[Federal Register Volume 88, Number 239 (Thursday, December 14, 2023)]
[Notices]
[Pages 86708-86712]
[FR Doc No: 2023-27398]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-99120; File No. SR-NYSE-2023-47]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Harmonize Rules 9261 and 9830

December 8, 2023.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that on November 27, 2023, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to harmonize Rules 9261 and 9830 with recent
changes by the Financial Industry Regulatory Authority, Inc.
(``FINRA'') that allow for video conference hearings under specified
conditions. The proposed rule change is available on the Exchange's
website at www.nyse.com, at the principal office of the Exchange, and
at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to harmonize Rules 9261 (Evidence and
Procedure in Hearing) and 9830 (Hearing) with recent changes by FINRA
to its Rules 9261 and 9830 that allow for video conference hearings
under specified conditions.
Background
    In 2013, the NYSE adopted disciplinary rules modeled on the FINRA
Rule 8000 Series and Rule 9000 Series, and which set forth rules for
conducting investigations and enforcement actions.\4\ The NYSE
disciplinary rules were implemented on July 1, 2013.\5\
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    \4\ See Securities Exchange Act Release No. 68678 (January 16,
2013), 78 FR 5213 (January 24, 2013) (SR-NYSE-2013-02) (``2013
Notice''); Release No. 69045 (March 5, 2013), 78 FR 15394 (March 11,
2013) (SR-NYSE-2013-02) (``2013 Approval Order'').
    \5\ See NYSE Information Memorandum 13-8 (May 24, 2013).
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    In adopting disciplinary rules modeled on FINRA's rules, the NYSE
adopted the hearing and evidentiary processes set forth in Rule 9261
and also in Rule 9830 for hearings in matters involving temporary and
permanent cease and desist orders under the Rule 9800 Series. As
adopted, the text of Rule 9261 is identical to the counterpart FINRA
rule. Rule 9830 is also identical to FINRA's counterpart rule, except
for conforming and technical amendments.\6\
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    \6\ See 2013 Approval Order, 78 FR at 15394, n. 7 & 15400; 2013
Notice, 78 FR at 5228 & 5234.
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    In 2020, given the spread of COVID-19 and its effect on FINRA's
adjudicatory functions nationwide, FINRA filed a temporary rule change
to grant FINRA's Office of Hearing Officers

(``OHO'') and the National Adjudicatory Council (``NAC'') the authority
to conduct certain hearings by video conference if warranted by the
current COVID-19-related public health risks posed by in-person
hearings. Among the rules FINRA amended were FINRA Rules 9261 and
9830.\7\
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    \7\ See Securities Exchange Act Release Nos. 83289 (September 2,
2020), 85 FR 55712 (September 9, 2020) (SR-FINRA-2020-027). FINRA
also proposed to temporarily amend FINRA Rules 1015 and 9524. FINRA
Rule 1015 governs the process by which an applicant for new or
continuing membership can appeal a decision rendered by FINRA's
Department of Member Supervision under FINRA Rule 1014 or 1017 and
request a hearing which would be conducted by a subcommittee of the
NAC. See id. The Exchange has not adopted FINRA Rule 1015. FINRA
Rule 9524 governs the process by which a statutorily disqualified
member firm or associated person can appeal the Department's
recommendation to deny a firm or sponsoring firm's application to
the NAC. See id. Under the Exchange's version of Rule 9524, if the
Chief Regulatory Officer rejects the application, the member
organization or applicant may request a review by the Exchange Board
of Directors. This differs from FINRA's process, which provides for
a hearing before the NAC and further consideration by the FINRA
Board of Directors.
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    In its filing, FINRA represented that its protocol for conducting
hearings by video conference would ensure that such hearings maintain a
fair process for the parties by, among other things, FINRA's use of a
high quality, secure and user-friendly video conferencing service and
provision of thorough instructions, training and technical support to
all hearing participants.\8\ According to FINRA, the changes were a
reasonable interim solution to allow FINRA's critical adjudicatory
processes to continue to function while protecting the health and
safety of hearing participants.\9\
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    \8\ See 85 FR at 55713.
    \9\ See id.
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    Given that FINRA and OHO administer disciplinary hearings on the
Exchange's behalf pursuant to a regulatory services agreement
(``RSA''),\10\ and that the public health concerns addressed by FINRA's
amendments applied equally to the Exchange's disciplinary hearings, in
2020 the Exchange also temporarily amended its disciplinary rules to
allow virtual hearings.\11\ Both FINRA \12\ and the Exchange \13\
extended the temporary relief several times due to the continuing
public health risks and logistical challenges related to COVID-19,
including whether hearing participants could safely travel and abide by
state or local quarantine requirements. The Exchange's temporary
amendments to Rules 9261 and 9830 expired on April 30, 2023.\14\
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    \10\ FINRA's OHO administers all aspects of Exchange
adjudications, including assigning hearing officers to serve as NYSE
hearing officers. A hearing officer from OHO will, among other
things, preside over the disciplinary hearing, select and chair the
hearing panel, and prepare and issue written decisions. The Chief or
Deputy Hearing Officer for all Exchange disciplinary hearings are
currently drawn from OHO and are all FINRA employees. The Exchange
believes that OHO will utilize the same video conference protocol
and processes for Exchange matters under the RSA as it proposes for
FINRA matters.
    \11\ See Securities Exchange Act Release No. 90024 (September
28, 2020), 85 FR 62353 (October 2, 2020) (SR-NYSE-2020-76) (Notice
of Filing and Immediate Effectiveness of Proposed Rule Change to
Harmonize Rules 9261 and 9830 with Recent Changes by the Financial
Industry Regulatory Authority, Inc.).
    \12\ See Securities Exchange Act Release No. 90619 (December 9,
2020), 85 FR 81250 (December 15, 2020) (SR-FINRA-2020-042);
Securities Exchange Act Release No. 91495 (April 7, 2021), 86 FR
19306 (April 13, 2021) (SR-FINRA-2021-006); Securities Exchange Act
Release No. 92685 (August 17, 2021), 86 FR 47169 (August 23, 2021)
(SR-FINRA-2021-019); Securities Exchange Act Release No. 93758
(December 13, 2021), 86 FR 71695 (December 17, 2021) (SR-FINRA-2021-
31); Securities Exchange Act Release No. 94430 (March 16, 2022), 87
FR 16262 (March 22, 2022) (SR-FINRA-2022-004); Securities Exchange
Act Release No. 95281 (July 14, 2022), 87 FR 43335 (July 20, 2022)
(SR-FINRA-2022-018); Securities Exchange Act Release No. 96107
(October 19, 2022), 87 FR 64526 (October 25, 2022) (SR-FINRA-2022-
029); and Securities Exchange Act Release No. 96746 (January 25,
2023), 88 FR 6346 (January 31, 2023) (SR-FINRA-2023- 001).
    \13\ See Securities Exchange Act Release No. 90821 (December 30,
2020), 86 FR 644 (January 6, 2021) (NYSE-2020-107); Securities
Exchange Act Release No. 91629 (April 22, 2021), 86 FR 22505 (April
28, 2021) (NYSE-2021-27); Securities Exchange Act Release No. 92907
(September 9, 2021), 86 FR 51421 (September 15, 2021) (NYSE-2021-
47); Securities Exchange Act Release No. 93920 (January 6, 2022), 87
FR 1794 (January 1, 2022) (NYSE-2021-78); Securities Exchange Act
Release No. 94666 (April 11, 2022), 87 FR 22607 (April 15, 2022)
(NYSE-2022-17); Securities Exchange Act Release No. 95473 (August
11, 2022), 87 FR 50648 (August 17, 2022) (NYSE-2022-35); Securities
Exchange Act Release No. 96259 (November 8, 2022), 87 FR 68544
(November 15, 2022) (NYSE-2022-50); and Securities Exchange Act
Release No. 96803 (February 3, 2023), 88 FR 8487 (February 9, 2023)
(NYSE-2023-10).
    \14\ See Securities Exchange Act Release No. 96803 (February 3,
2023), 88 FR 8487 (February 9, 2023) (NYSE-2023-10) (extending the
expiration date of the temporary rule amendments to, among other
rules, FINRA Rules 9261 and 9830 from January 31, 2023 to April 30,
2023). The temporary amendments expired on April 30, 2023, because
the Exchange did not file another proposed rule change again
extending the temporary amendments beyond that date. See id. at
8488.
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    Recently, the Commission approved FINRA's proposal to make the
temporary amendments regarding video conference hearings permanent,
with some modifications, to permit the use of video conferences for
reasons beyond COVID-19.\15\ Specifically, FINRA amended, among other
rules, FINRA Rules 9261 and 9830 to extend OHO's authority to order
hearings by video conference to other similar situations in which
proceeding in person could endanger the health or safety of the
participant or alternatively would be impracticable (e.g., an uncommon
situation or extraordinary circumstances such as a natural disaster or
terrorist attack that caused travel to be cancelled for an extended
period of time).\16\ As approved, OHO has discretion to determine
whether the circumstances for a video hearing have been met and can act
quickly if a future unexpected event impairs their ability to conduct
in-person hearings safely.\17\ In addition, OHO also has authority to
order hearings to occur by video conference based on a motion, which
was not permitted under the previous temporary amendments to FINRA
Rules 9261 and 9830.\18\
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    \15\ See Securities Exchange Act Release Nos. 98029 (August 4,
2023), 88 FR 51879 (August 4, 2023) (SR-FINRA-2023-008) (Order
Approving a Proposed Rule Change To Amend FINRA Rules 1015, 9261,
9341, 9524, 9830 and Funding Portal Rule 900 (Code of Procedure) To
Permit Hearings Under Those Rules To Be Conducted by Video
Conference) (``FINRA Approval Order'').
    \16\ See FINRA Approval Order, 88 FR at 51880.
    \17\ See id.
    \18\ See id.
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    As the FINRA Approval Order noted, FINRA represented that it will
utilize the same protocols for conducting video conference hearings as
those employed under the temporary amendments, including using a high
quality, secure, user-friendly video conferencing service and providing
thorough instructions, training, and technical support to all hearing
participants.\19\ In addition, the FINRA Approval Order noted that,
according to FINRA, the parties could file a joint motion requesting
the hearing to occur, in whole or in part, by video conference based on
a showing of good cause. In-person hearings, however, would remain the
default method for conducting hearings.\20\
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    \19\ See id.
    \20\ See id.
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    Further, as noted in the FINRA Approval Order, given the nature of
evidentiary hearings,\21\ which often occur over multiple days and
generally include numerous documents in evidence and witness testimony,
motions for a hearing by video conference would need to be joined by
all parties, and even joint motions could be denied if the adjudicator
determines that good cause has not been shown.\22\ According to FINRA,
OHO would have reasonable discretion based on a joint motion of the
parties to exercise its authority to determine whether a

