[Federal Register Volume 82, Number 187 (Thursday, September 28, 2017)]
[Notices]
[Pages 45331-45339]
[FR Doc No: 2017-20757]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32831; File No. 812-14758]

Oaktree Strategic Income, LLC, et al.

September 22, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of application for an order under sections 17(d) and 57(i)
of the Investment Company Act of 1940 (the ``Act'') and rule 17d-1
under the Act to permit certain joint transactions otherwise prohibited
by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.
Applicants request an order to permit a business development company to
co-invest in portfolio companies with affiliated investment funds.

Applicants: Oaktree Strategic Income, LLC (``OSI''), Oaktree Capital
Management, L.P. (``OCM LP''), Oaktree High Yield Bond Fund, L.P.,
Oaktree High Yield Fund II, L.P., OCM High Yield Trust, Oaktree
Expanded High Yield Fund, L.P., Oaktree Global High Yield Bond Fund,
L.P., Oaktree European High Yield Fund, L.P., Oaktree Senior Loan Fund,
L.P., Oaktree Enhanced Income Fund III, L.P., Oaktree Enhanced Income
Fund III (Parallel), L.P., Oaktree CLO 2014-1 Ltd., Oaktree CLO 2014-2
Ltd., Oaktree CLO 2015-1 Ltd., Oaktree EIF I Series A1, Ltd., Oaktree
EIF I Series A, Ltd., Oaktree EIF II Series A1, Ltd., Oaktree EIF II
Series A2, Ltd., Oaktree EIF II Series B1, Ltd., Oaktree EIF III Series
I, Ltd., Oaktree EIF III Series II, Ltd., Oaktree Strategic Credit Fund
A, L.P., Oaktree Strategic Credit Fund B, L.P., Ace Strategic Credit
Holdings (Cayman), L.P., Exelon Strategic Credit Holdings, LLC, Oaktree
FF Investment Fund, L.P., Oaktree-Minn Strategic Credit, LLC, Oaktree-
NGP Strategic Credit, LLC, Oaktree-TBMR Strategic Credit Fund, LLC,
Oaktree-TBMR Strategic Credit Fund C, LLC, Oaktree-TBMR Strategic
Credit Fund F, LLC, Oaktree-TBMR Strategic Credit Fund G, LLC, Oaktree-
TCDRS Strategic Credit, LLC, Oaktree-TSE 16 Strategic Credit, LLC,
Oaktree Mezzanine Fund IV, L.P., Oaktree Middle-Market Direct Lending
Fund, L.P., Oaktree Middle-Market Direct Lending Unlevered Fund, L.P.,
Oaktree Middle-Market Direct Lending Fund (Parallel), L.P., Oaktree
Middle-Market Direct Lending Unlevered Fund (Parallel), L.P., Oaktree
European Capital Solutions Fund (Parallel), L.P., Oaktree European
Capital Solutions Fund, L.P., Oaktree European Special Situations Fund,
L.P., Oaktree Desert Sky Investment Fund, L.P., Oaktree Emerging
Markets Debt Total Return Fund, L.P., Oaktree Boulder Investment Fund,
L.P., OCM Convertible Trust, Oaktree Non-U.S. Convertible Fund, L.P.,
Oaktree High Income Convertible Fund, L.P., Oaktree High Income
Convertible Fund II, L.P., Oaktree Opportunities Fund X, L.P., Oaktree
Opportunities Fund X (Parallel), L.P., Oaktree Opportunities Fund X
(Parallel 2), L.P., Oaktree Opportunities Fund Xb, L.P., Oaktree
Opportunities Fund Xb (Parallel), L.P., Oaktree Opportunities Fund Xb
(Parallel 2), L.P., Oaktree Huntington Investment Fund II, L.P.,
Oaktree Cascade Investment Fund I, L.P., Oaktree Cascade Investment
Fund II, L.P., Oaktree Value Opportunities Fund, L.P., Oaktree BAA
Emerging Market Opportunities Fund, L.P., Oaktree Glacier Investment
Fund, L.P., Oaktree TX Emerging Market Opportunities Fund, L.P.,
Oaktree Emerging Market Opportunities Fund, L.P., Oaktree Special
Situations Fund, L.P., OCM Avalon Co-Investment Fund, L.P., Oaktree
European Principal Fund IV, L.P., Oaktree European Principal Fund IV,
S.C.S., Oaktree Power Opportunities Fund IV, L.P., Oaktree Power
Opportunities Fund IV (Parallel), L.P., Oaktree Infrastructure Fund,
L.P., Oaktree Infrastructure Fund (Parallel), L.P., Oaktree
Infrastructure Fund, S.C.S., Oaktree Energy Infrastructure Fund, L.P.,
Oaktree Energy Infrastructure Fund (Parallel), L.P., Oaktree
Transportation Infrastructure Fund, L.P., Oaktree Transportation
Infrastructure Fund (Parallel), L.P., Oaktree Real Estate Opportunities
Fund VII, L.P., Oaktree Real Estate Opportunities Fund VII (Parallel),
L.P., Oaktree Real Estate Opportunities Fund VII (Parallel 2), L.P.,
Oaktree Real Estate Opportunities Fund VII (Parallel 3), L.P., Oaktree
Real Estate Opportunities Fund VII (Parallel 4), L.P., Oaktree Juniper
Investment Fund, L.P., Oaktree Pinnacle Investment Fund, L.P., Oaktree
Real Estate Debt Fund II, L.P., Oaktree Real Estate Debt Fund II
(Parallel), L.P., Oaktree Real Estate Income Fund, L.P., Oaktree Real
Estate Debt Securities Fund--SF, LLC, Oaktree Emerging Markets Absolute
Return Fund, L.P., Oaktree Emerging Markets Equity Fund, L.P., Oaktree
Value Equity Fund, L.P., Oaktree Japan Absolute Return Fund, L.P.,
Oaktree Private Investment Fund IV, L.P., Oaktree-Forrest Multi-
Strategy, LLC, Oaktree TT Multi-Strategy Fund, L.P., and Oaktree Global
Credit Fund, L.P.

Filing Dates: The application was filed on March 30, 2017, and amended
on August 28, 2017.

Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on October 17, 2017, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
St. NE., Washington, DC 20549-1090. Applicants: 333 South Grand Ave.,
28th Floor, Los Angeles, CA 90071.

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at
(202) 551-6811, or David J. Marcinkus, Branch Chief, at<PHONE_NUMBER>
(Chief Counsel's Office, Division of Investment Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling<PHONE_NUMBER>.

Introduction

    1. The Applicants request an order of the Commission under Sections
17(d) and 57(i) and Rule 17d-1 thereunder (the ``Order'') to permit,
subject to the terms and conditions set forth in the application (the
``Conditions''), a Regulated Fund \1\ and one or more other Regulated
Funds and/or one or more

Affiliated Funds \2\ to enter into Co-Investment Transactions with each
other. ``Co-Investment Transaction'' means any transaction in which one
or more Regulated Funds (or its Wholly-Owned Investment Sub)
participated together with one or more Affiliated Funds and/or one or
more other Regulated Funds in reliance on the Order. ``Potential Co-
Investment Transaction'' means any investment opportunity in which a
Regulated Fund (or its Wholly-Owned Investment Sub) could not
participate together with one or more Affiliated Funds and/or one or
more other Regulated Funds without obtaining and relying on the
Order.\3\
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    \1\ ``Regulated Funds'' means OSI and any other Future Regulated
Funds. ``Future Regulated Fund'' means a closed-end management
investment company (a) that is registered under the Act or has
elected to be regulated as a BDC and (b) whose investment adviser is
an Adviser. ``Adviser'' means OCM LP together with any future
investment adviser that (i) controls, is controlled by or is under
common control with OCM LP, (ii) is registered as an investment
adviser under the Investment Advisers Act of 1940 (the ``Advisers
Act''), and (iii) is not a Regulated Fund or a subsidiary of a
Regulated Fund.
    \2\ ``Affiliated Fund'' means any Existing Affiliated Fund
(identified in Appendix A to the application) or any entity (a)
whose investment adviser is an Adviser, (b) that would be an
investment company but for Section 3(c)(1), 3(c)(5)(C) or 3(c)(7) of
the Act and (c) that intends to participate in the program of co-
investments described in the application.
    \3\ All existing entities that currently intend to rely on the
Order have been named as Applicants and any existing or future
entities that may rely on the Order in the future will comply with
its terms and Conditions set forth in the application.
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Applicants

