[Federal Register Volume 79, Number 200 (Thursday, October 16, 2014)]
[Notices]
[Pages 62227-62229]
[FR Doc No: 2014-24543]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73329; File No. SR-NYSEARCA-2014-115]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca
Retail Liquidity Program and NYSE Arca Equities Rule 7.44 To Provide
That Retail Price Improvement Orders That Are Not Priced Better Than
the Best Protected Bid or Best Protected Offer Will Not Be Rejected
Upon Entry

October 9, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on October 1, 2014, NYSE Arca, Inc. (``Exchange'' or ``NYSE
Arca'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend NYSE Arca Equities Rule 7.44 to
provide that Retail Price Improvement Orders that are not priced better
than the best protected bid or best protected offer will not be
rejected upon entry. The text of the proposed rule change is available
on the Exchange's Web site at www.nyse.com, at the principal office of
the Exchange, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange is proposing to amend NYSE Arca Equities Rule 7.44
(``Rule 7.44'') to provide that Retail Price Improvement Orders
(``RPI'') that are not priced better than the best protected bid
(``PBB'') or best protected offer (``PBO'') will not be rejected upon
entry.
    Rule 7.44 sets forth the Exchange's pilot Retail Liquidity Program
(the ``Program'').\4\ Under the Program, ETP Holders are able to
provide price improvement to Retail Orders, as defined in Rule
7.44(a)(3) and (k), by submitting an RPI, which is non-displayed
liquidity in NYSE Arca-listed securities and UTP Securities, excluding
NYSE-listed (Tape A) securities, that is priced more aggressively than
the PBBO by at least $0.001 per share and that is identified as an RPI
in a manner prescribed by the Exchange. RPIs are entered at a single
limit price, rather than being pegged to the PBBO; however, RPIs can be
designated as a Mid-Point Passive Liquidity (``MPL'') Order, in which
case the order will re-price as the PBBO changes.\5\ RPIs remain non-
displayed and only execute against Retail Orders.
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    \4\ See Securities Exchange Act Release No. 71176 (Dec. 23,
2013), 78 FR 79524 (Dec. 30, 2013) (SR-NYSEArca-2013-107).
    \5\ RPIs not designated as MPL Orders would alternatively need
to be designated as a Passive Liquidity (``PL'') Order.
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    Rule 7.44(a)(4) currently provides that an order that is identified
as an RPI but is not priced better than the PBB or PBO will be rejected
upon entry. The Exchange proposes to amend Rule 7.44(a)(4) to permit
entry of RPI's that are not priced better than the PBB or PBO. The
Exchange believes that by accepting all RPIs, regardless of price, the
Exchange will expand the interest that would be available to provide
price improvement for Retail Orders, particularly if the PBB or PBO
moves such that an RPI that otherwise would have been rejected could
become price-improving interest.
    To effect this change, the Exchange proposes to delete the third
sentence of Rule 7.44(a)(4) that provides for such inferior-priced RPIs
to be rejected upon entry. The Exchange further proposes to amend the
fourth sentence of Rule 7.44(a)(4) to conform the rule text to this
proposed change. Specifically, the current rule text provides that
``[a] previously entered RPI that becomes priced at or inferior to the
PBBO will not be eligible to interact with incoming

Retail Orders, and such an RPI will cancel if a Retail Order executes
against all displayed liquidity at the PBBO and the [sic] attempt [sic]
to execute against the RPI.'' Because the Exchange would no longer be
rejecting RPIs that are not priced better than the PBB or PBO, the
Exchange believes that use of the term ``previously entered'' would no
longer reflect the universe of RPIs that may not be priced better than
the PBB or PBO. The Exchange therefore proposes to amend this sentence
to delete the term ``previously entered'' and instead state that an RPI
that is or becomes priced at or inferior to the PBBO would be subject
to the treatment currently described in the rule.
    The Exchange does not intend to make any other changes to the
Program with this rule filing. The Exchange will announce the
implementation date of the systems functionality associated with the
proposed rule change by Trader Update to be published no later than 30
days following the effective date. The implementation date will be no
later than 30 days following the issuance of the Trader Update.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the
Act,\6\ in general, and furthers the objectives of Section 6(b)(5),\7\
in particular, in that it is designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and in general,
to protect investors and the public interest.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change removes
impediments to and perfects the mechanism of a free and open market and
national market system because it would enable additional RPI interest
to be entered regardless of price, thereby allowing that RPI interest
to remain in Exchange systems and become eligible to provide price
improvement if the PBB or PBO changes such that the RPI interest
becomes priced better than the PBB or PBO. The Exchange further
believes that the proposed rule change protects investors and the
public interest because it potentially increases the amount of RPI
interest available to provide price improvement to incoming Retail
Orders if the PBB or PBO moves such that the RPI becomes eligible to
provide price improvement. The Exchange further believes the proposal
will protect investors and the public interest because the proposed
rule change will increase the incentives of liquidity providers to
enter RPIs because liquidity providers will no longer need to risk
rejection of RPIs that may be priced inferior to the PBB or PBO upon
entry.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange believes that
the Program is designed to increase competition among execution venues,
encourage additional liquidity, and offer the potential for price
improvement to retail investors. The Exchange notes that a significant
percentage of the orders of individual investors are executed over-the-
counter. The Exchanges believes that it is appropriate to create a
financial incentive to bring more retail order flow to a public market.
The Exchange believes that the proposed rule change supports this
objective by eliminating the possibility that liquidity-providing
interest would be rejected based on price.

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

    No written comments were solicited or received with respect to the
proposed rule change.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \8\ and Rule 19b-4(f)(6) \9\ thereunder because
the proposal does not: (i) Significantly affect the protection of
investors or the public interest; (ii) impose any significant burden on
competition; and (iii) by its terms, become operative for 30 days from
the date on which it was filed, or such shorter time as the Commission
may designate if consistent with the protection of investors and the
public interest.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
    \10\ In addition, Rule 19b-4(f)(6)(iii) requires the Exchange to
give the Commission written notice of the Exchange's intent to file
the proposed rule change, along with a brief description and text of
the proposed rule change, at least five business days prior to the
date of filing of the proposed rule change, or such shorter time as
designated by the Commission. The Exchange has satisfied this
requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may
not become operative prior to 30 days after the date of filing.
However, Rule 19b-4(f)(6)(iii) \11\ permits the Commission to designate
a shorter time if such action is consistent with the protection of
investors and the public interest.
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    \11\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.\12\
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    \12\ 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEArca-2014-115 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2014-115. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such

filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NYSEArca-2014-115 and should be submitted on or before
November 6, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-24543 Filed 10-15-14; 8:45 am]
BILLING CODE 8011-01-P


1 MEMORANDUM TO: EPA Docket: OAR 2004 0076 FROM: USEPA, Clean Air Markets Division SUBJECT: Unfunded Mandates Reform Act ( UMRA) Analysis for Proposed Federal Implementation Plan for Clean Air Interstate Rule and Proposed Response to North Carolina's Section 126 Petition DATE: August 23, 2005 Background and Overview of Proposed Rulemaking Title II of the UMRA of 1995 ( Public Law 104 4)( UMRA) establishes requirements for federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments and the private sector. Under Section 202 of the UMRA, 2 U. S. C. 1532, EPA generally must prepare a written statement, including a cost benefit analysis, for any proposed or final rule that " includes any Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $ 100,000,000 or more ... in any one year." A " Federal mandate" is defined under Section 421( 6), 2 U. S. C. 658( 6), to include a " Federal intergovernmental mandate" and a " Federal private sector mandate." A " Federal intergovernmental mandate," in turn, is defined to include a regulation that " would impose an enforceable duty upon State, Local, or Tribal governments," Section 421( 5)( A)( i), 2 U. S. C. 658( 5)( A)( i), except for, among other things, a duty that is " a condition of Federal assistance," Section 421( 5)( A)( i)( I). A " Federal private sector mandate" includes a regulation that " would impose an enforceable duty upon the private sector," with certain exceptions, Section 421( 7)( A), 2 U. S. C. 658( 7)( A).

The EPA believes that the requirements of Section 202 of UMRA apply to the proposed Federal implementation plans ( FIP) for the Clean Air Interstate Rule ( CAIR) and section 126 action because this proposed action could result in the establishment of enforceable mandates directly applicable to sources ( including sources owned by State and local governments) that could result in costs greater than $ 100 million in any one year. The UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost effective or least burdensome alternative that achieves the objectives of the rule.