hearing should occur by video conference under the proposed rule
change.\23\ Moreover, in deciding whether to schedule a hearing by
video conference, OHO could consider and balance a variety of factors
including, for example and without limitation, a hearing participant's
individual health concerns and access to the connectivity and
technology necessary to participate in a video conference hearing.
Additionally, as noted above, OHO may consider whether a situation is
uncommon or there are extraordinary circumstances.\24\
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    \21\ As used herein, ``evidentiary hearings'' refers to hearings
conducted before OHO under Rules 9261 and 9830. See id., 88 FR at
51880, n. 25.
    \22\ See id. at 51881.
    \23\ See id.
    \24\ See text accompanying note 16, supra.
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    Finally, the FINRA Approval Order noted that for approximately two
and a half years, while the temporary amendments were in effect, OHO
successfully conducted numerous hearings by video conference using
Zoom, a system which was vetted by FINRA's information technology
staff.\25\ FINRA stated that this use of video conference technology
has been an effective and efficient alternative to in-person
hearings.\26\
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    \25\ See FINRA Approval Order, 88 FR at 51880.
    \26\ See id.
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    As discussed below, the Exchange proposes to delete the temporary
rule text in Rule 9261 and Rule 9830 permitting video conferences that
expired earlier this year and replace it with rule text based on
FINRA's recently approved amendments to its Rules 9261 and 9830
permitting video conference hearings under specified conditions.
Proposed Rule Change
    NYSE Rule 9261(b) provides that if a disciplinary hearing is held,
a party shall be entitled to be heard in-person, by counsel, or by the
party's representative. Similarly, NYSE Rule 9830 outlines the
requirements for hearings for temporary and permanent cease and desist
orders. NYSE Rule 9830(a), however, does not specify that a party shall
be entitled to be heard in-person, by counsel, or by the party's
representative. Consistent with FINRA's temporary amendment to FINRA
Rules 9261 and 9830 that expired earlier this year, both NYSE rules
temporarily granted the Chief or Deputy Chief Hearing Officer temporary
authority to order, upon consideration of COVID-19-related public
health risks presented by an in-person hearing, that a hearing under
those rules be conducted by video conference.
    The Exchange proposes to delete the temporary amendments to Rules
9261 and 9830 and conform these rules to FINRA Rules 9261 and 9830 as
recently amended. The Exchange would add text to the rules permitting
the Chief or Deputy Chief Hearing Officer to order the hearing to be
conducted in whole or in part by video conference consistent with the
FINRA Approval Order either based upon an assessment that proceeding in
person may endanger the health or safety of the participants or would
be impracticable or upon consideration of a joint motion of the parties
for good cause shown. As noted, FINRA has adopted a detailed and
thorough protocol to ensure that hearings conducted by video conference
will maintain a fair process for the parties.\27\ Moreover, the
proposed rule change would modernize existing procedures and allow
parties who jointly prefer video conference to potentially save travel
costs and time. As proposed, the use of video conferences would be
limited and controlled, and in-person hearings would continue to be the
default method for conducting hearings.\28\ Furthermore, the proposed
rule includes procedural safeguards to ensure fairness, such as the
requirement that for evidentiary hearings that any motions be joined by
all parties and show good cause.\29\ The Exchange believes that this is
a reasonable procedure to follow in hearings under Rules 9261 and 9830
chaired by a FINRA employee.
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    \27\ See text accompanying notes 8 & 19, supra.
    \28\ See FINRA Approval Order, 88 FR at 51882.
    \29\ See id.
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    To effectuate these changes, the Exchange proposes to add the
following deletions (bracketed) and additions (italicized) to Rule
9261(b):

    If a hearing is held, a Party shall be entitled to be heard in
person, by counsel, or by the Party's representative. [Upon
consideration of the current public health risks presented by an in-
person hearing, the Chief Hearing Officer or Deputy Chief Hearing
Officer may, on a temporary basis, determine that the hearing shall
be conducted, in whole or in part, by video conference.]Upon a
determination that proceeding in person may endanger the health or
safety of the participants or would be impracticable, or upon
consideration of a joint motion of the Parties for good cause shown,
the Chief Hearing Officer or Deputy Chief Hearing Officer may, in
the exercise of reasonable discretion, order the hearing to be
conducted, in whole or in part, by video conference.

