[Federal Register Volume 84, Number 78 (Tuesday, April 23, 2019)]
[Notices]
[Pages 16900-16903]
[FR Doc No: 2019-08107]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85673; File No. SR-ICC-2019-004]

Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change, Security-Based Swap Submission, or
Advance Notice Relating to ICC's Model Validation Framework

April 17, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on April 5, 2019, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission the proposed rule change, security-
based swap submission, or advance notice as described in Items I, II
and III below, which Items have been prepared by ICC. The Commission is
publishing this notice to solicit comments on the proposed rule change,
security-based swap submission, or advance notice from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change, Security-Based Swap Submission, or Advance Notice

    The principal purpose of the proposed rule change is to revise the
ICC Model Validation Framework. These revisions do not require any
changes to the ICC Clearing Rules (``Rules'').

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change, Security-Based Swap Submission, or
Advance Notice

    In its filing with the Commission, ICC included statements
concerning the purpose of and basis for the proposed rule change,
security-based swap submission, or advance notice and discussed any
comments it received on the proposed rule change, security-based swap
submission, or advance notice. The text of these statements may be
examined at the places specified in Item IV below. ICC has prepared
summaries, set forth in sections (A), (B),

and (C) below, of the most significant aspects of these statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change, Security-Based Swap Submission, or
Advance Notice

(a) Purpose
    ICC proposes revisions to its Model Validation Framework. ICC
believes such revisions will facilitate the prompt and accurate
clearance and settlement of securities transactions and derivative
agreements, contracts, and transactions for which it is responsible.
The proposed revisions are described in detail as follows.
    The Model Validation Framework sets forth ICC's model validation
procedures. Through the model validation procedures, ICC determines the
appropriateness of changes to the risk modeling components (``Model
Components'') of ICC's risk management system and the appropriateness
of the configuration and calibration of ICC's risk management system.
ICC's proposed changes consist of clarification updates related to the
classification of Model Components, documentation requirements, the
priority scale used by independent validators, and the annual
validation of Model Components and related practices. ICC proposes to
make such changes effective following Commission approval of the
proposed rule change.
    ICC proposes to revise the `Risk Management System Models' section
to account for Model Components that are no longer utilized. Currently,
the Model Validation Framework notes new Model Components, which
consider risk drivers that are not currently included in the risk
management system, and enhancements to Model Components, which improve
upon the methodologies used by the risk management system to consider a
given risk driver or drivers (collectively, ``Model Change''). ICC
proposes to amend the Model Validation Framework to also consider
retired Model Components, which are no longer utilized in the risk
management system.
    In the `Model Change Qualification and Materiality' section, ICC
proposes to include a quantitative measure to define certain Model
Changes. ICC classifies Model Changes as either Materiality A or
Materiality B, depending on how substantially the Model Change affects
the risk management system's assessment of risk for the related risk
driver or drivers. ICC proposes to characterize any Model Change that
leads to a decrease/increase of the total pre-funded financial
resources over a certain percentage as a Materiality A Model Change.
    The proposed revisions to the `Documentation Requirements' section
relate to the Model Inventory, which is maintained by the ICC Risk
Department and contains key information about all Model Components and
Model Changes. The Model Validation Framework specifies documentation
requirements for the type of information maintained in the Model
Inventory. ICC proposes updates to the documentation requirements to
include retired Model Components and to remove information considered
not relevant for purposes of the Model Inventory.
    The proposed updates to the `Independent Initial Validation'
section relate to the priority scale used by independent validators.
The Model Validation Framework requires independent initial validators
to classify their findings based on a priority scale, consisting of
high, medium, and low priority ratings. ICC proposes to amend the low
priority rating to allow ICC, in consultation with the Risk Committee,
to take no action with respect to the corresponding item if it does not
reflect a potential deficiency.
    ICC proposes clarifying changes to the `Independent Periodic
Review' section. ICC proposes to include additional information
regarding how it tracks the annual validation of Model Components and
related practices. The proposed changes specify that independent
validators perform periodic reviews of Model Components and related
practices at least every twelve months and that ICC relies on the date
of the engagement letter to track this twelve month requirement. As
part of the independent periodic review, the Model Validation Framework
also directs independent validators to classify their findings based on
the priority scale. ICC proposes amendments to the low priority rating
to note that corresponding items may reflect deficiencies that create
immaterial risks and that ICC, in consultation with the Risk Committee,
may take no action with respect to the corresponding item if it does
not reflect a potential deficiency.
(b) Statutory Basis
    Section 17A(b)(3)(F) of the Act \3\ requires, among other things,
that the rules of a clearing agency be designed to promote the prompt
and accurate clearance and settlement of securities transactions, and
to the extent applicable, derivative agreements, contracts and
transactions; to assure the safeguarding of securities and funds which
are in the custody or control of the clearing agency or for which it is
responsible; and to comply with the provisions of the Act and the rules
and regulations thereunder. ICC believes that the proposed rule change
is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to ICC, in particular, to Section
17(A)(b)(3)(F) \4\, because ICC believes that the proposed rule change
will promote the prompt and accurate clearance and settlement of
securities transactions, derivatives agreements, contracts, and
transactions, and contribute to the safeguarding of securities and
funds associated with security-based swap transactions in ICC's custody
or control, or for which ICC is responsible. The Model Validation
Framework provides assurances as to the suitability of changes to Model
Components and the appropriateness of the configuration and calibration
of ICC's risk management system, including the appropriateness of risk
requirements. The proposed changes to the Model Validation Framework
provide additional detail and transparency regarding ICC's model
validation procedures, which enhance ICC's approach to identifying
potential weaknesses in ICC's risk management system by providing a
process for reviewing and enhancing ICC's risk management system.
Moreover, ICC believes that having policies and procedures that clearly
and accurately document ICC's model validation procedures are an
important component to the effectiveness of ICC's risk management
system, which promotes the prompt and accurate clearance and settlement
of securities transactions, derivatives agreements, contracts, and
transactions and the safeguarding of securities and funds which are in
the custody or control of ICC or for which it is responsible. As such,
the proposed rule change is designed to promote the prompt and accurate
clearance and settlement of securities transactions, derivatives
agreements, contracts, and transactions and to contribute to the
safeguarding of securities and funds associated with security-based
swap transactions in ICC's custody or control, or for which ICC is
responsible within the meaning of Section 17A(b)(3)(F) of the Act.\5\
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    \3\ 15 U.S.C. 78q-1(b)(3)(F).
    \4\ Id.
    \5\ Id.
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    In addition, the proposed rule change is consistent with the
relevant requirements of Rule 17Ad-22.\6\ Rule