On May 12, 2005 EPA, as authorized by section 301 of the Clean Air Act, published the CAIR in the Federal Register to ensure compliance with the requirements of section 110( a)( 2)( D) of the CAA, relating to interstate transport of air pollution. In a final rule signed the same day as 2 the CAIR and published on April 25, 2005, EPA found that States have failed to submit SIPs to satisfy the interstate transport requirements under section 110( a)( 2)( D)( i) of the CAA for the PM2.5 and 8 hour ozone NAAQS. ( 70 FR 21147). These findings give EPA the authority to issue a FIP at any time to correct the deficiencies and require that the Administrator issue a FIP for each State, within two years of making such findings, unless a SIP revision correcting the deficiency is approved by EPA before a FIP is promulgated. In March 2004, North Carolina submitted a petition to EPA pursuant to Section 126 of the Clean Air Act contending that emissions from certain facilities in upwind States contribute significantly to nonattainment in and interfere with maintenance by the State of North Carolina with the PM2.5 and eight hour ozone standards. The petition requests that EPA find that emissions of NOx and SO 2 from large electric generating units ( EGUs) in 12 States are significantly contributing to nonattainment with and interfering with maintenance of the PM2.5 standard and that NOx emissions from EGUs in five States are significantly contributing to 8 hour ozone nonattainment and interfering with maintenance of the standard. If EPA makes such findings, EPA would be authorized to establish Federal emissions limits for the affected sources. EPA has entered into a consent decree with the State of North Carolina, agreeing to respond to the petition through notice and comment rulemaking, and to issue proposed findings and any necessary control remedies by August 1, 2005.

During the CAIR rulemaking process, the Agency did not reach a conclusion regarding the applicability of the UMRA requirements to the CAIR. Notwithstanding, the Agency prepared a written statement for the CAIR Supplemental Notice of Proposed Rulemaking ( SNPR) consistent with the requirements of Section 202 of the UMRA. Furthermore, as EPA stated in the CAIR proposal, the Agency is not obligated to develop under Section 203 of the UMRA a small government agency plan for the CAIR. Furthermore, in a manner consistent with the intergovernmental consultation provisions of Section 204 of the UMRA, EPA carried out consultations with the governmental entities affected by the CAIR.

While not required for the CAIR, EPA analyzed the economic impacts of the CAIR on government entities for informational purposes. Specifically, EPA identified 81 State and municipality owned electric generating entities potentially affected by the emission reduction requirements, and analyzed the potential impact on these entities. That analysis assumed that all States would adopt the CAIR model trading rules and thus it quantified the impact of applying the model trading rules to sources in States affected by the CAIR. The analysis did not examine potential indirect economic impacts associated with the CAIR, such as employment effects in industries providing fuel and pollution control equipment, or the potential effects of electricity price increases on industries and households.

The Agency is now proposing FIPs for all States affected by the CAIR. The FIPs would serve as a backstop measure to achieve the emission reductions requirements established by the CAIR until States have approved State implementation plans ( SIPs) to achieve the reductions. The Agency also proposes EPA's response to a petition submitted by the State of North Carolina under section 126 of the CAA. The EPA is proposing Federal cap and trade programs for electric 3 1 The IPM is a multiregional, dynamic, deterministic linear programming model of the U. S. electric power sector. The Agency uses IPM to examine costs and, more broadly, analyze the projected impact of environmental polices on the electric power sector in the 48 contiguous States and the District of Columbia. Documentation for IPM can be found at www. epa. gov/ airmarkets/ epa ipm. generation units ( EGUs) as the control strategy for the FIPs as well as the section 126 action. The proposed Federal cap and trade programs are virtually identical to the CAIR model trading rules. The government entity analysis prepared for the CAIR identifies the maximum potential impact of the CAIR FIP and section 126 response, and the Agency relied on the CAIR analysis to determine the potential impact of the proposed CAIR FIP and section 126 action on governmental entities.

As explained in more detail in the CAIR regulatory impact analysis ( RIA), the Agency used the Integrated Planning Model ( IPM) 1 to model emission and economic impacts of the CAIR. The EPA's modeling assumed that affected States would adopt regulations that implement the CAIR model trading programs, and we modeled the CAIR requirements on a geographic region that is almost identical to the region that would be affected by the proposed CAIR FIPs   the CAIR modeling included annual SO 2 and NO x requirements for Arkansas, however this State would be subject only to ozone season NOx requirements under the proposed FIP. ( Therefore, the total impacts of the proposed FIPs on government owned entities are somewhat overstated in the CAIR analysis because that analysis assumed annual reduction requirements in Arkansas.) The section 126 response would affect a subset of the CAIR States.

Because the Federal cap and trade programs for electric generation units ( EGUs) EPA is proposing as the control strategy for the FIPs as well as the section 126 action are virtually identical to the CAIR model trading rules, the analysis and written statement prepared for CAIR satisfies the requirements of section 202 of the UMRA with respect to the proposed CAIR FIP and section 126 action. The analysis prepared for CAIR is presented below ( the same analysis is presented in chapter 8 in the Regulatory Impact Analysis for the CAIR, available in the CAIR docket). In addition to the intergovernmental consultations that EPA carried out during the CAIR process, the Agency also consulted with governmental agencies during development of the proposed CAIR FIP and section 126 response. The EPA convened a Small Business Advocacy Review Panel and conducted outreach to small entity representatives, including representatives of small government entities, to obtain the advice and recommendations of small entities that potentially would be subject to the proposed CAIR FIP and section 126 response ( the resulting report is in the docket for this proposal). The Agency conducted CAIR outreach meetings and invited representatives of all States that would be affected by the proposed CAIR FIP and section 126 response.

Identification of Government Owned Entities Using eGRID data, EPA identified State and municipality owned utilities and subdivisions 4 2 EGRID is EPA's Emissions & Generation Resource Integrated Database, which contains emissions and resource mix data for virtually every power plant and company that generates electricity in the United States. eGRID is available at www. epa. gov/ cleanenergy/ egrid/ download. htm. in the CAIR region. 2 EPA then used IPM output ( from modeling based on assuming that affected States adopt regulations that implement the CAIR model trading rules) to associate these plants with individual generating units. Entities that did not own at least one unit with a generating capacity of greater than 25 MW were omitted from the analysis because of their exemption from the CAIR. This exempts 179 entities owned by State or local governments. Additionally, government owned entities for which IPM does not project generation in either 2010 or 2015 under the base case or CAIR were exempted from this analysis, because they are not projected to be operating and thus will not face the costs of compliance with the CAIR. Five municipal entities were dropped from the analysis for this reason. Thus, EPA identified 81 State and municipality owned utilities that are potentially affected by the CAIR, out of a possible 265, which are summarized in Table 1.

Table 1. Summary of Potential Impacts on Government Entities under CAIR EGU Ownership Type Potentially Affected Entities Projected Annualized Costs ($ 1,000,000) Number of Government Entities with Compliance Costs > 1% of Generation Revenues Number of Government Entities with Compliance Costs > 3% of Generation Revenues 2010 2015 2010 2015 2010 2015 Subdivision 5

$ 15.2

$ 1.7 3 3 0 1 State 7

$ 134.2

$ 110.5 0 2 0 0 Municipal 69

$ 162.5

$ 97.9 17 34 17 22 Total 81

$ 311.9   $ 210.2 20 39 17 23 Note: The total number of potentially affected entities in this table excludes the 184 entities that have been dropped because they will not be affected by CAIR. Also, the total number of entities with costs greater than 1 percent or 3 percent of revenues includes only entities experiencing positive costs. A negative cost value implies that the group of entities experiences a net savings under CAIR. Source: IPM and TRUM analysis Overview of Analysis and Results After identifying potentially affected government entities, EPA estimated the impact of the CAIR in 2010 and 2015 based on the following:

total impacts of compliance on government entities and 5

ratio of small entity impacts to revenues from electricity generation.

The financial burden to owners of EGUs under CAIR is composed of compliance and administrative costs. This section outlines the compliance and administrative costs for the 81 potentially affected government owned units in the CAIR region.

Methodology for Estimating Impacts of CAIR on Government Entities The primary burden on State and municipal governments that operate utilities under CAIR is the cost of installing control technology on units to meet SO 2 and NO x emission limits or the cost of purchasing allowances. However, an entity can comply with CAIR through any combination of the following: installing retrofit technologies, purchasing allowances, switching to a cleaner fuel, or reducing emissions through a reduction in generation. Additionally, units with more allowances than needed can sell these allowances on the market. The chosen compliance strategy will be primarily a function of the unit's marginal control costs and its position relative to the marginal control costs of other units.

To attempt to account for each potential control strategy, EPA estimates compliance costs as follows: C Compliance =   C Operating+ Retrofit +   C Fuel +   C Allowances +   C Transaction     R where C represents a component of cost as labeled, and   R represents the retail value of foregone electricity generation.