    The proposed text is identical to the language adopted by
FINRA.\30\
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    \30\ See Exchange Act Release No. 97403 (May 4, 2023), 88 FR
28645 (May 4, 2023) (File No. SR-FINRA-2023-008) (Notice of Filing
of a Proposed Rule Change To Amend FINRA Rules 1015, 9261, 9341,
9524, 9830 and Funding Portal Rule 900 (Code of Procedure) To Permit
Hearings Under Those Rules To Be Conducted by Video Conference).
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    Similarly, the Exchange proposes the following deletions and
additions to Rule 9830(a):

    The hearing shall be held not later than 15 days after service
of the notice and filing initiating the temporary cease and desist
proceeding, unless otherwise extended by the Chief Hearing Officer
or Deputy Chief Hearing Officer for good cause shown. If a Hearing
Officer or Hearing Panelist is recused or disqualified, the hearing
shall be held not later than five days after a replacement Hearing
Officer or Hearing Panelist is appointed. [Upon consideration of the
current public health risks presented by an in-person hearing, the
Chief Hearing Officer or Deputy Chief Hearing Officer may, on a
temporary basis, determine that the hearing shall be conducted, in
whole or in part, by video conference.]Upon a determination that
proceeding in person may endanger the health or safety of the
participants or would be impracticable, or upon consideration of a
joint motion of the Parties for good cause shown, the Chief Hearing
Officer or Deputy Chief Hearing Officer may, in the exercise of
reasonable discretion, order the hearing to be conducted, in whole
or in part, by video conference.
    Once again, the proposed language is identical to the language
adopted by FINRA.\31\
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    \31\ See id.
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2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the
Act,\32\ in general, and furthers the objectives of Section
6(b)(5),\33\ in particular, because it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, to
remove impediments to, and perfect the mechanism of, a free and open
market and a national market system and, in general, to protect
investors and the public interest. Additionally, the Exchange believes
the proposed rule change is designed to provide a fair procedure for
the disciplining of members and persons associated with members,
consistent with Sections 6(b)(7) and 6(d) of the Act.\34\
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    \32\ 15 U.S.C. 78f(b).
    \33\ 15 U.S.C. 78f(b)(5).
    \34\ 15 U.S.C. 78f(b)(7) & 78f(d).
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    The Exchange believes that the proposed rule changes support the
objectives of the Act by harmonizing Exchange rules modeled on FINRA's
rules, resulting in less burdensome and more efficient regulatory
compliance. As previously noted, the additional text proposed for Rule
9261 and Rule 9830 is identical to the text in the counterpart

FINRA rules. As such, the proposed rule change would facilitate rule
harmonization among self-regulatory organizations with respect to the
conduct of video conference hearings, thereby fostering cooperation and
coordination with persons engaged in facilitating transactions in
securities and will remove impediments to and perfect the mechanism of
a free and open market and a national market system.
    The Exchange believes that the proposed rule change protects
investors and the public interest by permitting the use of broadly
available technology to allow hearings to proceed by video conference
under certain circumstances. The Exchange's disciplinary proceedings
serve a critical role in providing investor protection and maintaining
fair and orderly markets by, for example, sanctioning misconduct and
preventing further customer harm by members and associated persons. The
proposed rule change would encourage the prompt resolution of these
cases while preserving fair process. The Exchange believes that this is
especially important in matters where temporary and permanent cease and
desist orders are sought because the proposed rule change would enable
those hearings to proceed without delay, thereby enabling the Exchange
to take immediate action to stop significant, ongoing customer harm, to
the benefit of the investing public.
    The proposed rule change promotes efficiency by permitting hearings
to occur by video conference in situations where the hearings would
otherwise be postponed for an uncertain period of time. Moreover, as
noted, FINRA will utilize the same protocols for conducting video
conference hearings as those employed under the temporary amendments,
including using a high quality, secure, user-friendly video
conferencing service and providing thorough instructions, training, and
technical support to all hearing participants.\35\ In addition, the
Chief or Deputy Chief Hearing Officer may take into consideration,
among other things, a hearing participant's individual health concerns
and access to the connectivity and technology necessary to participate
in a video conference hearing.\36\
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    \35\ See FINRA Approval Order, 88 FR at 51880.
    \36\ See id. at 51881 & n. 36.
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    For the same reasons, the Exchange believes that the proposed
changes are designed to provide a fair procedure for the disciplining
of members and persons associated with members, consistent with
Sections 6(b)(7) and 6(d) of the Act.\37\ The Exchange believes that
the proposed rule change provides a fair procedure by allowing hearings
to proceed by video conference not only due to public health or safety
reasons but also at a party or the parties' request for reasons
particular to them. The Chief or Deputy Chief Hearing Officer could
allow a hearing to proceed by video conference in the exercise of
reasonable discretion and subject to procedural safeguards that ensure
fairness, including the requirement that any motions be joined by all
parties and show good cause. Overall, the proposed rule change
represents a significant step toward modernizing disciplinary process
procedures in a manner that preserves in-person hearings but allows for
the use of video conference technology under certain circumstances.
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    \37\ 15 U.S.C. 78f(b)(7) and 78f(d).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not intended to address competitive issues but is rather intended
solely to create permanent rules that would allow video conference
hearings if OHO determines that proceeding in person may endanger the
health or safety of the participants or would be impracticable, or
where both parties prefer doing so and show good cause, thereby
providing greater harmonization with approved FINRA rules.

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

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

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

    The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \38\ and Rule 19b-4(f)(6) thereunder.\39\
Because the proposed rule change does not: (i) significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\40\
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    \38\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \39\ 17 CFR 240.19b-4(f)(6).
    \40\ Rule 19b-4(f)(6)(iii) requires a self-regulatory
organization to give the Commission written notice of its intent to
file the proposed rule change, along with a brief description and
text of the proposed rule change, at least five business days prior
to the date of filing of the proposed rule change, or such shorter
time as designated by the Commission. The Exchange has satisfied
this requirement.
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    A proposed rule change filed under Rule 19b-4(f)(6) \41\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\42\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
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    \41\ 17 CFR 240.19b-4(f)(6).
    \42\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \43\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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    \43\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
file number SR-NYSE-2023-47 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-NYSE-2023-47. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's

internet website (https://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 website viewing and printing in the
Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of the filing also will be available for inspection and
copying at the principal office of the Exchange. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection.
    All submissions should refer to file number SR-NYSE-2023-47 and
should be submitted on or before January 4, 2024.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\44\
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    \44\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27398 Filed 12-13-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: October 19, 2007 (Volume 72, Number 202)]
[Proposed Rules]
[Page 59231-59238]
[DOCID:fr19oc07-21]

=======================================================================
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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

15 CFR Parts 740, 742, 744, 748, 754, 764 and 772

[Docket No.<PHONE_NUMBER>-7061-01]
RIN 0694-AD94

Mandatory Electronic Filing of Export and Reexport License
Applications, Classification Requests, Encryption Review Requests, and
License Exception AGR Notifications

AGENCY: Bureau of Industry and Security, Commerce.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would require that export and reexport
license applications, classification requests, encryption review
requests, License Exception AGR notifications and related documents be
submitted to the Bureau of Industry and Security (BIS) via its
Simplified Network Application Process (SNAP-R) system. This
requirement would not apply to applications for Special Comprehensive
Licenses or in certain situations in which BIS would authorize paper
submissions.

DATES: Comments must be received by December 18, 2007.

ADDRESSES: Comments on this proposed rule may be submitted via http://www.regulations.gov.
 Scroll down to the heading ``Search Documents.''

At Step 1, select ``Documents Accepting Comments'' then, at Optional
Step 2, select from the pull down menu ``Bureau of Industry and
Security'' and click on the ``Submit'' button. On the resulting screen,
select docket number BIS-2007-0002. Click on the yellow comment icon.
You may either type your comments directly on the on-line comment form
or ``attach'' a file containing your comments. Regulations.gov accepts
most popular document file formats. Comments may also be e-mailed to
BIS at<EMAIL_ADDRESS>(please refer to regulatory
identification number (RIN) 0694-AD94 in the subject line) or submitted
on paper to Regulatory Policy Division, Office of Exporter Services,
Bureau of Industry and Security, Room H2705, U.S. Department of
Commerce, 14th Street and Pennsylvania Avenue, NW., Washington, DC
20230. Please refer to RIN 0694-AD94 in all paper comments.

