[Federal Register: January 24, 2011 (Volume 76, Number 15)]
[Rules and Regulations]
[Page 4066-4072]
[DOCID:fr24ja11-6]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 201, 202 and 240

[Release No. 34-63723]

Rules of Practice

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: Section 916 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (``Dodd-Frank Act'') \1\ amended Section 19(b) of the
Securities Exchange Act of 1934 (``Exchange Act''),\2\ which governs
the handling of proposed rule changes submitted by self-regulatory
organizations (``SROs''). Among other things, the Dodd-Frank Act's
amendments to Section 19 of the Exchange Act require the Securities and
Exchange Commission (``Commission'') to promulgate rules setting forth
the procedural requirements of proceedings to determine whether a
proposed rule change should be disapproved. In satisfaction of this
requirement, the Commission is adopting new Rules of Practice to
formalize the process it will use when conducting proceedings to
determine whether an SRO's proposed rule change should be disapproved
under Section 19(b)(2) of the Exchange Act. The new rules are intended
to add transparency to the Commission's conduct of those proceedings
and address the process the Commission will follow to institute
proceedings and provide notice of the grounds for disapproval under
consideration as well as provide interested parties with an opportunity
to submit written materials to the Commission. In addition, the
Commission is making conforming changes to Rule 19b-4 under the
Exchange Act in recognition of the new Rules of Practice. Further,
pursuant to Section 107 of the Sarbanes-Oxley Act of 2002 (``Sarbanes-
Oxley Act''), the provisions of paragraphs (1) through (3) of Section
19(b) of the Exchange Act govern the proposed rules of the Public
Company Accounting Oversight Board (``PCAOB'').\3\ The Commission is
amending Regulation P to add a rule providing that these new Rules of
Practice also formalize the process the Commission will use when
conducting proceedings to determine whether a PCAOB proposed rule
should be disapproved.
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    \1\ Public Law 111-203 (July 21, 2010).
    \2\ 15 U.S.C. 78s(b)(2).
    \3\ See 15 U.S.C. 7217.

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DATES: Effective Date: January 24, 2011.

FOR FURTHER INFORMATION CONTACT: Richard Holley III, Assistant
Director, at<PHONE_NUMBER>, Kristie Diemer, Special Counsel, at (202)
551-5613, and Arisa Tinaves, Special Counsel, at<PHONE_NUMBER>,
Division of Trading and Markets, or Jeffrey S. Cohan, Senior Special
Counsel, at<PHONE_NUMBER>, Office of the Chief Accountant, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-7010.

SUPPLEMENTARY INFORMATION: The Commission is adding to its Rules of
Practice \4\ to establish procedures for instituting proceedings to
determine whether an SRO's proposed rule change should be disapproved
under Section 19(b) of the Exchange Act (Sec.  201.700 et seq.) and is
making corresponding changes to Rule 19b-4 under the Exchange Act (15
U.S.C. 78f(b)(4)). The Commission is also adding Rule 170 to Regulation
P \5\ to provide that Sec.  201.700 et seq. establishes procedures for
instituting proceedings to determine whether a PCAOB proposed rule
should be disapproved.
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    \4\ 17 CFR 201 et seq.
    \5\ 17 CFR 202.100 et seq.
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I. Discussion of Rule Amendments

A. Background

    Section 916 of the Dodd-Frank Act amended Section 19(b) of the
Exchange Act, which governs the Commission's handling of proposed rule
changes submitted by SROs, including national securities exchanges, the
Financial Industry Regulatory Authority (``FINRA''), and registered
clearing agencies.\6\ Notably, the amendments to Section 19(b) in
Section 916 of the Dodd-Frank Act established new statutory deadlines
applicable to the Commission's publication and review of proposed SRO
rule changes.\7\
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    \6\ Pursuant to Section 107 of the Sarbanes-Oxley Act, the
provisions of paragraphs (1) through (3) of Section 19(b) of the
Exchange Act also govern proposed rules of the PCAOB.
    \7\ Pursuant to Rule 30-3(a) (17 CFR 200.30-3(a)), the
Commission has delegated authority to the Division of Trading and
Markets for certain functions related to the handling of proposed
rule changes filed by SROs under Section 19 of the Exchange Act.

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    Among other things, amended Section 19(b) imposes a requirement
that an SRO's proposed rule change be sent by the Commission to the
Federal Register for publication within 15 days of the date on which
the SRO posted its proposed rule change on its Web site.\8\ Further,
Section 916(a) of the Dodd-Frank Act amended Section 19(b)(2) of the
Exchange Act to require the Commission, within 45 days of the
``publication date'' of notice of a proposed rule change, to either
approve a proposed rule change, disapprove a proposed rule change, or
institute proceedings to determine whether the proposed rule change
should be disapproved.\9\ With the exception of the ability to
disapprove a proposed rule change without first instituting
proceedings, the authority to either approve a proposed rule change or
institute proceedings to determine whether a proposed rule change
should be disapproved is not new.
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    \8\ See Section 19(b)(2)(E) of the Exchange Act (15 U.S.C.
78s(b)(2)(E)), as added by Section 916(a) of the Dodd-Frank Act. The
15-day period commences when the SRO, ``after filing a proposed rule
change with the Commission,'' posts its proposal on a publicly
available Web site. See id. Separately, Rule 19b-4(l) under the
Exchange Act requires the SRO to post a proposal on its Web site
within two business days after filing the proposal with the
Commission. See 17 CFR 240.19b-4(l). If the Commission fails to send
the notice to the Federal Register by the applicable deadline, then
the ``publication date'' would be deemed to be the date on which the
SRO Web site publication was made. See 15 U.S.C. 78s(b)(2)(E).
    \9\ See Exchange Act Section 19(b)(2)(A)(i). The initial 45-day
period may be extended by either the Commission or the SRO for up to
an additional 45 days to a maximum of 90 days total. See 15 U.S.C.
78s(b)(2)(A)(ii). If the Commission subsequently fails to act within
the applicable time frame, then the proposed rule change will be
``deemed to have been approved.'' See 15 U.S.C. 78s(b)(2)(D).
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    In addition, the Dodd-Frank Act removed the concept of
``abrogation'' of a filing that an SRO designated to be effective
immediately upon filing with the Commission. Prior to the Dodd-Frank
Act, the Commission had the authority, within 60 days of the date of
filing, to summarily abrogate a proposed rule change filed for
immediate effectiveness under former Section 19(b)(3)(A) of the
Exchange Act \10\ if the Commission determined that such action was
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Exchange
Act.\11\ Abrogation suspended the effectiveness of an immediately
effective proposal and obligated the SRO, if it desired to proceed with
its proposed rule change, to refile the proposal for notice, comment,
and Commission consideration under Section 19(b)(2) of the Exchange
Act. Section 916(c) of the Dodd-Frank Act amended Section 19(b)(3)(C)
of the Exchange Act and replaced abrogation with a process in which the
Commission may ``temporarily suspend'' a proposed 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 Exchange Act) and then must
institute proceedings under Section 19(b)(2)(B) to determine whether to
approve or disapprove the SRO rule change.\12\
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    \10\ See 15 U.S.C. 78s(b)(3)(A).
    \11\ See former Section 19(b)(3)(C); former 15 U.S.C.
78s(b)(3)(C).
    \12\ See 15 U.S.C. 78s(b)(3)(C). Section 19(b)(3)(C) further
provides that a temporary suspension is not reviewable under
Exchange Act Section 25 nor is it deemed to be ``final agency
action.''
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    Prior to the Dodd-Frank Act's amendments to Section 19, proceedings
to determine whether to disapprove a proposed rule change were rarely
begun and even more rarely concluded.\13\ Rather, an SRO typically
modified or withdrew a proposal when it understood the Commission or
its staff had concerns that could lead it to institute such
proceedings. The Dodd-Frank Act's amendments to Section 19 may increase
the number of proceedings that the Commission determines to institute
because, among other things, the new authority to ``temporarily
suspend'' an immediately effective filing obligates the Commission to
institute proceedings to determine whether to disapprove the SRO rule
change with the imposition of the suspension. That provision, together
with the new statutory deadlines applicable to Commission review and
publication of an SRO's proposed rule change, will further increase the
Commission's workload. Consequent constraints on Commission resources
would be compounded to the extent that the Commission continues to
receive an increasing number of proposed rule changes from an
increasing number of SROs.
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    \13\ See, e.g., infra note 16 (citing to a 1984 disapproval
proceeding order).
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B. Rule Amendments