    2. OSI is a Delaware limited liability company and a closed-end
management investment company that will elect to be regulated as a
business development company (``BDC'') under the Act.\4\ Upon OSI's
election to be regulated as a BDC, OSI's Board \5\ will be comprised of
a majority of members who are Independent Directors.\6\
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    \4\ Section 2(a)(48) defines a BDC to be any closed-end
investment company that operates for the purpose of making
investments in securities described in Section 55(a)(1) through
55(a)(3) and makes available significant managerial assistance with
respect to the issuers of such securities.
    \5\ ``Board'' means the board of directors (or the equivalent)
of a Regulated Fund.
    \6\ ``Independent Director'' means a member of the Board of any
relevant entity who is not an ``interested person'' as defined in
Section 2(a)(19) of the Act. No Independent Director of a Regulated
Fund will have a financial interest in any Co-Investment
Transaction, other than indirectly through share ownership in one of
the Regulated Funds.
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    3. OCM LP, a Delaware limited partnership that is registered under
the Advisers Act, serves as the investment adviser to OSI.
    4. The Existing Affiliated Funds are the investment funds
identified in Appendix A to the application. Applicants represent that
each Existing Affiliated Fund is a separate and distinct legal entity
and each would be an investment company but for Section 3(c)(1),
3(c)(5)(C) or 3(c)(7) of the Act. OCM LP is the Adviser to the Existing
Affiliated Funds.
    5. Each of the Applicants may be deemed to be controlled by Oaktree
Capital Group, LLC (``OCG''), a publicly traded company. OCG owns
controlling interests in the Adviser and, thus, may be deemed to
control the Regulated Funds and the Affiliated Funds. Applicants state
that OCG is a holding company and does not currently offer investment
advisory services to any person and is not expected to do so in the
future. Applicants state that as a result, OCG has not been included as
an Applicant.
    6. Applicants state that a Regulated Fund may, from time to time,
form one or more Wholly-Owned Investment Subs.\7\ Such a subsidiary may
be prohibited from investing in a Co-Investment Transaction with a
Regulated Fund (other than its parent) or any Affiliated Fund because
it would be a company controlled by its parent Regulated Entity for
purposes of Section 57(a)(4) and Rule 17d-1. Applicants request that
each Wholly-Owned Investment Sub be permitted to participate in Co-
Investment Transactions in lieu of the Regulated Entity that owns it
and that the Wholly-Owned Investment Sub's participation in any such
transaction be treated, for purposes of the Order, as though the parent
Regulated Fund were participating directly. Applicants represent that
this treatment is justified because a Wholly-Owned Investment Sub would
have no purpose other than serving as a holding vehicle for the
Regulated Fund's investments and, therefore, no conflicts of interest
could arise between the parent Regulated Fund and the Wholly-Owned
Investment Sub. The Board of the parent Regulated Fund would make all
relevant determinations under the Conditions with regard to a Wholly-
Owned Investment Sub's participation in a Co-Investment Transaction,
and the Board would be informed of, and take into consideration, any
proposed use of a Wholly-Owned Investment Sub in the Regulated Fund's
place. If the parent Regulated Fund proposes to participate in the same
Co-Investment Transaction with any of its Wholly-Owned Investment Subs,
the Board of the parent Regulated Fund will also be informed of, and
take into consideration, the relative participation of the Regulated
Fund and the Wholly-Owned Investment Sub.
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    \7\ ``Wholly-Owned Investment Sub'' means an entity (i) that is
wholly-owned by a Regulated Fund (with such Regulated Fund at all
times holding, beneficially and of record, 100% of the voting and
economic interests); (ii) whose sole business purpose is to hold one
or more investments on behalf of such Regulated Fund (and, in the
case of a SBIC Subsidiary (defined below), maintain a license under
the SBA Act (defined below) and issue debentures guaranteed by the
SBA (defined below)); (iii) with respect to which such Regulated
Fund's Board has the sole authority to make all determinations with
respect to the entity's participation under the Conditions; and (iv)
that would be an investment company but for Section 3(c)(1) or
3(c)(7) of the Act. ``SBIC Subsidiary'' means a Wholly- Owned
Investment Sub that is licensed by the Small Business Administration
(the ``SBA'') to operate under the Small Business Investment Act of
1958, as amended, (the ``SBA Act'') as a small business investment
company.
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Applicants' Representations

A. Allocation Process

    7. Applicants state that the Adviser is presented with thousands of
investment opportunities each year on behalf of its clients and after
OSI elects to be regulated as a BDC, the Adviser will determine how to
allocate those opportunities in a manner that, over time, is fair and
equitable to all of its clients. Such investment opportunities may be
Potential Co-Investment Transactions.
    8. Applicants represent that the Adviser has established processes
for allocating initial investment opportunities, opportunities for
subsequent investments in an issuer and dispositions of securities
holdings reasonably designed to treat all clients fairly and equitably.
Further, Applicants represent that these processes will be extended and
modified in a manner reasonably designed to ensure that the additional
transactions permitted under the Order will both (i) be fair and
equitable to the Regulated Funds and the Affiliated Funds and (ii)
comply with the Conditions.
    9. Specifically, applicants state that the Adviser is organized and
managed such that the portfolio managers and analysts (``Investment
Teams''), responsible for evaluating investment opportunities and
making investment decisions on behalf of clients are promptly notified
of the opportunities. If the requested Order is granted, the Advisers
will establish, maintain and implement policies and procedures
reasonably designed to ensure that, when such opportunities arise, the
Advisers to the relevant Regulated Funds are promptly notified and
receive the same information about the opportunity as any other
Advisers considering the opportunity for their clients. In particular,
consistent with Condition 1, if a Potential Co-Investment Transaction
falls within the then-current Objectives and Strategies \8\

and any Board-Established Criteria \9\ of a Regulated Fund, the
policies and procedures will require that the relevant Investment Team
responsible for that Regulated Fund receive sufficient information to
allow the Regulated Fund's Adviser to make its independent
determination and recommendations under the Conditions.
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    \8\ ``Objectives and Strategies'' means with respect to any
Regulated Fund, its investment objectives and strategies, as
described in its most current registration statement on Form N-2,
other current filings with the Commission under the Securities Act
of 1933 (the ``Securities Act'') or under the Securities Exchange
Act of 1934, as amended, and its most current report to
stockholders.
    \9\ ``Board-Established Criteria'' means criteria that the Board
of a Regulated Fund may establish from time to time to describe the
characteristics of Potential Co-Investment Transactions regarding
which the Adviser to the Regulated Fund should be notified under
Condition 1. The Board-Established Criteria will be consistent with
the Regulated Fund's Objectives and Strategies. If no Board-
Established Criteria are in effect, then the Regulated Fund's
Adviser will be notified of all Potential Co-Investment Transactions
that fall within the Regulated Fund's then-current Objectives and
Strategies. Board-Established Criteria will be objective and
testable, meaning that they will be based on observable information,
such as industry/sector of the issuer, minimum EBITDA of the issuer,
asset class of the investment opportunity or required commitment
size, and not on characteristics that involve a discretionary
assessment. The Adviser to the Regulated Fund may from time to time
recommend criteria for the Board's consideration, but Board-
Established Criteria will only become effective if approved by a
majority of the Independent Directors. The Independent Directors of
a Regulated Fund may at any time rescind, suspend or qualify its
approval of any Board-Established Criteria, though Applicants
anticipate that, under normal circumstances, the Board would not
modify these criteria more often than quarterly.
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    10. The Adviser to each applicable Regulated Fund will then make an
independent determination of the appropriateness of the investment for
the Regulated Fund in light of the Regulated Fund's then-current
circumstances. If the Adviser to a Regulated Fund deems the Regulated
Fund's participation in such Potential Co-Investment Transaction to be
appropriate, then it will formulate a recommendation regarding the
proposed order amount for the Regulated Fund.
    11. Applicants state that, for each Regulated Fund and Affiliated
Fund whose Adviser recommends participating in a Potential Co-
Investment Transaction, the Adviser will submit a proposed order amount
to an internal allocation committee which the Adviser will establish to
handle the allocation of investment opportunities in Potential Co-
Investment Transactions (the ``Co-Investment Transaction Allocation
Committee''). Applicants state further that, at this stage, each
proposed order amount may be reviewed and adjusted, in accordance with
the Advisers' written allocation policies and procedures, by the Co-
Investment Transaction Allocation Committee.\10\ The order of a
Regulated Fund or Affiliated Fund resulting from this process is
referred to as its ``Internal Order.'' The Internal Order will be
submitted for approval by the Required Majority of any participating
Regulated Funds in accordance with the Conditions.\11\
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    \10\ The reason for any such adjustment to a proposed order
amount will be documented in writing and preserved in the records of
the Advisers.
    \11\ ``Required Majority'' means a required majority, as defined
in Section 57(o) of the Act. In the case of a Regulated Fund that is
a registered closed-end fund, the Board members that make up the
Required Majority will be determined as if the Regulated Fund were a
BDC subject to Section 57(o).
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    12. If the aggregate Internal Orders for a Potential Co-Investment
Transaction do not exceed the size of the investment opportunity
immediately prior to the submission of the orders to the underwriter,
broker, dealer or issuer, as applicable (the ``External Submission''),
then each Internal Order will be fulfilled as placed. If, on the other
hand, the aggregate Internal Orders for a Potential Co-Investment
Transaction exceed the size of the investment opportunity immediately
prior to the External Submission, then the allocation of the
opportunity will be made pro rata on the basis of the size of the
Internal Orders.\12\ If, subsequent to such External Submission, the
size of the opportunity is increased or decreased, or if the terms of
such opportunity, or the facts and circumstances applicable to the
Regulated Funds' or the Affiliated Funds' consideration of the
opportunity, change, the participants will be permitted to submit
revised Internal Orders in accordance with written allocation policies
and procedures that the Advisers will establish, implement and
maintain.\13\
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    \12\ The Advisers will maintain records of all proposed order
amounts, Internal Orders and External Submissions in conjunction
with Potential Co-Investment Transactions. Each applicable Adviser
will provide the Eligible Directors with information concerning the
Affiliated Funds' and Regulated Funds' order sizes to assist the
Eligible Directors with their review of the applicable Regulated
Fund's investments for compliance with the Conditions. ``Eligible
Directors'' means, with respect to a Regulated Fund and a Potential
Co-Investment Transaction, the members of the Regulated Fund's Board
eligible to vote on that Potential Co-Investment Transaction under
Section 57(o) of the Act.
    \13\ However, if the size of the opportunity is decreased such
that the aggregate of the original Internal Orders would exceed the
amount of the remaining investment opportunity, then upon submitting
any revised order amount to the Board of a Regulated Fund for
approval, the Adviser to the Regulated Fund will also notify the
Board promptly of the amount that the Regulated Fund would receive
if the remaining investment opportunity were allocated pro rata on
the basis of the size of the original Internal Orders. The Board of
the Regulated Fund will then either approve or disapprove of the
investment opportunity in accordance with condition 2, 6, 7, 8 or 9,
as applicable.
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B. Follow-On Investments