FOR FURTHER INFORMATION CONTACT: William Arvin e-mail
<EMAIL_ADDRESS>or tel.<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Background

    BIS administers a system of export and reexport controls in
accordance with the Export Administration Regulations (EAR). In doing
so, BIS requires that parties wishing to engage in certain transactions
apply for licenses, submit encryption review requests, or submit
certain notifications to BIS. BIS also reviews, upon request,
specifications of various items and determines their proper
classification under the EAR. Currently members of the public submit
these applications, requests and notifications to BIS in one of three
ways: via SNAP-R, via BIS's Electronic License Application Information
Network (ELAIN), or via the paper BIS Multipurpose Application Form BIS
748-P and its two appendices, the BIS 748-P A (item appendix) and the
BIS 748-P B (end user appendix). In many instances, BIS needs
additional documents to act on the submission. For documents that
relate to paper submissions, the documents can be mailed or delivered
to BIS with the BIS 748-P form. For submissions made electronically via
ELAIN, the documents must be sent to BIS separately and matched up with
the application when they arrive.
    In 2006, BIS made a number of improvements its then existing
Simplified Network Application Processing system (SNAP), and designated
this improved version as ``SNAP-R''. The improvements include the
ability to include documents related to a submission in the form of PDF
(portable document format) files as ``attachments'' to the submission.
Other improvements include a feature that allows BIS personnel to
request additional information from the submitting party and for the
party to submit that information in a manner that ties the chain of
communication to the submission.
    BIS believes that use of SNAP-R will reduce processing times and
simplify compliance with and administration of export controls. SNAP-R
provides not only improved efficiency in submission and processing, but
improved end-user security through rights management and an updated
application and security infrastructure.
    Therefore, BIS proposes to require that all export and reexport
license applications (other than Special Comprehensive License
applications), classification requests, encryption review requests,
License Exception AGR notifications, and ``attached'' related documents
be submitted to BIS via its Simplified Network Application Process
(SNAP-R) system unless BIS authorizes paper submissions. This proposed
rule would also set the criteria by which BIS would authorize paper
submissions and would terminate use of ELAIN. This proposed rule would
make no changes to the procedures by which the public requests advisory
opinions because such requests are not processed via either the paper
form 748-P or either of BIS's existing electronic systems.

Changes Proposed To Be Made by This Rule

    The changes that this proposed rule would make center on part 748
of the EAR, which sets forth the principal procedures governing the
submission of the applications, review requests and notifications that
would be affected by this proposed rule. The changes would appear in
Sec.  748.1--``General provisions,'' Sec.  748.3--``Classification
requests, advisory opinions, and

encryption review requests,'' and in Sec.  748.6--``General
instructions for license applications.'' The rule would also make
conforming changes to a number of EAR provisions that currently employ
language related to the paper forms.

Substantive Changes

    Section 748.1 would be revised to emphasize electronic filing over
paper and to set forth the basic requirement that license applications
(other than Special Comprehensive License applications), encryption
review requests, License Exception AGR notifications, and
classification requests and any accompanying documents must be
submitted via SNAP-R unless BIS authorizes submission via paper.
Revised section 748.1 would continue to specify that for paper
submissions, only original BIS paper forms may be used and that
reproductions or facsimiles are not acceptable.
    Section 748.1 would also set forth the criteria under which BIS
would authorize paper submissions. Those criteria are: (1) BIS has
received no more than one submission from the party in the twelve
months immediately preceding the current submission, i.e., the combined
total of the party's license applications (other than Special
Comprehensive Licenses), encryption review requests, License Exception
AGR notifications, and classification requests could not exceed one;
(2) the party does not have access to the Internet; (3) BIS has
rejected the party's electronic filing registration or revoked its
eligibility to file electronically; (4) BIS has requested that the
party submit on paper for a particular transaction; or (5) BIS has
determined that urgency, a need to implement government policy or a
circumstance outside the submitting party's control justify allowing
paper submissions on a particular instance.
    Parties who wished to submit on paper would submit the BIS Form
748-P. In addition to the information relevant to the substance of the
submission itself, the submitter would be required to include, either
on the form or as an attachment, a statement explaining which of the
five foregoing criteria justify a paper submission and supporting
information. If BIS agreed that at least one of the criteria were met,
it would process the submission in accordance with its regular
procedures. If BIS found that none of the criteria provided by the
submitter was met, it would return the form without action and inform
the submitter of the reason for rejecting the request to file on paper.
A decision by BIS to reject the request to file on paper is subject to
appeal under part 756 of the EAR. This proposed rule also would move
the address for paper submissions from Sec.  748.2 to Sec.  748.1.
    Section 748.3 would be revised to replace instructions about where
and how to submit classification requests, with a reference to the
procedures in Sec.  748.1. Section 748.3 would continue to state
requirements about the kinds of information that must be included in
classification requests.
    Section 748.6 would be revised to require that any documents
submitted in support of any license application submitted via SNAP-R be
submitted via the SNAP-R system as PDF (portable document format)
files. Section 748.6 also would be revised to remove the statement that
application control numbers are preprinted on the paper forms. The
paper forms will continue to bear a preprinted application control
number, but for electronic submissions, application control numbers are
communicated to the submitter electronically once BIS accepts the
submission.

Conforming Changes

    A number of EAR provisions currently state that a particular
submission must be made on the BIS 748-P paper form or state that it
must be either on the 748-P or its electronic equivalent. If such a
provision refers to a classification request or encryption review
request, this proposed rule would revise that provision to state that
the submission must be made in accordance with Sec. Sec.  748.1 and
748.3. If such a provision refers to a license application (other than
a Special Comprehensive License application), this proposed rule also
would revise that provision to state that the submission must be in
accordance with Sec. Sec.  748.1, 748.4 and 748.6. The changes
described in this paragraph would be made in:
     Sec.  740.8(b)(2), relating to classification requests
pursuant to License Exception ``Key Management Infrastructure (KMI)'';
     Sec.  740.9(a)(4)(i) and (iii), relating to authorizations
to sell or dispose of or to retain abroad more than one year items
exported under License Exception ``Temporary imports, exports and
reexports (TMP)'';
     Sec.  740.12(a)(2)(iii)(C), relating to applications to
exceed the frequency limits for individual gift parcels under license
exception ``Gift parcels and humanitarian donations (GFT)'';
     Sec.  740.17(d)(1), relating to the submission of
encryption review requests under License Exception ``Encryption
commodities and software'' (ENC);
     Sec.  742.15(b)(2)(i), relating to submission of review
requests for certain encryption items; Supplement No. 6 to part 742,
relating to submission of review requests for certain ``mass market''
encryption commodities and software;
     Sec.  754.2(g)(1), relating applications for export of
certain California crude oil;
     Sec.  754.4(d)(1), relating to applications to export
unprocessed Western Red Cedar; and
     Sec.  764.7(b)(2)(i), relating to applications to take
certain actions with respect to certain items in Libya.
    This proposed rule would replace the requirement to use the form
BIS 748-P in Sec.  740.18(c)(2) when submitting notice to the
government in advance of shipments under License Exception
``Agricultural Commodities (AGR)'' with a requirement to submit such
notices in accordance with Sec.  748.1 of the EAR.
    This proposed rule also would replace references to the BIS 748-P
Multipurpose Application Form with the word ``application'' in
provisions that describe certain information that must be submitted
with particular types of license applications. This change emphasizes
that the same information is required regardless of whether an
application is submitted on paper or electronically. The change
described in this paragraph would be made in:
     Sec.  744.21(d), relating to applications to export or
reexport certain items to known military end-uses in the People's
Republic of China;
     Sec.  748.4(b)(2)(ii), relating to written authority of
certain agents to submit on a principal's behalf;
     Sec.  754.4(d)(2) and (d)(3), relating to applications for
export of unprocessed western red cedar;
     Sec.  754.5(b)(2), relating to applications to export
horses by sea; and
     Sec.  772.1, definition of ``Other party authorized to
receive license.''
    This proposed rule also would remove the reference to date time
stamping in Sec.  754.2(g)(5)(i) by BIS of applications to export crude
oil because that process occurs only with paper applications. However,
the proposed rule would retain the policy in Sec.  754.2(g)(5)(i) of
issuing licenses for approved applications in the order in which the
applications are received.
    This proposed rule would also change the reference currently found
in Sec.  748.3 to the section containing the address for submitting
advisory opinion requests from 748.2 to 748.1.