In reality, compliance choices and market conditions can combine such that an entity may actually experience a savings in any of the individual components of cost. Under CAIR, for example, EPA projects that the price of low sulfur coal will fall as many units install scrubbers and switch away from low sulfur coal to cheaper bituminous coal, such that many entities burning low sulfur coal actually experience a reduction in fuel costs as a result of the demand shift. Similarly, although some units will forgo some level of electricity generation ( and thus revenues) to comply, this impact will be lessened on these entities by the projected increase in electricity prices under CAIR as well as reductions in fuel costs, while those not reducing generation levels will see an increase in electricity revenues. Elsewhere, units burning high or medium sulfur coal might decide to pay relatively more for low sulfur coal under CAIR and sell allowances on the market, in the hopes of negating some or all of their compliance cost. Because this analysis evaluates the total costs along each of these four compliance strategies for each entity, it inevitably captures savings or gains such as those described. As a result, what we describe as cost is really more of a measure of the net economic impact of the rule on small entities.

In this analysis, EPA used IPM parsed output for the base case and CAIR ( http:// www. epa. gov/ airmarkets/ epa ipm/ iaqr. html) to estimate compliance cost at the unit level. These costs were then summed for each small entity, adjusting for ownership share. Compliance cost estimates were based on the following: operating and retrofit costs, sale or purchase of allowances, and the change in fuel costs or electricity generation revenues under CAIR relative to 6 3A similar approach was used in impact analyses for the prior section 126 action and FIP for the NO x SIP Call. the base case. These components of compliance cost were estimated as follows:

( 1) Retrofit and operating costs: Using the IPM parsed output for the base case and CAIR ( http:// www. epa. gov/ airmarkets/ epa ipm/ iaqr. html), EPA identified units that install control technology under CAIR and the technology installed. The equations for calculating retrofit costs were adopted from EPA's Technology Retrofit and Updating Model ( TRUM). The model calculates the capital cost ( in $/ MW); the fixed operation and maintenance ( O& M) cost ( in $/ MW year); the variable O& M cost ( in $/ MWh); and the total annualized retrofit cost for units projected to install FGD, SCR, or SNCR.

( 2) Sale or purchase of allowances: EPA estimated the value of initial SO 2 and NO x allowance holdings. For SO 2, units were assumed to retain their Phase II allowance allocations as determined under EPA's 1998 reallocation of Acid Rain allowances, adjusted to reflect the 50 percent reduction in 2010 and 65 percent reduction in 2015 under CAIR. The value of banked SO 2 allowances was not considered in this analysis. Because the use of banked allowances is expected to be a significant compliance strategy, this analysis most likely overstates annualized compliance costs. For NO x, the State emission budgets were assumed to be apportioned to units on a heat input basis. Each unit was assumed to receive a share of the State NO x emission budget equal to its share of the total State heat input for that year in the base case. This is a simplification of what is included in the model rule, which proposes allocating NO x allowances based on heat input from 1999 through 1992.3 However, States can ultimately decide how to allocate NO x allowances.

To estimate the value of allowances holdings, allocated allowances were subtracted from projected emissions, and the difference was then multiplied by the allowance price projected by IPM. Units were assumed to purchase or sell allowances to exactly cover their projected emissions under CAIR.

( 3) Fuel costs: Fuel costs were estimated by multiplying fuel input ( MMBtu) by region and fuel type adjusted fuel prices ($/ MMBtu) from TRUM. The change in fuel expenditures under CAIR was then estimated by taking the difference in fuel costs between CAIR and the base case.

( 4) Value of electricity generated: EPA estimated electricity generation by first estimating the unit capacity factor and maximum fuel capacity. The unit capacity factor is estimated by dividing fuel input ( MMBtu) by maximum fuel capacity ( MMBtu). The maximum fuel capacity was estimated by multiplying capacity 7 4 All costs are reported in 1999 dollars.

5 Neither the costs nor the revenues of units that retire under CAIR are included in this portion of the analysis. Because these units are better off retiring under CAIR than continuing operation, the true cost of the rule on these units is not represented by our modeling. The true cost of CAIR for these units is the differential between their costs in the base case and the costs of meeting their customers' demand under the rule. ( MW) * 8,760 operating hours * heat rate ( MMBtu/ MWh). The value of electricity generated was then estimated by multiplying capacity ( MW)* capacity factor* 8,760* regional adjusted retail electricity price ($/ MWh).

( 5) Administrative costs: Because most affected units are already monitored as a result of other regulatory requirements, EPA considered the primary administrative cost to be transaction costs related to purchasing or selling allowances. EPA assumed that transaction costs were equal to 1.5 percent of the total absolute value of a unit's allowances. This assumption is based on market research by ICF Consulting.

Results A summary of economic impacts on government owned entities is presented in Table 1. According to EPA's analysis, the total net economic impact on each category of government owned entity ( State and municipality owned utilities and subdivisions) is expected to be negative in both 2010 and 2015.4 IPM modeling of CAIR projects that approximately 340 MW ( 8 units of 219 in this analysis) of municipality owned capacity would be uneconomic to maintain under CAIR, beyond what is projected in the base case. This represents about 0.4 percent of all subdivision, State, and municipality capacity in the CAIR region. For comparison, overall affected capacity under CAIR, about 5.3GW, or 1.7 percent of all coal fired capacity is projected to be uneconomic to maintain relative to the base case. This comparison suggests that government entities should not face a disproportionate burden under CAIR. In practice, units projected to be uneconomic to maintain may be " mothballed," retired, or kept in service to ensure transmission reliability in certain parts of the grid. Our IPM modeling is unable to distinguish between these potential outcomes.

As was done for the small entities analysis, EPA further assessed the economic and financial impacts of the rule using the ratio of compliance costs to the value of revenues from electricity generation in the base case, also focusing specifically on entities for which this measure is greater than 1 percent. 5 EPA projects that 20 government entities will have compliance costs greater than 1 percent of revenues from electricity generation in 2010, and 39 will in 2015. Entities that are projected to experience negative compliance costs under CAIR are not included in those totals. This approach is more indicative of a significant impact when an analysis is 8 looking at entities operating in a competitive market environment. Government owned entities do not operate in a competitive market environment and therefore will be able to recover expenses under CAIR through rate increases. Given this, EPA considers the 1 percent measure in this case a crude measure of the extent to which rate increases will be made at publicly owned companies.

The distribution across entities of economic impacts as a share of base case revenue is summarized in Table 2. For state owned entities and subdivisions, the maximum economic impact as a share of base case revenues is approximately 3 percent. A few municipality owned entities experience economic impacts that are significantly higher than the capacity weighted average for this group. In the cases where entities are projected to experience positive net costs that are a high percentage of revenues, these entities do not find it economic to retrofit and are unable to switch to a lower sulfur coal. Thus, these entities comply primarily through the purchase of allowances and reductions in generation.

Table 2. Distribution of Economic Impacts on Government Entities under CAIR EGU Ownership Type Capacity Weighted Average Economic Impacts as a % of Generation Revenues Min Max 2010 2015 2010 2015 2010 2015 Sub division   3.6%   2.0%   80.0%   27.6% 1.9% 3.1%

State   5.2%   3.9%   11.4%   10.2% 0.2% 2.8%

Municipal   5.9%   0.3%   13.8%   20.4% 17.2% 43.5%

All   4.2%   2.3%

80.0%   27.6% 17.2% 43.5%

Source: IPM and TRUM analysis Additionally, a few entities are projected to experience negative net costs that are a high percentage of base case revenues. These entities have units that are able to switch to a cheaper, lower sulfur coal to comply with CAIR and are able to maintain or increase generation levels, thus increasing revenues. Additionally, entities in regions for which we project large electricity price increases relative to other regions tend to be among those at the lower end of the distribution.

The various components of annualized incremental cost under CAIR to each group of government entities are summarized in Table 3. Overall, with the exceptions of subdivisions in 2010, each group is a net purchaser of allowances. Additionally, each group experiences both a reduction in fuel expenditures and an increase in electricity revenue under CAIR. Incremental fuel costs are negative because of the combination of a reduction in total coal use, switching to bituminous coal, and reduced low sulfur coal prices under CAIR. Additionally, although total electricity generation by government entities falls slightly under CAIR, the total loss in revenues is 9 more than exceeded by the revenue gains projected as a result of retail electricity prices rising under CAIR.

Summary of Government Entity Impacts The EPA examined the potential economic impacts on State and municipality owned entities associated with the CAIR based on assumptions of how the affected States will implement control measures to meet their emission reduction requirements. These impacts were calculated for the CAIR rulemaking to provide additional understanding of the nature of potential impacts and additional information to the States as they revise SIPs to meet the emissions budgets set by the CAIR rulemaking. As noted above, because the Federal cap and trade programs for electric generation units ( EGUs) EPA is proposing as the control strategy for the FIPs as well as the section 126 action are virtually identical to the CAIR model trading rules, the CAIR analysis ( which assumed that States would adopt the CAIR model trading rules) meets the requirements of section 202 of UMRA for the proposed CAIR FIP and section 126 action.