17Ad-22(b)(2) \7\ requires ICC to establish, implement, maintain and
enforce written policies and procedures reasonably designed to use
margin requirements to limit its credit exposures to participants under
normal market conditions and use risk-based models and parameters to
set margin requirements and review such margin requirements and the
related risk-based models and parameters at least monthly. As described
above, the Model Validation Framework sets forth ICC's model validation
procedures, which provide assurances as to the appropriateness of
changes to Model Components; the appropriateness of the configuration
and calibration of ICC's risk management system, including through
ongoing monitoring and validation; and the use of independent initial
and annual validations. Such procedures serve to promote the soundness
of Model Components and to ensure that ICC's risk management system is
effective and appropriate in addressing the risks associated with
clearing security based swap-related portfolios. Namely, the Model
Validation Framework provides a process for continually reviewing and
enhancing ICC's risk management system, including risk requirements,
thereby promoting ICC's use of margin requirements to limit its credit
exposures to participants under normal market conditions and ICC's use
of risk-based models and parameters to set margin requirements and
review such margin requirements and the related risk-based models and
parameters at least monthly, consistent with Rule 17Ad-22(b)(2).\8\
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    \6\ 17 CFR 240.17Ad-22.
    \7\ 17 CFR 240.17Ad-22(b)(2).
    \8\ Id.
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    Rule 17Ad-22(b)(3) \9\ requires ICC to establish, implement,
maintain and enforce written policies and procedures reasonably
designed to maintain sufficient financial resources to withstand, at a
minimum, a default by the two Clearing Participant (``CP'') families to
which it has the largest exposures in extreme but plausible market
conditions. The Model Validation Framework supports ICC's ability to
maintain sufficient risk requirements and enhances ICC's approach to
identifying potential weaknesses in the risk management system by
requiring ICC to review and improve its risk management system,
including through the use of independent initial and annual
validations, thereby ensuring that ICC continues to maintain sufficient
financial resources to withstand, at a minimum, a default by the two CP
families to which it has the largest exposures in extreme but plausible
market conditions, consistent with the requirements of Rule 17Ad-
22(b)(3).\10\
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    \9\ 17 CFR 240.17Ad-22(b)(3).
    \10\ Id.
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    Rule 17Ad-22(b)(4) \11\ requires ICC to establish, implement,
maintain and enforce written policies and procedures reasonably
designed to provide for an annual model validation consisting of
evaluating the performance of the clearing agency's margin models and
the related parameters and assumptions associated with such models by a
qualified person who is free from influence from the persons
responsible for the development or operation of the models being
validated. The proposed changes to the Model Validation Framework
require independent validators to perform periodic reviews of Model
Components and related practices at least every twelve months and
include additional detail regarding tracking the annual validation of
Model Components and related practices, thereby ensuring that ICC
provide for an annual model validation consisting of evaluating the
performance of ICC's margin models and the related parameters and
assumptions associated with such models by a qualified person who is
free from influence from the persons responsible for the development or
operation of the models being validated, consistent with Rule 17Ad-
22(b)(4).\12\
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    \11\ 17 CFR 240.17Ad-22(b)(4).
    \12\ Id.
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    Rule 17Ad-22(d)(8) \13\ requires ICC to establish, implement,
maintain and enforce written policies and procedures reasonably
designed to have governance arrangements that are clear and transparent
to fulfill the public interest requirements in Section 17A of the
Act.\14\ The Model Validation Framework clearly assigns and documents
responsibility and accountability for oversight of the Model Validation
Framework and the performance of model validation procedures. The
proposed revisions allow ICC, in consultation with the Risk Committee,
to take no action with respect to certain items from independent
validator reports. As such, the governance arrangements in the Model
Validation Framework are clear and transparent, such that information
relating to the assignment of responsibilities and the requisite
involvement of ICC personnel, ICC departments, the Risk Committee, and
the Board is clearly documented, consistent with the requirements of
Rule 17Ad-22(d)(8).\15\
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    \13\ 17 CFR 240.17Ad-22(d)(8).
    \14\ 15 U.S.C. 78q-1.
    \15\ 17 CFR 240.17Ad-22(d)(8).
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(B) Clearing Agency's Statement on Burden on Competition

