[Federal Register Volume 80, Number 11 (Friday, January 16, 2015)]
[Rules and Regulations]
[Pages 2315-2320]
[FR Doc No: 2015-00491]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2014-0540; FRL-9920-54]

Fosetyl-Al; Pesticide Tolerances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation establishes tolerances for residues of
Aluminum tris (O-ethylphosphonate) (fosetyl-Al) in or

on pepper/eggplant, subgroup 8-10B. Bayer CropScience requested these
tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).

DATES: This regulation is effective January 16, 2015. Objections and
requests for hearings must be received on or before March 17, 2015, and
must be filed in accordance with the instructions provided in 40 CFR
part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

ADDRESSES: The docket for this action, identified by docket
identification (ID) number EPA-HQ-OPP-2014-0540, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory
Public Docket (OPP Docket) in the Environmental Protection Agency
Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334,
1301 Constitution Ave. NW., Washington, DC 20460-0001. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>, and the telephone number for the OPP
Docket is<PHONE_NUMBER>. Please review the visitor instructions and
additional information about the docket available at http://www.epa.gov/dockets.

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

I. General Information

A. Does this action apply to me?

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

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

    You may access a frequently updated electronic version of EPA's
tolerance regulations at 40 CFR part 180 through the Government
Printing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl. To access the OCSPP
test guidelines referenced in this document electronically, please go
to http://www.epa.gov/ocspp and select ``Test Methods and Guidelines.''

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

    Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an
objection to any aspect of this regulation and may also request a
hearing on those objections. You must file your objection or request a
hearing on this regulation in accordance with the instructions provided
in 40 CFR part 178. To ensure proper receipt by EPA, you must identify
docket ID number EPA-HQ-OPP-2014-0540 in the subject line on the first
page of your submission. All objections and requests for a hearing must
be in writing, and must be received by the Hearing Clerk on or before
March 17, 2015. Addresses for mail and hand delivery of objections and
hearing requests are provided in 40 CFR 178.25(b).
    In addition to filing an objection or hearing request with the
Hearing Clerk as described in 40 CFR part 178, please submit a copy of
the filing (excluding any Confidential Business Information (CBI)) for
inclusion in the public docket. Information not marked confidential
pursuant to 40 CFR part 2 may be disclosed publicly by EPA without
prior notice. Submit the non-CBI copy of your objection or hearing
request, identified by docket ID number EPA-HQ-OPP-2014-0540, by one of
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be CBI or other
information whose disclosure is restricted by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW., Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please follow the
instructions at http://www.epa.gov/dockets/contacts.html. Additional
instructions on commenting or visiting the docket, along with more
information about dockets generally, is available at http://www.epa.gov/dockets.

II. Summary of Petitioned-For Tolerance

    In the Federal Register of November 7, 2014 (79 FR 66347) (FRL-
9918-69), EPA issued a document pursuant to FFDCA section 408(d)(3), 21
U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP
3E8182) by Bayer CropScience, 2 T.W. Alexander Dr., P.O. Box 12014,
Research Triangle Park, NC 27709. The petition requested that 40 CFR
180.415 be amended by establishing tolerances for residues of the
fungicide fosetyl-Al, aluminum tris (O-ethylphosphonate), in or on
pepper/eggplant, subgroup 8-10B at 0.01 parts per million (ppm) and
non-bell (chili) pepper, dried fruit at 0.01 ppm. That document
referenced a summary of the petition prepared by Bayer CropScience, the
registrant, which is available in the docket, http://www.regulations.gov. Comments were received on the notice of filing.
EPA's response to these comments is discussed in Unit IV.C.
    Based upon review of the data supporting the petition, EPA is not
establishing a separate tolerance for residues of fosetyl-Al on pepper,
non-bell (chili), dry fruit. The reason for this is explained in Unit
IV.D.

III. Aggregate Risk Assessment and Determination of Safety

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

including exposure resulting from the tolerances established by this
action. EPA's assessment of exposures and risks associated with
fosetyl-Al 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 major target organs following repeated oral exposure to
fosetyl-Al are the reproductive system in the dog (testicular
degeneration: Spermatocytic and/or spermatidic giant cells in the lumen
of the seminiferous tubules) and the urinary system in the rat
(histopathological changes in the kidney, impairment of calcium/
phosphorus metabolism, calculi and hyperplasia in the urinary tract,
bladder tumors). There is no concern for increased quantitative or
qualitative susceptibility of the young following in utero (rats and
rabbits) and pre-and postnatal exposure (rats) to fosetyl-Al. Also,
there is no evidence of developmental toxicity, reproductive toxicity
in the rat, neurotoxicity, or immunotoxicity at dose levels that do not
exceed the limit dose. The microscopic finding in the dog testes may be
considered an isolated finding in light of the lack of any functional
deficits in the rat 2-generation reproductive toxicity study and the
lack of effects on the rat reproductive organs following chronic
exposure. Additionally, a clear no-observed-adverse-effect level
(NOAEL) was established for the effect observed in the dog and was
selected as a suitable point of departure (POD) for the chronic dietary
(all populations) exposure scenario. Fosetyl-Al is negative for
carcinogenicity except at extremely high doses (>limit dose) in rats
and mice, and it did not show any genotoxic potential (classified as
not likely to be carcinogenic to humans). Fosetyl-Al is not acutely
toxic via the oral, dermal, and inhalation routes. It produces severe
eye irritation, is not a dermal irritant, and is negative for dermal
sensitization.
    Specific information on the studies received and the nature of the
adverse effects caused by fosetyl-Al as well as the NOAEL and the
lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies
can be found at http://www.regulations.gov in document ``Fosetyl-
Aluminum [Fosetyl-Al]: Human Health Risk Assessment for the
Establishment of Tolerances with No U.S. Registration in/on Pepper/
eggplant, Subgroup 8-10B and Pepper, Non-bell (Chili), Dry Fruit'' in
docket ID number EPA-HQ-OPP-2014-0540.

B. Toxicological Points of Departure/Levels of Concern

    Once a pesticide's toxicological profile is determined, EPA
identifies toxicological points of departure (POD) and levels of
concern to use in evaluating the risk posed by human exposure to the
pesticide. For hazards that have a threshold below which there is no
appreciable risk, the toxicological POD is used as the basis for
derivation of reference values for risk assessment. PODs are developed
based on a careful analysis of the doses in each toxicological study to
determine the dose at which no adverse effects are observed (the NOAEL)
and the lowest dose at which adverse effects of concern are identified
(the LOAEL). Uncertainty/safety factors are used in conjunction with
the POD to calculate a safe exposure level--generally referred to as a
population-adjusted dose (PAD) or a reference dose (RfD)--and a safe
margin of exposure (MOE). For non-threshold risks, the Agency assumes
that any amount of exposure will lead to some degree of risk. Thus, the
Agency estimates risk in terms of the probability of an occurrence of
the adverse effect expected in a lifetime. For more information on the
general principles EPA uses in risk characterization and a complete
description of the risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm.
    A summary of the toxicological endpoints for fosetyl-Al used for
human risk assessment is shown in Table 1 of this unit.

  Table 1--Summary of Toxicological Doses and Endpoints for Fosetyl-Al for Use in Human Health Risk Assessment
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                                    Point of departure
        Exposure/scenario            and uncertainty/     RfD, PAD, LOC for     Study and toxicological effects
                                      safety factors       risk assessment
----------------------------------------------------------------------------------------------------------------
Acute dietary (General population  No hazard or appropriate acute endpoint was identified in the database.
 including infants and children).
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Chronic dietary (All populations)  NOAEL = 250 mg/kg/    Chronic RfD = 2.5    Chronic oral toxicity (dog).
                                    day.                  mg/kg/day.          LOAEL = 500 mg/kg/day based on
                                   UFA = 10x...........  cPAD = 2.5 mg/kg/     increased incidence of testicular
                                   UFH = 10x...........   day.                 degeneration (spermatocytic and/
                                   FQPA SF = 1x........                        or spermatidic giant cells in the
                                                                               lumen of the seminiferous
                                                                               tubules).
Incidental oral short-term (1 to   NOAEL = 300 mg/kg/    Residential LOC for  3-generation reproduction (rat).
 30 days) and intermediate-term     day.                  MOE <100.           LOAEL = 600 mg/kg/day based on
 (1 to 6 months).                  UFA = 10x...........                        decreased body weight gains in
                                   UFH = 10x...........                        the F2b generation and urinary
                                   FQPA SF = 1x........                        tract changes in adults.
Inhalation short-term (1 to 30     Inhalation (or oral)  Residential LOC for  3-generation reproduction (rat).
 days) and intermediate-term (1     study NOAEL = 300     MOE <100.           LOAEL = 600 mg/kg/day based on
 to 6 months).                      mg/kg/day                                  decreased body weight gains in
                                    (inhalation                                the F2b generation and urinary
                                    absorption rate =                          tract changes in adults.
                                    100%).
                                   UFA = 10x...........
                                   UFH = 10x...........
                                   FQPA SF = 1x........
----------------------------------------------------------------------------------------------------------------