    As required by Section 19(b)(2)(F) of the Exchange Act (added by
Section 916(a) of the Dodd-Frank Act), the Commission is promulgating
new Rules of Practice setting forth the procedural requirements for
proceedings to determine whether to disapprove an SRO's proposed rule
change.\14\ Specifically, the Commission is adopting rules to outline
the procedures that it will follow when exercising its authority under
Section 19(b)(2)(A)(i)(II) of the Exchange Act, pursuant to which the
Commission either (1) may institute proceedings to determine whether a
proposed rule change filed under Section 19(b)(2) should be disapproved
or (2) shall institute such proceedings to determine whether to
disapprove an immediately effective proposed rule change filed under
Section 19(b)(3)(A) that the Commission determined to temporarily
suspend.
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    \14\ See 15 U.S.C. 78s(b)(2)(F). Section 19(b)(2)(F) also
requires the Commission, as part of its effort to promulgate rules
setting forth the procedural requirements for proceedings to
determine whether to disapprove an SRO's proposed rule change, to
have ``consult[ed] with other regulatory agencies.'' Id. In
satisfaction of this requirement, Commission staff has consulted
with staff from the Commodity Futures Trading Commission, the
Federal Reserve Board, and the Office of the Comptroller of the
Currency.
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    The procedural rules that the Commission now is adopting are
intended to implement the mandate imposed by the Dodd-Frank Act.\15\
The rules also are intended to bring transparency to the conduct of
proceedings to disapprove a proposed rule change under Section 19(b) of
the Exchange Act and reflect the process that the Commission generally
has followed when it has had occasion to conduct such proceedings.\16\
Among other things, the new rules outline the process that the
Commission will follow to provide to the SRO notice of the grounds for
disapproval under consideration.\17\
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    \15\ Rules 700 and 701 are not affected by the other Rules of
Practice contained in part 201, except as specifically provided for
in Rule 700. See amendment to Rule of Practice 100 (``Scope of the
Rules of Practice'') adding new subparagraph (b)(3).
    \16\ See, e.g., Securities Exchange Act Release No. 21439
(October 31, 1984), 49 FR 44577 (November 7, 1984) (File Nos. SR-
CBOE-84-15 and SR-CBOE-84-16) (Order Instituting Proceedings to
Determine Whether to Disapprove Rule Changes).
    \17\ Though in a proceeding to determine whether to disapprove a
proposed rule change the Commission is required to publish notice of
its grounds for disapproval under consideration, the Commission
could ultimately either disapprove or approve the proposal following
conclusion of the proceedings. See Exchange Act Section 19(b)(2)(C);
15 U.S.C. 78s(b)(2)(C) (setting forth the standards applicable to
Commission approval or disapproval of a proposed rule change). See
also infra note 27.
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    While the new rules are not within the scope of the existing Rules
of Practice, they do incorporate three existing Rules of Practice by
reference: Rule 103 (Construction of Rules), 104 (Business Hours), and
160 (Time Computation). Rule 103, among other things, specifies that
the Rules of Practice ``shall be construed and administered to secure
the just, speedy, and inexpensive determination of every proceeding.''
\18\ It also states that counsel

for a party may take any action required or permitted to be taken by
such party.\19\ Rule 104 sets forth the business hours of the
Commission, which will be applicable to the filing of papers with the
Commission.\20\ Rule 160 governs the computation of time periods, which
will be applicable when the Commission establishes, for example,
deadlines by which comments must be received.\21\
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    \18\ See 17 CFR 201.103(a).
    \19\ See 17 CFR 201.103(c)(3).
    \20\ See 17 CFR 201.104.
    \21\ See 17 CFR 201.160. Among other things, Rule 160 addresses
compliance with deadlines that fall on a Saturday, Sunday, or
Federal holiday.
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    Consistent with Exchange Act Section 19(b)(2)(B), when instituting
proceedings to determine whether to disapprove an SRO's proposed rule
change, the new rules state that the Commission shall provide notice to
the SRO and to the public of the grounds for disapproval under
consideration. This notice shall include a brief statement of the
matters of fact and law that the Commission is considering in
determining whether to disapprove the rule filing.\22\ In addition to
publication of such notice in the Federal Register, the rules provide
that the Commission also will serve a copy of the notice to the SRO
that filed the proposed rule change.\23\
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    \22\ As stated in Rule 700(e), the Commission is not required to
amend its notice of the grounds for disapproval under consideration
to consider additional matters of fact and law beyond what was set
forth in its notice of the grounds for disapproval under
consideration.
    \23\ Specifically, in addition to Federal Register publication,
notice will be served to the contact person listed on the cover page
of the Form 19b-4 filing filed with the Commission. See Rule
700(b)(1)(iii).
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    As reflected in new Rule 700(b)(1), such notice of the grounds for
disapproval under consideration may be provided either simultaneously
with the initial publication by the Commission of the notice of the
SRO's proposed rule change in the Federal Register, or it may be
published separately in the Federal Register subsequent to the initial
publication by the Commission of the notice of the SRO's proposed rule
change in the Federal Register. Providing for publication of the
grounds for disapproval under consideration simultaneous with the
initial publication of the proposed rule change in the Federal Register
recognizes that a proposed rule change may initially raise questions as
to whether the Commission would be able to approve the proposal as
consistent with the Exchange Act and the rules and regulations
thereunder applicable to the SRO. Simultaneous publication will allow
the Commission to highlight prominently for public comment issues on
which it seeks comment in an efficient manner when the proposal is
first noticed for public comment. In addition, it will allow the
Commission to proceed without additional delay to act on a proposed
rule change in a more efficient manner. Alternatively, providing for
publication of the grounds for disapproval under consideration
subsequent to the initial publication of the proposed rule change in
the Federal Register recognizes that commenters or the Commission may
identify an issue with a proposal after a proposal was published for
comment that warrants the institution of proceedings to determine
whether to disapprove the proposal. Further, as a consequence of the
short timeframe for noticing a proposal that is established in revised
Section 19(b) of the Exchange Act, the Commission may be compelled to
publish filings that are later found to raise concerns under the
Exchange Act, in which case the Commission may decide to institute
proceedings subsequent to the initial publication of the proposed rule
change in the Federal Register.\24\
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    \24\ As required by Section 19(b)(2)(E) of the Exchange Act
(added by Section 916(a) of the Dodd-Frank Act), the Commission must
send notice of an SRO's proposed rule change to the Federal Register
for publication within 15 calendar days of the date on which the SRO
posts its proposed rule change on its Web site. Failure to meet the
15 calendar day statutory timeframe results in the ``publication
date'' being deemed to be the day on which the SRO posted its
proposal on its Web site. Because the 45-day statutory deadline for
Commission action is keyed off of the ``publication date,'' and
because failure to act by that deadline results in a proposal being
``deemed approved,'' failure to notice a proposal within 15 calendar
days can effectively reduce the time that the Commission and
commenters have to fully consider a proposal.
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    When instituting proceedings, Section 19(b)(2)(B)(i)(II) of the
Exchange Act requires the Commission to provide the SRO with an
opportunity for a hearing. Accordingly, new Rule 700(c) outlines the
conduct of the proceedings and establishes the opportunity for the SRO
that filed the proposed rule change, as well as any other interested
parties, to be heard on the matter. Specifically, Rule 700(c) states
that all parties, including the SRO, will be given a specified amount
of time (as indicated in the notice of the grounds for disapproval) to
submit supporting or opposing materials, in writing, for the
Commission's consideration in determining whether to approve or
disapprove a proposed rule change.\25\ In particular, the SRO that
submitted the proposed rule change could file a written statement in
support of its proposed rule change demonstrating, in specific detail,
how such proposed rule change is consistent with the requirements of
the Exchange Act and the rules and regulations thereunder applicable to
the SRO.\26\ The statement could include a response to each of the
grounds for disapproval under consideration as well as any specific
representations or undertakings (e.g., representations or undertakings
concerning the SRO's plans for surveillance or enforcement of a
proposed new trading rule).
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    \25\ A request for an opportunity for an oral presentation of
views should be submitted as a written request to the Secretary of
the Commission and should include a reference to the proposed rule
change's file number. See Exchange Act Rule 19b-4(g). The
Commission, in its sole discretion, may determine whether any issues
relevant to approval or disapproval would be facilitated by the
opportunity for an oral presentation of views. See Rule 700(c)(2).
    \26\ Notably, the instructions to Form 19b-4 require an SRO to
present, in a clear and comprehensible manner, how every proposed
rule change it files with the Commission is consistent with the
requirements of the Exchange Act and the rules and regulations
thereunder applicable to the SRO. These standards are reflected in
Rule 700(b)(3).
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    At the conclusion of the initial opportunity to submit written
materials, the rules provide an opportunity for the SRO whose proposed
rule change is under consideration to respond to any comments received
on its proposal (i.e., a ``rebuttal period'').\27\ The rules state that
any failure by the SRO to respond to comments received on the proposal
may result in the Commission not having a sufficient basis to make an
affirmative finding as to whether the SRO's proposed rule change is
consistent with the Exchange Act and the rules and regulations
thereunder applicable to the SRO.\28\
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    \27\ The Commission will indicate in the notice of the grounds
for disapproval the specified amount of time for the rebuttal
period. See Rule 700(c)(3).
    \28\ The standard for approval of a proposed rule change is that
the Commission ``shall approve a proposed rule change * * * if it
finds that such proposed rule change is consistent with the
requirements of [the Exchange Act] and the rules and regulations
issued under [the Exchange Act] that are applicable to [the SRO].''
15 U.S.C. 78s(b)(2)(C)(i). The standard for disapproval is that the
Commission ``shall disapprove a proposed rule change of [an SRO] if
it does not make [such finding].'' 15 U.S.C. 78s(b)(2)(C)(ii).
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    Further, the new rules state that the Commission may consider any
failure by the SRO to provide all of the information required by Form
19b-4 in the manner required by the Form, as well as any failure to
explain how the proposed rule change is consistent with the
requirements of the Exchange Act and the applicable rules and
regulation thereunder or any failure by the SRO to provide a complete
response to the Commission's grounds for disapproval under
consideration, in determining whether to approve or disapprove the