    ICC does not believe the proposed rule change would have any
impact, or impose any burden, on competition. The proposed changes to
ICC's Model Validation Framework will apply uniformly across all market
participants. Therefore, ICC does not believe the proposed rule change
imposes any burden on competition that is inappropriate in furtherance
of the purposes of the Act.

(C) Clearing Agency's Statement on Comments on the Proposed Rule
Change, Security-Based Swap Submission, or Advance Notice Received From
Members, Participants or Others

    Written comments relating to the proposed rule change have not been
solicited or received. ICC will notify the Commission of any written
comments received by ICC.

III. Date of Effectiveness of the Proposed Rule Change, Security-Based
Swap Submission, or Advance Notice 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 self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-ICC-2019-004 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-ICC-2019-004. This file
number 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 website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change, security-based
swap submission, or advance notice that are filed with the Commission,
and all written communications relating to the proposed rule change,
security-based swap submission, or advance notice 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 website 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
such filings will also be available for inspection and copying at the
principal office of ICE Clear Credit and on ICE Clear Credit's website
at https://www.theice.com/clear-credit/regulation. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-ICC-2019-004 and should be submitted on
or before May 14, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary .
[FR Doc. 2019-08107 Filed 4-22-19; 8:45 am]
 BILLING CODE 8011-01-P


investigate certain general factors including pesticide use, vulnerability of the use area, soil type,
and general hydrology including aquifer type and depth, and climate.  Aquifers are herein defined
as a saturated geologic unit that can transmit significant quantities of water under ordinary
hydraulic gradients.  However, many individuals rely on shallow ground water sources ($"!"
shallow saturated soils) that do not necessarily meet this definition.  The term “aquifer” used
throughout this guidance is intended to cover both types of drinking water sources.  This
reconnaissance work can be done easily using spatially distributed data such as a GIS display.
Once an area is found that appears to meet these factors, the next step is to look for individual
fields that might be appropriate for the study.  At this time, it is important to focus on specific
site characteristics including aquifer characteristics and other criteria listed below.
With few exceptions, all candidate sites for a prospective ground-water study should meet the
following criteria (ordered by expected significance):
·
Unconfined aquifer,
·
Less than 30-foot depth to the water table,
·
No flow restrictive layers between the surface and water table,
·
Single Soil Series Mapping Unit
·
Less than or equal to 2% topographic slope (generally level),