Cancer (Oral, dermal, inhalation)  Classification: Not likely to be carcinogenic to humans.
----------------------------------------------------------------------------------------------------------------
FQPA SF = Food Quality Protection Act Safety Factor. LOAEL = lowest-observed-adverse-effect-level. LOC = level
  of concern. mg/kg/day = milligram/kilogram/day. MOE = margin of exposure. NOAEL = no-observed-adverse-effect-
  level. PAD = population adjusted dose (c = chronic). RfD = reference dose. UF = uncertainty factor. UFA =
  extrapolation from animal to human (interspecies). UFH = potential variation in sensitivity among members of
  the human population (intraspecies).

C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary
exposure to fosetyl-Al, EPA considered exposure under the petitioned-
for tolerances as well as all existing fosetyl-Al tolerances in 40 CFR
180.415. EPA assessed dietary exposures from fosetyl-Al in food as
follows:
    i. Acute exposure. Quantitative acute dietary exposure and risk
assessments are performed for a food-use pesticide, if a toxicological
study has indicated the possibility of an effect of concern occurring
as a result of a 1-day or single exposure. No such effects were
identified in the toxicological studies for fosetyl-Al; therefore, a
quantitative acute dietary exposure assessment is unnecessary.
    ii. Chronic exposure. In conducting the chronic dietary exposure
assessment EPA used the food consumption data from the U.S. Department
of Agriculture's (USDA's) 2003-2008 National Health and Nutrition
Examination Survey, What We Eat in America, (NHANES/WWEIA). As to
residue levels in food, EPA's unrefined chronic analysis is based on
tolerance-level residues and 100% crop treated (PCT) assumptions.
Default processing factors were used for all crops except for citrus
where processing studies showed no residue concentration; thus, the
processing factor was set to one for processed citrus commodities.
    iii. Cancer. Based on the data summarized in Unit III.A., EPA has
concluded that fosetyl-Al is not carcinogenic to humans. Therefore, a
dietary exposure assessment for the purpose of assessing cancer risk is
unnecessary.
    iv. Anticipated residue and PCT information. EPA did not use
anticipated residue and/or PCT information in the dietary assessment
for fosetyl-Al. Tolerance level residues and/or 100 PCT were assumed
for all food commodities.
    2. Dietary exposure from drinking water. The Agency used screening
level water exposure models in the dietary exposure analysis and risk
assessment for fosetyl-Al in drinking water. These simulation models
take into account data on the physical, chemical, and fate/transport
characteristics of fosetyl-Al. Further information regarding EPA
drinking water models used in pesticide exposure assessment can be
found at http://www.epa.gov/oppefed1/models/water/index.htm.
    Environmental fate properties suggest that fosetyl-Al is not likely
to reach ground or surface water under most conditions, and if it does
reach surface water, it is expected to degrade rapidly. Using the
Screening Concentration in Ground Water (SCI-GROW) model, the estimated
drinking water concentration (EDWC) of fosetyl-Al for chronic exposures
for non-cancer assessments is estimated to be 0.006 parts per billion
(ppb) for ground water. Thus, the ground water EDWC of 0.006 ppb was
directly incorporating into the chronic dietary risk assessment.
    3. From non-dietary exposure. The term ``residential exposure'' is
used in this document to refer to non-occupational, non-dietary
exposure (e.g., for lawn and garden pest control, indoor pest control,
termiticides, and flea and tick control on pets). Fosetyl-Al is
currently registered for the following use that could result in
residential exposure: Turf. EPA assessed residential exposure using the
following assumptions: Residential handler and residential post-
application exposures. The residential handler assessment
quantitatively evaluated inhalation exposure from hose end sprayer for
turf applications but not dermal exposure as no dermal point of
departure was identified. There is the potential for short-term post-
application exposure for individuals exposed as a result of being in an
environment that has been previously treated with fosetyl-Al (based on
contact with treated turf at the maximum turf application rate of 17.6
pounds (lbs) active ingredient/Acre (ai/A)). Incidental oral post-
application exposure is quantitatively assessed for children 1 to <2
years old for exposure to treated turf. Dermal post-application
exposure was not assessed because no dermal hazard was identified.
Further information regarding EPA standard assumptions and generic
inputs for residential exposures may be found at http://www.epa.gov/pesticides/science/residential-exposure-sop.html.
    4. Cumulative effects from substances with a common mechanism of
toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when
considering whether to establish, modify, or revoke a tolerance, the
Agency consider ``available information'' concerning the cumulative
effects of a particular pesticide's residues and ``other substances
that have a common mechanism of toxicity.''
    Although fosetyl-Al shares a similar chemical structure with many
organophosphates (OPs), there is no evidence of neurotoxicity or
evidence of cholinesterase inhibition following exposure to fosetyl-Al
at dose levels at and greater than the limit dose. EPA has concluded
that fosetyl-Al is a not member of the OP cumulative group. EPA has not
found fosetyl-Al to share a common mechanism of toxicity with any other
substances either, and fosetyl-Al does not appear to produce a toxic
metabolite produced by any other substances. For the purposes of this
tolerance action, therefore, EPA has assumed that fosetyl-Al does 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 Web site at http://www.epa.gov/pesticides/cumulative.

D. Safety Factor for Infants and Children

    1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA
shall apply an additional tenfold (10X) margin of safety for infants
and children in the case of threshold effects to account for prenatal
and postnatal toxicity and the completeness of the database on toxicity

and exposure unless EPA determines based on reliable data that a
different margin of safety will be safe for infants and children. This
additional margin of safety is commonly referred to as the Food Quality
Protection Act Safety Factor (FQPA SF). In applying this provision, EPA
either retains the default value of 10X, or uses a different additional
safety factor when reliable data available to EPA support the choice of
a different factor.
    2. Prenatal and postnatal sensitivity. There is no evidence of
increased susceptibility following in utero exposure to fosetyl-Al in
either the rat (at dose levels that do not exceed the limit dose) or
rabbit developmental toxicity study, and there is no evidence of
increased susceptibility following in utero and/or pre-/postnatal
exposure in the 3-generation reproduction study in rats.
    3. Conclusion. EPA has determined that reliable data show the
safety of infants and children would be adequately protected if the
FQPA SF were reduced to 1x. That decision is based on the following
findings:
    i. The toxicity database for fosetyl-Al is complete.
    ii. There is no indication that fosetyl-Al is a neurotoxic chemical
and there is no need for a developmental neurotoxicity study or
additional uncertainty factors (UFs) to account for neurotoxicity.
    iii. There is no evidence that fosetyl-Al results in increased
susceptibility in in utero rats or rabbits in the prenatal
developmental studies or in young rats in the 3-generation reproduction
study.
    iv. There are no residual uncertainties identified in the exposure
databases. The dietary food exposure assessments were performed based
on 100 PCT and tolerance-level residues. EPA made conservative
(protective) assumptions in the water modeling used to assess exposure
to fosetyl-Al in drinking water. EPA used similarly conservative
assumptions to assess post-application exposure of children as well as
incidental oral exposure of toddlers. These assessments will not
underestimate the exposure and risks posed by fosetyl-Al.