Table 3. Incremental Annualized Costs under CAIR Summarized by Ownership Group and Cost Category ($ 1,000,000)

EGU Ownership Type Retrofit + Operating Cost Net Purchase of Allowances Fuel Cost Lost Electricity Revenue Administrative Cost 2010 2015 2010 2015 2010 2015 2010 2015 2010 2015 Subdivision 10.4 9.4   1.6 1.7   3.2   8.4   20.9   4.5 0.0 0.1 State 20.1 25.9 29.2 52.5   116.8   143.1   67.0   46.3 0.3 0.5 Municipal 21.3 26.7 39.3 94.8   120.0   156.8   103.7   63.7 0.7 1.0 Source: IPM and TRUM analysis According to EPA's analysis, the total net economic impact on government owned entities is expected to be negative in both 2010 and 2015. However, IPM modeling projects that about 340 MW of municipality owned capacity ( about 0.4 percent of all subdivision, State, and municipality capacity in the CAIR region) would be uneconomic to maintain under CAIR, beyond what is projected in the base case. In practice, units projected to be uneconomic to maintain may be " mothballed," retired, or kept in service to ensure transmission reliability in certain parts of the grid. Our IPM modeling is unable to distinguish between these potential outcomes.

Of the 81 government entities considered in this analysis and the 265 government entities in the CAIR region that are included in EPA's modeling, 20 may experience compliance costs in excess of 1 percent of revenues in 2010, and 39 may in 2015, based on our assumptions of how the affected States implement control measures to meet their emissions budgets as set forth in this rulemaking.

Government entities projected to experience compliance costs in excess of 1 percent of 10 revenues have some potential for significant impact resulting from implementation of the proposed CAIR FIP and section 126 action. However, the majority of entities facing potentially significant impacts are located in States with regulated electricity markets, where they have the ability to pass some or all of their compliance cost on to ratepayers. In addition, the decision to include only units greater than 25 MW in size exempts 179 government entities that would otherwise be potentially affected by regulations implementing the CAIR trading programs. Finally, the use of cap and trade in general will limit impacts on entities owned by small governments relative to a less flexible command and control program.


[Federal Register Volume 80, Number 99 (Friday, May 22, 2015)]
[Notices]
[Pages 29790-29791]
[FR Doc No: 2015-12386]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2015-0047]

Public Hearing To Determine Whether Fiat Chrysler Has Reasonably
Met Its Obligations To Remedy Recalled Vehicles and To Notify NHTSA,
Owners, and Purchasers of Recalls

AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.

ACTION: Notice of public hearing.

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

SUMMARY: NHTSA will hold a public hearing on whether Fiat Chrysler
Automobiles US LLC (Fiat Chrysler) has reasonably met its obligations
to remedy recalled vehicles and to notify NHTSA, owners, and purchasers
of recalls.

DATES: The public hearing will be held beginning at 10 a.m. ET on July
2, 2015, at the U.S. Department of Transportation, 1200 New Jersey
Avenue SE., Washington, DC 20590. If you wish to attend or speak at the
hearing, you must register in advance no later than June 30, 2015 (and
June 26, 2015, for non-U.S. citizens), by following the instructions in
the Procedural Matters section of this notice. NHTSA will consider late
registrants to the extent time and space allows, but cannot ensure that
late registrants will be able to attend or speak at the hearing. To
ensure that NHTSA has an opportunity to consider comments, NHTSA must
receive written comments by June 23, 2015.

ADDRESSES: You may submit comments to the docket number identified in
the heading of this document by any of the following methods:
     Federal eRulemaking Portal: go to http://www.regulations.gov. Follow the online instructions for submitting
comments.
     Mail: Docket Management Facility, M-30, U.S. Department of
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery or Courier: West Building Ground Floor, Room
W12-140, 1200 New Jersey Avenue SE., between 9 a.m. and 5 p.m. ET,
Monday through Friday, except Federal holidays.
     Fax:<PHONE_NUMBER>.
    Regardless of how you submit your comments, you should mention the
docket number of this document.
    You may call the Docket office at<PHONE_NUMBER>.
    Note that all comments received will be posted without change to
http://www.regulations.gov, including any personal information
provided.

FOR FURTHER INFORMATION CONTACT: For registration to attend or speak at
the public hearing: Carla Bridges, National Highway Traffic Safety
Administration, 1200 New Jersey Avenue SE., Washington, DC 20590
(Telephone:<PHONE_NUMBER>) (Fax:<PHONE_NUMBER>). For hearing procedures:
Justine Casselle, Office of the Chief Counsel, National Highway Traffic
Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 20590
(Telephone:<PHONE_NUMBER>) (Fax:<PHONE_NUMBER>). Information regarding
recalls is available on NHTSA's Web site: http://www.safercar.gov. To
find recalls by NHTSA Recall Number: (1) In the drop-down menu in the
lower right-hand corner for ``Shortcut search for a recall,''

select ``by Campaign ID Number''; (2) click ``Go''; (3) select the box
for ``Recalls''; (3) enter the recall number; and (4) click ``GO.''

SUPPLEMENTARY INFORMATION: NHTSA has substantial concerns about the
significant safety hazards posed to consumers in connection with Fiat
Chrysler's administration and execution of its recalls. Pursuant to 49
U.S.C. 30118(e) and 30120(e), and 49 CFR 557.6(d) and 557.7, NHTSA has
decided to hold a public hearing on whether Fiat Chrysler has
reasonably met its obligations under the National Traffic and Motor
Vehicle Safety Act, as amended (Safety Act), to remedy recalled
vehicles and to provide notifications regarding its recalls.
    The public hearing may address recalls including NHTSA Recall Nos.
13V-038, 13V-252, 13V-527, 13V-528, 13V-529, 14V-373, 14V-391, 14V-438,
14V-567, 14V-634, 14V-749, 14V-795, 14V-796, 14V-817, 15V-041, 15V-046,
15V-090, 15V-114, 15V-115, and 15V-178. The recall campaigns are to
address the following:
    1. Loosening of the rear axle pinion nut causing loss of vehicle
control (13V-038);
    2. Rear fuel tank structure's risk of failure (13V-252);
    3. Failure of the left tie rod assembly resulting in loss of
steering control (13V-527);
    4. Failure of the left tie rod assembly resulting in loss of
steering control (13V-528);
    5. Failure of the left tie rod assembly resulting in loss of
steering control (13V-529);
    6. Inadvertent ignition switch movement turning off the engine
(14V-373);
    7. Vanity lamp wiring shortages resulting in fire (14V-391);
    8. Inadvertent ignition switch movement turning off the engine
(14V-438);
    9. Inadvertent ignition switch movement turning off the engine
(14V-567);
    10. Sudden failure of the alternator (14V-634);
    11. Inoperative instrument cluster causing vehicle failure (14V-
749);
    12. Broken springs in the clutch ignition interlock switch (14V-
795);
    13. Loosening of the rear axle pinion nut causing loss of vehicle
control (14V-796);
    14. Potential air bag inflator rupture with metal fragments causing
serious injury (14V-817);
    15. Unintended air bag deployment during vehicle operation (15V-
041);
    16. Unintended air bag deployment during vehicle operation (15V-
046);
    17. Contaminated, dislodged or broken parking pawl or park rod
(15V-090);
    18. Fuel leak near an ignition source (15V-114);
    19. Fuel pump relay causing a vehicle to stall without warning
(15V-115); and,
    20. Driver and passenger side door latch failure (15V-178).