24
·
Two to five acres in area, and
·
Sufficient distance from drainage features to ensure stable hydraulic gradient
conditions.
2.21  Unconfined Aquifer
Prospective ground-water monitoring studies are designed to monitor the downward movement
of pesticides toward the water table.  The quality of ground water in shallow, unconfined aquifers
where recharge is rapid is most likely to be affected by pesticide use.  The impact of pesticide use
under these conditions is manifested reasonably quickly.  Under different conditions, for
example, where the aquifer is deep or recharge is not rapid, it may take several years for the
impact of a pesticide to be measured in ground water.  Therefore, the time it takes for a pesticide
to leach from its point of application to ground water (its travel time) can be quite variable and
highly dependant upon transport pathways.  It is therefore important to consider the “travel time”
of the tracer or pesticide residues to reach ground water when selecting a site.  Travel time will
most likely increase with increasing depth.  Thus, the study maybe required to continue for a
longer period of time.  Registrants should therefore consider travel time while the site selection
process is occurring.
Unconfined aquifers are defined here as those where the water table forms the upper boundary
and where no significant low-permeability layers overlie that boundary.  The water table is
defined as the top of the saturated zone, where the fluid pressure is approximately equal to
atmospheric pressure (Freeze and Cherry, 1979).
2.22  Shallow Depth
Depth to the uppermost aquifer material is an important variable in determining the vulnerability
of shallow unconfined aquifers to contamination of agricultural chemicals.  Kolpin et al. (1993)
stated that the greater the depth to the top of the aquifer, the smaller the frequency of herbicide
detection.  In Mehnert et al. (1995), study results showed that the occurrence of agricultural
chemicals was higher when the well depth was less than 30 feet.  Therefore, to determine the
potential for a pesticide to leach during the time frame in which the study occurs, shallow is
defined here to be an average depth to ground water of less than or equal to 30 feet and the depth
to the water table suggests a recharge zone.  While no specific depth is considered “too shallow,”
sites with shallow water tables may actually have an upward flux rather than downward flux.
Therefore, professional judgment should be exercised to avoid picking a site with too shallow a
ground water table.  Sites with drain tiles, drainage ditches, etc. may also need to be considered
for some pesticide uses particularly in those geographic use areas where they dominate.  As noted
above, sites with preferential flow and tile drains will require specialized protocols which will
need to be reviewed on a case-by-case basis.
2.23  No Flow Restrictive Layers
Sites with soil layers that may restrict the downward movement of water should be avoided.
Often the definition of restrictive zones is limited to those layers such as clays and hard pans that

25
restrict downward water movement.  These are soil layers that normally have low hydraulic
conductivity values (less than 0.5 cm per hour (Soil Survey Staff, 1992).  Soil particle size
distribution (texture), soil structure, and pore size distribution are factors that significantly
influence the leaching of pesticides through the soil profile to ground water (USEPA, 1990).
However, soil layers with highly contrasting soil textures may also inhibit water flow (!"#", sandy
loam overlying a coarse sand or fine gravel) and should not be considered. Sites should be
carefully evaluated for soil properties that may inhibit water flow.
2.24  Preferential Flow
Consideration should be given to selecting sites with a documented history of preferential flow
where the pesticide may be used in that area.  Pesticides which will be used in areas dominated
by preferential flow ($"!" soils with macropores or fingered flow in sandy soils) may leach faster
in these soils than conventional flow transport processes and may be more representative of a
“high exposure” scenario for that chemical.  The consideration of sites dominated by preferential
flow should be considered on a case by case basis.
Completion of test pits are a quick and inexpensive method for evaluating soil variability and
determining if preferential flow is likely to be an important process at a site.  Data collected
during a study may also indicate if preferential flow processes are important.  Site specific data
can answer questions which provide insight into the presence of preferential flow processes.
Examples of the types of questions are “did the tracer reach ground water quicker than expected,
or not at all?”, “did pesticide leach to ground water faster than expected from modeling?”, and
“is there variability in occurrence time and concentration of tracer and pesticide in lysimeters?”.
The answers to these questions can provide information which suggests that preferential flow
process may, or may not, be important at a specific site.
2.25  Tile Drains
In some instances, a pesticide may be proposed for use in an area dominated by tile drains.  Site
selection should consider the occurrence of tile drains.  However, care should be used when
considering a site with tile drains.  Installation of tile drains can fundamentally alter the structure
of subsurface soils and result in “artificial” pathways for leaching.  In no cases, should a site
selected with tiles drains eliminate ground-water monitoring as part of the design due to the
presence of tile drains.  Sampling of tile drains may be considered as a supplement to the study,
but not as a substitute to other required elements.  The consideration of sites dominated by tile
drains should be considered on a case by case basis.
2.26  Single Soil Series Mapping Unit
Single soil series mapping units in the field are desirable to best define the conditions represented
by multiple samples collected over the extent of the field.  While no field is truly homogeneous,
sites can be selected to minimize site variability and sampling designs can be used to better
understand pesticide fate.  The site should have uniform soil characteristics in three dimensions:
aerially or spatially (same series) and vertically (similar properties from the soil surface to the