E. Aggregate Risks and Determination of Safety

    EPA determines whether acute and chronic dietary pesticide
exposures are safe by comparing aggregate exposure estimates to the
acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA
calculates the lifetime probability of acquiring cancer given the
estimated aggregate exposure. Short-, intermediate-, and chronic-term
risks are evaluated by comparing the estimated aggregate food, water,
and residential exposure to the appropriate PODs to ensure that an
adequate MOE exists.
    1. Acute risk. An acute aggregate risk assessment takes into
account acute exposure estimates from dietary consumption of food and
drinking water. No adverse effect resulting from a single oral exposure
was identified and no acute dietary endpoint was selected. Therefore,
fosetyl-Al is not expected to pose an acute risk.
    2. Chronic risk. Using the exposure assumptions described in this
unit for chronic exposure, EPA has concluded that chronic exposure to
fosetyl-Al from food and water will utilize 12% of the cPAD for
children 1-2 years old, the population group receiving the greatest
exposure. Based on the explanation in Unit III.C.3., regarding
residential use patterns, chronic residential exposure to residues of
fosetyl-Al is not expected.
    3. Short-term risk. Fosetyl-Al is currently registered for uses
that could result in short-term residential exposure, and the Agency
has determined that it is appropriate to aggregate chronic exposure
through food and water with short-term residential exposures to
fosetyl-Al.
    Using the exposure assumptions described in this unit for short-
term exposures, EPA has concluded the combined short-term food, water,
and residential exposures result in aggregate MOEs of 3,200 for adult
residential handlers applying liquid concentrates to turf via hose-end
sprayer and for children, 540 for children's incidental oral post-
application exposure from contacting treated lawns. Because EPA's level
of concern for fosetyl-Al is an MOE of 100 or below, these MOEs are not
of concern.
    4. Intermediate-term risk. Intermediate-term aggregate exposure
takes into account intermediate-term residential exposure plus chronic
exposure to food and water (considered to be a background exposure
level).
    Because no intermediate-term non-occupational exposures are
expected, fosetyl-Al is not expected to pose an intermediate-term risk.
    5. Aggregate cancer risk for U.S. population. Based on the
discussion in Unit III.A, fosetyl-Al is not expected to pose a cancer
risk to humans.
    6. Determination of safety. Based on these risk assessments, EPA
concludes that there is a reasonable certainty that no harm will result
to the general population, or to infants and children from aggregate
exposure to fosetyl-Al residues.

IV. Other Considerations

A. Analytical Enforcement Methodology

    Rhone-Poulenc Method No. AR 154-97 underwent successfully
independent laboratory validation for use as an enforcement analytical
method. Although the tolerance expression includes only parent fosetyl-
Al, Method AR 154-97 was validated for both fosetyl-Al and its
metabolite, phosphorous acid.
    In support of the pepper trials, the registrant made use of a data
collection method, Method No. 00861/M001, which achieved a lower Limit
of Quantitation (LOQ) than Method AR 154-97. Method No. 00861/M001 is
an HPLC-MS/MS (high performance liquid chromatography-tandem mass
spectrometry) method that uses the same extraction solvent as Method AR
154-97. Sufficient method validation data were submitted with the field
trial data to support a LOQ of 0.01 ppm for fosetyl-Al residues in
pepper (bell and non-bell). As EPA encourages the development of
improved analytical methods and because both methods use the same
extraction solvent, EPA considers Method No. 00861/M001 to also be a
suitable enforcement method for peppers. Thus, both methods may be
requested from: Chief, Analytical Chemistry Branch, Environmental
Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone
number:<PHONE_NUMBER>; email address<EMAIL_ADDRESS>
B. International Residue Limits

    In making its tolerance decisions, EPA seeks to harmonize U.S.
tolerances with international standards whenever possible, consistent
with U.S. food safety standards and agricultural practices. EPA
considers the international maximum residue limits (MRLs) established
by the Codex Alimentarius Commission (Codex), as required by FFDCA
section 408(b)(4). The Codex Alimentarius is a joint United Nations
Food and Agriculture Organization/World Health Organization food
standards program, and it is recognized as an international food safety
standards-setting organization in trade agreements to which the United
States is a party. EPA may establish a tolerance that is different from
a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain
the reasons for departing from the Codex level.
    The Codex has not established a MRL for fosetyl-Al.

C. Response to Comments

    The Agency received a comment expressing concerns about allowing
residues of pesticides on eggplant and peppers. The Agency understands
the commenter's concerns and recognizes that some individuals believe
that no residue of pesticides should be allowed because of potential
effects. However, under the existing legal framework provided by FFDCA
section 408, EPA is authorized to establish pesticide tolerances where
persons seeking such tolerances have demonstrated that the pesticide
meets the safety standard imposed by the statute. Based on its
assessment of the available data, the Agency has concluded there is a
reasonable certainty that no harm will result from aggregate exposure
to residues of fosetyl-Al.

D. Revisions to Petitioned-For Tolerances

    EPA is not establishing a separate tolerance for residues of
fosetyl-Al in or on pepper, non-bell (chili), dry fruit. The residues
found on the dried commodity will be covered by the tolerance for
residues of fosetyl-Al in or on pepper/eggplant, subgroup 8-10B;
therefore, no separate tolerance is needed.

 V. Conclusion

    Therefore, tolerances are established for residues of fosetyl-Al,
aluminum tris (O-ethylphosphonate), in or on pepper/eggplant, subgroup
8-10B at 0.01 ppm.

VI. Statutory and Executive Order Reviews

    This action establishes tolerances under FFDCA section 408(d) in
response to a petition submitted to the Agency. The Office of
Management and Budget (OMB) has exempted these types of actions from
review under Executive Order 12866, entitled ``Regulatory Planning and
Review'' (58 FR 51735, October 4, 1993). Because this action has been
exempted from review under Executive Order 12866, this action is not
subject to Executive Order 13211, entitled ``Actions Concerning
Regulations That Significantly Affect Energy Supply, Distribution, or
Use'' (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled
``Protection of Children from Environmental Health Risks and Safety
Risks'' (62 FR 19885, April 23, 1997). This action does not contain any
information collections subject to OMB approval under the Paperwork
Reduction Act (PRA) (44 U.S.C. 3501 et seq.), nor does it require any
special considerations under Executive Order 12898, entitled ``Federal
Actions to Address Environmental Justice in Minority Populations and
Low-Income Populations'' (59 FR 7629, February 16, 1994).
    Since tolerances and exemptions that are established on the basis
of a petition under FFDCA section 408(d), such as the 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 action directly regulates growers, food processors, food
handlers, and food retailers, not States or tribes, nor does this
action alter the relationships or distribution of power and
responsibilities established by Congress in the preemption provisions
of FFDCA section 408(n)(4). As such, the Agency has determined that
this action will not have a substantial direct effect on States or
tribal governments, on the relationship between the national government
and the States or tribal governments, or on the distribution of power
and responsibilities among the various levels of government or between
the Federal Government and Indian tribes. Thus, the Agency has
determined that Executive Order 13132, entitled ``Federalism'' (64 FR
43255, August 10, 1999) and Executive Order 13175, entitled
``Consultation and Coordination with Indian Tribal Governments'' (65 FR
67249, November 9, 2000) do not apply to this 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) (2 U.S.C. 1501 et seq.).
    This action does not involve any technical standards that would
require Agency consideration of voluntary consensus standards pursuant
to section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA) (15 U.S.C. 272 note).

VII. Congressional Review Act

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

List of Subjects in 40 CFR Part 180

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

    Dated: December 23, 2014.
Susan Lewis,
Director, Registration Division, Office of Pesticide Programs.
    Therefore, 40 CFR chapter I is amended as follows:

PART 180--[AMENDED]

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

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

0
2. In Sec.  180.415, add alphabetically ``Pepper/eggplant, subgroup 8-
10'' to the table in paragraph (a) to read as follows:

Sec.  180.415  Aluminum tris (O-ethylphosphonate); tolerances for
residues.

    (a) * * *

------------------------------------------------------------------------
                                                            Parts per
                       Commodity                             million
------------------------------------------------------------------------

                                * * * * *
Pepper/eggplant, subgroup 8-10B \1\....................            0.01

                                * * * * *
------------------------------------------------------------------------
\1\ There are no U.S. registrations as of December 23, 2014.

* * * * *
[FR Doc. 2015-00491 Filed 1-15-15; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 82, Number 164 (Friday, August 25, 2017)]
[Rules and Regulations]
[Pages 40477-40479]
[FR Doc No: 2017-17399]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2017-0128; Product Identifier 2016-NM-194-AD; Amendment
39-18999; AD 2017-17-09]
RIN 2120-AA64

Airworthiness Directives; The Boeing Company Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule.

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

SUMMARY: We are adopting a new airworthiness directive (AD) for all The
Boeing Company Model 737-300, -400, and -500 series airplanes. This AD
was prompted by a manufacturer's review that showed that the fuel tank
access door at a certain wing buttock line did not have an engineered
ground path with the mating wing structure. This AD requires replacing
the fuel tank access door, doing a check of the electrical bond, doing
related investigative and corrective actions if necessary, and revising
the maintenance or inspection program by incorporating an airworthiness
limitation (AWL). We are issuing this AD to address the unsafe
condition on these products.