Public Comments

    BIS will consider all comments received on or before December 18,
2007. BIS will consider comments received after that date if possible
but cannot assure such consideration. All public comments on this
proposed rule must be in writing (writing includes electronic
submission of comments via http://www.regulations.gov or e-mail directly to

BIS) and will be a matter of public record, available for public
inspection and copying on the http://www.regulations.gov Web site under docket

number BIS-2007-0002.

Rulemaking Requirements

    1. This rule has been determined to be significant for purposes of
Executive Order 12866.
    2. Notwithstanding any other provision of law, no person is
required to respond to nor be subject to a penalty for failure to
comply with a collection of information, subject to the requirements of
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA),
unless that collection of information displays a currently valid Office
of Management and Budget (OMB) Control Number. This regulation involves
collections previously approved by the OMB under control number 0694-
0088, ``Multi-Purpose Application,'' which carries a burden hour
estimate of 58 minutes to prepare and submit form BIS-748.
Miscellaneous and recordkeeping activities account for 12 minutes per
submission. This proposed rule would require persons seeking
authorization to submit paper filings to state, either in the
additional information block on the paper form or an attachment, which
of the criteria for paper submissions they meet and the reasons
therefore. BIS believes that requests seeking authorization to submit
paper filings would impose a minimal burden on applicants as the
information requirements are small and the number of requests is
expected to be low. Applicants making a request would identify one or
more of the 5 criteria under which BIS would authorize a paper
submission, and provide the factual basis for the authorization to
submit on paper. BIS estimates that only a small number of submissions
will seek authorization to file on paper. Based on current information
on submissions, more than 85% of all submissions affected by this rule
are currently transmitted to BIS via SNAP-R. Therefore, BIS estimates
that this requirement will make no material change of the estimated
time of 58 minutes needed to prepare and submit a BIS-748. Send
comments regarding these burden estimates or any other aspect of these
collections of information, including suggestions for reducing the
burden, to David Rostker, OMB Desk Officer, by e-mail at
<EMAIL_ADDRESS>or by fax to<PHONE_NUMBER>; and to the Regulatory

Policy Division, Bureau of Industry and Security, Department of
Commerce, P.O. Box 273, Washington, DC 20044.
    3. This rule does not contain policies with Federalism implications
as that term is defined in Executive Order 13132.
    4. The Chief Counsel for Regulation of the Department of Commerce
has certified to the Counsel for Advocacy of the Small Business
Administration that this proposed rule would not have a significant
economic impact on a substantial number of small entities.

Number of Small Entities Affected

    BIS does not collect data on the size of entities that file these
submissions. However, based on the information that it does possess,
BIS believes that fewer than 1340 small entities are likely to be
affected by this rule. BIS arrived at this conclusion by identifying
all of the entities that filed two or more submissions during the
period from January 1, 2006 through December 31, 2006. A total of 1592
such entities were identified. BIS determined that 252 of these are not
small entities because they could be identified through open public
sources as having more than $100 million in annual sales or more than
5,000 employees or because they are United States Government agencies.
    Because many industries may be involved in exporting, BIS could not
directly relate its data to the ``Small Business Size Standards Matched
to North American Industry Classification System'' (the Standards
Table) published by the Small Business Administration (SBA). However,
BIS notes that the Standards Table designates business as small based
on either sales or number of employees, depending on the industry. The
maximum annual sales and maximum number of employees listed in that
document are $31 million and 1,500, respectively. Both numbers are far
below the threshold selected by BIS in arriving at the number of 1340
as the maximum number of small entities likely to be affected by this
rule. Quite likely many of the 1340 remaining entities would be larger
than the largest business listed in the Standards Table.
    In addition, most of the categories in the Standards Table for
which the sales limit is more than $6.5 million are unlikely to be
impacted by this rule because they are unlikely to engage in export or
reexport transactions that require specific authorization from BIS.
Examples of small entities at the higher end of the range of the
Standards Table include, Forest Fire Suppression--$16.5 million, New
Single-Family Housing Construction Contractors--$31.0 million and
Gasoline Stations with Convenience Stores--$25.0 million.

Burden Incurred

    Some entities might incur no additional burden because of this
rule. These are the entities whose submissions require no accompanying
documents, those who are already creating the documents in PDF and
those who are already creating the documents using software that is
capable of producing the same documents in PDF. BIS does not have data
on the number of entities that would incur no burden, but based on a
sample of submissions of the type to which this proposed rule would
apply for the period October 15, 2006 through March 9, 2007, BIS
estimates that about 48 percent of the submissions would not require
any accompanying documents.
    Some entities might incur only a software acquisition burden
because of this rule. These are the entities whose accompanying
documents are already created using software that cannot produce PDF
files directly, but that can produce such files with additional
software that the entity can purchase. BIS estimates that such an
entity with a small operation would incur an initial expense of
approximately $325 to acquire that software necessary to comply with
this rule. This estimate is based on the price of Adobe Acrobat[reg]
Standard Edition ($299) as posted on the Adobe Corporation Web site on
December 27, 2006, plus any taxes or shipping charges.
    Some entities might need to scan paper documents and convert them
to PDF files. Such entities would have three alternatives: Pay someone
else to scan and convert the documents; acquire a scanner with built-in
PDF capability; or acquire hardware and software to scan in and convert
the documents.
    An entity with a small number of documents to scan probably would
find it most economical to pay someone else to scan the paper documents
and convert them to PDF files. After reviewing some prices charged in
the Washington area, BIS estimates that the costs would range from
about $19 to about $31 to convert eight pages of paper documents to PDF
format.
    In some instances, the entity could utilize software that comes
bundled

with a scanner to comply with this requirement. In such instances, BIS
estimates that the entity would incur an initial cost of approximately
$500 (to purchase the scanner) to comply with this rule.
    In some cases, particularly if the entity has to scan numerous
complex paper documents, the costs could be higher. BIS estimates that
the initial costs for an entity facing such a situation would be
approximately $900. This estimate is based on a price of $300 for Adobe
Acrobat[reg] Standard Edition software, $500 for a scanner, and $100
for taxes and shipping charges.
    Entities that have to scan paper documents may incur labor costs to
scan and convert the documents to PDF. BIS estimates that scanning and
converting a document page would take from 2 minutes to 10 minutes per
page depending on the scanner and computer performance. BIS recently
sampled the submissions that had accompanying documents for the months
of February and March 2006. A total of 703 submissions had accompanying
documents. Some submissions had only one accompanying page. The average
number of accompanying pages for these 703 submissions was 8.5 and the
largest number of accompanying pages for any one submission was 284.
However, BIS has no way of determining which attachments could be
generated electronically and which would require scanning. Assuming an
average of 8.5 pages per document and labor costs for documents at $15
per hour, this cost could range from about $0.50 for one accompanying
page that took two minutes to scan to $720 for a 284-page document that
took 10 minutes per page to scan. Assuming an average scanning time of
5 minutes per page and an 8.5 as the average number of pages scanned,
the average estimated labor cost for scanning would be $10.63.