26
water table).  It is likely to be easier to ensure that soils are uniform spatially, than that they do
not vary with depth.
The study director should at least ensure that each 2- to 5-acre study site be a single soil mapping
unit as defined by the National Resource Conservation Service (NRCS) (formerly Soil
Conservation Service or SCS).  The mapping unit should be a consociation, which is a delineated
unit dominated by a single soil series and similar soils.  In general, at least three-quarters of the
mapping unit consists of the named soil series and similar soils (from a hydrologic standpoint).
The total amount of dissimilar inclusions are generally less than 15 % if the soil properties are
more limiting and  25 % in not limiting (Soil Division Staff, 1993).
Once a particular study area has been identified, specific soil mapping units containing the soil
series on the candidate site can be found by consulting county soil surveys published by NRCS.
Refinement of NRCS maps may be necessary to achieve the level of detail necessary for site
selection and characterization.  The soils maps should be evaluated and refined as needed by a
qualified soil scientist.
In addition to being relatively homogenous over the candidate study site, the soil physical
properties should be consistent with the conditions the study is intended to evaluate.  For
instance, soils appropriate for high-exposure ground-water monitoring studies should be among
the most vulnerable soils allowed on the product label for a particular use.  Two types of soils are
appropriate in these situations:
·
Coarse-textured soils with low organic matter content: These soils are characterized by
high sand content, low silt and clay content, and low organic matter (less than 2%) in the
uppermost soil horizons; or
·
Structured soils with high hydraulic conductivity.
Sites that do not consist of either of these types of soils would be removed from further
consideration.
The selection of a "typical use" study site would be carried out in a similar fashion, but the main
selection criteria would favor a site representative of the most common conditions to which the
pesticide will be applied, which might not reflect the highest vulnerability to leaching.  A
determination of the areas with the greatest use cannot be the sole criterion in the selection of a
study site.  "Typical use" studies will only be requested if there is a question as to whether the
pesticide will leach under those conditions.
2.27  Low Topographic Slope
The site should be as level as possible to minimize runoff or run-on.  The topographic gradient of
proposed study sites should not exceed 2%.  In addition to slope, the shape of the land surface

27
should also be considered.  For example, concave land surfaces will encourage infiltration and
convex land surfaces would tend to encourage runoff, and should therefore be avoided.
2.28  Stable Hydraulic Gradient
It
is recommended that study sites not be located within the radius of influence of irrigation or
production wells.  Sites also should not be located near surface-water bodies or tides that control
the direction of ground-water flow.  The Agency has a concern that surficial water bodies could
cause extreme fluctuations in the direction of ground-water flow.  Whatever information that
might be gained concerning the leaching potential of a pesticide would be obscured by the effects
of outside influences on the height of the water table and direction of ground-water flow.  Further
information on local conditions may be obtained from area reconnaissance and an investigation
of wells and surface drainage features on surrounding properties.
2.3  COOPERATOR INTERVIEW
The third step in the site selection process is to interview farmers ("cooperators") to investigate
the history of pesticide use at each site and to secure permission to use individual fields as study
sites.  Once the registrant has narrowed the search for appropriate study sites to the county or
soil-series level, individual candidate sites can be identified.  Individual farmers should be
contacted about past agricultural practices and the long-term availability of the site for extended
monitoring. If the farmer has not owned the property for at least the past five years, the previous
owner should be contacted if possible to establish additional site history.
2.31  No Prior History of Test Pesticide Use
The history of the site should be known in order to identify use of the test pesticide, degradates,
tracer, or other compounds which could interfere with analytical procedures or interpretation of
the study results.  Therefore, the registrant should demonstrate that there has been no use of the
test pesticide on the test site during the previous five-year period.  For pesticides with extremely
long half-lives (greater than six months), study directors should investigate a longer prior use
history (an additional two to five years of site history, when possible).
Pesticide use information should be verified using the cooperator's written records.  In addition,
the study director should be thorough in inquiring if any pesticide spills, pesticide storage near
wells, or other point sources have occurred at or near the site.  In addition, sites that have
received fill material from off-site sources should be identified due to potential contamination
issues.  It is incumbent upon the study director to fully investigate the site and report results
before the commencement of the monitoring study.  Sites where such potential point sources
occur should be eliminated from further consideration at this stage.
2.32  Long-Term Availability of Study Site
Ground-water monitoring studies are typically conducted over a 2 to 3 year period.  The length of
the required monitoring period is determined by several factors, the most important of which is
the pattern of movement of both the pesticide and tracer through the soil column, as determined