Based on information presented at the public hearing and other
available information, NHTSA may issue an order that could include a
finding that Fiat Chrysler failed to carry out its recall requirements
under the Safety Act and requiring Fiat Chrysler to take specific
actions to comply with the law.
    Any interested person may make written and/or oral presentations of
information, views, and arguments on whether Fiat Chrysler has
reasonably met the remedy and/or notification requirements. There will
be no cross-examination of witnesses. 49 CFR 557.7.
    NHTSA will consider the views of participants in deciding whether
Fiat Chrysler has reasonably met the notification and/or remedy
requirements under 49 U.S.C. 30118 and 30120, and in developing the
terms of an order (if any) requiring Fiat Chrysler to take specified
action as the remedy for the recalls and/or take other action. 49
U.S.C. 30118(e), 30120(e); 49 CFR 557.8.
    Procedural Matters: Interested persons may participate in these
proceedings through written and/or oral presentations. Persons wishing
to attend must notify Carla Bridges, National Highway Traffic Safety
Administration, 1200 New Jersey Avenue SE., Washington, DC 20590
(Telephone:<PHONE_NUMBER>) (Fax:<PHONE_NUMBER>), before the close of
business on June 30, 2015 (and June 26, 2015, for non-U.S. citizens).
Each person wishing to attend must provide his or her name and country
of citizenship. Non-U.S. citizens must also provide date of birth,
title or position, and passport or diplomatic ID number, along with
expiration date. Each person wishing to make an oral presentation must
also specify the amount of time that the presentation is expected to
last, his or her organizational affiliation, phone number, and email
address. NHTSA will prepare a schedule of presentations. Depending upon
the number of persons who wish to make oral presentations and the
anticipated length of those presentations, NHTSA may limit the length
of oral presentations.
    For security purposes, photo identification is required to enter
the U.S. Department of Transportation building. To allow sufficient
time to clear security and enter the building, NHTSA recommends that
hearing participants arrive 30 to 60 minutes prior to the start of the
public hearing.
    The hearing will be held at a site accessible to individuals with
disabilities. Individuals who require accommodations, such as sign
language interpreters, should contact Ms. Justine Casselle using the
contact information in the FOR FURTHER INFORMATION CONTACT section
above no later than June 24, 2015. A transcript of the proceedings will
be placed in the docket for this notice at a later date.
    Persons who wish to file written comments should submit them so
that they are received by NHTSA no later than June 23, 2015.
Instructions on how to submit written comments to the docket is located
under the ADDRESSES section of this notice.

    Authority:  49 U.S.C. 30118(e), 30120(e); 49 CFR 557.6(d),
557.7; delegations of authority at 49 CFR 1.95(a) and 501.2(a)(1).

    Dated: May 18, 2015.
Mark R. Rosekind,
Administrator.
[FR Doc. 2015-12386 Filed 5-21-15; 8:45 am]
BILLING CODE 4910-59-P


[Federal Register: October 15, 2007 (Volume 72, Number 198)]
[Notices]
[Page 58341-58344]
[DOCID:fr15oc07-79]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56631; File No. CBOE-2007-99]

Self-Regulatory Organizations; Chicago Board Options Exchange,
Incorporated; Notice of Filing of Proposed Rule Change, as Modified by
Amendment No. 1, Relating to a Delta Hedging Exemption From Equity
Options Position Limits

October 9, 2007.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 21, 2007, the Chicago Board Options Exchange, Incorporated
(``CBOE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') a proposed rule change as described in
Items I, II, and III below, which Items have been prepared
substantially by the CBOE. The Exchange filed Amendment No. 1 to the
proposal on October 4, 2007.\3\ The Commission is publishing this
notice to solicit comments on the proposed rule change, as modified by
Amendment No. 1, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 replaces and supersedes the previously filed
proposed rule change in its entirety.
---------------------------------------------------------------------------

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

    The Exchange proposes to create a delta hedging exemption from
equity options position limits. The text of the proposed rule change is
available at CBOE, the Commission's Public Reference Room, and http://www.cboe.com/legal
.

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

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

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

1. Purpose
    All options traded on the Exchange are subject to position and
exercise limits, as provided under CBOE Rules 4.11 and 4.12.\4\
Position limits are imposed, generally, to maintain fair and orderly
markets for options and other securities by limiting the amount of
control one or more affiliated persons or entities may have over one
particular options class or the security or securities that underlie
that options class. Exchange rules also contain various hedge
exemptions to allow certain hedged positions in excess of the
applicable standard position limit.\5\
---------------------------------------------------------------------------

    \4\ Position limits for index options are provided separately
under CBOE Rules 24.4, 24.4A, and 24.4B.
    \5\ See Interpretation and Policy .04 to Rule 4.11.
---------------------------------------------------------------------------

    Over the years, CBOE has increased the size of options position and
exercise limits, as well as the size and scope of available hedge
exemptions to the applicable position limits.\6\ These hedge exemptions
generally require a one-to-one hedge (i.e., one stock option contract
must be hedged by the number of shares underlying the options contract,
typically 100 shares). In practice, however, many firms do not hedge
their options positions in this manner. Instead, these firms engage in
what is commonly known as ``delta hedging.'' Delta hedging varies the
number of shares of the underlying security used to hedge an options
position based upon the relative sensitivity of the value of the option
contract to a change in the price of the underlying security.\7\ Delta
hedging is a widely accepted method for risk management.
---------------------------------------------------------------------------

    \6\ See, e.g., Securities Exchange Act Release No. 55176
(January 25, 2007), 72 FR 4741 (February 1, 2007) (SR-CBOE-2007-08);
Securities Exchange Act Release No. 51244 (February 23, 2005), 70 FR
10010 (March 1, 2005) (SR-CBOE-2003-30); and Securities Exchange Act
Release No. 45603 (March 20, 2002), 67 FR 14751 (March 27, 2002)
(SR-CBOE-00-12).
    \7\ To illustrate, a stock option contract with a delta of .5
will move $0.50 for every $1.00 move in the underlying stock.
---------------------------------------------------------------------------

    Delta Neutral-Based Equity Hedge Exemption. The Exchange proposes
to adopt a new exemption from equity options position and exercise
limits \8\ for positions held by CBOE members and certain of their
affiliates that are ``delta

neutral'' \9\ under a ``permitted pricing model'' (as defined below),
subject to certain conditions (``Exemption''). The proposed Exemption
would apply only to equity options (stock options and options on
exchange-traded funds (``ETFs'')).\10\
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    \8\ Rule 4.12 establishes exercise limits for an option at the
same level as the option's position limit under Rule 4.11;
therefore, no changes are proposed to Rule 4.12.
    \9\ The term ``delta neutral'' is defined in proposed Rule
4.11.04(c)(A) as referring to an equity option position that is
hedged, in accordance with a permitted pricing model, by a position
in the underlying security or one or more instruments relating to
the underlying security, for the purpose of offsetting the risk that
the value of the option position will change with incremental
changes in the price of the security underlying the option position.
    \10\ The Exchange intends to submit a separate proposed rule
change to adopt a delta neutral-based hedge exemption for certain
index options and to expand the delta neutral-based hedge exemption
for ETF options to allow highly correlated instruments to be
included in any ETF option net delta calculation.
---------------------------------------------------------------------------

    Any equity option position that is not delta neutral would be
subject to position and exercise limits, subject to the availability of
other exemptions. Only the ``option contract equivalent of the net
delta'' of such position would be subject to the appropriate position
limit.\11\
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    \11\ Under proposed Rule 4.11.04(c)(B), the term ``options
contract equivalent of the net delta'' is defined as the net delta
divided by the number of shares underlying the option contract, and
the term ``net delta'' is defined as, at any time, the number of
shares (either long or short) required to offset the risk that the
value of an equity option position will change with incremental
changes in the price of the security underlying the option position,
as determined in accordance with a permitted pricing model.
---------------------------------------------------------------------------

    Only financial instruments relating to the security underlying an
equity options position could be included in any determination of an
equity options position's net delta or whether the options position is
delta neutral. In addition, members could not use the same equity or
other financial instrument position in connection with more than one
hedge exemption. Therefore, a stock position used as part of a delta
hedging strategy could not also serve as the basis for any other equity
hedge exemption.
    Permitted Pricing Model. Under the proposed rule, the calculation
of the delta for any equity option position, and the determination of
whether a particular equity option position is delta neutral, must be
made using a permitted pricing model. A ``permitted pricing model'' is
defined in proposed Rule 4.11.04(c)(C) to mean the pricing model
maintained and operated by The Options Clearing Corporation (``OCC'')
and the pricing models used by (i) A member or its affiliate subject to
consolidated supervision by the Commission pursuant to Appendix E of
Rule 15c3-1 under the Act; (ii) a financial holding company (``FHC'')
or a company treated as an FHC under the Bank Holding Company Act of
1956, or its affiliate subject to consolidated holding company group
supervision; \12\ (iii) a Commission-registered OTC derivatives dealer;
\13\ and (iv) a national bank.\14\
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    \12\ The pricing model of an FHC or of an affiliate of an FHC
would have to be consistent with: (i) The requirements of the Board
of Governors of the Federal Reserve System (``FRB''), as amended
from time to time, in connection with the calculation of risk-based
adjustments to capital for market risk under capital requirements of
the FRB, provided that the member or affiliate of a member relying
on this exemption in connection with the use of such model is an
entity that is part of such company's consolidated supervised
holding company group; or (ii) the standards published by the Basel
Committee on Banking Supervision, as amended from time to time and
as implemented by such company's principal regulator, in connection
with the calculation of risk-based deductions or adjustments to or
allowances for the market risk capital requirements of such
principal regulator applicable to such company--where ``principal
regulator'' means a member of the Basel Committee on Banking
Supervision that is the home country consolidated supervisor of such
company--provided that the member or affiliate of a member relying
on this exemption in connection with the use of such model is an
entity that is part of such company's consolidated supervised
holding company group. See subparagraph (C)(3) of proposed Rule
4.11.04(c).
    \13\ The pricing model of a Commission-registered OTC
derivatives dealer would have to be consistent with the requirements
of Appendix F to Rules 15c3-1 and 15c3-4 under the Act, as amended
from time to time, in connection with the calculation of risk-based
deductions from capital for market risk thereunder. Only an OTC
derivatives dealer and no other affiliated entity (including a
member) would be able to rely on this part of the Exemption. See
subparagraph (C)(4) of proposed Rule 4.11.04(c).
    \14\ The pricing model of a national bank would have to be
consistent with the requirements of the Office of the Comptroller of
the Currency, as amended from time to time, in connection with the
calculation of risk-based adjustments to capital for market risk
under capital requirements of the Office of the Comptroller of the
Currency. Only a national bank and no other affiliated entity
(including a member) would be able to rely on this part of the
Exemption. See subparagraph (C)(5) of proposed Rule 4.11.04(c).
---------------------------------------------------------------------------