    13. Applicants state that from time to time the Regulated Funds and
Affiliated Funds may have opportunities to make Follow-On Investments
\14\ in an issuer in which a Regulated Fund and one or more other
Regulated Funds and/or Affiliated Funds previously have invested.
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    \14\ ``Follow-On Investment'' means an additional investment in
the same issuer, including, but not limited to, through the exercise
of warrants, conversion privileges or other rights to purchase
securities of the issuer.
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    14. Applicants propose that Follow-On Investments would be divided
into two categories depending on whether the prior investment was a Co-
Investment Transaction or a Pre-Boarding Investment.\15\ If the
Regulated Funds and Affiliated Funds had previously participated in a
Co-Investment Transaction with respect to the issuer, then the terms
and approval of the Follow-On Investment would be subject to the
Standard Review Follow-Ons described in Condition 8. If the Regulated
Funds and Affiliated Funds have not previously participated in a Co-
Investment Transaction with respect to the issuer but hold a Pre-
Boarding Investment, then the terms and approval of the Follow-On
Investment would be subject to the Enhanced-Review Follow-Ons described
in Condition 9. All Enhanced Review Follow-Ons require the approval of
the Required Majority. For a given issuer, the participating Regulated
Funds and Affiliated Funds would need to comply with the requirements
of Enhanced-Review Follow-Ons only for the first Co-Investment
Transaction. Subsequent Co-Investment Transactions with respect to the
issuer would be governed by the requirements of Standard Review Follow-
Ons.
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    \15\ ``Pre-Boarding Investments'' are investments in an issuer
held by a Regulated Fund as well as one or more Affiliated Funds
and/or one or more other Regulated Funds that: (i) Were acquired
prior to participating in any Co-Investment Transaction; (ii) were
acquired in transactions in which the only term negotiated by or on
behalf of such funds was price; and (iii) were acquired either: (A)
in reliance on one of the JT No-Action Letters (defined below); or
(B) in transactions occurring at least 90 days apart and without
coordination between the Regulated Fund and any Affiliated Fund or
other Regulated Fund.
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    15. A Regulated Fund would be permitted to invest in Standard
Review Follow-Ons either with the approval of the Required Majority
under Condition 8(c) or without Board approval under Condition 8(b) if
it is (i) a Pro Rata Follow-On Investment \16\ or (ii) a Non-

Negotiated Follow-On Investment.\17\ Applicants believe that these Pro
Rata and Non-Negotiated Follow-On Investments do not present a
significant opportunity for overreaching on the part of any Adviser and
thus do not warrant the time or the attention of the Board. Pro Rata
Follow-On Investments and Non-Negotiated Follow-On Investments remain
subject to the Board's periodic review in accordance with Condition 10.
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    \16\ A ``Pro Rata Follow-On Investment'' is a Follow-On
Investment (i) in which the participation of each Affiliated Fund
and each Regulated Fund is proportionate to its outstanding
investments in the issuer or security, as appropriate, immediately
preceding the Follow-On Investment, and (ii) in the case of a
Regulated Fund, a majority of the Board has approved the Regulated
Fund's participation in the pro rata Follow-On Investments as being
in the best interests of the Regulated Fund. The Regulated Fund's
Board may refuse to approve, or at any time rescind, suspend or
qualify, its approval of Pro Rata Follow-On Investments, in which
case all subsequent Follow-On Investments will be submitted to the
Regulated Fund's Eligible Directors in accordance with Condition
8(c).
    \17\ A ``Non-Negotiated Follow-On Investment'' is a Follow-On
Investment in which a Regulated Fund participates together with one
or more Affiliated Funds and/or one or more other Regulated Funds
(i) in which the only term negotiated by or on behalf of the funds
is price and (ii) with respect to which, if the transaction were
considered on its own, the funds would be entitled to rely on one of
the JT No-Action Letters. ``JT No-Action Letters'' means SMC
Capital, Inc., SEC No-Action Letter (pub. avail. Sept. 5, 1995) and
Massachusetts Mutual Life Insurance Company, SEC No-Action Letter
(pub. avail. June 7, 2000).
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C. Dispositions

    16. Applicants propose that Dispositions \18\ would be divided into
two categories. If the Regulated Funds and Affiliated Funds holding
investments in the issuer had previously participated in a Co-
Investment Transaction with respect to the issuer, then the terms and
approval of the Disposition would be subject to the Standard Review
Dispositions described in Condition 6. If the Regulated Funds and
Affiliated Funds have not previously participated in a Co-Investment
Transaction with respect to the issuer but hold a Pre-Boarding
Investment, then the terms and approval of the Disposition would be
subject to the Enhanced Review Dispositions described in Condition 7.
Subsequent Dispositions with respect to the same issuer would be
governed by Condition 6 under the Standard Review Dispositions.\19\
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    \18\ ``Disposition'' means the sale, exchange or other
disposition of an interest in a security of an issuer.
    \19\ However, with respect to an issuer, if a Regulated Fund's
first Co-Investment Transaction is an Enhanced Review Disposition,
and the Regulated Fund does not dispose of its entire position in
the Enhanced Review Disposition, then before such Regulated Fund may
complete its first Standard Review Follow-On in such issuer, the
Eligible Directors must review the proposed Follow-On Investment not
only on a stand-alone basis but also in relation to the total
economic exposure in such issuer (i.e., in combination with the
portion of the Pre-Boarding Investment not disposed of in the
Enhanced Review Disposition), and the other terms of the
investments. This additional review would be required because such
findings would not have been required in connection with the prior
Enhanced Review Disposition, but they would have been required had
the first Co-Investment Transaction been an Enhanced Review Follow-
On.
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    17. A Regulated Fund may participate in a Standard Review
Disposition either with the approval of the Required Majority under
Condition 6(d) or without Board approval under Condition 6(c) if (i)
the Disposition is a Pro Rata Disposition \20\ or (ii) the securities
are Tradable Securities \21\ and the Disposition meets the other
requirements of Condition 6(c)(ii). Pro Rata Dispositions and
Dispositions of a Tradable Security remain subject to the Board's
periodic review in accordance with Condition 10.
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    \20\ A ``Pro Rata Disposition'' is a Disposition (i) in which
the participation of each Affiliated Fund and each Regulated Fund is
proportionate to its outstanding investment in the security subject
to Disposition immediately preceding the Disposition; and (ii) in
the case of a Regulated Fund, a majority of the Board has approved
the Regulated Fund's participation in pro rata Dispositions as being
in the best interests of the Regulated Fund. The Regulated Fund's
Board may refuse to approve, or at any time rescind, suspend or
qualify, its approval of Pro Rata Dispositions, in which case all
subsequent Dispositions will be submitted to the Regulated Fund's
Eligible Directors.
    \21\ ``Tradable Security'' means a security that meets the
following criteria at the time of Disposition: (i) It trades on a
national securities exchange or designated offshore securities
market as defined in rule 902(b) under the Securities Act; (ii) it
is not subject to restrictive agreements with the issuer or other
security holders; and (iii) it trades with sufficient volume and
liquidity (findings as to which are documented by the Advisers to
any Regulated Funds holding investments in the issuer and retained
for the life of the Regulated Fund) to allow each Regulated Fund to
dispose of its entire position remaining after the proposed
Disposition within a short period of time not exceeding 30 days at
approximately the value (as defined by section 2(a)(41) of the Act)
at which the Regulated Fund has valued the investment.
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D. Delayed Settlement

    18. Applicants represent that under the terms and Conditions of the
Application, all Regulated Funds and Affiliated Funds participating in
a Co-Investment Transaction will invest at the same time, for the same
price and with the same terms, conditions, class, registration rights
and any other rights, so that none of them receives terms more
favorable than any other. However, the settlement date for an
Affiliated Fund in a Co-Investment Transaction may occur up to ten
business days after the settlement date for the Regulated Fund, and
vice versa.\22\ Nevertheless, in all cases, (i) the date on which the
commitment of the Affiliated Funds and Regulated Funds is made will be
the same even where the settlement date is not and (ii) the earliest
settlement date and the latest settlement date of any Affiliated Fund
or Regulated Fund participating in the transaction will occur within
ten business days of each other.
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    \22\ Applicants state this may occur for two reasons. First,
when the Affiliated Fund or Regulated Fund is not yet fully funded
because, when the Affiliated Fund or Regulated Fund desires to make
an investment, it must call capital from its investors to obtain the
financing to make the investment, and in these instances, the notice
requirement to call capital could be as much as ten business days.
Second, where, for tax or regulatory reasons, an Affiliated Fund or
Regulated Fund does not purchase new issuances immediately upon
issuance but only after a short seasoning period of up to ten
business days.
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E. Holders

    19. Under Condition 15, if an Adviser, its principals, or any
person controlling, controlled by, or under common control with the
Adviser or its principals, and the Affiliated Funds (collectively, the
``Holders'') own in the aggregate more than 25 percent of the
outstanding voting shares of a Regulated Fund (the ``Shares''), then
the Holders will vote such Shares as directed by an independent third
party when voting on matters specified in the Condition. Applicants
believe that this Condition will ensure that the Independent Directors
will act independently in evaluating Co-Investment Transactions,
because the ability of the Adviser or its principals to influence the
Independent Directors by a suggestion, explicit or implied, that the
Independent Directors can be removed will be limited significantly. The
Independent Directors shall evaluate and approve any independent party,
taking into account its qualifications, reputation for independence,
cost to the shareholders, and other factors that they deem relevant.

