minimum Corporate
Contribution to address losses or shortfalls arising out of a Clearing
Member default, the size of the Minimum Corporate Contribution would be
temporarily reduced, for a period of 270 days, to the amount remaining
after its application.\18\ Each application of the Minimum Corporate
Contribution would trigger a new 270-day period.\19\ Under the
proposal, OCC would be obligated to notify Clearing Members of any such
reduction of the Minimum Corporate Contribution. OCC believes that 270
calendar days, or approximately nine months, is sufficient time for OCC
to accumulate the funds necessary to reestablish the Minimum Corporate
Contribution.\20\
---------------------------------------------------------------------------

    \18\ For example, if the Minimum Corporate Contribution were
$100 million and OCC applied $25 million to address default losses,
then the Minimum Corporate Contribution would be temporarily set at
$75 million.
    \19\ For example, if OCC were to contribute a portion of the
Minimum Corporate Contribution on day 1 and another portion 100 days
later, the Minimum Corporate Contribution would remain temporarily
reduced until day 370.
    \20\ See Notice of Filing, 86 FR at 12060. OCC stated that the
analysis on which its belief is based is the same analysis on which
OCC relied to set various thresholds related to OCC's plan for
replenishing its regulatory capital. See id.
---------------------------------------------------------------------------

    OCC proposes change to its Rules, Capital Management Policy,
Default Management Policy, Clearing Fund Methodology Policy, and
Recovery and Orderly Wind-Down Plan to effectuate the changes described
above.

III. Discussion and Notice of No Objection

    Although the Clearing Supervision Act does not specify a standard
of review for an advance notice, the stated purpose of the Clearing
Supervision Act is instructive: To mitigate systemic risk in the
financial system and promote financial stability by, among other
things, promoting uniform risk management standards for SIFMUs and
strengthening the liquidity of SIFMUs.\21\
---------------------------------------------------------------------------

    \21\ See 12 U.S.C. 5461(b).
---------------------------------------------------------------------------

    Section 805(a)(2) of the Clearing Supervision Act authorizes the
Commission to prescribe regulations containing risk management
standards for the payment, clearing, and settlement activities of
designated clearing entities engaged in designated activities for which
the Commission is the supervisory agency.\22\ Section 805(b) of the
Clearing Supervision Act provides the following objectives and
principles for the Commission's risk management standards prescribed
under Section 805(a): \23\
---------------------------------------------------------------------------

    \22\ 12 U.S.C. 5464(a)(2).
    \23\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

     To promote robust risk management;
     to promote safety and soundness;
     to reduce systemic risks; and
     to support the stability of the broader financial system.
    Section 805(c) provides, in addition, that the Commission's risk
management standards may address such areas as risk management and
default policies and procedures, among other areas.\24\
---------------------------------------------------------------------------

    \24\ 12 U.S.C. 5464(c).
---------------------------------------------------------------------------

    The Commission has adopted risk management standards under Section
805(a)(2) of the Clearing Supervision Act and Section 17A of the
Exchange Act (the ``Clearing Agency Rules'').\25\ The Clearing Agency
Rules require, among other things, each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures that are reasonably designed to meet certain minimum
requirements for its operations and risk management practices on an
ongoing basis.\26\ As such, it is appropriate for the Commission to
review advance notices against the Clearing Agency Rules and the
objectives and principles of these risk management standards as
described in Section 805(b) of the Clearing Supervision Act. As
discussed below, the Commission believes the changes proposed in the
Advance Notice are consistent with the objectives and principles
described in Section 805(b) of the Clearing Supervision Act,\27\ and in
the Clearing Agency Rules, in particular Rule 17Ad-22(e)(2).\28\
---------------------------------------------------------------------------

    \25\ 17 CFR 240.17Ad-22. See Securities Exchange Act Release No.
68080 (Oct. 22, 2012), 77 FR 66220 (Nov. 2, 2012) (S7-08-11). See
also Covered Clearing Agency Standards, 81 FR 70786. OCC is a
``covered clearing agency'' as defined in Rule 17Ad-22(a)(5).
    \26\ 17 CFR 240.17Ad-22.
    \27\ 12 U.S.C. 5464(b).
    \28\ 17 CFR 240.17Ad-22(e)(2).
---------------------------------------------------------------------------

A. Consistency With Section 805(b) of the Clearing Supervision Act

    The Commission believes that the proposal contained in OCC's
Advance Notice is consistent with the stated objectives and principles
of Section 805(b) of the Clearing Supervision Act.\29\ Specifically, as
discussed below,

the Commission believes that the changes proposed in the Advance Notice
are consistent with promoting robust risk management, promoting safety
and soundness, reducing systemic risks, and supporting the stability of
the broader financial system.\30\
---------------------------------------------------------------------------

    \29\ As noted above, the Commission considers all public
comments received on the proposal regardless of whether the comments
are submitted on the Proposed Rule Change or the Advance Notice. One
commenter raised issues related solely to the consistency of the
proposal with the requirements of Section 17A of the Exchange Act.
See letter from Richard J. McDonald, Susquehanna International Group
(``SIG''), dated March 30, 2021, to Vanessa Countryman, Secretary,
Commission (``SIG Letter''), available at https://www.sec.gov/comments/sr-occ-2021-003/srocc2021003.htm.
    Specifically, SIG expressed concern regarding (i) the extent to
which OCC fees, dues, and other charges would be used to finance the
equity windfall of OCC shareholders and their commercial interests
and (ii) the effect of the proposal on the protection of investors
and the public interest. The Commission's evaluation of the Advance
Notice is conducted under the Clearing Supervision Act and, as noted
above, generally considers whether the proposal will mitigate
systemic risk and promote financial stability. The Commission notes
that SIG has not explained or demonstrated how the retention of
capital, derived from clearing fees, for use as skin-in-the-game
would cause the proposal to be inconsistent with the Clearing
Supervision Act. The SIG Letter is directed at the Proposed Rule
Change and will be addressed in that context.
    \30\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