Cost Reductions To Offset the Burdens

    A party not using the electronic ``attachment'' feature of SNAP-R
would have to submit any required documents by paper. In many
instances, such a party would incur labor costs to copy the documents
that are comparable to those incurred when scanning a document to
produce a PDF file. For such parties, any increased scanning costs
incurred by using SNAP-R would be offset by decreased copying costs.
    Electronic filing can reduce costs in other ways as well.
Currently, in many instances, attachments are submitted to BIS by
overnight courier. Electronic filing would eliminate these courier
costs. Collectively, the 1592 entities that made two or more
submissions in 2006 provided 22,223 submissions. The largest number
from any one submitter was 911, the smallest number from any one
submitter was 2, and the average number per submitter was 14. Assuming
an average cost of $20.00 to submit documents by courier, and further
assuming that about 52 percent of the submissions required accompanying
documents, the aggregate savings provided by electronic submission of
accompanying documents would be $231,119 for the largest submitter,
$146 for a submitter of the average number of submissions and $20 for a
submitter of 2 submissions. In addition SNAP-R will provide the
submitter with automatic confirmation of receipt of the documents by
BIS. In many instances, couriers charge extra for delivery
confirmation.
    Further savings would be achieved if a particular set of documents
applied to more than one submission. A party using SNAP-R would need to
submit the documents only once and could reference them in subsequent
submissions to which they apply whereas a party submitting via paper
would have to submit new paper copies each time. Applicants for
successive export licenses to ship the same items repeatedly could
experience substantial savings from this feature of SNAP-R.
    The SNAP-R system groups all communications between exporter and
BIS for each electronic application, including supporting documents so
that they can be viewed from within the SNAP-R application by all
authorized personnel of the submitter. This feature allows for easier
reassignment of work when necessary due, for example, to employee
absences, resignations, or retirements, than a system in which users
have to manage their own documentation and transcribe their
communications with the licensing officers and correlate those
communications with paper submissions of supporting documents.
    Electronic filing can reduce costs to the submitters and to the
government by reducing paper handling and delays incurred when moving
paper through the system. Currently, BIS uses an electronic system to
process all submissions that are subject to this proposed rule, whether
it receives the submission on paper or electronically. However, if the
attachments are on paper, delays ensue as paper documents are moved to
the technical personnel in BIS and in other government agencies whereas
electronic attachments can be transmitted to the appropriate personnel
almost instantly. Electronic attachments are likely to reduce the total
time from submission to final decision by several days. Although the
benefit of faster processing times is difficult to quantify, the
information that BIS possesses indicates that, in the aggregate, the
potential benefit is quite large. In calendar year 2006, BIS processed
18,941 license applications with an aggregate value of $36 billion.
Assuming a six percent annual rate of return for alternative
investments, the opportunity cost of holding $36 billion worth of
merchandise in inventory while waiting for a government decision on
whether the transaction may proceed would be $2.16 billion annually or
$5.9 million per day. Dividing $5.9 million by the number of
applications, 18,941, provides an inferred average opportunity cost of
$311 for each day that processing of an application is delayed.

Conclusion

    BIS is unable to determine whether or not the number of small
entities likely to be affected by this is rule is substantial. However,
for any small entities that are affected, the savings from re-use of
documents for multiple submissions, reduced courier fees and faster
processing times are likely to fully or partially compensate for the
cost of compliance with this rule. Thus the economic impact of this
rule on such entities is not significant.

List of Subjects

15 CFR Parts 740 and 748

    Administrative practice and procedure, Exports, Reporting and
recordkeeping requirements.

15 CFR Part 742

    Exports, Terrorism.

15 CFR Part 744

    Exports, Reporting and recordkeeping requirements, Terrorism

15 CFR Part 754

    Agricultural commodities, Exports, Forests and forest products,
Horses, Petroleum, Reporting and recordkeeping requirements.

15 CFR Part 764

    Administrative practice and procedure, Exports, Law enforcement,
Penalties.

15 CFR Part 772

    Exports.

    Accordingly, parts 740, 742, 748, 754, 764 and 772 of the Export
Administration Regulations (15 CFR 730-774) are proposed to be amended
as follows:

PART 740--[AMENDED]

    1. The authority citation for 15 CFR part 740 continues to read as
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
Sec. 901-911, Pub. L. 106-387; E.O. 13026, 61 FR 58767, 3 CFR, 1996
Comp., p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783;
Notice of August 3, 2006, 71 FR 44551 (August 7, 2006); Notice of
August 15, 2007, 72 FR 46137 (August 16, 2007).

    2. In Sec.  740.8 revise paragraph (b)(2) to read as follows:

Sec.  740.8  Key management infrastructure (KMI).

* * * * *
    (b) Eligible commodities and software. * * *
    (2) For such classification requests, indicate ``License Exception
KMI'' in Block 9 on the application. Submit the request to BIS in
accordance with Sec. Sec.  748.1 and 748.3 of the EAR and send a copy
of the request to: Attn: ENC Encryption Request Coordinator, 9800
Savage Road, Suite 6940, Fort Meade, MD 20755-6000
* * * * *
    3. In Sec.  740.9 revise the first sentences of paragraphs
(a)(4)(i) and (a)(4)(iii) to read as follows:

Sec.  740.9  Temporary imports, exports and reexports (TMP).

* * * * *
    (a) * * *
    (4) * * *
    (i) Permanent export or reexport. If the exporter or the reexporter
wishes to sell or otherwise dispose of the commodities or software
abroad, except as permitted by this or other applicable License
Exception, the exporter or reexporter must request authorization by
submitting a license application to BIS in accordance with Sec. Sec.
748.1, 748.4 and 748.6 of the EAR. * * *
* * * * *
    (iii) Authorization to retain abroad beyond one year. If the
exporter wishes to retain a commodity or software abroad beyond the 12
months authorized by paragraph (a) of this section, the exporter must
request authorization by submitting a license application in accordance
with Sec. Sec.  748.1, 748.4 and 748.6 of the EAR to BIS 90 days prior
to the expiration of the 12 month period. * * *
* * * * *
    4. In Sec.  740.12, revise paragraph (a)(2)(iii)(C) to read as
follows:

Sec.  740.12  Gift parcels and humanitarian donations (GFT).

    (a) * * *
    (2) * * *
    (iii)* * *
    (C) Parties seeking authorization to exceed these frequency limits
due to compelling humanitarian concerns (e.g., for certain gifts of
medicine) should submit a license application in accordance with
Sec. Sec.  748.1, 748.4 and 748.6 of the EAR to BIS with complete
justification.
* * * * *
    5. In Sec.  740.17 revise the paragraph (d)(1) to read as follows:

Sec.  740.17  Encryption commodities and software (ENC).

* * * * *
    (d) * * *
    (1) Instructions for requesting review. Review requests submitted
to BIS must be submitted as described in Sec. Sec.  748.1 and 748.3 of
the EAR. See paragraph (e)(5)(ii) of this section for the mailing
address for the ENC Encryption Request Coordinator. To ensure that your
review request is properly routed, insert the phrase ``License
Exception ENC'' in Block 9 (Special Purpose) of the application. Also,
place an ``X'' in the box marked ``Classification Request'' in Block 5
(Type of Application) of Form BIS-748P or select ``Commodity
Classification'' if filing electronically. Neither the electronic nor
paper forms provide a separate block to check for the submission of
encryption review requests. Failure to properly complete these items
may delay consideration of your review request.
* * * * *
    6. In Sec.  740.18 revise paragraph (c)(2) to read as follows:

Sec.  740.18  Agricultural commodities (AGR).