proposed rule change.\29\ In particular, such failure may result in the
Commission not having a sufficient basis to make an affirmative finding
that the proposed rule change is consistent with the Exchange Act and
the rules and regulations thereunder applicable to the SRO.
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    \29\ In addition, a filing that does not comply with all
applicable requirements, including the requirements of Form 19b-4,
may be rejected as not properly filed under the circumstances
outlined in Section 19(b)(10) of the Exchange Act. See Section
19(b)(10) of the Exchange Act, 15 U.S.C. 78s(b)(10) (setting forth
the rule of construction relating to the filing date of proposed
rule changes and the ability of the Commission to reject incomplete
filings). Specifically, as stated in the general instructions to
Form 19b-4, any filing that does not comply with the requirements of
Form 19b-4 may be returned to the SRO and any filing so returned
shall for all purposes be deemed not to have been filed with the
Commission. See also Rule 0-3 under the Exchange Act, 17 CFR 254.0-3
(``[t]he date on which papers are actually received by the
Commission shall be the date of filing thereof if all of the
requirements with respect to the filing have been complied with * *
*'').
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    After conclusion of the initial comment period and the rebuttal
period, the opportunity for interested parties to comment on the
proposed rule change would close. Thereafter, the Commission would
issue a written order either approving or disapproving the SRO's
proposed rule change that sets out the reasons for the Commission's
determination.\30\
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    \30\ See Rule 701; see also Exchange Act Section 19(b)(2)(C); 15
U.S.C. 78s(b)(2)(C).
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    The new rules also specify the record that the Commission will
consider in the context of a proceeding to determine whether to
disapprove an SRO's proposed rule change. Specifically, Rule 700(d)(3)
states that the Commission will determine the matter on the basis of
the record, which shall include the SRO's proposed rule change filed on
Form 19b-4, any written materials received from any party on the
proposed rule change, and any written materials that reflect
communications between the Commission and any interested parties.\31\
Further, the rules reflect that written materials shall be filed with
the Secretary of the Commission and that all materials received will
generally be made publicly available.
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    \31\ In the event that an oral presentation of supporting or
opposing views is ordered by the Commission, the written transcript
of the remarks would become part of the record.
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    Further, the Commission is making conforming edits to Rule 19b-4 in
light of new Rules of Practice 700 and 701. In particular, the
Commission is removing existing paragraph (g) of that rule, which
references the opportunity for interested persons to be heard in the
context of a proceeding to determine whether to disapprove a proposed
rule change, and is replacing it with a cross reference to new Rules of
Practice 700-701.\32\ In addition, the Commission is amending paragraph
(l) of Rule 19b-4 concerning the obligation of an SRO to post and
maintain a copy of each proposed rule change on its Web site to provide
specific guidance to the SRO as to when to remove a proposed rule
change that is disapproved by the Commission. Currently, Rule 19b-4(l)
does not specifically reference a Commission disapproval order as one
of the potential final actions on a proposal.
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    \32\ Rule 19b-4(g) is consistent with the process outlined in
new Rules of Practice 700 and 701. However, to avoid any confusion
or overlap, the Commission is amending the Rule 19b-4(g) to cross
reference the new Rules of Practice.
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    Finally, the Commission is adding Rule 170 to Regulation P \33\ to
provide that Sec.  201.700 et seq. establishes the procedures for
instituting proceedings to determine whether a PCAOB proposed rule
should be disapproved. Specifically, and consistent with Section 107 of
the Sarbanes-Oxley Act, new Rule 170 clarifies that Sec.  201.700 et
seq applies to proposed rules of the PCAOB as fully as if it were a
proposed rule change of a ``registered securities association''. Rule
170, like Section 107(b)(4)(A) of the Sarbanes-Oxley Act, substitutes
the approval criteria to be ``consistent with the requirements of title
I of the Sarbanes-Oxley Act of 2002, and the rules and regulations
issued thereunder applicable to such organization, or as necessary or
appropriate in the public interest or for the protection of investors *
* *.'' Further, given that the PCAOB is not explicitly subject to Rule
19b-4, Rule 170 also clarifies the requirement for the PCAOB to
demonstrate that a proposed rule is ``consistent with the requirements
of title I of the Sarbanes-Oxley Act of 2002, and the rules and
regulations issued thereunder applicable to such organization, or as
necessary or appropriate in the public interest or for the protection
of investors.'' \34\
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    \33\ 17 CFR 202.100 et seq.
    \34\ 15 U.S.C. 7217(b)(4)(A).
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II. Administrative Procedure Act, Regulatory Flexibility Act, and
Paperwork Reduction Act

    The Commission finds, in accordance with the Administrative
Procedure Act (``APA''),\35\ that the new rules and rule amendments
relate solely to agency organization, procedures or practices.
Accordingly, these new rules and rule amendments are not subject to the
provisions of the APA requiring notice, opportunity for public comment,
and publication. The Regulatory Flexibility Act,\36\ therefore, does
not apply. Similarly, because these rules relate to ``agency
organization, procedure or practice that does not substantially affect
the rights or obligations of non-agency parties,'' analysis of major
status under the Small Business Regulatory Enforcement Fairness Act is
not required.\37\ The new rules and rule amendments do not contain any
new collection of information requirements as defined by the Paperwork
Reduction Act of 1995, as amended.\38\ Rather, the new rules and rule
amendments govern a process that the Commission will be able to
institute when an SRO's proposed rule change submitted on Form 19b-4
failed to provide the Commission with a sufficient basis to make a
finding whether the proposed rule change was or was not consistent with
the Exchange Act and the rules and regulations thereunder applicable to
the SRO. The required scope of information that an SRO must submit to
the Commission to explain each proposed rule change and demonstrate
that each proposed rule change is consistent with the Exchange Act and
the rules and regulations thereunder is established in existing Form
19b-4, and the rules and rule amendments do not contain any additional
collection of information requirements beyond what SROs are already
required to provide to the Commission.
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    \35\ 5 U.S.C. 553(b)(3)(A).
    \36\ 5 U.S.C. 601 et seq.
    \37\ 5 U.S.C. 804(3)(C).
    \38\ 44 U.S.C. 3501 et seq.
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III. Consideration of the Costs and Benefits of the Rule Amendments and
Burden on Competition

    The Commission is sensitive to the costs and benefits imposed by
its rules and has identified certain costs and benefits of these rules.
The rules and rule amendments that the Commission is adopting are
intended to implement the mandate imposed by the Dodd-Frank Act. The
benefits of the new rules and rule amendments also include increased
transparency of the Commission's conduct of proceedings to determine
whether to disapprove an SRO's proposed rule change. New Rules 201.700
and 701 and new Rule 170 under Regulation P establish procedures for
the Commission to follow when instituting and conducting proceedings to
determine whether to disapprove a proposed rule filing. The new rules
and rule amendments provide procedures for the Commission, SROs, the
PCAOB, and the public concerning the administration of certain of the
Commission's responsibilities under Section 19 of the Exchange Act and

Section 107 of the Sarbanes-Oxley Act, and reflect a process that is
intended to help ensure that only those proposed rule changes that are
consistent with the Exchange Act and title I of the Sarbanes-Oxley Act,
respectively, are permitted.
    There also are potential costs of the new rules. An SRO or the
PCAOB may incur costs as a result of the new rules, for example, when
submitting written material in support of its proposed rule change or
providing a response to any adverse comments received. However, the
Commission believes that such costs typically are already incurred by
the SROs when filing proposed rule changes on Form 19b-4, particularly
since Form 19b-4 contains comprehensive and rigorous requirements that
an SRO must follow when presenting, explaining, and offering a thorough
legal analysis of each proposed rule change. Further, SROs already
typically submit responses to adverse substantive comments received
during the rule filing process. Similarly, the PCAOB has incurred costs
by presenting, explaining, and offering similarly rigorous legal
analysis of each of its proposed rules.
    Further, because the new rules and rule amendments relate to agency
organization, procedures or practice, the Commission believes that they
will have no adverse impact on capital formation, nor are they expected
to have any potential adverse impact on efficiency. In particular, the
new rules and rule amendments are intended to add transparency to the
Commission's institution and conduct of proceedings to determine
whether to disapprove a proposed rule change. To the extent that
interested parties identify issues and present information that informs
the Commission's decision-making with respect to a particular proposed
rule change that itself may affect capital formation or price
efficiency, then the Commission's new rules and rule amendments could,
in turn, promote capital formation and efficiency.
    Section 23(a) of the Exchange Act \39\ requires the Commission,
when making rules and regulations under the Exchange Act, to consider
the impact a new rule would have on competition. Exchange Act Section
23(a)(2) prohibits the Commission from adopting any rule that would
impose a burden on competition not necessary or appropriate in
furtherance of the purposes of the Exchange Act.
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    \39\ 15 U.S.C. 78w(a).
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    The new rules and rule amendments implement the Dodd-Frank Act
statutory changes to the rule change process and are intended to
enhance transparency with respect to the Commission's conduct of
proceedings under the Exchange Act to determine whether to disapprove
an SRO's proposed rule change or a proposed rule of the PCAOB. The new
rules, which set forth the administrative procedures concerning the
Commission's conduct of such proceedings, apply equally to all SROs,
including all national securities exchanges, FINRA, and clearing
agencies that are required to submit proposed rule filing changes with
the Commission. We note that many of the substantive requirements of
the new rules come directly from the amendments to Exchange Act Section
19(b) by the Dodd-Frank Act. In addition, these rules are intended to
codify and reflect the typical process that the Commission has followed
when conducting proceedings to determine whether to disapprove an SRO's
proposed rule change. Therefore, the Commission does not expect the
rules to have an anti-competitive effect. To the contrary, the new
rules provide all interested parties with an opportunity to express
their views to the Commission concerning an SRO's proposed rule change
or a proposed rule of the PCAOB that the Commission is considering
potentially disapproving. To that extent, the new rules are expected to
promote competition and help ensure that SRO rules are consistent with
the Exchange Act and the rules and regulations thereunder and PCAOB
rules and standards are consistent with the Sarbanes-Oxley Act and the
rules and regulations thereunder.