    Aggregation of Accounts. Members and non-member affiliates relying
on the Exemption would be required to ensure that the permitted pricing
model is applied to all positions in or relating to the security
underlying the relevant options position that are owned or controlled
by the member, or its affiliates.
    However, the net delta of an options position held by an entity
entitled to rely on the Exemption, or by a separate and distinct
trading unit of such entity, may be calculated without regard to
positions in or relating to the security underlying the option position
held by an affiliated entity or by another trading unit within the same
entity, provided that: (i) The entity demonstrates to the Exchange's
satisfaction that no control relationship, as defined in Rule 4.11.03,
exists between such affiliates or trading units, and (ii) the entity
has provided the Exchange written notice in advance that it intends to
be considered separate and distinct from any affiliate, or, as
applicable, which trading units within the entity are to be considered
separate and distinct from each other for purposes of the
Exemption.\15\
---------------------------------------------------------------------------

    \15\ See subparagraph (D) of proposed Rule 4.11.04(c).
---------------------------------------------------------------------------

    The Exchange has set forth in Regulatory Circular RG04-45
(``Aggregation Circular'') the conditions under which it will deem no
control relationship to exist between affiliated broker-dealers and
between separate and distinct trading units within the same broker-
dealer. The Exchange proposes to amend the Aggregation Circular to
include affiliated entities, not only affiliated broker-dealers as in
the current version.
    Any member or non-member affiliate relying on the Exemption must
designate, by prior written notice to the Exchange, each trading unit
or entity whose options positions are required by Exchange rules to be
aggregated with the options positions of such member or non-member
affiliate relying on the Exemption for purposes of compliance with
Exchange position or exercise limits.\16\
---------------------------------------------------------------------------

    \16\ See proposed Rule 4.11.04(c)(D)(3).
---------------------------------------------------------------------------

    Obligations of Members and Affiliates. Any member relying on the
Exemption would be required to provide a written certification to the
Exchange that it is using a permitted pricing model as defined in the
rule for purposes of the Exemption. In addition, by such reliance, such
member would authorize any other person carrying for such member an
account including, or with whom such member has entered into, a
position in or relating to a security underlying the relevant option
position to provide to the Exchange or OCC such information regarding
such account or position as the Exchange or OCC may request as part of
the Exchange's confirmation or verification of the accuracy of any net
delta calculation under this Exemption.\17\
---------------------------------------------------------------------------

    \17\ See subparagraph (E) of proposed Rule 4.11.04(c).
---------------------------------------------------------------------------

    The options positions of a non-member affiliate relying on the
Exemption must be carried by a member with which it is affiliated. A
member carrying an account that includes an equity option position for
a non-member affiliate that intends to rely on the Exemption would be
required to obtain from such non-member affiliate a written
certification that it is using a

permitted pricing model as defined in the rule for purposes of the
Exemption.\18\
---------------------------------------------------------------------------

    \18\ In addition, the member would be required to obtain from
such non-member affiliate a written statement confirming that such
non-member affiliate: (a) Is relying on the Exemption; (b) will use
only a permitted pricing model for purposes of calculating the net
delta of its option positions for purposes of the Exemption; (c)
will promptly notify the member if it ceases to rely on the
Exemption; (d) authorizes the member to provide to the Exchange or
the OCC such information regarding positions of the non-member
affiliate as the Exchange or OCC may request as part of the
Exchange's confirmation or verification of the accuracy of any net
delta calculation under the Exemption; and (e) if the non-member
affiliate is using the OCC Model, has duly executed and delivered to
the Exchange such documents as the Exchange may require to be
executed and delivered to the Exchange as a condition to reliance on
the Exemption. See subparagraph (E)(3) of proposed Rule 4.11.04(c).
---------------------------------------------------------------------------

    Reporting. Under proposed Rule 4.11.04(c)(F), each member relying
on the Exemption would be required to report, in accordance with Rule
4.13,\19\ (i) All equity option positions (including those that are
delta neutral) that are reportable thereunder, and (ii) on its own
behalf or on behalf of a designated aggregation unit pursuant to Rule
4.11.04(c)(D), for each such account that holds an equity option
position subject to the Exemption in excess of the levels specified in
Rule 4.11, the net delta and the options contract equivalent of the net
delta of such position.
---------------------------------------------------------------------------

    \19\ Exchange Rule 4.13 requires, among other things, that
members report to the Exchange aggregate long or short positions on
the same side of the market of 200 or more contracts of any single
class of options contracts dealt in on the Exchange.
---------------------------------------------------------------------------

    The Exchange and other self-regulatory organizations are working on
modifying the Large Options Position Report system and/or OCC reports
to allow a member to indicate that an equity options position is delta
neutral.
    Records. Under proposed Rule 4.11.04(c)(G), each member relying on
the Exemption would be required to (i) Retain, and would be required to
undertake reasonable efforts to ensure that any non-member affiliate of
the member relying on the exemption retains, a list of the options,
securities and other instruments underlying each options position net
delta calculation reported to the Exchange hereunder, and (ii) produce
such information to the Exchange upon request.\20\
---------------------------------------------------------------------------

    \20\ A member would be authorized to report position information
of its non-member affiliate pursuant to the written statement
required under proposed Rule 4.11.04(c)(E)(3)(ii)(d).
---------------------------------------------------------------------------

    Reliance on Federal Oversight. As provided under proposed Rule
4.11.04(c)(C), a permitted pricing model includes proprietary pricing
models used by members and affiliates that have been approved by the
Commission, the FRB or another federal financial regulator. In adopting
the proposed Exemption the Exchange would be relying upon the rigorous
approval processes and ongoing oversight of a federal financial
regulator. The Exchange notes that it would not be under any obligation
to verify whether a member's or its affiliate's use of a proprietary
pricing model is appropriate or yielding accurate results.
    CBOE will announce the effective date of the proposed rule change
in a regulatory circular to be published no later than 60 days after
Commission approval. The effective date shall be no later than 30 days
after publication of the regulatory circular.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with section
6(b) of the Act,\21\ in general, and furthers the objectives of section
6(b)(5) of the Act,\22\ in particular, in that it is designed in
particular, in that it is designed to prevent fraudulent and
manipulative acts and practices, promote just and equitable principles
of trade, remove impediments to and perfect the mechanism of a free and
open market and a national market system, and, in general, to protect
investors and the public interest. The Exchange believes the proposed
delta neutral-based hedge exemption from equity options position and
exercise limits is appropriate in that it is based on a widely accepted
risk management method used in options trading. Also, the Commission
has previously stated its support for recognizing options positions
hedged on a delta neutral basis as properly exempted from position
limits.\23\
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b).
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ See Securities Exchange Act Release No. 40594 (October 23,
1998), 63 FR 59362, 59380 (November 3, 1998) (S7-30-97) (adopting
rules relating to OTC Derivatives Dealers).
---------------------------------------------------------------------------

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

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

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

    No written comments were either solicited or received.

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

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) As the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which CBOE consents, the Commission will:
    (A) By order approve 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 is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

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

File Number SR-CBOE-2007-99 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2007-99. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all

written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m.