DATES: This AD is effective September 29, 2017.
    The Director of the Federal Register approved the incorporation by
reference of certain publications listed in this AD as of September 29,
2017.

ADDRESSES: For service information identified in this final rule,
contact Boeing Commercial Airplanes, Attention: Contractual & Data
Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA
90740-5600; telephone<PHONE_NUMBER>; Internet https://www.myboeingfleet.com. You may view this service information at the
FAA, Transport Standards Branch, 1601 Lind Avenue SW., Renton, WA. For
information on the availability of this material at the FAA, call 425-
227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2017-
0128.

Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2017-
0128; or in person at the Docket Management Facility between 9 a.m. and
5 p.m., Monday through Friday, except Federal holidays. The AD docket
contains this final rule, the regulatory evaluation, any comments
received, and other information. The address for the Docket Office
(phone:<PHONE_NUMBER>) is Docket Management Facility, U.S. Department of
Transportation, Docket Operations, M-30, West Building Ground Floor,
Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Serj Harutunian, Aerospace Engineer,
Propulsion Section, FAA, Los Angeles ACO Branch, 3960 Paramount
Boulevard, Lakewood, CA 90712-4137; phone:<PHONE_NUMBER>; fax: 562-627-
5210; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR
part 39 by adding an AD that would apply to all The Boeing Company
Model 737-300, -400, and -500 series airplanes. The NPRM published in
the Federal Register on March 9, 2017 (82 FR 13079). The NPRM was
prompted by a report that the fuel tank access door at wing buttock
line 191.00 did not have an engineered ground path with the mating wing
structure. The NPRM proposed to require replacing the fuel tank access
door, doing a check of the electrical bond, doing related investigative
and corrective actions if necessary, and revising the maintenance or
inspection program by incorporating an AWL. We are issuing this AD to
prevent an ungrounded path that could result in an increased risk of
ignition and subsequent fuel tank explosion in the event of a lightning
strike.

Comments

    We gave the public the opportunity to participate in developing
this AD. The following presents the comments received on the NPRM and
the FAA's response to each comment.

Support for the NPRM

    The Air Line Pilots Association, International, stated that it
supports the NPRM.

Request To Revise the Proposed AD To State the Compliance Time and
Remove an Exception

    Boeing requested that we revise paragraph (g) of the proposed AD to
state the specific compliance time ``within 36 months after the
effective date of this AD,'' rather than referring to the service
information for compliance times. Boeing suggested that providing the
compliance time in the body of the proposed AD would minimize confusion
and misunderstanding.
    Boeing also requested that we remove paragraph (i)(1) of the
proposed AD, which specifies an exception to the compliance time stated
in the service information. Boeing further noted that we would also
need to renumber paragraph (i)(2) of the proposed AD and update
references to the affected paragraphs of the proposed AD. Boeing
pointed out that if we stated the specific compliance time as
requested, the exception language in paragraph (i)(1) of the proposed
AD is no longer necessary.
    We agree with the requested changes for the reasons provided by the
commenter. We have revised this AD accordingly.

Request To Correct the Certification Maintenance Requirements (CMR)
Document Title

    Boeing requested that we correct the title of the CMR document from
``Boeing 737-12345 . . .'' to ``Boeing 737-100/200/200C/300/400/500 . .
. .''
    We agree with this request and have corrected the document title in
this final rule.

Effects of Winglets on Accomplishment of the Proposed Actions

    Aviation Partners Boeing stated that the installation of winglets
per Supplemental Type Certificate (STC) ST01219SE does not affect the
accomplishment of the manufacturer's service instructions.
    We agree with the commenter that STC ST01219SE does not affect the
accomplishment of the manufacturer's service instructions. Therefore
the installation of STC ST01219SE does not affect the ability to
accomplish the actions required by this AD. We have not changed this AD
in this regard.

Conclusion

    We reviewed the relevant data, considered the comments received,
and determined that air safety and the public interest require adopting
this final rule with the changes described previously and minor
editorial changes. We have determined that these minor changes:
     Are consistent with the intent that was proposed in the
NPRM for correcting the unsafe condition; and
     Do not add any additional burden upon the public than was
already proposed in the NPRM.
    We also determined that these changes will not increase the
economic burden on any operator or increase the scope of this final
rule.

Related Service Information Under 1 CFR Part 51

    We reviewed the following service information.
     Boeing Service Bulletin 737-57-1320, dated October 7,
2016, which describes procedures for replacing the fuel tank access
door with a new installation that has two engineered ground paths
between the new door assembly and the mating wing structure, doing a
check of the electrical bond, and related investigative and corrective
actions.
     Boeing 737-100/200/200C/300/400/500 Airworthiness
Limitations (AWLs) and Certification Maintenance Requirements (CMRs)
D6-38278-CMR, dated May 2016. The AWL required by this AD is AWL 28-
AWL-30 ``Upper Wing Fuel Tank Access Panel--Lightning Protection
Electrical Design Features,'' which describes features to verify during
installation of the upper fuel tank access panel.
    This service information is reasonably available because the
interested parties have access to it through their normal course of
business or by the means identified in the ADDRESSES section.

Costs of Compliance

    We estimate that this AD affects 381 airplanes of U.S. registry. We
estimate the following costs to comply with this AD:

                                                 Estimated Costs
----------------------------------------------------------------------------------------------------------------
                                                                                Cost per      Cost on U.S.
                Action                         Labor cost           Parts cost        product        operators
----------------------------------------------------------------------------------------------------------------
Install new door assembly and check     12 work-hours x $85 per           $2,237          $3,257      $1,240,917
 electrical bond.                        hour = $1,020.
Revise maintenance or inspection        1 work-hour x $85 per                  0              85          32,385
 program.                                hour = $85.
----------------------------------------------------------------------------------------------------------------

    We have received no definitive data that would enable us to provide
cost estimates for the on-condition actions specified in this AD.
    According to the manufacturer, some of the costs of this AD may be
covered under warranty, thereby reducing the cost impact on affected
individuals. We do not control warranty coverage for affected
individuals. As a result, we have included all costs in our cost
estimate.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. Subtitle VII: Aviation Programs,
describes in more detail the scope of the Agency's authority.
    We are issuing this rulemaking under the authority described in
Subtitle VII, Part A, Subpart III, Section 44701: ``General
requirements.'' Under that section, Congress charges the FAA with
promoting safe flight of civil aircraft in air commerce by prescribing
regulations for practices, methods, and procedures the Administrator
finds necessary for safety in air commerce. This regulation is within
the scope of that authority because it addresses an unsafe condition
that is likely to exist or develop on products identified in this
rulemaking action.
    This AD is issued in accordance with authority delegated by the
Executive Director, Aircraft Certification Service, as authorized by
FAA Order 8000.51C. In accordance with that order, issuance of ADs is
normally a function of the Compliance and Airworthiness Division, but
during this transition period, the Executive Director has delegated the
authority to issue ADs applicable to transport category airplanes to
the Director of the System Oversight Division.

Regulatory Findings

    This AD will not have federalism implications under Executive Order
13132. This AD will not have a substantial direct effect on the States,
on the relationship between the national government and the States, or
on the distribution of power and responsibilities among the various
levels of government.
    For the reasons discussed above, I certify that this AD:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) Is not a ``significant rule'' under DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979),
    (3) Will not affect intrastate aviation in Alaska, and
    (4) Will not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.

Adoption of the Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA amends 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

0
1. The authority citation for part 39 continues to read as follows:

    Authority: 49 U.S.C. 106(g), 40113, 44701.

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new airworthiness
directive (AD):

2017-17-09 The Boeing Company: Amendment 39-18999; Docket No. FAA-
2017-0128; Product Identifier 2016-NM-194-AD.

(a) Effective Date

    This AD is effective September 29, 2017.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to all The Boeing Company Model 737-300, -400,
and -500 series airplanes, certificated in any category.

(d) Subject

    Air Transport Association (ATA) of America Code 57, Wings.

(e) Unsafe Condition

    This AD was prompted by a manufacturer's review that showed that
the fuel tank access door at wing buttock line 191.00 did not have
an engineered ground path with the mating wing structure. We are
issuing this AD to prevent an ungrounded path that could result in
an increased risk of ignition and subsequent fuel tank explosion in
the event of a lightning strike.