    The Commission continues to regard skin-in-the-game as a potential
tool to align the various incentives of a covered clearing agency's
stakeholders, including management and clearing members.\31\ OCC's
current rules provide for the application of excess capital as skin-in-
the-game. The Commission believes that OCC's proposal to set aside
capital to maintain a minimum amount of skin-in-the-game strengthens
OCC's existing skin-in-the-game rules. OCC's current rules align senior
management's personal economic incentives with OCC's overall risk
management incentives,\32\ but do not guaranty that an amount of OCC
capital would be set aside to ensure a pre-determined minimum level of
skin-in-the-game. The Commission believes that holding a Minimum
Corporate Contribution, in addition to the EDCP unvested balance, to
ensure such a minimum level of skin-in-the-game would help to align
OCC's economic incentives as a corporation with risk management more
broadly, thereby promoting robust risk management at OCC.
---------------------------------------------------------------------------

    \31\ Covered Clearing Agency Standards, 81 FR at 70805-06.
    \32\ See Securities Exchange Act Release No. 87257 (Oct. 8,
2019), 84 FR 55194, 55199 (Oct. 15, 2019) (File No. SR-OCC-2019-
805).
---------------------------------------------------------------------------

    Holding a defined Minimum Corporate Contribution, as opposed to an
undefined amount of excess capital, may help to incentivize OCC further
to maintain the appropriate amount of resources to manage a Clearing
Member default, consistent with the promotion of safety and soundness
at OCC. Further, the Commission believes that, to the extent the
proposed changes are consistent with promoting OCC's safety and
soundness, they are also consistent with supporting the stability of
the broader financial system. OCC has been designated as a SIFMU, in
part, because its failure or disruption could increase the risk of
significant liquidity or credit problems spreading among financial
institutions or markets.\33\ The Commission believes that the proposed
changes would help support the maintenance of OCC as a going concern
following a Clearing Member default, which in turn would help support
the stability of the financial system by reducing the risk of
significant liquidity or credit problems spreading among market
participants that rely on OCC's central role in the options market.
Finally, the Commission believes that the proposed changes to increase
OCC's pre-determined default management resources are consistent with
the reduction of systemic risk because such increase enhances the
ability of OCC to absorb and contain the spread of any losses that
might arise from a member default.
---------------------------------------------------------------------------

    \33\ See Financial Stability Oversight Council (``FSOC'') 2012
Annual Report, Appendix A, https://home.treasury.gov/system/files/261/here.pdf (last visited Mar. 17, 2021).
---------------------------------------------------------------------------

    Accordingly, and for the reasons stated above, the Commission
believes the changes proposed in the Advance Notice are consistent with
Section 805(b) of the Clearing Supervision Act.\34\
---------------------------------------------------------------------------

    \34\ 12 U.S.C. 5464(b).
---------------------------------------------------------------------------

B. Consistency With Rule 17Ad-22(e)(2) Under the Exchange Act

    Rule 17Ad-22(e)(2) under the Exchange Act requires that a covered
clearing agency establish, implement, maintain, and enforce written
policies and procedures reasonably designed to provide for governance
arrangements that, among other things, are clear and transparent;
clearly prioritize the safety and efficiency of the covered clearing
agency; and support the public interest requirements of the Exchange
Act.\35\ In adopting Rule 17Ad-22(e)(2), the Commission discussed
comments it received regarding the concept of skin-in-the-game as a
potential tool to align the various incentives of a covered clearing
agency's stakeholders, including management and clearing members.\36\
And, while the Commission declined to include a specific skin-in-the-
game requirement in the rule, it stated its belief that ``the proper
alignment of incentives is an important element of a covered clearing
agency's risk management practices,'' and noted that skin-in-the-game
``may play a role in those risk management practices in many
instances.'' \37\ OCC's current rules require the application
management compensation and excess capital as skin-in-the-game, which
in turn should help further align the interests of OCC's stakeholders,
including OCC management and Clearing Members.\38\
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    \35\ 17 CFR 240.17Ad-22(e)(2).
    \36\ Covered Clearing Agency Standards, 81 FR at 70805-06.
    \37\ Covered Clearing Agency Standards, 81 FR at 70806.
    \38\ See CMP Approval Order at 5507.
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    As described above, OCC's proposal would not reduce the resources
OCC would apply to address default losses or remove the current skin-
in-the-game component of OCC's rules. Rather, OCC proposes to set aside
a defined amount of capital for the sole purpose of absorbing losses
and shortfalls arising out of a Clearing Member default. OCC has
clearly stated the factors that the Board would consider when
determining the amount of resources to hold as skin-in-the-game, a
portion of which would comprise the Minimum Corporate Contribution. OCC
also proposes to establish a clear process for addressing reductions in
the Minimum Corporate Contribution arising out of a Clearing Member's
default. Accordingly, the Commission believes that the proposed changes
to establish a persistent minimum level of skin-in-the-game are
consistent with Rule 17Ad-22(e)(2) under the Exchange Act.\39\
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    \39\ 17 CFR 240.17Ad-22(e)(2).
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IV. Conclusion

    It is therefore noticed, pursuant to Section 806(e)(1)(I) of the
Clearing Supervision Act, that the Commission does not object to
Advance Notice (SR-OCC-2021-801) and that OCC is authorized to
implement the proposed change as of the date of this notice or the date
of an order by the Commission approving proposed rule change SR-OCC-
2021-003, whichever is later.

    By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-07454 Filed 4-9-21; 8:45 am]
BILLING CODE 8011-01-P