28
by the analysis of pore-water and well-water samples.  The site owner should be made aware that
time estimates are imperfect, and that study conditions or chemical properties (i.e. very persistent
chemicals) may require the site to be available for more than 3 years.  Additionally, in cases
where leaching of the pesticide is being investigated at multiple sites or in cases where
application to sandy soils has already been excluded from the registration label, then studies may
need to be conducted at sites where travel times to ground water are longer.  If a site is not
available for a minimum 2 to 3 years, the site should be eliminated from further consideration at
this stage.
2.4 PRELIMINARY SITE CHARACTERIZATION
The fourth step in the site selection process is to undertake a reconnaissance of candidate sites.
The final result should be a set of proposed study sites.  Once a set of candidate fields has been
identified and access is secured, preliminary characterization should be carried out.  This
investigation includes estimations of soil characteristics and variability, a description of site
hydrogeology, identification of topographic and surface features that could impact the study, and
site access considerations.  Utilizing benchmark soil series as established by the NRCS will
provide the registrant with additional soils data.  Because these Benchmark series fall within a
specified range of criteria and is available in GIS coverage, the spatial distribution of the soil and
the range of properties could be characterized to identify how vulnerable the site actually is and
how it fits within the entire use area.
Information about pesticides used on and near the site should be gathered to ensure that
contamination of the aquifer has not occurred.  In addition, it is important to ensure that no
chemicals were applied that would be difficult to analytically separate from the test compound.
The results of these investigations should be submitted to the Agency in the form of tables
presenting the characteristics of the candidate sites, maps indicating locations of candidate sites,
a description of which sites are most preferred, and why.  The presence of compounds that
interfere analytically with the test pesticide will result in rejection of the site.
Ranking of the various sites should be based on how likely each site would be to meet study
guidelines after full characterization.  A small number of soil samples should be collected for
analysis from each candidate site, with the intent of determining the texture, organic matter, and
permeability of the uppermost soil layers.  Local water table depth should be determined by
consulting the local NRCS office, examining existing wells on the site, or by installing
piezometers.  The natural configuration of the land surface should also be considered; sites
containing depressions or low-lying areas that could facilitate ponding should be avoided.  Any
additional information that can be collected during this phase of the characterization should
further the goal of ensuring that a chosen site will be accepted after a more resource-intensive,
full site characterization.

29
Upon receiving the preliminary site characterization data from the registrant, EPA will give
conditional acceptance of sites that appear to be consistent with study guidelines.  Full site-
characterization can then commence.
2.41  Absence of Dominant Fracture Flow
The hydraulic gradient, the configuration of the piezometric (or potentiometric) surface, and
textural variations in the aquifer media are typically used to estimate the average direction and
velocity of ground-water flow.  This technique is not appropriate for the determination of
ground-water flow and velocity in karst or highly fractured regions.  For this reason, areas where
prevalent ground-water flow occurs along karst or fracture-flow features are generally
unacceptable for highly vulnerable study sites, unless significant use of the pesticide is
anticipated in such an environment.  Special monitoring techniques should be planned for such
situations.

30
CHAPTER 3 - SITE CHARACTERIZATION AND CONCEPTUAL MODEL
Interpretation of the results of a prospective ground-water monitoring study largely depends upon
whether the hydrogeology of the study site is adequately understood.  Site characterization data
are necessary to more accurately assess site vulnerability, thereby placing into context results of
the study relative to conditions throughout the pesticide use area.
Site characterization includes a description of topography at the site and in the vicinity, soil
characteristics, and vadose and saturated zone hydrogeology.  Descriptions of agronomic
practices (including irrigation and tillage) and climate (rainfall frequency, amount, and seasonal
distribution) are also fundamental.  This information is needed before monitoring equipment is
installed.  Information collected in this phase of the study may be used as input parameters for
computer models.
A conceptual model should be developed to understand how the site characteristics may affect
the fate of the test pesticide.  This model involves the analysis and interpretation of data collected
during site characterization for soils, the vadose zone, and the saturated zone.  Various methods
exist to compile, analyze, and present these data in both graphical and tabular form.  Visual
displays of data are usually the most convenient and useful for presenting site characterization
data.  Once the flow system is understood, and the conceptual model is developed, a monitoring
plan can be designed that is suited to the study site (Chapter 4).
Site characterization activities are divided into four steps.  These steps are described in detail in
the following sections:
·
Existing Local Data and Base Map
·
Soil and Vadose Zone Investigation
·
Saturated Zone Investigation
·
Conceptual Model
Products of site characterization are:  1) a summary of existing local data; 2) a detailed base map;
3) site- specific characterization data; and 4) a conceptual hydrogeologic model of the site.  All
these data and the conceptual model should be summarized and described in the Site
Characterization Report (Chapter 5).
3.1 EXISTING LOCAL DATA AND BASE MAP
The first step in the site characterization process is to gather all available information about the
geology, topography, soils, hydrology, climate, and agricultural practices that could affect the