(f) Compliance

    Comply with this AD within the compliance times specified,
unless already done.

(g) New Door Assembly, Electrical Bond Check, and Related Corrective
Actions

    Within 36 months after the effective date of this AD: Install a
new door assembly, do a check of the electrical bond, and do all
applicable related investigative and corrective actions, in
accordance with the Accomplishment Instructions of Boeing Service
Bulletin 737-57-1320, dated October 7, 2016, except as required by
paragraph (i) of this AD. Do all applicable related investigative
and corrective actions before further flight.

(h) Revise the Maintenance or Inspection Program

    Prior to or concurrently with accomplishment of the actions
required by paragraph (g) of this AD, or within 30 days after the
effective date of this AD, whichever occurs later: Revise the
maintenance or inspection program, as applicable, to incorporate
Airworthiness Limitation 28-AWL-30, ``Upper Wing Fuel Tank Access
Panel--Lightning Protection Electrical Design Features,'' as
specified in Boeing 737-100/200/200C/300/400/500 Airworthiness
Limitations (AWLs) and Certification Maintenance Requirements (CMRs)
D6-38278-CMR, dated May 2016.

(i) Service Information Exception

    Where Boeing Service Bulletin 737-57-1320, dated October 7,
2016, specifies to contact Boeing for repair instructions, and
specifies that action as Required for Compliance (RC), this AD
requires repair using a method approved in accordance with the
procedures specified in paragraph (j) of this AD.

(j) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Los Angeles ACO Branch, FAA, has the authority
to approve AMOCs for this AD, if requested using the procedures
found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your
request to your principal inspector or local Flight Standards
District Office, as appropriate. If sending information directly to
the manager of the certification office, send it to the attention of
the person identified in paragraph (k) of this AD. Information may
be emailed to<EMAIL_ADDRESS>    (2) Before using any approved AMOC, notify your appropriate
principal inspector, or lacking a principal inspector, the manager
of the local flight standards district office/certificate holding
district office.
    (3) An AMOC that provides an acceptable level of safety may be
used for any repair, modification, or alteration required by this AD
if it is approved by the Boeing Commercial Airplanes Organization
Designation Authorization (ODA) that has been authorized by the
Manager, Los Angeles ACO Branch, to make those findings. To be
approved, the repair method, modification deviation, or alteration
deviation must meet the certification basis of the airplane, and the
approval must specifically refer to this AD.
    (4) Except as required by paragraph (i) of this AD: For service
information that contains steps that are labeled as Required for
Compliance (RC), the provisions of paragraphs (j)(4)(i) and
(j)(4)(ii) of this AD apply.
    (i) The steps labeled as RC, including substeps under an RC step
and any figures identified in an RC step, must be done to comply
with the AD. If a step or substep is labeled ``RC Exempt,'' then the
RC requirement is removed from that step or substep. An AMOC is
required for any deviations to RC steps, including substeps and
identified figures.
    (ii) Steps not labeled as RC may be deviated from using accepted
methods in accordance with the operator's maintenance or inspection
program without obtaining approval of an AMOC, provided the RC
steps, including substeps and identified figures, can still be done
as specified, and the airplane can be put back in an airworthy
condition.

(k) Related Information

    For more information about this AD, contact Serj Harutunian,
Aerospace Engineer, Propulsion Section, FAA, Los Angeles ACO Branch,
3960 Paramount Boulevard, Lakewood, CA 90712-4137; phone: 562-627-
5254; fax:<PHONE_NUMBER>; email<EMAIL_ADDRESS>
(l) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the
incorporation by reference (IBR) of the service information listed
in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
    (2) You must use this service information as applicable to do
the actions required by this AD, unless the AD specifies otherwise.
    (i) Boeing Service Bulletin 737-57-1320, dated October 7, 2016.
    (ii) Boeing 737-100/200/200C/300/400/500 Airworthiness
Limitations (AWLs) and Certification Maintenance Requirements (CMRs)
D6-38278-CMR, dated May 2016.
    (3) For service information identified in this AD, contact
Boeing Commercial Airplanes, Attention: Contractual & Data Services
(C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-
5600; telephone<PHONE_NUMBER>; Internet https://www.myboeingfleet.com.
    (4) You may view this service information at the FAA, Transport
Standards Branch, 1601 Lind Avenue SW., Renton, WA. For information
on the availability of this material at the FAA, call<PHONE_NUMBER>.
    (5) You may view this service information that is incorporated
by reference at the National Archives and Records Administration
(NARA). For information on the availability of this material at
NARA, call<PHONE_NUMBER>, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Renton, Washington, on August 9, 2017.
Dionne Palermo,
Acting Director, System Oversight Division, Aircraft Certification
Service.
[FR Doc. 2017-17399 Filed 8-24-17; 8:45 am]
 BILLING CODE 4910-13-P


[Federal Register: June 11, 2010 (Volume 75, Number 112)]
[Notices]
[Page 33368]
[DOCID:fr11jn10-121]

=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

Submission for OMB Review; Comment Request

Upon Written Request; Copies Available From: Securities and Exchange
Commission, Office of Investor Education and Advocacy, Washington, DC
20549-0213.

Extension: Form S-8; OMB Control No. 3235-0066; SEC File No. 270-66.

    Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') has submitted to the Office of Management
and Budget this request for extension of the previously approved
collection of information discussed below.
    Form S-8 (17 CFR 239.16b) under the Securities Act of 1933 (15
U.S.C. 77a et seq.) is the primary registration statement used by
eligible registrants to register securities to be issuers in connection
with employee benefit plans. Form S-8 provides verification of
compliance with securities law requirements and assures the public
availability and dissemination of such information. The likely
respondents will be companies. The information must be filed with the
Commission on occasion. Form S-8 is a public document. All information
provided is mandatory. We estimate that Form S-8 takes approximately 24
hours per response to prepare and is filed by approximately 2,680
respondents. In addition, we estimate that 50% of the 24 hours per
response (12 hours per response) is prepared by the filer for a total
annual reporting burden of 32,160 hours (12 hours per response x 2,680
responses).
    An agency may conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a currently
valid control number.
    Written comments regarding the above information should be directed
to the following persons: (i) Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Office of Management and Budget, Room 10102, New Executive Office
Building, Washington, DC 20503 or send an e-mail to: Shagufta_
<EMAIL_ADDRESS>and (ii) Charles Boucher, Director/CIO, Securities
and Exchange Commission, C/O Shirley Martinson, 6432 General Green Way,
Alexandria, VA 22312; or send an e-mail to<EMAIL_ADDRESS>
Comments must be submitted to OMB within 30 days of this notice.

    Dated: June 7, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-14056 Filed 6-10-10; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 251 (Friday, December 30, 2016)]
[Notices]
[Pages 96545-96550]
[FR Doc No: 2016-31679]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79687; File No. SR-NASDAQ-2016-183]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing of Proposed Rule Change To Shorten the Settlement
Cycle From T+3 to T+2

December 23, 2016.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 22, 2016, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to amend Nasdaq Rules 11140 (Transactions in
Securities ``Ex-Dividend,'' ``Ex-Rights'' or ``Ex-Warrants''), 11150
(Transactions ``Ex-Interest'' in Bonds Which Are Dealt in ``Flat''),
11210 (Sent by Each Party), 11320 (Dates of Delivery), 11620
(Computation of Interest), and IM-11810 (Sample Buy-In Forms), to
conform to the Commission's proposed amendment to SEA Rule 15c6-1(a) to
shorten the standard settlement cycle for most broker-dealer
transactions from three business days after the trade date (``T+3'') to
two business days after the trade date (``T+2'') and the industry-led
initiative to shorten the settlement cycle from T+3 to T+2.\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 78962 (September 28,
2016), 81 FR 69240 (October 5, 2016) (Amendment to Securities
Transaction Settlement Cycle) (File No. S7-22-16) (``SEC Proposing
Release'').
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's
Web site at http://nasdaq.cchwallstreet.com, at the principal office of
the Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements

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

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

1. Purpose
SEC Proposing Release
    On September 28, 2016, the Commission proposed amending SEA Rule
15c6-1(a) to shorten the standard settlement cycle for most broker-
dealer transactions from T+3 to T+2 on the basis that the shorter
settlement cycle would reduce the risks that arise from the value and
number of unsettled securities transactions prior to the completion of
settlement, including credit, market, and liquidity risk directly faced
by U.S. market participants.\4\ The proposed rule amendment was
published for comment in the Federal Register on October 5, 2016.\5\
---------------------------------------------------------------------------