Applicants' Legal Analysis

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
participation by a registered investment company and an affiliated
person in any ``joint enterprise or other joint arrangement or profit-
sharing plan,'' as defined in the rule, without prior approval by the
Commission by order upon application. Section 17(d) of the Act and rule
17d-1 under the Act are applicable to Regulated Funds that are
registered closed-end investment companies.
    2. Similarly, with regard to BDCs, section 57(a)(4) of the Act
generally prohibits certain persons specified in section 57(b) from
participating in joint transactions with the BDC or a company

controlled by the BDC in contravention of rules as prescribed by the
Commission. Section 57(i) of the Act provides that, until the
Commission prescribes rules under section 57(a)(4), the Commission's
rules under section 17(d) of the Act applicable to registered closed-
end investment companies will be deemed to apply to transactions
subject to section 57(a)(4). Because the Commission has not adopted any
rules under section 57(a)(4), rule 17d-1 also applies to joint
transactions with Regulated Funds that are BDCs.
    3. Co-Investment Transactions are prohibited by either or both of
Rule 17d-1 and Section 57(a)(4) without a prior exemptive order of the
Commission to the extent that the Affiliated Funds and the Regulated
Funds participating in such transactions fall within the category of
persons described by Rule 17d-1 and/or Section 57(b), as applicable,
vis-[agrave]-vis each participating Regulated Fund. Each of the
participating Regulated Funds and Affiliated Funds may be deemed to be
affiliated persons vis-[agrave]-vis a Regulated Fund within the meaning
of section 2(a)(3) by reason of common control because (i) controlled
affiliates of OCG manage each of the Affiliated Funds and may be deemed
to control any Future Regulated Fund, (ii) OCG controls OCM LP, which
manages OSI. Thus, each of the Affiliated Funds could be deemed to be a
person related to OSI in a manner described by Section 57(b) and
related to other Future Regulated Funds in a manner described by Rule
17d-1; and therefore the prohibitions of Rule 17d-1 and Section
57(a)(4) would apply respectively to prohibit the Affiliated Funds from
participating in Co-Investment Transactions with the Regulated Funds.
    4. In passing upon applications under rule 17d-1, the Commission
considers whether the company's participation in the joint transaction
is consistent with the provisions, policies, and purposes of the Act
and the extent to which such participation is on a basis different from
or less advantageous than that of other participants.
    5. Applicants state that in the absence of the requested relief, in
many circumstances the Regulated Funds would be limited in their
ability to participate in attractive and appropriate investment
opportunities. Applicants state that, as required by Rule 17d-1(b), the
Conditions ensure that the terms on which Co-Investment Transactions
may be made will be consistent with the participation of the Regulated
Funds being on a basis that it is neither different from nor less
advantageous than other participants, thus protecting the equity
holders of any participant from being disadvantaged. Applicants further
state that the Conditions ensure that all Co-Investment Transactions
are reasonable and fair to the Regulated Funds and their shareholders
and do not involve overreaching by any person concerned, including the
Advisers. Applicants state that the Regulated Funds' participation in
the Co-Investment Transactions in accordance with the Conditions will
be consistent with the provisions, policies, and purposes of the Act
and would be done in a manner that is not different from, or less
advantageous than, that of other participants.

Applicants' Conditions

    Applicants agree that the Order will be subject to the following
Conditions:
    1. Identification and Referral of Potential Co-Investment
Transactions.
    (a) The Advisers will establish, maintain and implement policies
and procedures reasonably designed to ensure that each Adviser is
promptly notified of all Potential Co-Investment Transactions that fall
within the then-current Objectives and Strategies and Board-Established
Criteria of any Regulated Fund the Adviser manages.
    (b) When an Adviser to a Regulated Fund is notified of a Potential
Co-Investment Transaction under Condition 1(a), the Adviser will make
an independent determination of the appropriateness of the investment
for the Regulated Fund in light of the Regulated Fund's then-current
circumstances.
    2. Board Approvals of Co-Investment Transactions.
    (a) If the Adviser deems a Regulated Fund's participation in any
Potential Co-Investment Transaction to be appropriate for the Regulated
Fund, it will then determine an appropriate level of investment for the
Regulated Fund.
    (b) If the aggregate amount recommended by the Advisers to be
invested in the Potential Co-Investment Transaction by the
participating Regulated Funds and any participating Affiliated Funds,
collectively, exceeds the amount of the investment opportunity, the
investment opportunity will be allocated among them pro rata based on
the size of the Internal Orders, as described in section III.A.1.b. of
the application. Each Adviser to a participating Regulated Fund will
promptly notify and provide the Eligible Directors with information
concerning the Affiliated Funds' and Regulated Funds' order sizes to
assist the Eligible Directors with their review of the applicable
Regulated Fund's investments for compliance with these Conditions.
    (c) After making the determinations required in Condition 1(b)
above, each Adviser to a participating Regulated Fund will distribute
written information concerning the Potential Co-Investment Transaction
(including the amount proposed to be invested by each participating
Regulated Fund and each participating Affiliated Fund) to the Eligible
Directors of its participating Regulated Fund(s) for their
consideration. A Regulated Fund will enter into a Co-Investment
Transaction with one or more other Regulated Funds or Affiliated Funds
only if, prior to the Regulated Fund's participation in the Potential
Co-Investment Transaction, a Required Majority concludes that:
    (i) The terms of the transaction, including the consideration to be
paid, are reasonable and fair to the Regulated Fund and its equity
holders and do not involve overreaching in respect of the Regulated
Fund or its equity holders on the part of any person concerned;
    (ii) the transaction is consistent with:
    (A) The interests of the Regulated Fund's equity holders; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Fund(s) or Affiliated
Fund(s) would not disadvantage the Regulated Fund, and participation by
the Regulated Fund would not be on a basis different from, or less
advantageous than, that of any other Regulated Fund(s) or Affiliated
Fund(s) participating in the transaction; provided that the Required
Majority shall not be prohibited from reaching the conclusions required
by this Condition 2(c)(iii) if:
    (A) The settlement date for another Regulated Fund or an Affiliated
Fund in a Co-Investment Transaction is later than the settlement date
for the Regulated Fund by no more than ten business days or earlier
than the settlement date for the Regulated Fund by no more than ten
business days, in either case, so long as: (x) The date on which the
commitment of the Affiliated Funds and Regulated Funds is made is the
same; and (y) the earliest settlement date and the latest settlement
date of any Affiliated Fund or Regulated Fund participating in the
transaction will occur within ten business days of each other; or
    (B) any other Regulated Fund or Affiliated Fund, but not the
Regulated Fund itself, gains the right to nominate a director for
election to a portfolio company's board of directors, the right to have
a board observer or any similar right to participate in the governance
or

management of the portfolio company so long as: (x) The Eligible
Directors will have the right to ratify the selection of such director
or board observer, if any; (y) the Adviser agrees to, and does, provide
periodic reports to the Regulated Fund's Board with respect to the
actions of such director or the information received by such board
observer or obtained through the exercise of any similar right to
participate in the governance or management of the portfolio company;
and (z) any fees or other compensation that any other Regulated Fund or
Affiliated Fund or any affiliated person of any other Regulated Fund or
Affiliated Fund receives in connection with the right of one or more
Regulated Funds or Affiliated Funds to nominate a director or appoint a
board observer or otherwise to participate in the governance or
management of the portfolio company will be shared proportionately
among any participating Affiliated Funds (who may, in turn, share their
portion with their affiliated persons) and any participating Regulated
Fund(s) in accordance with the amount of each such party's investment;
and
    (iv) the proposed investment by the Regulated Fund will not involve
compensation, remuneration or a direct or indirect \23\ financial
benefit to the Advisers, any other Regulated Fund, the Affiliated Funds
or any affiliated person of any of them (other than the parties to the
Co-Investment Transaction), except (A) to the extent permitted by
Condition 14, (B) to the extent permitted by Section 17(e) or 57(k), as
applicable, (C) indirectly, as a result of an interest in the
securities issued by one of the parties to the Co-Investment
Transaction, or (D) in the case of fees or other compensation described
in Condition 2(c)(iii)(B)(z).
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    \23\ For example, procuring the Regulated Fund's investment in a
Potential Co-Investment Transaction to permit an affiliate to
complete or obtain better terms in a separate transaction would
constitute an indirect financial benefit.
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    3. Right to Decline. Each Regulated Fund has the right to decline
to participate in any Potential Co-Investment Transaction or to invest
less than the amount proposed.
    4. General Limitation. Except for Follow-On Investments made in
accordance with Conditions 8 and 9 below,\24\ a Regulated Fund will not
invest in reliance on the Order in any issuer in which a Related Party
has an investment.\25\
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    \24\ This exception applies only to Follow-On Investments by a
Regulated Fund in issuers in which that Regulated Fund already holds
investments.
    \25\ ``Related Party'' means (i) any Close Affiliate and (ii) in
respect of matters as to which any Adviser has knowledge, any Remote
Affiliate. ``Close Affiliate'' means the Advisers, the Regulated
Funds, the Affiliated Funds and any other person described in
Section 57(b) (after giving effect to Rule 57b-1) in respect of any
Regulated Fund (treating any registered investment company or series
thereof as a BDC for this purpose) except for limited partners
included solely by reason of the reference in Section 57(b) to
Section 2(a)(3)(D). ``Remote Affiliate'' means any person described
in Section 57(e) in respect of any Regulated Fund (treating any
registered investment company or series thereof as a BDC for this
purpose) and any limited partner holding 5% or more of the relevant
limited partner interests that would be a Close Affiliate but for
the exclusion in that definition.
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    5. Same Terms and Conditions. A Regulated Fund will not participate
in any Potential Co-Investment Transaction unless (i) the terms,
conditions, price, class of securities to be purchased, date on which
the commitment is entered into and registration rights (if any) will be
the same for each participating Regulated Fund and Affiliated Fund and
(ii) the earliest settlement date and the latest settlement date of any
participating Regulated Fund or Affiliated Fund will occur as close in
time as practicable and in no event more than ten business days apart.
The grant to one or more Regulated Funds or Affiliated Funds, but not
the respective Regulated Fund, of the right to nominate a director for
election to a portfolio company's board of directors, the right to have
an observer on the board of directors or similar rights to participate
in the governance or management of the portfolio company will not be
interpreted so as to violate this Condition 5, if Condition
2(c)(iii)(B) is met.
    6. Standard Review Dispositions.
    (a) General. If any Regulated Fund or Affiliated Fund elects to
sell, exchange or otherwise dispose of an interest in a security and
one or more Regulated Funds and Affiliated Funds have previously
participated in a Co-Investment Transaction with respect to the issuer,
then:
    (i) The Adviser to such Regulated Fund or Affiliated Fund will
notify each Regulated Fund that holds an investment in the issuer of
the proposed Disposition at the earliest practical time; and
    (ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to participation by such
Regulated Fund in the Disposition.
    (b) Same Terms and Conditions. Each Regulated Fund will have the
right to participate in such Disposition on a proportionate basis, at
the same price and on the same terms and conditions as those applicable
to the Affiliated Funds and any other Regulated Fund.
    (c) No Board Approval Required. A Regulated Fund may participate in
such a Disposition without obtaining prior approval of the Required
Majority if:
    (i) (A) The participation of each Regulated Fund and Affiliated
Fund in such Disposition is proportionate to its then-current holding
of the security (or securities) of the issuer that is (or are) the
subject of the Disposition; \26\ (B) the Board of the Regulated Fund
has approved as being in the best interests of the Regulated Fund the
ability to participate in such Dispositions on a pro rata basis (as
described in greater detail in the application); and (C) the Board of
the Regulated Fund is provided on a quarterly basis with a list of all
Dispositions made in accordance with this Condition; or
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    \26\ In the case of any Disposition, proportionality will be
measured by each participating Regulated Fund's and Affiliated
Fund's outstanding investment in the security in question
immediately preceding the Disposition.
---------------------------------------------------------------------------