Copies of the filing also will be available for inspection and copying
at the principal office of the CBOE. All comments received will be
posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CBOE-2007-99 and should be submitted on
or before November 5, 2007.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\24\
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-20216 Filed 10-12-07; 8:45 am]

BILLING CODE 8011-01-P


   Federal Food, Drug, and Cosmetic Act (FFDCA) Considerations for Bacillus
                          thuringiensis Cry1F Protein

                    Docket ID Number: EPA-HQ-OPP-2013-0704
                            Date: January 13, 2014

Section 408(c)(2)(A)(i) of FFDCA allows the EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if the EPA determines that the exemption is "safe." Section 408(c)(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. Pursuant to FFDCA section 408(c)(2)(B), in establishing or maintaining in effect an exemption from the requirement of a tolerance, the EPA must take into account the factors set forth in FFDCA section 408(b)(2)(C), which require the EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance exemption, 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...." Additionally, FFDCA section 408(b)(2)(D) requires that the EPA consider "available information concerning the cumulative effects of [a particular pesticide's] . . . residues and other substances that have a common mechanism of toxicity."
The EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. First, the EPA determines the toxicity of pesticides. Second, the EPA examines exposure to the pesticide through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings.
I.  Summary of Petitioned-for Tolerance Exemption
In the Federal Register of November 22, 2013 (78 FR 70007), the EPA issued a notice pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide tolerance petition (PP 2F8066) by Dow AgroSciences LLC, 9330 Zionsville Road, Indianapolis, IN, 46268. The petition requested that 40 CFR part 174 be amended by establishing an exemption from the requirement of a tolerance for residues of Bacillus thuringiensis Cry1F protein in the food commodity soybean. The notice referenced a summary of the petition prepared by the petitioner, Dow AgroSciences LLC, which is available in Docket ID Number EPA-HQ-OPP-2013-0704 via http://www.regulations.gov.
II. Toxicological Profile
Consistent with section 408(b)(2)(D) of FFDCA, the EPA reviewed the available scientific data and other relevant information on Bacillus thuringiensis Cry1F protein, and considered its validity, completeness, and reliability, as well as the relationship of this information to human risk. The EPA also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.
A.  Overview of Bacillus thuringiensis Cry1F protein

Since 2001, Bacillus thuringiensis Cry1F protein has been used in registered pesticide products to provide protection from feeding damage caused by a number of lepidopteran pests. In conjunction with some of these registered pesticide products, the EPA established the following exemptions from the requirement of a tolerance:

   (1) Bacillus thuringiensis Cry1F protein in cotton (40 C.F.R. § 174.504)  -  see the Federal Register of April 25, 2007 (72 FR 20434).

   (2) Bacillus thuringiensis Cry1F protein in corn (40 C.F.R. § 174.520)  -  see the Federal Register of April 25, 2007 (72 FR 20435).

Dow AgroSciences LLC developed DAS-81419-2 soybean (Glycine max) to express Bacillus thuringiensis Cry1F protein for use as a plant-incorporated protectant (PIP). Event DAS-81419-2 soybean was created by Agrobacterium - mediated transformation using the 2T-DNA plasmid vector pDAB9582, and produces both Bacillus thuringiensis protein δ-endotoxins Cry1Ac and Cry1F. An exemption from the requirement of a tolerance for residues of Bacillus thuringiensis Cry1Ac protein in all food commodities, when used as a PIP, was established at 40 CFR 174.510 (72 FR 20435; April 25, 2007). A single T-DNA insert containing each of the intact plant transcription units (PTUs) for the cry1Fv3, cry1Ac(synpro), and pat genes was integrated into soybean to create DAS-81419-2. The proteins are intended to provide protection from feeding damage caused by the larvae of a number of lepidopteran pests. Dow AgroSciences LLC's DAS-81419-2 soybean also expresses the Phosphinothricin Acetyltransferase (PAT) enzyme, which is exempt from the requirement of a tolerance when used as a PIP inert ingredient in all food commodities (40 CFR 174.522; April 25, 2007; 72 FR 20435). This enzyme confers tolerance of the soybean plants to the herbicide, glufosinate. In its July 24, 2012 submission to the EPA, Dow AgroSciences LLC, proposed to register an end-use pesticide product (EPA File Symbol 68467-EN) that contains Bacillus thuringiensis Cry1F and Cry1Ac proteins as the active ingredients for commercial use as a PIP.  Accompanying the pesticide registration application was Pesticide Petition 2F8066 requesting that an exemption from the requirement of a tolerance be established for residues of Bacillus thuringiensis Cry1F protein in soybean when used as a PIP.

In support of its tolerance exemption request, an analytical method for enforcement purposes was submitted by Dow AgroSciences LLC.  Dow AgroSciences LLC analytical method 110675, "Determination of Cry1F Protein in Soybean Tissues Using an Enzyme-Linked Immunosorbent Assay (ELISA)," was demonstrated to be suitable for its intended purpose. The method was validated over the concentration range of from 0.05 ng/mg to 1 ng/mg dr weight (DW) for root R3, from 0.15 ng/mg to 1.5 ng/mg DW for forage R3, from 0.2 ng/mg to 2 ng/mg DW for grain, and from 0.25 ng/mg DW to 2.5 ng/mg DW for leaf V5 and leaf V10-12.  The method has a validated limit of quantitation (LOQ) of 0.1 ng/mg DW for root R3, 0.3 ng/mg DW for forage R3, 0.4 ng/mg DW for grain, and 0.5 ng/mg DW for leaf V5 and leaf V10-12, and a limit of detection (LOD) of 0.05 ng/mg DW for root R3, 0.15 ng/mg DW for forage R3, 0.20 ng/mg DW for grain, and 0.25 ng/mg DW for leaf V5 and leaf V10-12.  Cry1F protein was recovered at acceptable levels from soybean tissues. This Cry1F ELISA method has been demonstrated to be suitable for quantitative measurements of the Cry1F protein in soybean tissue.

B.  Toxicology Data Requirements

All applicable mammalian toxicology data requirements supporting the request for an exemption from the requirement of a tolerance for residues of Bacillus thuringiensis Cry1F protein in or on the food and feed commodities of soybean have been fulfilled with data submitted by the petitioner or by data and information available to the Agency resulting from its previous reviews.

The overall conclusions from all toxicological information submitted by the petitioner are briefly described below, and more in-depth synopses of study results can be found in the associated Biopesticides Registration Action Document and its supporting materials provided as a reference in Section VII of this document.

No indication of toxicity toward mammals was noted in the review of the two Cry proteins, Cry1Ac and Cry1F, expressed in soybean.

It should be noted that the allergenicity of Cry1Ac protein was evaluated previously as evidenced in MRID No. 478417-09 (US EPA, 2010a). Based upon sequence comparisons to known allergens and digestibility assays (MRID No. 478417-08), Cry1Ac was considered to be of little potential to function as an allergen.

An exemption from the requirement of a food tolerance was established previously for phosphinothricin acetyltransferase (PAT; 40 CFR 174.522) as expressed as part of a plant-incorporated protectant, so no further toxicological review of this protein is contained herein.

Mammalian Toxicity and Allergenicity Assessment, Bacillus thuringiensis Cry1F Protein

An acute oral toxicity study in mice (MRID No. 455423-14) indicated that Cry1F is non-toxic to humans and other mammals. Cry1F protein is a δ-endotoxin from Bacillus thuringiensis that has been used extensively in plant-incorporated protectants as a means of insect pest management. Cry1F was previously granted an exemption from the requirement of a tolerance for expression in cotton (CFR 40 Section 174.504) and maize (CFR Section 174.520); a separate petition for an exemption from the requirement of a tolerance for Cry1F as expressed in soybean (PP 2F8066) is included with the submission from Dow AgroSciences for registration of DAS-81419-2 soybean.

Since Cry1F is a protein, allergenic potential was also considered. Currently, no definitive tests for determining the allergenic potential of novel proteins exist. Therefore, EPA uses a weight-of- evidence approach where the following factors are considered: source of the trait; amino acid sequence comparison with known allergens; and biochemical properties of the protein, including in vitro digestibility in simulated gastric fluid (SGF) followed by simulated intestinal fluid (SIF), and glycosylation. This approach is consistent with the approach outlined in the Annex to the Codex Alimentarius "Guideline for the Conduct of Food Safety Assessment of Foods Derived from Recombinant-DNA Plants."  The allergenicity assessment for Cry1F follows:

   1. Source of the trait. Bacillus thuringiensis is not considered to be a source of allergenic proteins.
   2. Amino acid sequence. A comparison of the amino acid sequence of Cry1F with known allergens showed no significant overall sequence similarity or identity at the level of eight contiguous amino acid residues.
   3. Digestibility.  (MRID No. 455423-18 ) The Cry1F protein was digested rapidly (< 5 min) in SGF containing pepsin. Small peptides remaining following gastric simulated digestion were completely degraded to amino acid residues in SIF upon contact (US EPA 2005; 2010b).
   4. Glycosylation. Cry1F expressed in soybean was shown not to be glycosylated.
   5. Conclusion: Considering all of the available information, EPA has concluded that the potential for Cry1F to be a food allergen is minimal.