    \4\ See Securities and Exchange Commission Press Release 2016-
200: ``SEC Proposes Rule Amendment to Expedite Process for Settling
Securities Transactions'' (September 28, 2016).
    \5\ See supra note 3.
---------------------------------------------------------------------------

Background
    In 1995, the standard U.S. trade settlement cycle for equities,
municipal and corporate bonds, and unit investment trusts, and
financial instruments composed of these products was shortened from
five business days after the trade date (``T+5'') to T+3.\6\
Accordingly, Nasdaq and other self-regulatory organizations (``SROs'')
amended their respective rules to conform to the T+3 settlement
cycle.\7\ Since that time, the SEC and the financial services industry
have continued to explore the idea of shortening the settlement cycle
even further.\8\
---------------------------------------------------------------------------

    \6\ In 1993, the Commission adopted SEA Rule 15c6-1 which became
effective in 1995. See Securities Exchange Act Release Nos. 33023
(October 6, 1993), 58 FR 52891 (October 13, 1993) and 34952
(November 9, 1994), 59 FR 59137 (November 16, 1994). SEA Rule 15c6-
1(a) provides, in relevant part, that ``a broker or dealer shall not
effect or enter into a contract for the purchase or sale of a
security (other than an exempted security, government security,
municipal security, commercial paper, bankers' acceptances, or
commercial bills) that provides for payment of funds and delivery of
securities later than the third business day after the date of the
contract unless otherwise expressly agreed to by the parties at the
time of the transaction.'' 17 CFR 240.15c6-1(a). Although not
covered by SEA Rule 15c6-1, in 1995, the Commission approved the
Municipal Securities Rulemaking Board's rule change requiring
transactions in municipal securities to settle by T+3. See
Securities Exchange Act Release No. 35427 (February 28, 1995), 60 FR
12798 (March 8, 1995) (Order Approving File No. SR-MSRB-94-10).
    \7\ See, e.g., Securities Exchange Act Release No. 35507 (March
17, 1995), 60 FR 15616 (March 24, 1995) (Order Approving File No.
SR-NASD-94-56); Securities Exchange Act Release No. 35506 (March 17,
1995), 60 FR 15618 (March 24, 1995) (Order Approving File No. SR-
NYSE-94-40); and Securities Exchange Act Release No. 35553 (March
31, 1995), 60 FR 18161 (April 10, 1995) (Order Approving File No.
SR-Amex-94-57).
    \8\ See, e.g., Securities Industry Association (``SIA''), ``SIA
T+1 Business Case Final Report'' (July 2000); Concept Release:
Securities Transactions Settlement, Securities Exchange Act Release
No. 49405 (March 11, 2004), 69 FR 12922 (March 18, 2004); and
Depository Trust & Clearing Corporation, ``Proposal to Launch a New
Cost-Benefit Analysis on Shortening the Settlement Cycle'' (December
2011).
---------------------------------------------------------------------------

    In April 2014, the Depository Trust & Clearing Corporation
(``DTCC'') published its formal recommendation to shorten the standard
U.S. trade settlement cycle to T+2 and announced that it would partner
with market participants and industry organizations to devise the
necessary approach and timelines to achieve T+2.\9\
---------------------------------------------------------------------------

    \9\ See DTCC, ``DTCC Recommends Shortening the U.S. Trade
Settlement Cycle'' (April 2014).
---------------------------------------------------------------------------

    In an effort to improve the overall efficiency of the U.S.
settlement system by reducing the attendant risks in T+3 settlement of
securities transactions, and to align U.S. markets with other major
global markets that have already moved to T+2, DTCC, in collaboration
with the financial services industry, formed an Industry Steering
Committee (``ISC'') and an industry working group and sub-working
groups to facilitate the move to T+2.\10\ In June 2015, the ISC
published a White Paper outlining the activities and proposed time
frames that would be required to move to T+2 in the U.S.\11\
Concurrently, the Securities Industry and Financial Markets Association
(``SIFMA'') and the Investment Company Institute (``ICI'') jointly
submitted a letter to SEC Chair White, expressing support of the
financial services industry's efforts to shorten the settlement cycle
and identifying SEA Rule 15c6-1(a) and several SRO rules that they
believed would require amendments for an effective transition to
T+2.\12\ In March 2016, the ISC announced the industry target date of
September 5, 2017 for the transition to a T+2 settlement cycle to
occur.\13\
---------------------------------------------------------------------------

    \10\ The ISC includes, among other participants, DTCC, the
Securities Industry and Financial Markets Association and the
Investment Company Institute.
    \11\ See ``Shortening the Settlement Cycle: The Move to T+2''
(June 18, 2015).
    \12\ See Letter from ICI and SIFMA to Mary Jo White, Chair, SEC,
dated June 18, 2015. See also Letter from Mary Jo White, Chair to
Kenneth E. Bentsen, Jr., President and CEO, SIFMA, and Paul Schott
Stevens, President and CEO, ICI, dated September 16, 2015
(expressing her strong support for industry efforts to shorten the
trade settlement cycle to T+2 and commitment to developing a
proposal to amend SEA Rule 15c6-1(a) to require standard settlement
no later than T+2).
    \13\ See ISC Media Alert: ``US T+2 ISC Recommends Move to
Shorter Settlement Cycle On September 5, 2017'' (March 7, 2016).
---------------------------------------------------------------------------

Proposed Rule Change
    In light of the SEC Proposing Release that would amend SEA Rule
15c6-1(a) to require standard settlement no later than T+2 and similar
proposals from other SROs,\14\ Nasdaq is proposing changes to its rules
pertaining to securities settlement by, among other things, amending
the definition of ``standard'' settlement as occurring on T+2. SEA Rule
15c6-1(a) currently establishes ``standard'' settlement as occurring no
later than T+3 for all securities, other than an exempt security,
government security, municipal security, commercial paper, bankers'
acceptances, or commercial bills.\15\ Nasdaq is proposing changes to
rules pertaining to securities settlement to support the industry-led
initiative to shorten the standard settlement cycle to two business
days. Most of the rules that Nasdaq has identified for these changes
are successors to provisions under the legacy NASD Rules of Fair
Practice and NASD Uniform Practice Code (``UPC'') that were amended
when the Commission adopted SEA Rule 15c6-1(a), which established T+3
as the standard settlement cycle.\16\ As such, Nasdaq is proposing to
amend Nasdaq Rules 11140 (Transactions in Securities ``Ex-Dividend,''
``Ex-Rights'' or ``Ex-Warrants''), 11150 (Transactions ``Ex- Interest''
in Bonds Which Are Dealt in ``Flat''), 11320 (Dates of Delivery), and
11620 (Computation of Interest). In addition, Nasdaq is proposing to
amend