    (ii) each security is a Tradable Security and (A) the Disposition
is not to the issuer or any affiliated person of the issuer; and (B)
the security is sold for cash in a transaction in which the only term
negotiated by or on behalf of the participating Regulated Funds and
Affiliated Funds is price.
    (d) Standard Board Approval. In all other cases, the Adviser will
provide its written recommendation as to the Regulated Fund's
participation to the Eligible Directors and the Regulated Fund will
participate in such Disposition solely to the extent that a Required
Majority determines that it is in the Regulated Fund's best interests.
    7. Enhanced Review Dispositions.
    (a) General. If any Regulated Fund or Affiliated Fund elects to
sell, exchange or otherwise dispose of a Pre-Boarding Investment in a
Potential Co-Investment Transaction and the Regulated Funds and
Affiliated Funds have not previously participated in a Co-Investment
Transaction with respect to the issuer:
    (i) The Adviser to such Regulated Fund or Affiliated Fund will
notify each Regulated Fund that holds an investment in the issuer of
the proposed Disposition at the earliest practical time;
    (ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to participation by such
Regulated Fund in the Disposition; and
    (iii) the Advisers will provide to the Board of each Regulated Fund
that holds an investment in the issuer all

information relating to the existing investments in the issuer of the
Regulated Funds and Affiliated Funds, including the terms of such
investments and how they were made, that is necessary for the Required
Majority to make the findings required by this Condition.
    (b) Enhanced Board Approval. The Adviser will provide its written
recommendation as to the Regulated Fund's participation to the Eligible
Directors, and the Regulated Fund will participate in such Disposition
solely to the extent that a Required Majority determines that:
    (i) The Disposition complies with Conditions 2(c)(i), (ii),
(iii)(A), and (iv); and
    (ii) the making and holding of the Pre-Boarding Investments were
not prohibited by Section 57 or Rule 17d-1, as applicable, and records
the basis for the finding in the Board minutes.
    (c) Additional Requirements. The Disposition may only be completed
in reliance on the Order if:
    (i) Same Terms and Conditions. Each Regulated Fund has the right to
participate in such Disposition on a proportionate basis, at the same
price and on the same terms and conditions as those applicable to the
Affiliated Funds and any other Regulated Fund;
    (ii) Original Investments. All of the Affiliated Funds' and
Regulated Funds' investments in the issuer are Pre-Boarding
Investments;
    (iii) Advice of counsel. Independent counsel to the Board advises
that the making and holding of the investments in the Pre-Boarding
Investments were not prohibited by Section 57 (as modified by Rule 57b-
1) or Rule 17d-1, as applicable;
    (iv) Multiple Classes of Securities. All Regulated Funds and
Affiliated Funds that hold Pre-Boarding Investments in the issuer
immediately before the time of completion of the Co-Investment
Transaction hold the same security or securities of the issuer. For the
purpose of determining whether the Regulated Funds and Affiliated Funds
hold the same security or securities, they may disregard any security
held by some but not all of them if, prior to relying on the Order, the
Required Majority is presented with all information necessary to make a
finding, and finds, that: (x) Any Regulated Fund's or Affiliated Fund's
holding of a different class of securities (including for this purpose
a security with a different maturity date) is immaterial \27\ in
amount, including immaterial relative to the size of the issuer; and
(y) the Board records the basis for any such finding in its minutes. In
addition, securities that differ only in respect of issuance date,
currency, or denominations may be treated as the same security; and
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    \27\ In determining whether a holding is ``immaterial'' for
purposes of the Order, the Required Majority will consider whether
the nature and extent of the interest in the transaction or
arrangement is sufficiently small that a reasonable person would not
believe that the interest affected the determination of whether to
enter into the transaction or arrangement or the terms of the
transaction or arrangement.
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    (v) No control. The Affiliated Funds, the other Regulated Funds and
their affiliated persons (within the meaning of Section 2(a)(3)(C) of
the Act), individually or in the aggregate, do not control the issuer
of the securities (within the meaning of Section 2(a)(9) of the Act).
    8. Standard Review Follow-Ons.
    (a) General. If any Regulated Fund or Affiliated Fund desires to
make a Follow-On Investment in an issuer and the Regulated Funds and
Affiliated Funds holding investments in the issuer previously
participated in a Co-Investment Transaction with respect to the issuer:
    (i) The Adviser to each such Regulated Fund or Affiliated Fund will
notify each Regulated Fund that holds securities of the portfolio
company of the proposed transaction at the earliest practical time; and
    (ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to the proposed
participation, including the amount of the proposed investment, by such
Regulated Fund.
    (b) No Board Approval Required. A Regulated Fund may participate in
the Follow-On Investment without obtaining prior approval of the
Required Majority if:
    (i) (A) The proposed participation of each Regulated Fund and each
Affiliated Fund in such investment is proportionate to its outstanding
investments in the issuer or the security at issue, as appropriate,\28\
immediately preceding the Follow-On Investment; and (B) the Board of
the Regulated Fund has approved as being in the best interests of the
Regulated Fund the ability to participate in Follow-On Investments on a
pro rata basis (as described in greater detail in the Application); or
---------------------------------------------------------------------------

    \28\ To the extent that a Follow-On Investment opportunity is in
a security or arises in respect of a security held by the
participating Regulated Funds and Affiliated Funds, proportionality
will be measured by each participating Regulated Fund's and
Affiliated Fund's outstanding investment in the security in question
immediately preceding the Follow-On Investment using the most recent
available valuation thereof. To the extent that a Follow-On
Investment opportunity relates to an opportunity to invest in a
security that is not in respect of any security held by any of the
participating Regulated Funds or Affiliated Funds, proportionality
will be measured by each participating Regulated Fund's and
Affiliated Fund's outstanding investment in the issuer immediately
preceding the Follow-On Investment using the most recent available
valuation thereof.
---------------------------------------------------------------------------

    (ii) it is a Non-Negotiated Follow-On Investment.
    (c) Standard Board Approval. In all other cases, the Adviser will
provide its written recommendation as to the Regulated Fund's
participation to the Eligible Directors and the Regulated Fund will
participate in such Follow-On Investment solely to the extent that a
Required Majority makes the determinations set forth in Condition 2(c).
If the only previous Co-Investment Transaction with respect to the
issuer was an Enhanced Review Disposition the Eligible Directors must
complete this review of the proposed Follow-On Investment both on a
stand-alone basis and together with the Pre-Boarding Investments in
relation to the total economic exposure and other terms of the
investment.
    (d) Allocation. If, with respect to any such Follow-On Investment:
    (i) The amount of the opportunity proposed to be made available to
any Regulated Fund is not based on the Regulated Funds' and the
Affiliated Funds' outstanding investments in the issuer or the security
at issue, as appropriate, immediately preceding the Follow-On
Investment; and
    (ii) the aggregate amount recommended by the Advisers to be
invested in the Follow-On Investment by the participating Regulated
Funds and any participating Affiliated Funds, collectively, exceeds the
amount of the investment opportunity, then the Follow-On Investment
opportunity will be allocated among them pro rata based on the size of
the Internal Orders, as described in section III.A.1.b. of the
application.
    (e) Other Conditions. The acquisition of Follow-On Investments as
permitted by this Condition will be considered a Co-Investment
Transaction for all purposes and subject to the other Conditions set
forth in the application.
    9. Enhanced Review Follow-Ons.
    (a) General. If any Regulated Fund or Affiliated Fund desires to
make a Follow-On Investment in an issuer that is a Potential Co-
Investment Transaction and the Regulated Funds and Affiliated Funds
holding investments in the issuer have not previously participated in a
Co-Investment Transaction with respect to the issuer:
    (i) The Adviser to each such Regulated Fund or Affiliated Fund will
notify each Regulated Fund that holds