* * * * *
    (c) Prior notification. * * *
    (2) Procedures. You must provide prior notification of exports and
reexports under License Exception AGR by submitting a completed
application in accordance with Sec.  748.1 of the EAR. The following
blocks must be completed, as appropriate: Blocks 1, 2, 3, 4, 5 (by
marking box 5 ``Other''), 14, 16, 17, 18, 19, 21, 22 (a), (e), (f),
(g), (h), (i), (j), 23, and 25 according to the instructions described
in Supplement No. 1 to part 748 of the EAR. If your commodity is
fertilizer, western red cedar or live horses, you must confirm that BIS
has previously classified your commodity as EAR99 by placing the
Commodity Classification Automatic Tracking System (CCATS) number in
Block 22(d). BIS will not initiate the registration of an AGR
notification unless the application is complete.
* * * * *

PART 742--[AMENDED]

    7. The authority citation for 15 CFR part 742 continues to read as
follows:

    Authority: 50 U.S.C. App. 2401 et seq.; 50 U.S.C. 1701 et seq.;
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; Sec. 901-911, Pub. L. 106-
387; Sec. 221, Pub. L. 107-56; Sec. 1503, Pub. L. 108-11, 117 Stat.
559; E.O. 12058, 43 FR 20947, 3 CFR, 1978 Comp., p. 179; E.O. 12851,
58 FR 33181, 3 CFR, 1993 Comp., p. 608; E.O. 12938, 59 FR 59099, 3
CFR, 1994 Comp., p. 950; E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp.,
p. 228; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783;
Presidential Determination 2003-23 of May 7, 2003, 68 FR 26459, May
16, 2003; Notice of August 3, 2006, 71 FR 44551 (August 7, 2006);
Notice of October 27, 2006, 71 FR 64109 (October 31, 2006); Notice
of August 15, 2007, 72 FR 46137 (August 16, 2007).

    8. In Sec.  742.5, revise paragraph (b)(2)(i) to read as follows:

Sec.  742.15  Encryption items.

* * * * *
    (b) Notification and review requirements for encryption items
controlled under ECCN 5A992, 5D992 or 5E992. * * *
    (2) Review requirement for mass market encryption commodities and
software exceeding 64 bits: * * *
    (i) Procedures for requesting review. To request review of your
mass market encryption products, you must submit to BIS and the ENC
Encryption Request Coordinator the information described in paragraphs
(a) through (e) of Supplement No. 6 to this part 742, and you must
include specific information describing how your products qualify for
mass market treatment under the criteria in the Cryptography Note (Note
3) of Category 5, Part 2 (``Information Security''), of the Commerce
Control List (Supplement No. 1 to part 774 of the EAR). Submit review
requests to BIS in accordance with Sec. Sec.  748.1 and 748.3 of the
EAR. To ensure that your review request is properly routed, insert the
phrase ``Mass market encryption'' in Block 9 (Special Purpose) and
place an ``X'' in the box marked ``Classification Request'' in Block 5
(Type of Application)--Block 5 does not provide a separate item to
check for the submission of encryption review requests. Failure to
properly complete these items may delay consideration of your review
request. Submissions to the ENC Encryption Request Coordinator should
be directed to the mailing address indicated in Sec.  740.17(e)(5)(ii)
of the EAR. BIS will notify you if there are any questions concerning
your request for review (e.g., because of missing or incomplete support
documentation).
* * * * *

    9. In Supplement No. 6 to Part 742 revise the first sentence to
read as follows:

Supplement No. 6 to Part 742--Guidelines for Submitting Review Requests
for Encryption Items

    Review requests for encryption items must include all of the
documentation described in this supplement and submitted to BIS in
accordance with Sec. Sec.  748.1 and 748.3 of the EAR. * * *
* * * * *

PART 744--[AMENDED]

    10. The authority citation for part 744 continues to read as
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
22 U.S.C. 3201 et seq.; 42 U.S.C. 2139a; Sec. 901-911, Pub. L. 106-
387; Sec. 221, Pub. L. 107-56; E.O. 12058, 43 FR 20947, 3 CFR, 1978
Comp., p. 179; E.O. 12851, 58 FR 33181, 3 CFR, 1993 Comp., p. 608;
E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950; E.O. 12947, 60
FR 5079, 3 CFR, 1995 Comp., p. 356; E.O. 13026, 61 FR 58767, 3 CFR,
1996 Comp., p. 228; E.O. 13099, 63 FR 45167, 3 CFR, 1998 Comp., p.
208; E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; E.O. 13224,
66 FR 49079, 3 CFR, 2001 Comp., p. 786; Notice of August 3, 2006, 71
FR 44551 (August 7, 2006); Notice of October 27, 2006, 71 FR 64109
(October 31, 2006); Notice of August 15, 2007, 72 FR 46137 (August
16, 2007).

    11. Revise Sec.  744.21(d) to read as follows:

Sec.  744.21  Restrictions on certain military end-uses in the People's
Republic of China.

* * * * *
    (d) License application procedure. When submitting a license
application pursuant to this section, you must state in the
``additional information'' block of the application that ``this
application is submitted because of the license requirement in Sec.
744.21 of the EAR (Restrictions on Certain Military End-uses in the
People's Republic of China).'' In addition, either in the additional
information block or in an attachment to the application, you must
include all known information concerning the military end-use of the
item(s). If you submit an attachment with your license application, you
must reference the attachment in the ``additional information'' block
of the application.
* * * * *

PART 748--[AMENDED]

    12. The authority citation for 15 CFR part 748 continues to read as
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13026, 61 FR 58767, 3 CFR, 1996 Comp., p. 228; E.O. 13222, 66
FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August 3, 2006, 71 FR
44551 (August 7, 2006); Notice of August 15, 2007, 72 FR 46137
(August 16, 2007).

    13. In Sec.  748.1, revise paragraph (a) and add a paragraph (d) to
read as follows:

Sec.  748.1  General provisions.

    (a) Scope. In this part, references to the Export Administration
Regulations or EAR are references to 15 CFR chapter VII, subchapter C.
The provisions of this part involve requests for classifications and
advisory opinions, export license applications, encryption review
requests, reexport license applications, and certain license exception
notices subject to the EAR. All terms, conditions, provisions, and
instructions, including the applicant and consignee certifications,
contained in such form(s) are incorporated as part of the EAR. For the
purposes of this part, the term ``application'' refers to both
electronic applications and the Form BIS-748P: Multipurpose
Application.
* * * * *
    (d) Electronic Filing Required. All export and reexport license
applications (other than Special Comprehensive License Applications),
encryption review requests, license exception AGR notifications, and
classification requests and their accompanying documents must be filed
via BIS's Simplified Network Application Processing system (SNAP-R),
unless BIS authorizes submitting such applications via the paper forms
BIS 748-P (Multipurpose Application Form), BIS-748P-A (Item Appendix)
and BIS-748P-B, (End-User Appendix). Only original paper forms may be
used. Facsimiles or reproductions are not acceptable.
    (1) Reasons for authorizing paper submissions. BIS will process
paper applications notices or requests if the submitting party meets
one or more of the following criteria:
    (i) BIS has received no more than one submission (i.e. the total
number of export license applications, reexport license applications,
encryption review requests, license exception AGR notifications, and
classification requests) from that party in the twelve months
immediately preceding its receipt of the current submission;
    (ii) The party does not have access to the Internet;
    (iii) BIS has rejected the party's electronic filing registration
or revoked its eligibility to file electronically;
    (iv) BIS has requested that the party submit a paper copy for a
particular transaction; or
    (v) BIS has determined that urgency, a need to implement U.S.
government policy or a circumstance outside the submitting party's
control justify allowing paper submissions in a particular instance.
    (2) Procedure for requesting authorization to file paper
applications, notifications, or requests. The applicant must state in
Block 24 or as an attachment to the paper application (Form BIS 748-P)
which of the criteria in paragraph (d)(1) of this section it meets and
the facts that support such statement. Submit the completed
application, notification or request to Bureau of Industry and
Security, U.S. Department of Commerce, P.O. Box 273, Washington, DC
20044 (U.S. Mail deliveries only) or to Bureau of Industry and
Security, U.S. Department of Commerce, 14th Street and Pennsylvania,
NW., Room H2705, Washington, DC 20230.
    (3) BIS decision. If BIS authorizes or requires paper filing
pursuant to this section, it will process the application, notification
or request in accordance with Part 750 of the EAR. If BIS rejects a
request to file using paper, it will return the Form BIS-748P and all
attachments to the submitting party without action and will state the
reason for the rejection.