31
fate and transport of the pesticide at the study site.  These data are used to characterize the local
hydrogeologic and agricultural conditions, and relate site-specific conditions to the regional
framework.  The base map of the study site provides a spatial reference for all site
characterization information and monitoring results.
3.11 Compile Existing Local Data
A description of the regional hydrogeology is important background information for developing
the conceptual model of flow and transport at the study site.  An understanding of the
hydrogeologic framework is typically needed to interpret the results of monitoring and to
understand field observations.
Soil is a primary factor in regulating whether rainwater runs off or infiltrates.  Data obtained
from soil surveys are used to create maps of soil classes, where average values of soil properties
are estimated within a defined region of a mapping unit (Webster, 1985; Cambardella et al.,
1994).  Thus, an initial set of possible study site locations can be determined in part with a
published United States Department of Agriculture (USDA) Soil Conservation Survey.  Site-
specific soil characterization and delineation, in addition to the Soil Survey, will normally be
necessary.
The timing and intensity of rainfall has a strong impact on the transport of pesticide residues off a
field due to leaching or runoff.  National Oceanic and Atmospheric Administration (NOAA) has
a nationwide system of weather stations that measures rainfall and computes statistics (averages,
return frequencies).  During the course of a prospective ground-water study, an onsite weather
station to measure rainfall amount and intensity, soil and air temperature and pan evaporation is
strongly recommended.  Historical rainfall at or near the study site should be determined to
ensure that water input during the study is consistent with historical data.  A water balance
should be developed to provide an estimate of the net historical recharge at the site.
3.12 Develop a Base Map
An accurate base map of each study site should be developed to provide a spatial reference for
site characterization observations and for subsequent monitoring data.  The base map should
fully represent the significant features of the study site and the surrounding area; particularly
those that may affect ground and surface water flow systems.  It is strongly recommended that all
base maps include:
·
The location of the test site by latitude and longitude (and by township range, and
section).  The use of more exact methods, such as a Global Positioning System (GPS) or
standard survey methods should also be considered,
·
The location of nearby roads, surface water bodies, fences, and municipal boundaries,
·
The location of nearby wells (including identification of irrigation source), canals, and
drainage systems,

32
·
The date the base map was developed and the sources of base map information,
·
The organization and individual responsible for the base map,
·
The area and slope of the control plot and test plot,
·
Ground surface elevations and topographic features in the vicinity of the study site, and
·
Map scale, map title, county name, and complete legend including topographic contour
interval, explanation of map symbols, and north arrow.
Detailed information on site topography is needed to identify areas within a field where leaching
is more likely to occur.  Although a study site should have a low slope overall, small-scale
natural variations in slope within a field can direct the flow of water to runoff or cause it to pond.
Identification of these areas is important for developing a conceptual model of the site, and in
interpreting results of monitoring.  We strongly recommend surveying the study site and adjacent
areas to provide elevation data at a one foot or less contour interval (depending on the slope of
the site).
Base maps are used to record the locations of all pertinent study features and sampling sites
including the location of soil cores, infiltration tests, piezometers, monitoring wells, lysimeters,
drinking and irrigation wells, buried drainage tiles, weather stations, pesticide mixing and
loading areas, pesticide storage facilities, disposal areas, and buildings.  In addition, the location
of a control area hydrologically upgradient of the study site should be identified and located on
the base map, as well as a site for the test pit excavation.  The Site Characterization Report
should include this base map.
3.13 Information Sources
Sources of information on soils, geology, hydrology, topography and climate include:  local
experts, USDA agricultural extension service, the USGS and state geologic surveys, USDA
NRCS soil surveys, and the NOAA climatic databases.  Information on pertinent surficial
features obtained from aerial photogrammetric surveys may also be of use in base map
development.  State transportation departments, environmental protection departments, and
county planning departments often maintain such information for land areas under their
jurisdiction.  Private companies may also be a source for aerial photogrammetric information in
some areas.
3.2 SOIL AND VADOSE ZONE INVESTIGATION
Soil structure and variations in soil texture, surficial geology, topography, hydrology, and the
impact of years of agricultural practices (e. g. tillage, irrigation, drainage structures) influence the
extent to which  precipitation or irrigation will infiltrate or runoff from a field.  If site