IV. Statutory Basis and Text of Rules

    The Commission is amending its Rules of Practice and Rule 19b-4
pursuant to authority set forth in the Exchange Act, including Sections
19(b) and 23(a). The Commission is amending Regulation P pursuant to
authority set forth in the Sarbanes-Oxley Act, including Sections 3(b)
and 107 and the Exchange Act, including Sections 19(b) and 23(a).

List of Subjects in 17 CFR Parts 201, 202 and 240

    Administrative practice and procedures.

Text of Amendments

    For the reasons set out in the preamble, Title 17, Chapter II of
the Code of Federal Regulations is amended as follows:

PART 201--RULES OF PRACTICE

0
1. The authority citation for part 201 is amended by adding authority
citations for Sec. Sec.  201.700 to 201.702 to read as follows:

    Authority: 15 U.S.C. 77s, 77sss, 78w, 78x, 80a-37, and 80b-11; 5
U.S.C. 504(c)(1).
    Sections 201.700 to 201.702 are also issued under sec. 916, Pub.
L. 111-203, 124 Stat. 1376.

0
2. Section 201.100 is amended by adding new paragraph (b)(3) to read as
follows:

Sec.  201.100  Scope of the rules of practice.

* * * * *
    (b) * * *
    (3) Initiation of proceedings for SRO proposed rule changes under
17 CFR 201.700-701, except where made specifically applicable therein.
* * * * *

0
3. Add Sec. Sec.  201.700 and 201.701 to read as follows:

Sec.  201.700  Initiation of proceedings for SRO proposed rule changes.

    (a) Rules of Practice. For purposes of these Rules of Practice
contained at 17 CFR 201.700 through 201.701, the following Rules of
Practice apply:
    (1) Rule 103, 17 CFR 201.103 (Construction of Rules);
    (2) Rule 104, 17 CFR 201.104 (Business Hours); and
    (3) Rule 160, 17 CFR 201.160 (Time Computation).
    (b) Institution of proceedings; notice and opportunity to submit
written views.
    (1) Generally. If the Commission determines to initiate proceedings
to determine whether a self-regulatory organization's proposed rule
change should be disapproved, it shall provide notice thereof to the
self-regulatory organization that filed the proposed rule change, as
well as all interested parties and the public, by publication in the
Federal Register of the grounds for disapproval under consideration.
    (i) Prior to notice. If the Commission determines to institute
proceedings prior to initial publication by the Commission of the
notice of the self-regulatory organization's proposed rule change in
the Federal Register, then the Commission shall publish notice of the
proposed rule change simultaneously with a brief summary of the grounds
for disapproval under consideration.
    (ii) Subsequent to notice. If the Commission determines to
institute proceedings subsequent to initial publication by the
Commission of the notice of the self-regulatory organization's proposed
rule change in the Federal Register, then the Commission shall publish
separately in the Federal Register a brief summary of the grounds for
disapproval under consideration.

    (iii) Service of an order instituting proceedings. In addition to
publication in the Federal Register of the grounds for disapproval
under consideration, the Secretary, or another duly authorized officer
of the Commission, shall serve a copy of the grounds for disapproval
under consideration to the self-regulatory organization that filed the
proposed rule change by serving notice to the person listed as the
contact person on the cover page of the Form 19b-4 filing. Notice shall
be made by delivering a copy of the order to such contact person either
by any method specified in 17 CFR 201.141(a) or by electronic means
including e-mail.
    (2) Notice of the grounds for disapproval under consideration. The
grounds for disapproval under consideration shall include a brief
statement of the matters of fact and law on which the Commission
instituted the proceedings, including the areas in which the Commission
may have questions or may need to solicit additional information on the
proposed rule change. The Commission may consider during the course of
the proceedings additional matters of fact and law beyond what was set
forth in its notice of the grounds for disapproval under consideration.
    (3) Demonstration of consistency with the Exchange Act. The burden
to demonstrate that a proposed rule change is consistent with the
Exchange Act and the rules and regulations issued thereunder that are
applicable to the self-regulatory organization is on the self-
regulatory organization that proposed the rule change. As reflected in
the General Instructions to Form 19b-4, the Form is designed to elicit
information necessary for the public to provide meaningful comment on
the proposed rule change and for the Commission to determine whether
the proposed rule change is consistent with the requirements of the
Exchange Act and the rules and regulations thereunder applicable to the
self-regulatory organization. The self-regulatory organization must
provide all information elicited by the Form, including the exhibits,
and must present the information in a clear and comprehensible manner.
In particular, the self-regulatory organization must explain why the
proposed rule change is consistent with the requirements of the
Exchange Act and the rules and regulations thereunder applicable to the
self-regulatory organization. A mere assertion that the proposed rule
change is consistent with those requirements, or that another self-
regulatory organization has a similar rule in place, is not sufficient.
Instead, the description of the proposed rule change, its purpose and
operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding. Any failure of the self-
regulatory organization to provide the information elicited by Form
19b-4 may result in the Commission not having a sufficient basis to
make an affirmative finding that a proposed rule change is consistent
with the Exchange Act and the rules and regulations issued thereunder
that are applicable to the self-regulatory organization.
    (c) Conduct of hearings.
    (1) Initial comment period in writing. Unless otherwise specified
by the Commission in its notice of grounds for disapproval under
consideration, all interested persons will be given an opportunity to
submit written data, views, and arguments concerning the proposed rule
change under consideration and whether the Commission should approve or
disapprove the proposed rule change. The self-regulatory organization
that submitted the proposed rule change may file a written statement in
support of its proposed rule change demonstrating, in specific detail,
how such proposed rule change is consistent with the requirements of
the Exchange Act and the rules and regulations thereunder applicable to
the self-regulatory organization, including a response to each of the
grounds for disapproval under consideration. Such statement may include
specific representations or undertakings by the self-regulatory
organization. The Commission will specify in the summary of the grounds
for disapproval under consideration the length of the initial comment
period.
    (2) Oral. The Commission, in its sole discretion, may determine
whether any issues relevant to approval or disapproval would be
facilitated by the opportunity for an oral presentation of views.
    (3) Rebuttal. At the end of the initial comment period, the self-
regulatory organization that filed the proposed rule change will be
given an opportunity to respond to any comments received. The self-
regulatory organization may voluntarily file, or the Commission may
request a self-regulatory organization to file, a response to a comment
received regarding any aspect of the proposed rule change under
consideration to assist the Commission in determining whether the
proposed rule change should be disapproved. The Commission will specify
in the summary of the grounds for disapproval under consideration the
length of the rebuttal period.
    (4) Non-response. Any failure by the self-regulatory organization
to provide a complete response, within the applicable time period
specified, to a comment letter received or to the Commission's grounds
for disapproval under consideration may result in the Commission not
having a sufficient basis to make an affirmative finding that a
proposed rule change is consistent with the Exchange Act and the rules
and regulations issued thereunder that are applicable to the self-
regulatory organization.
    (d) Record before the Commission.
    (1) Filing of papers with the Commission. Filing of papers with the
Commission shall be made by filing them with the Secretary, including
through electronic means. In its notice setting forth the grounds for
disapproval under consideration for a proposed rule change, the
Commission shall inform interested parties of the methods by which they
may submit written comments and arguments for or against Commission
approval.
    (2) Public availability of materials received. During the conduct
of the proceedings, the Commission generally will make available
publicly all written comments it receives without change. In its notice
setting forth the grounds for disapproval under consideration for a
proposed rule change, the Commission shall inform interested parties of
the methods by which they may view 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.
    (3) Record before the Commission. The Commission shall determine
each matter on the basis of the record. The record shall consist of the
proposed rule change filed on Form 19b-4 by the self-regulatory
organization, including all attachments and exhibits thereto, and all
written materials received from any interested parties on the proposed
rule change, including the self-regulatory organization that filed the
proposed rule change, through the means identified by the Commission as
provided in paragraph (1), as well as any written materials that
reflect communications between the Commission and any interested
parties.
    (e) Amended notice not required. The Commission is not required to
amend its notice of grounds for disapproval under consideration in
order to consider, during the course of the proceedings, additional
matters of fact and law beyond what was set forth in the notice

of the grounds for disapproval under consideration.

Sec.  201.701  Issuance of order.

    At any time following conclusion of the rebuttal period specified
in 17 CFR 201.700(b)(4), the Commission may issue an order approving or
disapproving the self-regulatory organization's proposed rule change
together with a written statement of the reasons therefor.

PART 202--INFORMAL AND OTHER PROCEDURES

0
4. The authority citation for part 202 continues to read as follows:

    Authority: 15 U.S.C. 77s, 77t, 78d-1, 78u, 78w, 78ll(d), 79r,
79t, 77sss, 77uuu, 80a-37, 80a-41, 80b-9, 80b-11, and 7201 et seq.,
unless otherwise noted.

0
5. Add Sec.  202.170 to read as follows:

Sec.  202.170  Initiation of disapproval proceedings for PCAOB proposed
rules.