securities of the portfolio company of the proposed transaction at the
earliest practical time;
    (ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to the proposed
participation, including the amount of the proposed investment, by such
Regulated Fund; and
    (iii) the Advisers will provide to the Board of each Regulated Fund
that holds an investment in the issuer all information relating to the
existing investments in the issuer of the Regulated Funds and
Affiliated Funds, including the terms of such investments and how they
were made, that is necessary for the Required Majority to make the
findings required by this Condition.
    (b) Enhanced Board Approval. The Adviser will provide its written
recommendation as to the Regulated Fund's participation to the Eligible
Directors, and the Regulated Fund will participate in such Follow-On
Investment solely to the extent that a Required Majority reviews the
proposed Follow-On Investment both on a stand-alone basis and together
with the Pre-Boarding Investments in relation to the total economic
exposure and other terms and makes the determinations set forth in
Condition 2(c). In addition, the Follow-On Investment may only be
completed in reliance on the Order if the Required Majority of each
participating Regulated Fund determines that the making and holding of
the Pre-Boarding Investments were not prohibited by Section 57 (as
modified by Rule 57b-1) or Rule 17d-1, as applicable. The basis for the
Board's findings will be recorded in its minutes.
    (c) Additional Requirements. The Follow-On Investment may only be
completed in reliance on the Order if:
    (i) Original Investments. All of the Affiliated Funds' and
Regulated Funds' investments in the issuer are Pre-Boarding
Investments;
    (ii) Advice of counsel. Independent counsel to the Board advises
that the making and holding of the investments in the Pre-Boarding
Investments were not prohibited by Section 57 (as modified by Rule 57b-
1) or Rule 17d-1, as applicable;
    (iii) Multiple Classes of Securities. All Regulated Funds and
Affiliated Funds that hold Pre-Boarding Investments in the issuer
immediately before the time of completion of the Co-Investment
Transaction hold the same security or securities of the issuer. For the
purpose of determining whether the Regulated Funds and Affiliated Funds
hold the same security or securities, they may disregard any security
held by some but not all of them if, prior to relying on the Order, the
Required Majority is presented with all information necessary to make a
finding, and finds, that: (x) Any Regulated Fund's or Affiliated Fund's
holding of a different class of securities (including for this purpose
a security with a different maturity date) is immaterial in amount,
including immaterial relative to the size of the issuer; and (y) the
Board records the basis for any such finding in its minutes. In
addition, securities that differ only in respect of issuance date,
currency, or denominations may be treated as the same security; and
    (iv) No control. The Affiliated Funds, the other Regulated Funds
and their affiliated persons (within the meaning of Section 2(a)(3)(C)
of the Act), individually or in the aggregate, do not control the
issuer of the securities (within the meaning of Section 2(a)(9) of the
Act).
    (d) Allocation. If, with respect to any such Follow-On Investment:
    (i) The amount of the opportunity proposed to be made available to
any Regulated Fund is not based on the Regulated Funds' and the
Affiliated Funds' outstanding investments in the issuer or the security
at issue, as appropriate, immediately preceding the Follow-On
Investment; and
    (ii) the aggregate amount recommended by the Advisers to be
invested in the Follow-On Investment by the participating Regulated
Funds and any participating Affiliated Funds, collectively, exceeds the
amount of the investment opportunity, then the Follow-On Investment
opportunity will be allocated among them pro rata based on the size of
the Internal Orders, as described in section III.A.1.(b) of the
application.
    (e) Other Conditions. The acquisition of Follow-On Investments as
permitted by this Condition will be considered a Co-Investment
Transaction for all purposes and subject to the other Conditions set
forth in the application.
    10. Board Reporting, Compliance and Annual Re-Approval.
    (a) Each Adviser to a Regulated Fund will present to the Board of
each Regulated Fund, on a quarterly basis, and at such other times as
the Board may request, (i) a record of all investments in Potential Co-
Investment Transactions made by any of the other Regulated Funds or any
of the Affiliated Funds during the preceding quarter that fell within
the Regulated Fund's then-current Objectives and Strategies and Board-
Established Criteria that were not made available to the Regulated
Fund, and an explanation of why such investment opportunities were not
made available to the Regulated Fund; (ii) a record of all Follow-On
Investments in and Dispositions of investments in any issuer in which
the Regulated Fund holds any investments by any Affiliated Fund or
other Regulated Fund during the prior quarter; and (iii) all
information concerning Potential Co-Investment Transactions and Co-
Investment Transactions, including investments made by other Regulated
Funds or Affiliated Funds that the Regulated Fund considered but
declined to participate in, so that the Independent Directors, may
determine whether all Potential Co-Investment Transactions and Co-
Investment Transactions during the preceding quarter, including those
investments that the Regulated Fund considered but declined to
participate in, comply with the Conditions.
    (b) All information presented to the Regulated Fund's Board
pursuant to this Condition will be kept for the life of the Regulated
Fund and at least two years thereafter, and will be subject to
examination by the Commission and its staff.
    (c) Each Regulated Fund's chief compliance officer, as defined in
rule 38a-1(a)(4), will prepare an annual report for its Board each year
that evaluates (and documents the basis of that evaluation) the
Regulated Fund's compliance with the terms and Conditions of the
application and the procedures established to achieve such compliance.
    (d) The Independent Directors will consider at least annually
whether continued participation in new and existing Co-Investment
Transactions is in the Regulated Fund's best interests.
    11. Record Keeping. Each Regulated Fund will maintain the records
required by Section 57(f)(3) of the Act as if each of the Regulated
Funds were a BDC and each of the investments permitted under these
Conditions were approved by the Required Majority under Section 57(f).
    12. Director Independence. No Independent Director of a Regulated
Fund will also be a director, general partner, managing member or
principal, or otherwise be an ``affiliated person'' (as defined in the
Act) of any Affiliated Fund.
    13. Expenses. The expenses, if any, associated with acquiring,
holding or disposing of any securities acquired in a Co-Investment
Transaction (including, without limitation, the expenses of the
distribution of any such securities registered for sale under the
Securities Act) will, to the extent not payable by the Advisers under
their respective

advisory agreements with the Regulated Funds and the Affiliated Funds,
be shared by the Regulated Funds and the participating Affiliated Funds
in proportion to the relative amounts of the securities held or being
acquired or disposed of, as the case may be.
    14. Transaction Fees.\29\ Any transaction fee (including break-up,
structuring, monitoring or commitment fees but excluding brokerage or
underwriting compensation permitted by Section 17(e) or 57(k)) received
in connection with any Co-Investment Transaction will be distributed to
the participants on a pro rata basis based on the amounts they invested
or committed, as the case may be, in such Co-Investment Transaction. If
any transaction fee is to be held by an Adviser pending consummation of
the transaction, the fee will be deposited into an account maintained
by the Adviser at a bank or banks having the qualifications prescribed
in Section 26(a)(1), and the account will earn a competitive rate of
interest that will also be divided pro rata among the participants.
None of the Advisers, the Affiliated Funds, the other Regulated Funds
or any affiliated person of the Affiliated Funds or the Regulated Funds
will receive any additional compensation or remuneration of any kind as
a result of or in connection with a Co-Investment Transaction other
than (i) in the case of the Regulated Funds and the Affiliated Funds,
the pro rata transaction fees described above and fees or other
compensation described in Condition 2(c)(iii)(B)(z), (ii) brokerage or
underwriting compensation permitted by Section 17(e) or 57(k) or (iii)
in the case of the Advisers, investment advisory compensation paid in
accordance with investment advisory agreements between the applicable
Regulated Fund(s) or Affiliated Fund(s) and its Adviser.
---------------------------------------------------------------------------

    \29\ Applicants are not requesting and the Commission is not
providing any relief for transaction fees received in connection
with any Co-Investment Transaction.
---------------------------------------------------------------------------

    15. Independence. If the Holders own in the aggregate more than 25
percent of the Shares of a Regulated Fund, then the Holders will vote
such Shares as directed by an independent third party when voting on
(1) the election of directors; (2) the removal of one or more
directors; or (3) any other matter under either the Act or applicable
State law affecting the Board's composition, size or manner of
election.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-20757 Filed 9-27-17; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 85, Number 125 (Monday, June 29, 2020)]
[Notices]
[Page 38885]
[FR Doc No: 2020-13909]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER20-1703-000]

 Capital Energy PA LLC; Supplemental Notice That Initial Market-
Based Rate Filing Includes Request for Blanket Section 204
Authorization

    This is a supplemental notice in the above-referenced Capital
Energy PA LLC's application for market-based rate authority, with an
accompanying rate tariff, noting that such application includes a
request for blanket authorization, under 18 CFR part 34, of future
issuances of securities and assumptions of liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE, Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is July 13, 2020.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically may mail similar pleadings to
the Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426. Hand delivered submissions in docketed
proceedings should be delivered to Health and Human Services, 12225
Wilkins Avenue, Rockville, Maryland 20852.
    In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://ferc.gov) using the
``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number field to access the document. At this time,
the Commission has suspended access to the Commission's Public
Reference Room, due to the proclamation declaring a National Emergency
concerning the Novel Coronavirus Disease (COVID-19), issued by the
President on March 13, 2020. For assistance, contact the Federal Energy
Regulatory Commission at<EMAIL_ADDRESS>or call toll-free,
(886) 208-3676 or TYY,<PHONE_NUMBER>.

    Dated: June 23, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2020-13909 Filed 6-26-20; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register: August 5, 2009 (Volume 74, Number 149)]
[Rules and Regulations]
[Page 38952-38956]
[DOCID:fr05au09-19]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2009-0490; FRL-8428-5]

Sodium and Ammonium Naphthalenesulfonate Formaldehyde
Condensates; Exemption from the Requirement of a Tolerance

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation establishes an exemption from the requirement
of a tolerance for residues of the sodium and ammonium
napthalenesulfonate formaldehyde condensates, herein referred to in
this document as the SANFCs, when used as inert ingredients in
pesticide formulations applied to growing corps under 40 CFR 180.920.
The Joint Inerts Task Force (JITF), Cluster Support Team Number 11 and
Akzo Nobel Surface Chemistry, LLC, submitted petitions to EPA under the
Federal Food, Drug, and Cosmetic Act (FFDCA), requesting an exemption
from the requirement of a tolerance. This regulation eliminates the
need to establish a maximum permissible level for residues of the
SANFCs.