33
characterization is inadequate, these real-world complexities will limit the interpretation of the
monitoring data.  Thus, characterization of the subsurface is fundamental and necessitates
substantial sampling, particularly between the soil surface and the saturated zone.  The following
sections group the investigation into two categories: an exploratory coring program in which
sampling and testing occur throughout the study site, and a test pit excavation, located adjacent to
or near the study site.  The sections below describe parameters that should be characterized
during the coring and test pit investigations.  There is significant flexibility as to which methods
can be used to measure the parameters for site characterization.  The emphasis is on
performance-based methods as dictated by site specific conditions.  Techniques are to be
approved by the EPA prior to use.
3.21  Exploratory Coring Program and Field Testing
All site characterization programs should include an exploratory coring program to directly
investigate and characterize the vadose zone.  The purpose of the exploratory coring program is
to obtain information about selected soil properties which reflect a soil's capacity to hold and
transmit water, to bind or retain a pesticide, and to degrade or transform a pesticide; or those
factors which considered together affect a pesticide's mobility and persistence at a specific study
site.  The soil coring program is also a means to assess the vertical and horizontal homogeneity
of these parameters across a study site.  Data collected from exploratory coring is used to develop
an initial conceptual model of subsurface conditions at the test site.  In this phase of the study,
soil heterogeneities or barriers to leaching not discovered in preliminary site selection can be
identified. Before initiation of the exploratory coring program, an effort should be made to
identify and locate utilities, irrigation systems, tile drains, etc. to avoid damage and costly repairs.
At least one continuous soil core (from the surface to the water table) from at least eight locations
throughout the study site, as well as one continuous core from a control area assumed to be up-
gradient of the study site, will be collected.  A detailed drilling log should be prepared by a
trained soil scientist or geologist to describe the texture, color, structure, and moisture content of
the soils as they are collected over the complete core. Methods for collecting soil samples (such
as split spoon or thin-walled Shelby tube) can be found in the open literature.  A soil core log
should give special attention to confining layers, abrupt changes in texture or color, and other
features needed to characterize the physical and chemical properties of the vadose and saturated
zones.  In addition, depth to the water table should be recorded.
Soil sub-samples should be taken from each core for laboratory analysis.  Special attention is to
be paid to the top six feet of the soil column, to allow comparison with NRCS soil surveys
(which describe soils to a depth of six feet).  The top six feet of the core should be divided into
either six-inch intervals or by soil diagnostic horizon, whichever is less.  Emphasis is placed on
the surface six feet because soil texture, porosity, structure, and organic matter content have a
large influence on the persistence and mobility of the applied pesticide. Below the top 6 feet of
the soil core, sub-samples should be collected every four feet, except when a visible change in
soil properties (color, texture, structure) is observed.  In this case, at least two sub-samples
should be taken from the 4-foot interval, to characterize the differences between soil types.  Each

34
sample should be described in the field by an experienced geologist and/or soil scientist.  In
addition, all soil sub-samples should be analyzed for the following information:
·
soil texture class, particle density, bulk density, porosity, fraction sand, fraction silt and
fraction clay,
·
organic matter content or organic carbon content,
·
field capacity (1/3 bar), 1 bar, 5 bar, and wilting point (15 bar) (all measured on
undisturbed soil samples),
·
saturated hydraulic conductivity,
·
hydraulic conductivity vs.  soil water content and matric potential,
·
field soil water content, residual water content and saturated water content,
·
matric potential vs.  soil water content (water characteristic function)
·
Munsell color (specify moisture condition, $"!", wet or dry), and
·
pH and cation exchange capacity or anion exchange capacity (if appropriate).
These samples should not be composited.  Compositing of samples precludes obtaining
information about the variability of these important parameters across the field.  Standard
methods for the parameters listed above are available from ASTM and are described in Mason
(1983), Klute et al.  (1986), Jury et al. (1991) and Wilson et al.  (1995). Consideration should be
given to conducting these tests on undisturbed samples where possible.
The compounds of interest (ie. pesticide, degradates and tracer), should also be analyzed for from
soil collected in each horizon to ensure there has been no prior use of these compounds at the
study site.  If the test compound has not been registered, this need not be done.
3.22  Number and Locations of Soil Cores
Given that the study will be conducted in a field that is approximately two to five acres in size, a
minimum of eight soil cores are needed to characterize the vadose zone.  A greater number of
cores will likely increase the reliability of interpretations of subsurface conditions.
There are a number of ways of determining where these soil cores should be collected.  The most


Index of CBI Communication with Companies

   1.)    CBI Placeholder: Feb. 2, 2012  -  Correspondence from Golden Refrigerant to EPA
   2.)    CBI Placeholder: Feb. 2, 2012  -  Correspondence from Polar Technology LLC to EPA
   3.)    CBI Placeholder: Feb. 2, 2012  -  Correspondence from Refrigerant Exchange to EPA
   4.)    CBI Placeholder: Feb. 3, 2012  -  Correspondence from Airgas Refrigerants to EPA
   5.)    CBI Placeholder: Feb. 3, 2012  -  Correspondence from Coolgas Inc. to EPA
   6.)    CBI Placeholder: Feb. 3, 2012  -  Correspondence from Total Reclaim to EPA
   7.)    CBI Placeholder: Feb. 4, 2012  -  Correspondence from Pure Chem Separation to EPA
   8.)    CBI Placeholder: Feb. 6, 2012  -  Correspondence from Advanced Refrigeration Technologies to EPA
   9.)    CBI Placeholder: Feb. 6, 2012  -  Correspondence from RemTec to EPA
   10.)    CBI Placeholder: Feb. 17, 2012  -  Correspondence from Summit Refrigerants to EPA
   11.)    CBI Placeholder: Mar. 13, 2012  -  Correspondence from Coolgas Inc. to EPA