    Initiation of disapproval proceedings for proposed rules of the
Public Company Accounting Oversight Board as defined by section 107 of
the Sarbanes-Oxley Act of 2002 are subject to the provisions of
Sec. Sec.  201.700 and 201.701 of this chapter as fully as if it were a
registered securities association, except that:
    (a) Demonstration of Consistency with the Sarbanes-Oxley Act of
2002. For purposes of proposed rules of the Public Company Accounting
Oversight Board, apply this paragraph in lieu of paragraph (b)(3) of
Sec.  201.700 of this chapter. The burden to demonstrate that a
proposed rule is consistent with the requirements of title I of the
Sarbanes-Oxley Act of 2002, and the rules and regulations issued
thereunder, or as necessary or appropriate in the public interest or
for the protection of investors, is on the Public Company Accounting
Oversight Board. In its filing the Public Company Accounting Oversight
Board must explain in a clear and comprehensible manner why the
proposed rule change is consistent with the requirements of title I of
the Sarbanes-Oxley Act of 2002 and the rules and regulations
thereunder, or as necessary or appropriate in the public interest or
for the protection of investors. A mere assertion that the proposed
rule change is consistent with those requirements is not sufficient.
Instead, the description of the proposed rule, its purpose and
operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding. Any failure by the Public
Company Accounting Oversight Board in its proposed rule filing with the
Commission may result in the Commission not having a sufficient basis
to make an affirmative finding that a proposed rule change is
consistent with the title I of the Sarbanes-Oxley Act of 2002, and the
rules and regulations issued thereunder, or as necessary or appropriate
in the public interest or for the protection of investors.
    (b) For each reference to ``the Exchange Act and the rules and
regulations thereunder applicable to the self-regulatory organization''
apply ``title I of the Sarbanes-Oxley Act of 2002, and the rules and
regulations issued thereunder applicable to such organization, or as
necessary or appropriate in the public interest or for the protection
of investors.''

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

0
6. The authority citation for part 240 continues to read as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee,
77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78j-1, 78k,
78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d),
78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and
80b-11, unless otherwise noted.

0
7. Section 240.19b-4 is amended by revising paragraphs (g), (l)(1) and
(l)(4) to read as follows:

Sec.  240.19b-4  Filings with respect to proposed rule changes by self-
regulatory organizations.

* * * * *
    (g) Proceedings to determine whether a proposed rule change should
be disapproved will be conducted pursuant to 17 CFR 201.700-701
(Initiation of Proceedings for SRO Proposed Rule Changes).
* * * * *
    (l) * * *
    (1) In the case of a proposed rule change filed under section
19(b)(2) of the Act (15 U.S.C. 78s(b)(2)), the Commission approves or
disapproves the proposed rule change or the self-regulatory
organization withdraws the proposed rule change, or any amendments, or
is notified that the proposed rule change is not properly filed; or
* * * * *
    (4) In the case of a proposed rule change, or any amendment
thereto, that has been disapproved, withdrawn or not properly filed,
the self-regulatory organization shall remove the proposed rule change,
or any amendment, from its Web site within two business days of
notification of disapproval, improper filing, or withdrawal by the SRO
of the proposed rule change.
* * * * *

    By the Commission.

    Dated: January 14, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-1199 Filed 1-21-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: March 13, 2007 (Volume 72, Number 48)]
[Notices]
[Page 11414-11416]
[DOCID:fr13mr07-93]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55412; File No. SR-NASD-2007-015]

Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Amend NASD Rules 1012 (General Provisions) and 1013 (New
Member Application and Interview) To Require an Applicant for
Membership To Submit an Application in the Manner Prescribed by NASD

March 7, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 20, 2007, the National Association of Securities Dealers,
Inc. (``NASD'') filed with the Securities and Exchange

Commission (``Commission'') the proposed rule change as described in
Items I, II and III below, which Items have been prepared by NASD. NASD
has designated the proposed rule change as constituting a ``non-
controversial'' proposed rule change under paragraph (f)(6) of Rule
19b-4 under the Act,\3\ which renders the proposed rule change
effective upon filing with the Commission. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
---------------------------------------------------------------------------

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

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

    NASD proposes to amend NASD Rules 1012 (General Provisions) and
1013 (New Member Application and Interview) to require an applicant for
membership to submit an application in the manner prescribed by NASD.
The text of the proposed rule change is available at NASD,
http://www.nasd.com, and 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, NASD 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. NASD 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
    Applying for NASD membership is a comprehensive process requiring
the submission of extensive information, considerable attention to
detail, and a substantial time commitment. To streamline the
application process and outline clearly the information that must be
submitted with the application, NASD recently amended Rule 1013 (New
Member Application and Interview) to require applicants to use a
standardized form, Form NMA, to submit their membership
applications.\4\ Form NMA is organized according to the 14 individual
standards for membership enumerated in Rule 1014 (Department Decision)
and assists applicants in compiling a complete application package by
listing the forms and supporting documentation required by Rule 1013.
Applicants currently submit Form NMA in hard copy to NASD, along with
the required forms and supporting documentation, via hand delivery,
courier, or first-class mail.\5\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 53564 (March 29,
2006), 71 FR 16847 (April 4, 2006) (SR-NASD-2006-038).
    \5\ See Rule 1012(a)(1) and Rule 1013(a)(1).
---------------------------------------------------------------------------

    NASD, however, previously indicated in the rule filing requiring
applicants to use Form NMA that it intended to develop systems to
enable applicants to submit Form NMA electronically. NASD has now
completed those systems and converted Form NMA to an electronic
document. The electronic Form NMA and the new electronic application
submission process changes only the manner in which NASD receives the
information that a membership application is required to include under
Rule 1013. They do not change the information applicants must submit
pursuant to Rule 1013 or the standards set forth in Rule 1014 for
granting an applicant's membership application.
    The proposed rule change amends Rule 1012 to require applicants to
file an application in the manner prescribed in Rule 1013. The proposed
rule change also amends Rule 1012(a) to reflect that the electronic
filing of a new member application will be deemed complete on the date
specified on the confirmation page generated by the electronic filing
system. In addition, the proposed rule change amends Rule 1013(a) to
require new member applicants to file an application in the manner
prescribed by NASD and to include the completed Form NMA as part of the
contents of a membership application.
    Finally, the proposed rule change deletes outdated references in
Rules 1011, 1012 and 1013 to ``the Association'' and replaces them with
``NASD.''\6\
---------------------------------------------------------------------------

    \6\ NASD no longer refers to itself using its full corporate
name or ``the Association.'' Instead, NASD uses the name ``NASD''
unless otherwise appropriate for corporate or regulatory reasons.
---------------------------------------------------------------------------

    Prior to the proposed rule change being operative and implemented,
NASD will make the Form NMA available to applicants via Web CRD and
will outline details in a Notice to Members regarding how to complete
the online form and submit it using the new electronic filing
system.\7\
---------------------------------------------------------------------------

    \7\ NASD will also provide notice through the NASD Notice to
Members process (or similar guidance) of any systems changes to the
electronic application process that would alter the manner in which
applicants interact with the electronic filing system.
---------------------------------------------------------------------------

    This move away from a paper new member application to an electronic
application will further streamline and make more efficient the new
member application process.\8\ An electronic application process is
also consistent with NASD's By-Laws, which state that new member
applications ``shall be made to the NASD via electronic process or such
other process as the NASD may prescribe, on the form to be prescribed
by the NASD.''\9\
---------------------------------------------------------------------------

    \8\ Cf. Securities Exchange Act Release No. 54654 (October 26,
2006), 71 FR 64326 (November 1, 2006) (SR-NASD-2006-60) (order
approving new NASD Rule 3170 (Mandatory Electronic Filing
Requirements) giving NASD the authority to require members to file
or submit electronically any regulatory notice or other document
that a member is required to file with (or otherwise submit to)
NASD).
    \9\ NASD By-Laws, Art. IV, Sec. 1(a).
---------------------------------------------------------------------------

    As noted in Item 2 above, NASD has filed the proposed rule change
for immediate effectiveness. NASD will announce the implementation date
of the proposed rule change in a Notice to Members to be published no
later than 60 days following Commission notice of the filing of the
proposed rule change for immediate effectiveness. The implementation
date will be 30 days from the publication of the Notice to Members.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among
other things, that NASD rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. The proposed rule change amends Rules 1012 and 1013 to
require new member applications to be submitted in the manner
prescribed by NASD, which will be electronically. The proposed rule
change does not propose any new or additional content requirements for
member applications. NASD believes that the proposed rule change is
consistent with the provisions of Section 15A(b)(6) as the requirement
to file electronic applications using Form NMS will ensure a more
streamlined and efficient membership application process.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

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

    NASD does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.

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

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change does not:
    (i) Significantly affect the protection of investors or the public
interest;
    (ii) impose any significant burden on competition; and
    (iii) become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \11\ and
Rule 19b-4(f)(6) thereunder.\12\
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.

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-NASD-2007-015 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-NASD-2007-015. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments,

all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of NASD. 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-NASD-2007-015 and should be submitted on or before April 3, 2007.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
---------------------------------------------------------------------------

    \13\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-4505 Filed 3-12-07; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 84, Number 199 (Tuesday, October 15, 2019)]
[Proposed Rules]
[Pages 55100-55103]
[FR Doc No: 2019-22438]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R10-OAR-2018-0597; FRL-10001-10-Region 10]

Air Plan Approval; ID: Idaho Portion of the Logan UT-ID 2006 24-
Hour PM2.5 Nonattainment Area; Moderate Plan Elements

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

SUMMARY: The Environmental Protection Agency (EPA) is proposing to
approve

revisions to the Idaho State Implementation Plan (SIP) submitted on
July 31, 2018. Idaho's submission addresses specific Clean Air Act
(CAA) requirements for the Idaho portion of the Logan, Utah-Idaho fine
particulate matter (PM2.5) nonattainment area (Logan UT-ID
area). The submission fulfills Idaho's commitment to submit Reasonable
Further Progress and Quantitative Milestone attainment plan elements
and updated Motor Vehicle Emissions Budgets to the EPA. If this
proposed approval is finalized, the EPA's prior conditional approval
will be removed and these elements will become fully approved.