DATES: This regulation is effective August 5, 2009. Objections and
requests for hearings must be received on or before October 5, 2009,
and must be filed in accordance with the instructions provided in 40
CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

ADDRESSES: EPA has established a docket for this action under docket
identification (ID) number EPA-HQ-OPP-2009-0490. All documents in the
docket are listed in the docket index available at http://
www.regulations.gov. Although listed in the index, some information is
not publicly available, e.g., Confidential Business Information (CBI)
or other information whose disclosure is restricted by statute. Certain
other material, such as copyrighted material, is not placed on the
Internet and will be publicly available only in hard copy form.
Publicly available docket materials are available in the electronic
docket at http://www.regulations.gov, or, if only available in hard
copy, at the OPP Regulatory Public Docket in Rm. S-4400, One Potomac
Yard (South Bldg.), 2777 S. Crystal Dr., Arlington, VA. The Docket
Facility is open from 8:30 a.m. to 4 p.m., Monday through Friday,
excluding legal holidays. The Docket Facility telephone number is (703)
305-5805.

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

I. General Information

A. Does this Action Apply to Me?

    You may be potentially affected by this action if you are an
agricultural producer, food manufacturer, or pesticide manufacturer.
Potentially affected entities may include, but are not limited to those
engaged in the following activities:
     Crop production (NAICS code 111).
     Animal production (NAICS code 112).
     Food manufacturing (NAICS code 311).
     Pesticide manufacturing (NAICS code 32532).
    This listing is not intended to be exhaustive, but rather to
provide a guide for readers regarding entities likely to be affected by
this action. Other types of entities not listed in this unit could also
be affected. The North American Industrial Classification System
(NAICS) codes have been provided to assist you and others in
determining whether this action might apply to certain entities. If you
have any questions regarding the applicability of this action to a
particular entity, consult the person listed under FOR FURTHER
INFORMATION CONTACT.

B. How Can I Access Electronic Copies of this Document?

    In addition to accessing electronically available documents at
http://www.regulations.gov, you may access this Federal Register
document electronically through the EPA Internet under the ``Federal
Register'' listings at http://www.epa.gov/fedrgstr. You may

also access a frequently updated electronic version of EPA's tolerance
regulations at 40 CFR part 180 through the Government Printing Office's
e-CFR cite at http://www.gpoaccess.gov/ecfr. To access the OPPTS
Harmonized Guidelines referenced in this document, go directly to the
guidelines at http://www.epa.gov/opptsfrs/home/guidelin.htm.

C. Can I File an Objection or Hearing Request?

    Under section 408(g) of FFDCA, 21 U.S.C. 346a, any person may file
an objection to any aspect of this regulation and may also request a
hearing on those objections. You must file your objection or request a
hearing on this regulation in accordance with the instructions provided
in 40 CFR part 178. To ensure proper receipt by EPA, you must identify
docket ID number EPA-HQ-OPP-2009-0490 in the subject line on the first
page of your submission. All requests must be in writing, and must be
mailed or delivered to the Hearing Clerk as required by 40 CFR part 178
on or before October 5, 2009.
    In addition to filing an objection or hearing request with the
Hearing Clerk as described in 40 CFR part 178, please submit a copy of
the filing that does not contain any CBI for inclusion in the public
docket that is described in ADDRESSES. Information not marked
confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA
without prior notice. Submit this copy, identified by docket ID number
EPA-HQ-OPP-2009-0490, by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the on-line instructions for submitting comments.
     Mail: Office of Pesticide Programs (OPP) Regulatory Public
Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania
Ave., NW., Washington, DC 20460-0001.
     Delivery: OPP Regulatory Public Docket (7502P),
Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South
Bldg.), 2777 S. Crystal Dr., Arlington, VA. Deliveries are only
accepted during the Docket Facility's normal hours of operation (8:30
a.m. to 4 p.m., Monday through Friday, excluding legal holidays).
Special arrangements should be made for deliveries of boxed
information. The Docket Facility telephone number is<PHONE_NUMBER>.

II. Background

    In the Federal Register of March 4, 2009 (74 FR 9397) (FRL-8401-8),
EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C.
346a(d)(3), announcing the filing of a pesticide petition (PP 9E7516)
by The Joint Inerts Task Force (JITF), Cluster Support Team Number 11
(CST 11), c/o CropLife America, 1156 15th Street, NW., Suite 400,
Washington, DC 20005. The petition requested that 40 CFR 180.920 be
amended by establishing exemptions from the requirement of a tolerance
for residues of sodium and ammonium naphthalenesulfonate formaldehyde
condensates. That notice referenced a summary of the petition prepared
by the JITF, CST 11, the petitioner, which is available to the public
in the docket, http://www.regulations.gov. Docket ID number EPA-HQ-OPP-
2009-0043 was established for the petition. There were no comments
received in response to the notice of filing.
    In the Federal Register of March 25, 2009 (74 FR 12856) (FRL-8399-
4), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21
U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP
8E7405) by Akzo Nobel Surface Chemistry, LLC, 525 West Van Buren
Street, Chicago, IL 60607-3823. The petition requested that 40 CFR
180.920 be amended by establishing exemptions from the requirement of a
tolerance for residues of mono-, di-, and trimethylnapthalenesulfonic
acids and napthalenesulfonic acids formaldehyde condensates, ammonium
and sodium salts. That notice referenced a summary of the petition
prepared by Akzo Nobel Surface Chemistry, LLC, the petitioner, which is
available to the public in the docket, http://www.regulations.gov.
Docket ID number EPA-HQ-OPP-2008-0822 was established for the petition.
There were no comments received in response to the notice of filing.
    These two petitions are grouped because they fall under the same
general chemical description criteria.
    These petitions were submitted in response to a final rule
published August 9, 2006 (71 FR 45415)(FRL-8084-1) in which the Agency
revoked, under section 408(e)(1) of the Federal Food, Drug, and
Cosmetic Act (FFDCA), the existing exemptions from the requirement of a
tolerance for residues of certain inert ingredients because of
insufficient data to make the determination of safety required by FFDCA
section 408(b)(2). The expiration date for the tolerance exemptions
subject to revocation was August 9, 2008, which was later extended to
August 9, 2009, by a final rule published in the Federal Register of
August 4, 2008 to allow for data to be submitted to support the
establishment of tolerance exemptions for these inert ingredients prior
to the effective date of the tolerance exemption revocation.

 III. Inert Ingredient Definition

    Inert ingredients are all ingredients that are not active
ingredients as defined in 40 CFR 153.125 and include, but are not
limited to, the following types of ingredients (except when they have a
pesticidal efficacy of their own): Solvents such as alcohols and
hydrocarbons; surfactants such as polyoxyethylene polymers and fatty
acids; carriers such as clay and diatomaceous earth; thickeners such as
carrageenan and modified cellulose; wetting, spreading, and dispersing
agents; propellants in aerosol dispensers; microencapsulating agents;
and emulsifiers. The term ``inert'' is not intended to imply
nontoxicity; the ingredient may or may not be chemically active.
Generally, EPA has exempted inert ingredients from the requirement of a
tolerance based on the low toxicity of the individual inert
ingredients.

IV. Aggregate Risk Assessment and Determination of Safety

    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish an
exemption from the requirement of a tolerance (the legal limit for a
pesticide chemical residue in or on a food) only if EPA determines that
the tolerance is ``safe.'' Section 408(b)(2)(A)(ii) of FFDCA defines
``safe'' to mean that ``there is a reasonable certainty that no harm
will result from aggregate exposure to the pesticide chemical residue,
including all anticipated dietary exposures and all other exposures for
which there is reliable information.'' This includes exposure through
drinking water and in residential settings, but does not include
occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to
give special consideration to exposure of infants and children to the
pesticide chemical residue in establishing a tolerance and to ``ensure
that there is a reasonable certainty that no harm will result to
infants and children from aggregate exposure to the pesticide chemical
residue....''
    EPA performs a number of analyses to determine the risks from
aggregate exposure to pesticide residues. First, EPA determines the
toxicity of pesticides. Second, EPA examines exposure to the pesticide
through food, drinking water, and through other exposures that occur as
a result of pesticide use in residential settings.
    Consistent with section 408(b)(2)(D) of FFDCA, and the factors
specified in section 408(b)(2)(D) of FFDCA, EPA has reviewed the
available scientific data

and other relevant information in support of this action. EPA has
sufficient data to assess the hazards of and to make a determination on
aggregate exposure for the petitioned-for exemption from the
requirement of a tolerance for residues of the SANFCs when used as
inert ingredients in pesticide formulations applied to growing crops.
EPA's assessment of exposures and risks associated with establishing
tolerances follows.