Nasdaq Rules 11210 (Sent by Each Party) and IM-11810 (Sample Buy-In
Forms) to conform provisions, where appropriate, to the T+2 settlement
cycle.\17\
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    \14\ See, e.g., Securities Exchange Act Release No. 77744 (April
29, 2016), 81 FR 26851 (May 4, 2016) (Order Approving File No. SR-
MSRB-2016-04).
    \15\ See supra note 7.
    \16\ The legacy NASD rules that were changed to conform to the
move from T+5 to T+3 included Section 26 (Investment Companies) of
the Rules of Fair Practice, and Section 5 (Transactions in
Securities ``Ex-Dividend,'' ``Ex-Rights'' or ``Ex- Warrants''),
Section 6 (Transactions ``Ex-Interest'' in Bonds Which Are Dealt in
``Flat''), Section 12 (Dates of Delivery), Section 46 (Computation
of Interest) and Section 64 (Acceptance and Settlement of COD
Orders) of the UPC. See Securities Exchange Act Release No. 35507
(March 17, 1995), 60 FR 15616 (March 24, 1995) (Order Approving File
No. SR-NASD-94-56). See also Notice to Members 95-36 (May 1995)
(enumerating the various sections under the NASD Rules of Fair
Practice and UPC that were amended to implement T+3 settlement for
securities transactions).
    \17\ Nasdaq Rules 11210 and IM-11810 are successors to legacy
NASD UPC Section 9 (Sent by Each Party) and 59 (``Buying-in''),
respectively, which remained unchanged during the transition from
T+5 to T+3. See supra note 17 [sic].
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    The details of the proposed rule change are described below.
(1) Nasdaq Rule 11140 (Transactions in Securities ``Ex-Dividend,''
``Ex- Rights'' or ``Ex-Warrants'')
    Rule 11140(b)(1) provides that for dividends or distributions, and
the issuance or distribution of warrants, that are less than 25 percent
of the value of the subject security, if definitive information is
received sufficiently in advance of the record date, the date
designated as the ``ex-dividend date'' shall be the second business day
preceding the record date if the record date falls on a business day,
or the third business day preceding the record date if the record date
falls on a day designated by Nasdaq Regulation as a non-delivery date.
Nasdaq is proposing to shorten the time frames in Rule 11140(b)(1) by
one business day.
(2) Nasdaq Rule 11150 (``Ex-Interest'' in Bonds Which Are Dealt in
``Flat'')
    Rule 11150(a) prescribes the manner for establishing ``ex-interest
dates'' for transactions in bonds or other similar evidences of
indebtedness which are traded ``flat.'' Such transactions are ``ex-
interest'' on the second business day preceding the record date if the
record date falls on a business day, on the third business day
preceding the record date if the record date falls on a day other than
a business day, or on the third business day preceding the date on
which an interest payment is to be made if no record date has been
fixed. Nasdaq is proposing to shorten the time frames in Rule 11150(a)
by one business day.
(3) Nasdaq Rule 11210 (Sent by Each Party)
    Paragraphs (c) and (d) of Rule 11210 set forth the ``Don't Know''
(``DK'') voluntary procedures for using ``DK Notices'' or other forms
of notices, respectively. Depending upon the notice used, a confirming
member may follow the ``DK'' procedures when it sends a comparison or
confirmation of a trade (other than one that clears through the
National Securities Clearing Corporation (``NSCC'') or other registered
clearing agency), but does not receive a comparison or confirmation or
a signed ``DK'' from the contra-member by the close of four business
days following the trade date of the transaction (``T+4''). The
procedures generally provide that after T+4, the confirming member
shall send a ``DK Notice'' (or similar notice) to the contra-member.
The contra-member then has four business days after receipt of the
confirming member's notice to either confirm or ``DK'' the transaction.
    Nasdaq is proposing to amend paragraphs (c) and (d) of Rule 11210
to provide that the ``DK'' procedures may be used by the confirming
member if it does not receive a comparison or confirmation or signed
``DK'' from the contra-member by the close of one business day
following the trade date of the transaction, rather than the current
T+4.\18\ In addition, Nasdaq is proposing amendments to paragraphs
(c)(2)(A), (c)(3), and (d)(5) of Rule 11210 to adjust the time in which
a contra-member has to respond to a ``DK Notice'' (or similar notice)
from four business days after the contra-member's receipt of the notice
to two business days.
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    \18\ As stated above, the time frames in Rule 11210 remained
unchanged during the transition from T+5 to T+3. In light of the
industry-led initiative to shorten the standard settlement cycle and
the SEC Proposing Release to amend SEA Rule 15c6-1(a) to establish
T+2 as the standard settlement for most broker dealer transactions,
the Exchange believes that the current time frames in Rule 11210 are
more protracted than necessary even in a T+3 environment and as
such, the Exchange is proposing to amend these time frames to
reflect more current industry practices.
---------------------------------------------------------------------------

(4) Nasdaq Rule 11320 (Dates of Delivery)
    Rule 11320 prescribes delivery dates for various transactions.
Paragraph (b) states that for a ``regular way'' transaction, delivery
must be made on, but not before, the third business day after the date
of the transaction. Nasdaq is proposing to amend Rule 11320(b) to
change the reference to third business day to second business day.
Paragraph (c) provides that in a ``seller's option'' transaction,
delivery may be made by the seller on any business day after the third
business day following the date of the transaction. Nasdaq is proposing
to amend Rule 11320(c) to change the reference to third business day to
second business day.
(5) Nasdaq Rule 11620 (Computation of Interest)
    In the settlement of contracts in interest-paying securities other
than for cash, Rule 11620(a) requires the calculation of interest at
the rate specified in the security up to, but not including, the third
business day after the date of the transaction. The proposed amendment
would shorten the time frame to the second business day. In addition,
the proposed amendment would make non-substantive technical changes to
the title of paragraph (a).
(6) Nasdaq Rule IM-11810 (Sample Buy-In Forms)
    Rule IM-11810(i)(1)(A) sets forth the fail-to-deliver and liability
notice procedures where a securities contract is for warrants, rights,
convertible securities or other securities which have been called for
redemption; are due to expire by their terms; are the subject of a
tender or exchange offer; or are subject to other expiring events such
as a record date for the underlying security and the last day on which
the securities must be delivered or surrendered is the settlement date
of the contract or later.\19\
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    \19\ Rule IM-11810(i) is the successor to legacy NASD UPC
Section 59(i) (Failure to Deliver and Liability Notice Procedures).
When this provision was added to NASD's existing close-out
procedures in 1984, it was drafted to be similar to the liability
notice provisions adopted by the NSCC so that members that were also
participants in NSCC could use the same procedures for both ex-
clearing and NSCC cleared transactions, thereby simplifying members'
back office procedures.
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    Under Rule IM-11810(i)(1)(A), the receiving member delivers a
liability notice to the owing counterparty. The liability notice sets a
cutoff date for the delivery of the securities by the counterparty and
provides notice to the counterparty of the liability attendant to its
failure to deliver the securities in time. If the owing counterparty,
or delivering member, delivers the securities in response to the
liability notice, it has met its delivery obligation. If the delivering
member fails to deliver the securities on the expiration date, it will
be liable for any damages that may accrue thereby.
    Rule IM-11810(i)(1)(A) further provides that when both parties to a
contract are participants in a registered clearing agency that has an
automated liability notification service, transmission of the liability
notice must be accomplished through such system.\20\ When the parties
to a contract are not both participants in a registered clearing agency
that has an automated liability notification service, such notice must
be issued using written or comparable

electronic media having immediate receipt capabilities not later than
one business day prior to the latest time and the date of the offer or
other event in order to obtain the protection provided by the Rule.\21\
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    \20\ In 2007, NYSE Rule 180 was amended to require that when the
parties to a failed contract were both participants in a registered
clearing agency that had an automated service for notifying a
failing party of the liability that will be attendant to a failure
to deliver and the contract was to be settled through the facilities
of that registered clearing agency, the transmission of the
liability notification must be accomplished through the use of the
registered clearing agency's automated liability notification
system. See Securities Exchange Act Release No. 55132 (January 19,
2007), 72 FR 3896 (January 26, 2007) (Order Approving File No. SR-
NYSE-2006-57).
    \21\ While Rule IM-11810 has undergone amendments over the
years, the one-day time frame in paragraph (j) has remained
unchanged. The one-day time frame also appears in comparable
provisions of other SROs. See, e.g., NSCC Rules & Procedures,
Procedure X (Execution of Buy-Ins) (Effective August 10, 2016); NYSE
Rule 282.65 (Fail to Deliver and Liability Notice Procedures). See
also infra note 28 and accompanying text.
---------------------------------------------------------------------------