DATES: Comments must be received on or before November 14, 2019.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R10-
OAR-2018-0597, at https://www.regulations.gov. Follow the online
instructions for submitting comments. Once submitted, comments cannot
be edited or removed from Regulations.gov. The EPA may publish any
comment received to its public docket. Do not electronically submit any
information you consider to be Confidential Business Information (CBI)
or other information the disclosure of which is restricted by statute.
Multimedia submissions (audio, video, etc.) must be accompanied by a
written comment. The written comment is considered the official comment
and should include discussion of all points you wish to make. The EPA
will generally not consider comments or comment contents located
outside of the primary submission (i.e., on the web, cloud, or other
file sharing system). For additional submission methods, the full EPA
public comment policy, information about CBI or multimedia submissions,
and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Matthew Jentgen,<PHONE_NUMBER>,
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Throughout this document whenever ``we,''
``us,'' or ``our'' is used, it is intended to refer to the EPA.

Table of Contents

I. Background
II. Analysis of the State's Submission
III. Proposed Action
IV. Statutory and Executive Order Reviews

I. Background

    On November 13, 2009, the EPA designated a portion of Franklin
County, Idaho nonattainment for the 2006 24-hour PM2.5 NAAQS
(74 FR 58688). This designation, as part of the cross-state Logan,
Utah-Idaho area, required Idaho to prepare and submit an attainment
plan to meet current statutory and regulatory requirements.\1\ On
December 14, 2012, the Idaho Department of Environmental Quality (IDEQ)
submitted an attainment plan for the Idaho portion of the Logan UT-ID
area. The plan addressed specific required elements, including but not
limited to the following elements: Emissions inventory, Reasonably
Available Control Measures/Technology (RACM/RACT), attainment
demonstration, contingency measures, and Motor Vehicle Emissions
Budgets (MVEBs). The EPA approved the baseline emissions inventory on
July 18, 2014 (79 FR 41904) and the control measures on March 25, 2014
(79 FR 16201). However, the EPA limited its approval of the submitted
control measures \2\ in light of the District of Columbia Circuit Court
of Appeal's decision in NRDC v. EPA, holding that EPA erred in
implementing the 1997 PM2.5 NAAQS pursuant only to the
general implementation requirements of Title I, Part D, Subpart 1 of
the CAA rather than also the requirements specific to PM10
in Title I, Part D, Subpart 4.\3\ In response to the litigation, Idaho
made a supplemental submission on December 24, 2014. The December 14,
2012 and December 24, 2014 submissions are hereinafter collectively
referred to as the Idaho attainment plan.
---------------------------------------------------------------------------

    \1\ See part D of title I of the Clean Air Act and the EPA's
Fine Particulate Matter National Ambient Air Quality Standards:
State Implementation Plan Requirements (72 FR 20586, April 25,
2007).
    \2\ The control measures were incorporated into the Idaho SIP,
but the EPA did not make a determination that the control measures
satisfy the requirement to adopt and implement RACM under CAA
Sections 172(c) and 189(a)(1) and 40 CFR 51.1009.
    \3\ NRDC v. EPA, 706 F.3d 428 (DC Cir. 2013).
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    The EPA responded to the Court's decision, in part, by retracting
the March 2012 guidance on SIP requirements for meeting the 2006 24-
hour PM2.5 standards \4\ and promulgating the Fine
Particulate Matter National Ambient Air Quality Standards: State
Implementation Plan Requirements (81 FR 58010, August 24, 2016). The
2016 PM2.5 SIP Requirements Rule clarified how states should
meet the statutory SIP requirements under Subpart 1 and Subpart 4 that
apply to areas designated as nonattainment for any PM2.5
NAAQS. Based on the requirements of Subparts 1 and 4 and the 2016
PM2.5 SIP Requirements Rule, on January 4, 2017, we approved
Idaho's control measures as meeting RACM/RACT, disapproved contingency
measures, and deferred action on the attainment demonstration, RFP, QM,
and MVEB requirements (82 FR 729).
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    \4\ Memorandum of March 2, 2012 (withdrawn June 6, 2013), from
Stephen D. Page, Director, Office of Air Quality Planning and
Standards, to the EPA Regional Air Directors, Region I-X,
``Implementation Guidance for the 2006 24-Hour Fine Particle
(PM2.5) National Ambient Air Quality Standards (NAAQS).''
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    Following our January 4, 2017, action, in an April 25, 2017 letter,
Idaho committed to make a SIP submission that would further address the
RFP, QM, and MVEB requirements. Because Idaho committed to address
these requirements within one year, in specific ways that the EPA
considered appropriate, the EPA conditionally approved the RFP, QM, and
MVEB elements of the Idaho attainment plan on August 8, 2017 (82 FR
37025). In that same action, we also finalized approval of the Idaho
attainment demonstration and the 2014 MVEBs as early progress budgets.
Based on quality-assured, quality-controlled data for the period 2015-
2017 showing that the area attained the 2006 24-hour PM2.5
NAAQS, on October 19, 2018, the EPA finalized a determination of
attainment by the attainment date and clean data determination for the
Logan UT-ID area (83 FR 52983). Finalization of the clean data
determination suspended the requirements for a nonattainment area to
submit an RFP plan, MVEB for the attainment year, and other SIP
requirements related to attainment of the 2006 PM2.5 NAAQS.
By virtue of the EPA's October 19, 2018 clean data determination, the
obligation to submit any attainment-related SIP revisions, including an
RFP Plan, quantitative milestones, and an MVEB for the attainment year
for the Logan, UT-ID area are not applicable so long as the area
continues to attain the 2006 24-hour PM2.5 NAAQS. See 40 CFR
51.1015(a). As we stated in our October 19, 2018, action, the clean
data determination does not preclude the state from submitting, nor the
EPA from acting on, the suspended attainment plan elements. See 83 FR
52983, 52985.

II. Analysis of the State's Submission

    On July 31, 2018, Idaho submitted a SIP revision to further address
the RFP, QM, and MVEB elements that EPA conditionally approved on
August 8, 2017 (Cache SIP Amendment or submission). The submission can
be found in the docket for this action. An RFP plan or analysis must
include four components, summarized as follows: (1) An implementation
schedule for control measures on sources in the nonattainment area; (2)
RFP projected emissions for each applicable quantitative milestone
year; (3) an

analysis that presents the schedule of control measures and estimated
emissions changes to be achieved by each milestone year and (4) an
analysis that demonstrates sufficient progress on an annual basis
toward attainment between the applicable baseline year to the
attainment year. See 40 CFR 51.1012. Idaho's submission addresses each
of the four components required by 40 CFR 51.1012. First, the
submission includes an implementation schedule for each of the three
control measures. Second, the submission includes RFP projected
emissions for each applicable quantitative milestone year. These
measures, which were relied upon in the Idaho attainment plan,
supported the attainment determination for the Logan UT-ID area based
on 2015-2017 monitoring data.\5\ Third, Idaho provided an analysis of
emissions reductions achieved for each of the control measures.
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    \5\ Determination of Attainment by the Attainment Date and Clean
Data Determination for the Logan, UT-ID area, October 19, 2018 (83
FR 52983).
---------------------------------------------------------------------------