A. Toxicological Profile

    EPA has evaluated the available toxicity data and considered its
validity, completeness, and reliability as well as the relationship of
the results of the studies to human risk. EPA has also considered
available information concerning the variability of the sensitivities
of major identifiable subgroups of consumers, including infants and
children.
    The toxicology database for the SANFC inerts is adequate to support
their use as inert ingredients in pesticide formulations. The existing
toxicology database for the SANFC consists of two OPPTS Harmonized
Guideline 870.3650 (combined repeated dose toxicity study with the
reproduction/developmental toxicity screening test in rats), and
several studies from the scientific literature on acute toxicity and
mutagenicity.
    The available toxicity data indicates that SANFC has low acute oral
and inhalation toxicity. SANFC was not mutagenic in an Ames test. In a
repeated 28-42 day OPPTS Harmonized Guideline 870.3650 combined
repeated dose toxicity study with the reproduction/developmental
toxicity screening with the representative test compound,
naphthalenesulfonic acid, sodium salt polymer with formaldehyde (CAS
9084-06-4), there was no evidence of increased susceptibility. Parental
toxicity manifested as decrements in body-weight gain in both sexes at
the limit dose (1,000 milligrams/kilogram/day (mg/kg/day)). No
developmental or reproductive effects were observed at doses of 100,
300, and 1,000 mg/kg/day. In an OPPTS Harmonized Guideline 870.3650
study submitted by Akzo Nobel Chemistry, LLC, no systemic toxicity was
observed at doses up to and including 456 mg/kg/day. (The highest dose
tested). There was no evidence of potential neurotoxicity or
immunotoxicity in the adult animal in the OPPTS Harmonized Guideline
870.3650 study at the limit dose of 1,000 mg/kg/day. There is no
evidence that the SANFCs are carcinogenic. There are no chronic data
available on the SANFC surfactants; however, no structural alerts for
cancer were identified in a qualitative structure activity relationship
(SAR) database, DEREK Version 11. In addition, there was little concern
about any of the postulated metabolites having greater toxicity than
the parent compounds. The higher molecular weight polymeric SANFC
surfactants (MW>1,000) are not expected to be readily absorbed or
metabolized, and should thus be rapidly excreted (likely in the feces)
unchanged. Additionally, lower molecular microsome cytochrome P-450
oxygenases may hydroxylate the naphthalene ring and/or methylene bridge
to produce alternative metabolites that should also be readily
conjugated and excreted. Furthermore, these compounds are formaldehyde
condensates and do not contain free formaldehyde. Therefore,
formaldehyde is not a residue of concern. In summary, due to the low
hazard potential for these inert compounds, a quantitative risk
assessment is not required for the SANFC inerts.
    Specific information on the studies received are included in the
Agency's Human Health Risk Assessment which can be found at http://
www.regulations.gov in document Sodium and Ammonium
Naphthalenesulfonate Formaldehyde Condensates (SANFCs - JITF CST 11
Inert Ingredients). ``Human Health Risk Assessment to Support Proposed
Exemption from the Requirement of a Tolerance When Used as Inert
Ingredients in Pesticide Formulations,'' pages 6-8 and pages 11-14 in
docket ID number EPA-HQ-OPP-2009-0043 and also in document ``Mono-, Di-
, and Trimethylnapthalensulfonic Acids and Naphthalenesulfonic Acids
Formaldehyde Condensates, Ammonium and Sodium Salts: Review of
Toxicological Studies in Support of an Exemption from the Requirement
of a Tolerance (40 CFR 180.920 and 40 CFR 180.910) When Used as Inert
Ingredients in Pesticide Formulations'' in docket ID number EPA-HQ-OPP-
2008-0822.

B. Toxicity Endpoint Selection and FQPA Considerations

    There was no significant hazard identified in the OPPTS Harmonized
Guideline 870.3650 study at the limit dose of 1,000 mg/kg/day to either
parental animals or their offspring. Thus, due to their low potential
hazard and the lack of a hazard endpoint, it was determined that a
quantitative risk assessment using safety factors applied to a point of
departure protective of an identified hazard endpoint is not
appropriate for the SANFCs. The Agency notes that there was no evidence
of neurotoxicity or increased susceptibility to the offspring of rats
following prenatal or postnatal exposure in the OPPTS Harmonized
Guideline 870.3650 studies. Based on this information, there is no
concern, at this time, for increased sensitivity to infants and
children to the SANFCs when used as inert ingredients in pesticide
formulations applied to growing crops and a safety factor analysis has
not been used to assess risk. For the same reason, EPA has determined
that an additional safety factor is not needed to protect the safety of
infants and children.

C. Aggregate Exposures

     In examining aggregate exposure, section 408 of FFDCA directs EPA
to consider available information concerning exposures from the
pesticide residue in food and all other non-occupational exposures,
including drinking water from ground water or surface water and
exposure through pesticide use in gardens, lawns, or buildings
(residential and other indoor uses).
    The SANFC inerts are used as dispersants, defoamers and emulsifiers
in pesticide formulations. These surfactants have a wide range of
industrial uses as well as serve as emulsifiers in personal care
products and in food contact packaging.
    The residues of concern are for the parent compound only.
Considering the large size and polarity of the SANFC molecules, it is
unlikely that they would be readily absorbed by livestock or taken up
by plants for further metabolism.
    No hazard was identified for the acute and chronic dietary
assessment (food and drinking water), or for the short-, intermediate-,
and long-term residential assessments, and therefore no quantitative
aggregate risk assessments were performed.

D. Cumulative Effects From Substances With a Common Mechanism of
Toxicity

     Section 408(b)(2)(D)(v) of FFDCA requires that, when considering
whether to establish, modify, or revoke a tolerance, the Agency
consider ``available information'' concerning the cumulative effects of
a particular pesticide's residues and ``other substances that have a
common mechanism of toxicity.''
    EPA has not found the SANFCs to share a common mechanism of
toxicity with any other substances, and SANFCs do not appear to produce
a toxic metabolite produced by other substances. For the purposes of
this tolerance action, therefore, EPA has

assumed that SANFCs do not have a common mechanism of toxicity with
other substances. For information regarding EPA's efforts to determine
which chemicals have a common mechanism of toxicity and to evaluate the
cumulative effects of such chemicals, see EPA's website at http://
www.epa.gov/pesticides/cumulative.

E. Determination of Safety

    Based on all available information, EPA concludes that there is a
reasonable certainty that no harm will result to the general population
or to infants and children from aggregate exposure to residues of the
SANFCs when used as inert ingredients in pesticide formulations applied
to growing crops.

V. Other Considerations

A. Analytical Enforcement Methodology

    An analytical method is not required for enforcement purposes since
the Agency is establishing an exemption from the requirement of a
tolerance without any numerical limitation.

B. International Residue Limits

    The Agency is not aware of any country requiring a tolerance for
the SANFCs nor have any CODEX Maximum Residue Levels been established
for any food crops at this time.

VI. Conclusion

    Therefore, an exemption from the requirement of a tolerance is
established for residues of the sodium and ammonium
naphthalenesulfonate formaldehyde condensates, under the tolerance
expression mono-, di-, and trimethylnapthalenesulfonic acids and
napthalenesulfonic acids formaldehyde condensates, ammonium and sodium
salts, when used as inert ingredients in pesticide formulations applied
to growing crops under 40 CFR 180.920.

VII. Statutory and Executive Order Reviews

    This final rule establishes an exemption from the requirement of a
tolerance under section 408(d) of FFDCA in response to a petition
submitted to the Agency. The Office of Management and Budget (OMB) has
exempted these types of actions from review under Executive Order
12866, entitled Regulatory Planning and Review (58 FR 51735, October 4,
1993). Because this final rule has been exempted from review under
Executive Order 12866, this final rule is not subject to Executive
Order 13211, entitled Actions Concerning Regulations That Significantly
Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001)
or Executive Order 13045, entitled Protection of Children from
Environmental Health Risks and Safety Risks (62 FR 19885, April 23,
1997). This final rule does not contain any information collections
subject to OMB approval under the Paperwork Reduction Act (PRA), 44
U.S.C. 3501 et seq., nor does it require any special considerations
under Executive Order 12898, entitled Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations (59 FR 7629, February 16, 1994).
    Since tolerances and exemptions that are established on the basis
of a petition under section 408(d) of FFDCA, such as the tolerance in
this final rule, do not require the issuance of a proposed rule, the
requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et
seq.) do not apply.
    This final rule directly regulates growers, food processors, food
handlers, and food retailers, not States or tribes, nor does this
action alter the relationships or distribution of power and
responsibilities established by Congress in the preemption provisions
of section 408(n)(4) of FFDCA. As such, the Agency has determined that
this action will not have a substantial direct effect on States or
tribal governments, on the relationship between the national government
and the States or tribal governments, or on the distribution of power
and responsibilities among the various levels of government or between
the Federal Government and Indian tribes. Thus, the Agency has
determined that Executive Order 13132, entitled Federalism (64 FR
43255, August 10, 1999) and Executive Order 13175, entitled
Consultation and Coordination with Indian Tribal Governments (65 FR
67249, November 9, 2000) do not apply to this final rule. In addition,
this final rule does not impose any enforceable duty or contain any
unfunded mandate as described under Title II of the Unfunded Mandates
Reform Act of 1995 (UMRA) (Public Law 104-4).
    This action does not involve any technical standards that would
require Agency consideration of voluntary consensus standards pursuant
to section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272
note).

VIII. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report to each House of the Congress and to
the Comptroller General of the United States. EPA will submit a report
containing this rule and other required information to the U.S. Senate,
the U.S. House of Representatives, and the Comptroller General of the
United States prior to publication of this final rule in the Federal
Register. This final rule is not a ``major rule'' as defined by 5
U.S.C. 804(2).

List of Subjects in 40 CFR Part 180

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

    Dated: July 29, 2009.
Lois Rossi,
Director, Registration Division, Office of Pesticide Programs.

0
Therefore, 40 CFR chapter I is amended as follows:

PART 180--[AMENDED]

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

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

0
2. In Sec.  180.920, the table is amended by adding alphabetically the
following inert ingredients to read as follows:

Sec.  180.920  Inert ingredients used pre-harvest; exemptions from the
requirement of a tolerance.

* * * * *

------------------------------------------------------------------------
        Inert Ingredients               Limits               Uses
------------------------------------------------------------------------
                                * * * * *
Mono-, di-, and                                       Surfactants,
 trimethylnapthalenesulfonic                           related adjuvants
 acids and napthalenesulfonic                          of surfactants
 acids formaldehyde condensates,
 ammonium and sodium salts (CAS
 Reg. Nos. 9008-63-3, 9069-80-1,
 9084-06-4, 36290-04-7, 91078-68-
 1, 141959-43-5, 68425-94-5)
                                * * * * *
------------------------------------------------------------------------

[FR Doc. E9-18725 Filed 8-4-09; 8:45 am]

BILLING CODE 6560-50-S