Cry1Ac and Cry1F were shown not to be glycosylated in extracts of DAS-81419-2 soybean, it is unlikely to be glycosylated in any other crops because in order for a protein to be glycoslyated, it needs to contain specific recognition sites for the enzymes involved in glycosylation, and the mechanisms of protein glycosylation are similar in different plants (Lerouge et al., 1998).

Overall Safety Conclusions

The continued use of Cry1Ac and Cry1F proteins in plant expression systems (plant-incorporated protectants) and in microbial biopesticides is fully supported by the information presented in this registration submission relative to human and animal health concerns. The lack of mammalian toxicity and allergenicity effects following thorough examination of pertinent information, as well as the efficacy noted in the insect bioassays, indicates that the specificity of the δ-endotoxins Cry1Ac and Cry1F as an insect management mechanism is safe as proposed for use in soybean intended for cultivation, and human and animal consumption.

III.  Aggregate Exposure

In examining aggregate exposure, FFDCA section 408 directs the EPA to consider available information concerning exposures from the pesticide residue in food and all other non-occupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses).

The Agency considered available information on the aggregate exposure levels of consumers (including major identifiable subgroups of consumers) to the PIP residue and to other related substances. These considerations include dietary exposure under the tolerance exemption and all other tolerances or exemptions in effect for the PIP residue, and exposure from nonoccupational
sources.

As previously discussed, data indicated that Cry1F protein is non-toxic to humans and other mammals, andCry1F protein was shown to be rapidly digested in vitro. Exemptions from the requirement of a tolerance already have been established for Bacillus thuringiensis Cry1F protein in cotton (40 CFR § 174.504) and corn (40 CFR § 174.520). The Agency has considered dietary exposure under the tolerance exemption and all other exemptions in effect for the PIP residue and exposure from non-occupational sources. When Cry1F protein is used as a PIP in soybean, corn, and cotton, it is expressed at very low levels in the plant. Humans may be exposed to
extremely low levels in the diet. There is also a very remote possibility that Cry1F protein can get in the water supply the same way that other proteins in crop debris can migrate into the ground, and, possibly, drinking water. Because such potential dietary exposure from soybean, corn, and cotton and drinking water is expected to be several orders of magnitude lower than the
amounts of these proteins shown to have no toxicity in mammalian tests, EPA concludes that even negligible exposure via food and drinking water would present no harm, based on the
lack of mammalian toxicity and allergenicity potential, and the rapid digestibility demonstrated in SGF for the PIP.

Non-occupational dermal and inhalation exposure is not expected, since the PIP is expressed and contained within soybean, corn, and cotton plant cells, which essentially eliminates these exposure routes or reduces these exposure routes to negligible. The use sites of this PIP are all agricultural, for insect control, so there would be no exposure to infants and children from residential, school or lawn use. The amino acid sequence homology of known aeroallergens was included in the amino acid comparison of Cry1F protein with known food allergens, and
the results indicated that no respiratory allergenicity would be expected if Cry1F protein were inhaled. The amino acid sequence results are discussed in Section II.B., above. Cry1F protein expression is low in the pollen of soybean, cotton and corn.  Additionally, soybean flowers in a cleistogamous fashion wherein the anthers generally release pollen within a closed or covered floral tube. There is no additional inhalation exposure from the presence of Cry1F in soybean due to the closed and self-pollinating nature of the soybean flower.  Pollen movement from soybean is minimal and highly localized when it happens (i.e., the pollen does not move readily on wind currents). This is the case also for the heavy and sticky pollen of cotton, which is insect-pollinated.  While pollen exposure is potentially high for wind-pollinated corn, it is not significant because of low Cry1F protein expression in corn pollen and lack of any human toxicity or allergenicity associated with the Cry1F protein.

Taking all these data and information into consideration, EPA concludes that even if negligible aggregate exposure should occur it would present no harm to the U.S. human population due to the lack of mammalian toxicity and the rapid digestibility demonstrated for the Cry1F protein.

IV.  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 EPA consider "available information concerning the cumulative effects of [a particular pesticide's] . . . residues and other substances that have a common mechanism of toxicity."

Because the Bacillus thuringiensis Cry1F protein does not have a toxic effect, this statutory provision to consider cumulative effects of substances with common mechanisms of toxicity does not apply.

V.  Determination of Safety for the United States Population, Infants and Children

FFDCA section 408(b)(2)(C) provides that, in considering the establishment of a tolerance or tolerance exemption for a pesticide chemical residue, the EPA shall assess the available information about consumption patterns among infants and children, special susceptibility of infants and children to pesticide chemical residues, and the cumulative effects on infants and children of the residues and other substances with a common mechanism of toxicity. In addition, FFDCA section 408(b)(2)(C) provides that the 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 the EPA determines that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the Food Quality Protection Act Safety Factor. In applying this provision, the EPA either retains the default value of 10X, or uses a different additional or no safety factor when reliable data are available to support a different additional or no safety factor.

Based on the toxicity and allergenicity data/information discussed in Section II of this document, the EPA concludes that there are no threshold effects of concern to infants, children, or adults when Bacillus thuringiensis Cry1F protein is used as labeled in accordance with good agricultural practices. As a result, the EPA concludes that no additional margin of exposure (safety) is necessary.

Moreover, based on the same data and the EPA analysis as presented directly above, the Agency concludes that there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposure to the residues of Bacillus thuringiensis Cry1F protein when it is used as labeled and in accordance with good agricultural practices as a plant-incorporated protectant in soybean. Such exposure includes all anticipated dietary exposures and all other exposures for which there is reliable information. The EPA has arrived at this conclusion because, considered collectively, the data and information available on Bacillus thuringiensis Cry1F protein do not demonstrate toxic, pathogenic, and/or infective potential to mammals, including infants and children.

VI.  Conclusions
The EPA concludes that there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposure to residues of Bacillus thuringiensis Cry1F protein. Therefore, an exemption from the requirement of a tolerance is established for residues of Bacillus thuringiensis Cry1F protein in the food and feed commodities of soybean when used as plant-incorporated protectants, and in accordance with label directions and good agricultural practices.

VII.  References

Lerouge, P. Cabanes-Macheteau, M., Rayon, C., Fichette-Lainé, A-C., Gomord, V., and Faye, L., (1998) N-Glycoprotein biosynthesis in plants: recent developments and future trends. Plant Molecular Biology 38: 31-48.

Sjoblad, Roy D., et al., (1992) Toxicological Considerations for Protein Components of Biological Pesticide Products. Regulatory Toxicology and Pharmacology 15:3-9.

U.S. Environmental Protection Agency (2005) BIOPESTICIDES REGISTRATION ACTION DOCUMENT (Bacillus thuringiensis Cry1F (synpro and Cry1Ac (synpro) Construct 281/3006 Insecticidal Crystal Proteins as expressed in cotton) (Chemical PC Codes 006512 and 006513, respectively) May 2005 Office of Pesticide Programs
http://www.epa.gov/oppbppd1/biopesticides/ingredients_keep/tech_docs/brad_006512.pdf

US Environmental Protection Agency (2010a) BIOPESTICIDE REGISTRATION ACTION DOCUMENT, Bacillus thuringiensis Cry1Ac Protein and the Genetic Material (Vector PV-GMIR9) Necessary for Its Production in MON 87701 (OECD Unique Identifier: MON 877Ø1-2) Soybean [PC Code 006532]  http://www.epa.gov/pesticides/biopesticides/pips/bt-cry1ac-protien.pdf

US Environmental Protection Agency (2010b) BIOPESTICIDES REGISTRATION ACTION DOCUMENT Cry1Ab and Cry1F Bacillus thuringiensis (Bt) Corn Plant-Incorporated Protectants  http://www.epa.gov/pesticides/biopesticides/pips/cry1f-cry1ab-brad.pdf

US Environmental Protection Agency (2014) BIOPESTICIDES REGISTRATION ACTION DOCUMENT PLANT-INCORPORATED PROTECTANTS: Bacillus thuringiensis Cry1Ac Protein and the Genetic Material Necessary for Its Production [PC Code 006527] and Bacillus thuringiensis Cry1F Protein and the Genetic Material Necessary for Its Production [PC Code 006528] as expressed in Event DAS-81419-2 Soybean (PIP product) [OECD Unique Identifier: DAS-81419-2]

Wozniak, C. A. (2013) Review of Human Health and Product Characterization Data for Registration of B. thuringiensis Cry1Ac and Cry1F Proteins and the Genetic Material Necessary for their Production in DAS-81419-2 Soybean.