    The first control measure discussed in Idaho's submission,
residential wood combustion (RWC) ordinances, were adopted within
Franklin County and all six Idaho cities on the Idaho side of the Logan
UT-ID area (Franklin, Preston, Weston, Dayton, Clifton, and Oxford).
Key elements in the current RWC ordinances include mandatory burn bans
issued when PM2.5 has reached or is forecasted to reach 75
on the Air Quality Index (AQI). This AQI value corresponds to a
PM2.5 concentration of 23.5 micrograms per cubic meter
([mu]g/m\3\) and aligns with the RWC ordinances applicable within Cache
County on the Utah side of the Logan UT-ID area. All RWC ordinances
effective in Franklin County prohibit both open burning and the use of
specified devices when an air quality alert is issued. The ordinances
also prohibit the installation of non-EPA-certified devices.
    As stated in the submission, these Idaho cities and counties have
implemented the ordinances and mandatory burn bans since 2012.\6\
Therefore, we have determined the submission demonstrates full
implementation of this control measure. Idaho estimated that maximum
reductions for this measure are 0.06 tons per day (tpd) direct
PM2.5, 0.009 tpd nitrogen oxides (NOX), and 0.078 tpd
volatile organic compounds (VOC).\7\
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    \6\ Cache SIP Amendment, Section 4.2 and Appendix B.
    \7\ Cache SIP Amendment, Section 4.1.
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    Idaho also implemented three wood stove change-out programs on the
Idaho side of the Logan UT-ID area. These programs were conducted in
2006-2007, 2011-2012, and 2013-2014. Accordingly, Idaho demonstrated in
the submission that a total of 209 uncertified RWC devices have been
changed-out since 2006. In addition, 39 stoves were removed and
destroyed through Idaho's Alternative Energy Device tax deduction
program. In total, 256 wood stoves have been changed out on the Idaho
side of the Logan UT-ID area since 2006. As described in the submission
(applying the appropriate temporal profile to convert to tons per day),
Idaho stated these change-outs have led to reductions of 0.05 tpd
direct PM2.5, 0.003 tpd NOX, and 0.13 tpd VOC.\8\
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    \8\ Cache SIP Amendment, Section 4.1.
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    The final control measure implemented on the Idaho side of the
Logan UT-ID area is road sanding agreements. Franklin County Road and
Bridge, the City of Preston, and the Idaho Transportation Department
(ITD) entered into road sanding agreements which were submitted to the
EPA and approved into the Idaho SIP on March 25, 2014 (79 FR 16201).
According to records submitted to Idaho and summarized in the
submission, ITD used salt in 2014 (409 tons), 2015 (340 tons), and 2016
(109 tons) and did not use sand. Franklin County Road and Bridge
historically used a 10:1 ratio of sand and salt; however, in the Idaho
attainment plan, Franklin County committed to use a 4:1 ratio of sand
and salt when anti-skid treatment is required. Franklin County also
agreed to apply brine when temperatures are above 22[deg]F, a measure
that further reduces the amount of sand required by approximately 50%.
The City of Preston now uses a 2:1 ratio of sand and salt at an average
of 700 tons total per year.
    Finally, in Section 4.5 of the Cache SIP Amendment, Idaho provided
an analysis that demonstrates sufficient progress on an annual basis
toward attainment between the applicable baseline year to the
attainment year. The analysis demonstrates that Idaho achieved
emissions reductions consistent with RFP. Idaho's RFP analysis is
supported by EPA's October 19, 2018 determination of attainment (83 FR
52983). Therefore, we propose to approve the RFP element submitted by
Idaho as part of its Moderate area plan for the Logan UT-ID area.
    With respect to QMs, EPA regulations require that the attainment
plan contain quantitative milestones to be achieved by the milestone
dates that provide for objective evaluation of reasonable further
progress toward timely attainment. See 40 CFR 51.1013. For areas
designated nonattainment for the 2006 PM2.5 NAAQS, such as
the Logan UT-ID area, quantitative milestones are required no later
than 3 years after December 31, 2014 40 CFR 51.1013(a)(4). Thus, 2017
is the first year the Logan, UT-ID area must include quantitative
milestones. The 2016 PM2.5 SIP Requirements Rule states that
the quantitative milestones contained in the attainment plan for a
Moderate nonattainment area should be constructed such that they can be
tracked, quantified and/or measured adequately in order for a state to
meet its milestone reporting obligations, which are due 90 days after a
given milestone date.\9\ The EPA suggested possible metrics that
``support and demonstrate how the overall quantitative milestones
identified for an area may be met, such as percent implementation of
control strategies, percent compliance with implemented control
measures, and adherence to a compliance schedule.'' \10\ This list was
not exclusive or exhaustive but reflected the EPA's view that the
purpose of the quantitative milestone requirement is to provide an
objective way to determine whether the area is making the necessary
progress towards attainment by the applicable attainment date, i.e., to
verify that the separate RFP requirement is met.\11\
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    \9\ 40 CFR 51.1013(b).
    \10\ 2016 PM2.5 SIP Requirements Rule (81 FR 58010,
58064).
    \11\ Id.
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    Idaho's submission includes a detailed implementation schedule,
estimated emissions reductions, and 2017 QM reporting metrics for the
control measures discussed above. For the wood combustion ordinances,
Idaho included in the submission a summary of the wood stove and open
burning curtailment days issued per year since 2012 as a means of
demonstrating implementation of this measure. The objective measure to
determine the progress of implementation of the wood stove change-out
program is the total number of wood stove change-outs completed. For
road sanding agreements, the objective metrics used to track progress
are tons of sand and salt used and changes in the sand-salt ratio. On
March 7, 2018, Idaho submitted a Quantitative Milestone Report to
demonstrate that all emission reduction measures have been implemented,
and Idaho has achieved milestones demonstrating progress toward
attainment.\12\ The EPA responded on September 7, 2018 stating

the submittal adequately met the Quantitative Mileston reporting
requirements.\13\ Therefore, we propose to approve Idaho's QMs as
meeting the requirements of the CAA and EPA's implementing regulations.
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    \12\ Idaho's March 7, 2018 Quantitative Milestone Report is
included in the docket for this action.
    \13\ The EPA's September 7, 2018, reply letter and supporting
document are included in the docket for this action.
---------------------------------------------------------------------------

    Lastly, with respect to MVEBs, an attainment plan must include in
its RFP submission an inventory of on-road mobile source emissions in
the nonattainment area for each milestone year.\14\ The Idaho
attainment plan projected 2014 emission budgets. On August 8, 2017, the
EPA approved the submitted 2014 MVEBs as early progress budgets and
conditionally approved Idaho's commitment to submit MVEBs for the 2015
attainment year (82 FR 37025). In the submission, Idaho modeled 2015
and 2017 on-road vehicle emissions. Growth in vehicle mile traveled
(VMT) was estimated using automatic traffic recorder, and population
growth was estimated using census data.
---------------------------------------------------------------------------

    \14\ 40 CFR 51.1012(a)(2).
---------------------------------------------------------------------------

    The revised MVEBs were determined for direct PM2.5,
NOX, and VOC emissions, pollutants that contribute to on-
road mobile source emissions of primary and secondary particulates in
the area. Idaho noted that, although ammonia (NH3)
contributes to secondary aerosol formation, the region is
NH3 rich, so the minimal mobile source NH3
emissions (less than 0.12 tons per day) are not considered in MVEBs. In
addition, although originally thought by the state to be a primary
contributor to direct PM2.5 concentrations, Idaho
determined, based on the MVEB analysis, that direct PM2.5
emissions from paved road dust are not considered significant (1% of
total wintertime contributions) and therefore were not included in the
MVEBs.
    The MVEB is comprised of on-road mobile sources and vehicle
emissions (exhaust, tire, and brake wear). The EPA's Motor Vehicle
Emissions Simulator (MOVES) model was used to develop vehicle emissions
estimates for the MVEB (Idaho used the most current version of MOVES
available at the time, MOVES 2014a, for its analysis). The MVEB will
apply when the EPA determines the budget is adequate for transportation
conformity. According to the EPA's conformity rule, the emissions
budget acts as a ceiling on emissions in the year for which it is
defined or until a SIP revision modifies the budget. Based on the
analysis, Idaho set the following emissions budgets for 2015,
applicable to the Idaho side of the Logan UT-ID area: 0.033 tpd direct
PM2.5, 0.676 tpd NOX, and 0.554 tpd VOC. In the
submission, Idaho included a MVEB for the 2017 RFP year that sets the
following emissions budgets: 0.029 tpd direct PM2.5, 0.544
tpd NOX, and 0.467 tpd VOC.
    We find that Idaho has evaluated the appropriate pollutants in its
MVEB analysis and included MVEBs for the appropriate milestone years.
According to the EPA's conformity rule, ammonia is a pollutant that is
not required to be included in a PM2.5 nonattainment area's
MVEB unless it is determined to be a significant contributor to
PM2.5 formation in the area (40 CFR 93.102(b)(2)(v)). Paved
road dust can also be excluded from an area's MVEB for similar reasons
(40 CFR 93.102(b)(3)). Neither IDEQ or the EPA Regional Administrator
have made a finding that transportation-related emissions of ammonia or
re-entrained paved road dust are a significant contributor to the
PM2.5 nonattainment problem. Therefore, we propose to
approve Idaho's MVEBs as meeting the requirements of the CAA and EPA's
implementing regulations.

III. Proposed Action

    Based on Idaho's submission and our evaluation discussed above, the
EPA is proposing to approve the RFP and QM elements and revised MVEBs
in the Cache SIP Amendment. If this proposed approval is finalized, the
EPA's prior conditional approval will be removed and these elements
will become fully approved.

IV. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP
submission that complies with the provisions of the CAA and applicable
federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in
reviewing SIP submissions, the EPA's role is to approve state choices,
provided that they meet the criteria of the CAA. Accordingly, this
proposed action merely approves state law as meeting federal
requirements and does not impose additional requirements beyond those
imposed by state law. For that reason, this proposed action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Orders
12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21,
2011);
     Is not an Executive Order 13771 (82 FR 9339, February 2,
2017) regulatory action because SIP approvals are exempted under
Executive Order 12866;
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because it does not involve technical standards; and
     Does not provide the EPA with the discretionary authority
to address, as appropriate, disproportionate human health or
environmental effects, using practicable and legally permissible
methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
    In addition, the SIP is not approved to apply on any Indian
reservation land or in any other area where the EPA or an Indian tribe
has demonstrated that a tribe has jurisdiction. In those areas of
Indian country, the rule does not have tribal implications and will not
impose substantial direct costs on tribal governments or preempt tribal
law as specified by Executive Order 13175 (65 FR 67249, November 9,
2000).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone,
Particulate matter, Reporting and recordkeeping requirements, Sulfur
oxides, Volatile organic compounds.

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

    Dated: October 2, 2019.
Chris Hladick,
Regional Administrator, Region 10.
[FR Doc. 2019-22438 Filed 10-11-19; 8:45 am]
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[Federal Register Volume 88, Number 196 (Thursday, October 12, 2023)]
[Notices]
[Pages 70665-70666]
[FR Doc No: 2023-22494]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket Nos. FDA-2020-P-1344 and FDA-2023-P-2655]

Determination That CYTOXAN (Cyclophosphamide) for Injection
(Sterile Dry Powder Excipient-Free Formulation), 500 Milligrams/Vial, 1
Gram/Vial, and 2 Grams/Vial, and CYTOXAN (Cyclophosphamide) for
Injection (Sterile Dry Powder With Sodium Chloride Formulation), 500
Milligrams/Vial, 1 Gram/Vial, and 2 Grams/Vial, Were Not Withdrawn From
Sale for Reasons of Safety or Effectiveness

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA or the Agency) has
determined that the sterile dry powder excipient-free formulation of
CYTOXAN (cyclophosphamide) for Injection, 500 milligrams (mg)/vial, 1
gram (g)/vial, and 2 g/vial, and the sterile dry powder with sodium
chloride formulation of CYTOXAN (cyclophosphamide) for Injection, 500
mg/vial, 1 g/vial, and 2 g/vial, were not withdrawn from sale for
reasons of safety or effectiveness. This determination means that FDA
will not begin procedures to withdraw approval of abbreviated new drug
applications (ANDAs) that refer to the sterile dry powder excipient-
free formulation or the sterile dry powder with sodium chloride
formulation of these drug products, and it will allow FDA to continue
to approve ANDAs that refer to these formulations of CYTOXAN as long as
they meet relevant legal and regulatory requirements.