    Given the proposed shortened settlement cycle, Nasdaq is proposing
to amend Rule IM-11810(i)(1)(A) in situations where both parties to a
contract are not participants of a registered clearing agency with an
automated notification service, by extending the time frame for
delivery of the liability notice. Rule IM-11810(i)(1)(A) would be
amended to provide that in such cases, the receiving member must send
the liability notice to the delivering member as soon as practicable
but not later than two hours prior to the cutoff time set forth in the
instructions on a specific offer or other event to obtain the
protection provided by the Rule. Nasdaq believes that extending the
time given to the receiving member to transmit liability notifications
will maintain the efficiency of the notification process while
mitigating the possible overuse of such notifications.
    Currently, Nasdaq understands that the identity of the
counterparty, or delivering member, becomes known to the receiving
member by mid-day on the business day after trade date (``T+1''), and
by that time, the receiving member will generally also know which
transactions are subject to an event identified in Rule IM-
11810(i)(1)(A) that would prompt the receiving member to issue a
liability notice to the delivering member. Nasdaq believes that the
receiving member regularly issues liability notices to the seller or
other parties from which the securities involved are due when the
security is subject to an event identified in Rule IM-11810(i)(1)(A)
during the settlement cycle as a way to mitigate the risk of a
potential fail-to-deliver. In the current T+3 settlement environment,
the one business day time frame gives the receiving member the
requisite time needed to identify the parties involved and undertake
the liability notification process.
    However, Nasdaq believes that the move to a T+2 settlement
environment will create inefficiencies in the liability notification
process under Rule IM-11810(i)(1)(A) when both parties to a contract
are not participants in a registered clearing agency with an automated
notification service. The shorter settlement cycle, with the loss of
one business day, would not afford the receiving member sufficient time
to: (1) ascertain that the securities are subject to an event listed in
Rule IM-11810(i)(1)(A) during the settlement cycle; (2) identify the
delivering member and other parties from which the securities involved
are due; and (3) determine the likelihood that such parties may fail to
deliver. Where the receiving member has sufficient time (e.g., one
business day after), it can transmit liability notices as needed to the
right parties. However, as a consequence of the shortened settlement
cycle, the receiving member would be compelled to issue liability
notices proactively to all potentially failing parties as a matter of
course to preserve its rights against such parties without the benefit
of knowing which transactions would actually necessitate the delivery
of such notice. This would create a significant increase in the volume
of liability notices members send and receive, many of which may be
unnecessary. Members would then have to manage this overabundance of
liability notices, increasing the possibility of errors, which would
adversely impact the efficiency of the process. Therefore, Nasdaq
believes its proposal to extend the time for the receiving member to
deliver a liability notice when the parties to a contract are not both
participants in a registered clearing agency with an automated
notification service would help alleviate the potential burden on the
liability notification process in a T+2 settlement environment.
Implementation
    Nasdaq will announce the effective date of the proposed rule change
in an Equity Regulatory Alert, which date would correspond with the
industry-led transition to a T+2 standard settlement, and the effective
date of the Commission's proposed amendment to SEA Rule 15c6-1(a) to
require standard settlement no later than T+2.\22\
---------------------------------------------------------------------------

    \22\ See supra note 3.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\23\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\24\ in particular, in that it is designed to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, and, in general, to protect investors and
the public interest. The Exchange believes that the proposed rule
change supports the supports [sic] the industry-led initiative to
shorten the settlement cycle to two business days. Moreover, the
proposed rule change is consistent with the SEC's proposed amendment to
SEA Rule 15c6-1(a) to require standard settlement no later than T+2.
Nasdaq believes that the proposed rule change will provide the
regulatory certainty to facilitate the industry-led move to a T+2
settlement cycle. As noted herein, upon approval, Nasdaq will announce
the effective date of the proposed rule change in an Equity Regulatory
Alert, which date would correspond with the industry-led transition to
a T+2 standard settlement, and the effective date of the Commission's
proposed amendment to SEA Rule 15c6-1(a) to require standard settlement
no later than T+2.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f(b).
    \24\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed rule change makes
changes to rules pertaining to securities settlement and is intended to
facilitate the implementation of the industry-led transition to a T+2
settlement cycle. Moreover, the proposed rule changes are consistent
with the SEC's proposed amendment to SEA Rule 15c6-1(a) to require
standard settlement no later than T+2. Accordingly, Nasdaq believes
that the proposed changes do not impose any burdens on the industry in
addition to those necessary to implement amendments to SEA Rule 15c6-
1(a) as described and enumerated in the SEC Proposing Release.\25\
---------------------------------------------------------------------------

    \25\ See supra note 3.
---------------------------------------------------------------------------

    These conforming changes include changes to rules that specifically
establish the settlement cycle as well as rules that establish time
frames based on settlement dates, including for certain post-settlement
rights and obligations. Nasdaq believes that the proposed changes set
forth in the filing are necessary to support a standard settlement
cycle across the U.S. for secondary market transactions in equities,
corporate and municipal bonds, unit investment trusts, and financial
instruments composed of these

products, among other things.\26\ A standard U.S. settlement cycle for
such products is critical for the operation of fair and orderly
markets.
---------------------------------------------------------------------------

    \26\ See supra note 3.
---------------------------------------------------------------------------

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

    A previous version of the proposed rule change was published for
comment in Equity Regulatory Alert 2016-4 on May 18, 2016. Two comments
were received in response to the Regulatory Alert.\27\ A copy of the
Regulatory Alert is attached as Exhibit 2a. A list of comments is
attached as Exhibit 2b [sic] and copies of the comment letters received
in response to the Regulatory Notice are attached as Exhibits 2c [sic].
---------------------------------------------------------------------------

    \27\ See Letter from Martin A. Burns, Chief Industry Operations
Officer, Investment Company Institute to John Zecca, Senior Vice
President, Marketwatch dated June 8, 2016 (``ICI''); letter from
Thomas F. Price, Managing Director, Operations, Securities Industry
and Financial Markets Association, to John Zecca, Senior Vice
President Market Watch dated June 8, 2016 (``SIFMA'').
---------------------------------------------------------------------------

    Both of the letters received expressed support for the industry led
move to T+2 stating, among other benefits, that the move will align
U.S. markets with international markets that already work in the T+2
environment, improve the overall efficiency and liquidity of the
securities markets, and the stability of the financial system by
reducing counterparty risk and pro-cyclical and liquidity demands, and
decreasing clearing capital requirements. SIFMA also provided their
view on the proposed amendments to two rules under the Nasdaq Rule
11800 Series (Buying In).
Nasdaq Rule IM-11810(i)--Sample Buy-In Forms
    In its comment letter, SIFMA raised a concern with the one-day time
frame in Rule IM-11810(i)(1)(A), asserting that the requirement for the
delivering member to deliver a liability notice to the receiving member
no later than one business day prior to the latest time and the date of
the offer or other event in order to obtain the protection provided by
the Rule may no longer be appropriate in a T+2 environment in some
situations such as where the delivery obligation is transferred to
another party as a result of continuous net settlement, settlements
outside of the NSCC, and settlements involving a third party that is
not a Nasdaq member firm. SIFMA noted that NYSE Rule 180 (Failure to
Deliver) includes a similar requirement for NYSE member firms that are
participants in a registered clearing agency to transmit liability
notification through an automated notification service and proposed
amending Rule IM-11810(i)(1)(A) to omit the reference to a notification
time frame, which would align with NYSE Rule 180.\28\ In the
alternative, SIFMA proposed amending Rule IM-11810(i)(1)(A) to require
that the liability notice be delivered in a ``reasonable amount of
time'' ahead of the settlement obligation in light of facts and
circumstances. SIFMA maintained that under either proposed amendment to
paragraph (j), the delivering member would be liable for any damages
caused by its failure to deliver in a timely fashion.
---------------------------------------------------------------------------

    \28\ See NYSE Rule 180 (Failure to Deliver) providing in part
that ``[w]hen the parties to a contract are both participants in a
registered clearing agency which has an automated service for
notifying a failing party of the liability that will be attendant to
a failure to deliver and that contract was to be settled through the
facilities of said registered clearing agency, the transmission of
the liability notification must be accomplished through use of said
automated notification service.'' Nasdaq notes that NYSE Rule 180
does not address the transmission of the liability notification for
parties to a contract that are not both participants in a registered
clearing agency (or non-participants). The transmission of the
liability notification for non-participants is addressed under NYSE
Rule 282.65 (Failure to Deliver and Liability Notice Procedures).
See supra note 22.
---------------------------------------------------------------------------

    While Nasdaq did not initially propose amendments to Rule IM-11810
for the T+2 initiative,\29\ in light of SIFMA's concern regarding Rule
IM-11810(i)(1)(A), Nasdaq is proposing to amend the Rule to provide
that, where both parties to a contract are not participants of a
registered clearing agency with an automated notification service, the
receiving member must send the liability notice to the delivering
member as soon as practicable but not later than two hours prior to the
cutoff time set forth in the instructions on a specific offer or other
event to obtain the protection provided by the Rule.\30\
---------------------------------------------------------------------------

    \29\ See Equity Regulatory Alert 2016-4.
    \30\ Nasdaq expects similar amendments to other comparable SRO
provisions in NYSE Rule 282.65 (Fail to Deliver and Liability Notice
Procedures) and FINRA Rule 11810 (Buying-in), and NSCC Rules &
Procedures, Procedure X (Execution of Buy-Ins) to address SIFMA's
concern about the one-day notification time frame.
---------------------------------------------------------------------------

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) by order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2016-183 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2016-183. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-

NASDAQ-2016-183 and should be submitted on or before January 20, 2017.
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-31679 Filed 12-29-16; 8:45 am]
 BILLING CODE 8011-01-P