FOR FURTHER INFORMATION CONTACT: Tereza Hess, Center for Drug
Evaluation and Research, Food and Drug Administration, 10903 New
Hampshire Ave., Bldg. 51, Rm. 6221, Silver Spring, MD 20993-0002, 202-
768-5659, [email protected].

SUPPLEMENTARY INFORMATION: Section 505(j) of the Federal Food, Drug,
and Cosmetic Act (FD&C Act) (21 U.S.C. 355(j)) allows the submission of
an ANDA to market a generic version of a previously approved drug
product. To obtain approval, the ANDA applicant must show, among other
things, that the generic drug product: (1) has the same active
ingredient(s), dosage form, route of administration, strength,
conditions of use, and (with certain exceptions) labeling as the listed
drug, which is a version of the drug that was previously approved, and
(2) is bioequivalent to the listed drug. ANDA applicants do not have to
repeat the extensive clinical testing otherwise necessary to gain
approval of a new drug application (NDA).
    Section 505(j)(7) of the FD&C Act requires FDA to publish a list of
all approved drugs. FDA publishes this list as part of the ``Approved
Drug Products With Therapeutic Equivalence Evaluations,'' which is
known generally as the ``Orange Book.'' Under FDA regulations, drugs
are removed from the list if the Agency withdraws or suspends approval
of the drug's NDA or ANDA for reasons of safety or effectiveness or if
FDA determines that the listed drug was withdrawn from sale for reasons
of safety or effectiveness (21 CFR 314.162).
    A person may petition the Agency to determine, or the Agency may
determine on its own initiative, whether a listed drug was withdrawn
from sale for reasons of safety or effectiveness. This determination
may be made at any time after the drug has been withdrawn from sale,
but must be made: (1) whenever a listed drug is voluntarily withdrawn
from sale and ANDAs that referred to the listed drug have been approved
and (2) prior to approving an ANDA that refers to the listed drug
(Sec.  314.161 (21 CFR 314.161)). FDA may not approve an ANDA that does
not refer to a listed drug.
    CYTOXAN (cyclophosphamide) for Injection (sterile dry powder with
sodium chloride formulation), with the 500 mg/vial, initially approved
on May 4, 1964, the 1 g/vial, initially approved on August 30, 1982,
and the 2 g/vial, initially approved on August 30, 1982, are the
subjects of NDA 012142, held by Baxter Pharmaceuticals. Subsequently,
CYTOXAN (cyclophosphamide) for Injection (lyophilized powder with
mannitol) was also approved under NDA 012142, with the 500 mg/vial
approved on January 4, 1984; the 1 g/vial approved on September 24,
1985; and the 2 g/vial approved on December 10, 1985. On November 7,
2003, the lyophilized powder with mannitol formulation in 500 mg/vial,
1 g/vial, and 2 g/vial strengths was reformulated and approved as a
sterile dry powder excipient-free formulation under Supplement 107 to
NDA 012142. On March 31, 2012, the CYTOXAN (cyclophosphamide) for
Injection, sterile dry powder with sodium chloride formulation in 500
mg/vial, 1 g/vial, and 2 g/vial strengths was reformulated and approved
as a lyophilized powder with mannitol formulation under Supplement 113.
CYTOXAN is indicated for treatment of malignant lymphomas: Hodgkin's
disease, lymphocytic lymphoma, mixed-cell type lymphoma, histiocytic
lymphoma, Burkitt's lymphoma, multiple myeloma, leukemias, mycosis
fungoides, neuroblastoma, adenocarcinoma of the ovary, retinoblastoma,
breast carcinoma, and minimal change nephrotic syndrome in pediatric
patients.
    FDA previously determined that certain CYTOXAN (cyclophosphamide)
for Injection formulations and strengths were not discontinued from
sale for reasons of safety or effectiveness, but these determinations
did not address all previously approved formulations and strengths. In
the Federal Register of March 1, 2004 (69 FR 9630), FDA issued a
determination that CYTOXAN (cyclophosphamide) for Injection (non-
lyophilized formulation), 2 g/vial, was not withdrawn from sale for
reasons of safety or effectiveness. In the Federal Register of August
5, 2013 (78 FR 47321), FDA issued a determination that CYTOXAN
(cyclophosphamide) for Injection (lyophilized formulations), 100 mg/
vial, 200 mg/vial, 500 mg/vial, 1 g/vial, and 2 g/vial, and CYTOXAN
(cyclophosphamide) for Injection (non-lyophilized formulations), 100
mg/vial and 200 mg/vial, were not withdrawn from sale for reasons of
safety or effectiveness. Neither of the previous Federal Register
notices expressly indicate that the determinations were made for the
sterile dry powder excipient-free formulation of CYTOXAN
(cyclophosphamide) for Injection in the 500 mg/vial, 1 g/vial, and 2 g/
vial strengths or the sterile dry powder with sodium chloride
formulation of CYTOXAN (cyclophosphamide) for Injection, 500 mg/vial, 1
g/vial, and 2 g/vial.
    The sterile dry powder excipient-free formulation of CYTOXAN
(cyclophosphamide) for Injection, 500 mg/vial, 1 g/vial, and 2 g/vial,
and the sterile dry powder with sodium chloride formulation of CYTOXAN
(cyclophosphamide) for Injection, 500 mg/vial, 1 g/vial, and 2 g/vial,
are discontinued.
    Lachman Consultant Services, Inc., submitted a citizen petition
dated May 5, 2020 (Docket No. FDA-2020-P-1344), under 21 CFR 10.30,
requesting that the Agency determine whether discontinued formulations
of all strengths of CYTOXAN (cyclophosphamide) for Injection approved
under NDA 012142, including the sterile dry powder excipient-free
formulation of CYTOXAN (cyclophosphamide) for Injection, 500 mg/vial, 1
g/vial, and 2 g/vial, were withdrawn from sale for reasons of safety or
effectiveness. Epic Pharma,

LLC submitted a citizen petition dated June 27, 2023 (Docket No. FDA-
2023-P-2655), also requesting that the Agency determine whether the
sterile dry powder excipient-free formulation of CYTOXAN
(cyclophosphamide) for Injection, 500 mg/vial, 1 g/vial, and 2 g/vial,
were withdrawn from sale for reasons of safety or effectiveness.
Although the citizen petitions did not specifically address the sterile
dry powder with sodium chloride formulation of CYTOXAN
(cyclophosphamide) for Injection, 500 mg/vial, 1 g/vial, and 2 g/vial,
this formulation also has been discontinued. We have also determined
whether the sterile dry powder with sodium chloride formulation of
CYTOXAN (cyclophosphamide) for Injection, 500 mg/vial, 1 g/vial, and 2
g/vial, was withdrawn for safety or effectiveness.
    After considering the citizen petitions and reviewing Agency
records and based on the information we have at this time, FDA has
determined under Sec.  314.161 that CYTOXAN (cyclophosphamide) for
Injection (sterile dry powder excipient-free formulation), 500 mg/vial,
1 g/vial, and 2 g/vial, and CYTOXAN (cyclophosphamide) for Injection
(sterile dry powder with sodium chloride formulation), 500 mg/vial, 1
g/vial, and 2 g/vial, were not withdrawn for reasons of safety or
effectiveness. The petitioners have identified no data or other
information suggesting that the sterile dry powder excipient-free
formulation of CYTOXAN (cyclophosphamide) for Injection, 500 mg/vial, 1
g/vial, and 2 g/vial, or the sterile dry powder with sodium chloride
formulation of CYTOXAN (cyclophosphamide) for Injection, 500 mg/vial, 1
g/vial, and 2 g/vial, were withdrawn for reasons of safety or
effectiveness. We have carefully reviewed our files for records
concerning the withdrawal of the sterile dry powder excipient-free
formulation of CYTOXAN (cyclophosphamide) for Injection, 500 mg/vial, 1
g/vial, and 2 g/vial, and the sterile dry powder with sodium chloride
formulation of CYTOXAN (cyclophosphamide) for Injection, 500 mg/vial, 1
g/vial, and 2 g/vial, from sale. We have also independently evaluated
relevant literature and data for possible postmarketing adverse events.
We have found no information that would indicate that these drug
products were withdrawn from sale for reasons of safety or
effectiveness.
    Accordingly, the Agency has determined that the sterile dry powder
excipient-free formulation of CYTOXAN (cyclophosphamide) for Injection,
500 mg/vial, 1 g/vial, and 2 g/vial, and the sterile dry powder with
sodium chloride formulation of CYTOXAN (cyclophosphamide) for
Injection, 500 mg/vial, 1 g/vial, and 2 g/vial, drug products have been
discontinued from marketing for reasons other than safety or
effectiveness. FDA will not begin procedures to withdraw approval of
approved ANDAs that have the sterile dry powder excipient-free
formulation or the sterile dry powder with sodium chloride formulation.
ANDAs that refer to CYTOXAN (cyclophosphamide) for Injection, 500 mg/
vial, 1 g/vial, and 2 g/vial may be approved by the Agency as long as
they meet all other legal and regulatory requirements for the approval
of ANDAs. If FDA determines that labeling for these drug products
should be revised to meet current standards, the Agency will advise
ANDA applicants to submit such labeling.

    Dated: October 5, 2023.
Lauren K. Roth,
Associate Commissioner for Policy.
[FR Doc. 2023-22494 Filed 10-11-23; 8:45 am]
BILLING CODE 4164-01-P