Sec.  748.2  [Amended]

    14. In Sec.  748.2, remove paragraph (c).
    15. In Sec.  748.3, revise paragraph (b) introductory text,
paragraph (b)(2), and the first sentence of paragraph (c) to read as
follows:

Sec.  748.3  Classification requests, advisory opinions, and encryption
review requests.

* * * * *
    (b) Classification requests. Submit classification requests in
accordance with the procedures in Sec.  748.1.
* * * * *
    (2) When submitting a classification request, you must complete
Blocks 1 through 5, 14, 22(a), (b), (c), (d), and (i), 24, and 25 on
the application. You must provide a recommended classification in Block
22(a) and explain the basis for your recommendation based on the
technical parameters specified in the appropriate ECCN in Block 24. If
you are unable to determine a recommended classification for your item,
include an explanation in Block 24, identifying the ambiguities or
deficiencies that precluded you from making a recommended
classification. See Supplement No. 1 to this part for information to be
included in blocks other than Block 24.
    (c) Advisory Opinions. Advisory opinion requests must be in writing
and be submitted to the address listed in Sec.  748.1(d)(2). * * *
* * * * *

    16. In Sec.  748.4(b)(2)(ii) revise the first sentence to read as
follows:

Sec.  748.4  Basic guidance related to applying for a license.

* * * * *
    (b) * * *
    (2) * * *
    (ii) Application. Block 7 of the application (documents on file
with applicant) must be marked ``other'' and Block 24 (Additional
information) must be marked ``748.4(b)(2)'' to indicate that the power
of attorney or other written authorization is on file with the agent. *
* *
* * * * *
    17. In Sec.  748.6, revise paragraph (a), the first sentence of
paragraph (b) and paragraph (e) to read as follows:

Sec.  748.6  General instructions for license applications.

    (a) Instructions. General instructions for filling out license
applications are in Supp. No. 1 to this part. Special instructions for
applications involving certain transactions are listed in Sec.  748.8
and described fully in Supp. No. 2 to this part.
    (b) Application Control Number. Each application has an application
control number. * * *
* * * * *
    (e) Attachments to applications. Documents required to be submitted
with applications filed via SNAP-R must be submitted as PDF files using
the procedures described in SNAP-R. Documents required to be submitted
with paper applications must bear the application control number to
which they relate and, if applicable, be stapled to the paper form.
Where necessary, BIS may require you to submit additional information
beyond that stated in the EAR confirming or amplifying information
contained in your license application.
* * * * *

PART 754--[AMENDED]

    18. The authority citation for 15 CFR part 754 continues to read as
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
10 U.S.C. 7420; 10 U.S.C. 7430(e); 30 U.S.C. 185(s), 185(u); 42
U.S.C. 6212; 43 U.S.C. 1354; 46 U.S.C. app. 466c; E.O. 11912, 41 FR
15825, 3 CFR, 1976 Comp., p. 114; E.O. 13222, 66 FR 44025, 3 CFR,
2001 Comp., p. 783; Notice of August 3, 2006, 71 FR 44551 (August 7,
2006); Notice of August 15, 2007, 72 FR 46137 (August 16, 2007).

    19. In Sec.  754.2, revise paragraphs (g)(1) and (g)(5)(i) to read
as follows:

Sec.  754.2  Crude oil.

* * * * *
    (g) Exports of certain California crude oil. * * *
    (1) Applicants must submit their applications in accordance with
Sec. Sec.  748.1, 748.4 and 748.6 of the EAR.
* * * * *
    (5) * * *
    (i) BIS will issue licenses for approved applications in the order
in which the applications are received, with the total quantity
authorized for any one license not to exceed 25 percent of the annual
authorized volume of California heavy crude oil.
* * * * *
    20. In Sec.  754.4, revise paragraphs (d)(1), (d)(2), and the
introductory text of paragraph (d)(3) to read as follows:

Sec.  754.4  Unprocessed Western Red Cedar.

* * * * *
    (d) * * *
    (1) Applicants requesting to export unprocessed western red cedar
must apply for a license in accordance Sec.  748.1, 748.4 and 748.6 of
the EAR, submit any other documents as may be required by BIS, and
submit a statement from an authorized representative of the exporter,
reading as follows:

    I, (Name) (Title) of (Exporter) HEREBY CERTIFY that to the best
of my knowledge and belief the (Quantity) (cubic meters or board
feed scribner) of unprocessed western red cedar timber that
(Exporter) proposes to export was not harvested from State or
Federal lands under contracts entered into after October 1, 1979.

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

Signature

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Date

    (2) In Blocks 16 and 18 of the application, ``Various'' may be
entered when there is more than one purchaser or ultimate consignee.
    (3) For each application submitted, and for each export shipment
made under a license, the exporter must assemble and retain for the
period described in part 762 of the EAR, and produce or make available
for inspection, the following:
* * * * *
    21. In Sec.  754.5 revise the second sentence of paragraph (b)(2)
to read as follows:

Sec.  754.5  Horses for export by sea.

* * * * *
    (b) * * *
    (2) * * * You must provide a statement in the additional
information section of the application certifying that no horse under
consignment is being exported for the purpose of slaughter.
* * * * *
    22. In Supplement No. 2 to Part 754, revise the text to footnote
number 2 in the table to read as follows:

Supplement No. 2 to Part 754--Western Red Cedar

* * * * *
    \2\ Report commodities on license applications in the units of
quantity indicated.

PART 764--[AMENDED]

    23. The authority citation for 15 CFR part 764 continues to read as
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August
3, 2006, 71 FR 44551 (August 7, 2006); Notice of August 15, 2007, 72
FR 46137 (August 16, 2007).

    24. In Sec.  764.7, revise the second sentence of paragraph
(b)(2)(i) to read as follows:

Sec.  764.7  Activities involving items that may have been illegally
exported or reexported to Libya.

* * * * *
    (b) * * *
    (2) * * *
    (i) * * * License applications should be submitted in accordance
with Sec. Sec.  748.1, 748.4 and 748.6 of the EAR, and should fully
describe the relevant activity within the scope of Sec.  764.2(e) of
this part which is the basis of the application. * * *
* * * * *

PART 772--[AMENDED]

    25. The authority citation for 15 CFR part 772 continues to read as
follows:

    Authority: 50 U.S.C. app. 2401 et seq.; 50 U.S.C. 1701 et seq.;
E.O. 13222, 66 FR 44025, 3 CFR, 2001 Comp., p. 783; Notice of August
3, 2006, 71 FR 44551 (August 7, 2006); Notice of August 15, 2007, 72
FR 46137 (August 16, 2007).

    26. In Sec.  772.1 revise the second sentence of the definition of
the term ``Other party authorized to receive license.''

Sec.  772.1  Definitions of terms as used in the Export Administration
Regulations (EAR).

* * * * *
    Other party authorized to receive license. * * * If a person and
address is listed in Block 15 of the application, the Bureau of
Industry and Security will send the license to that person instead of
the applicant.
* * * * *

    Dated: October 15, 2007.
Matthew S. Borman,
Deputy Assistant Secretary for Export Administration.
[FR Doc. E7-20655 Filed 10-18-07; 8:45 am]

BILLING CODE 3510-33-P


[Federal Register Volume 80, Number 101 (Wednesday, May 27, 2015)]
[Rules and Regulations]
[Pages 30153-30155]
[FR Doc No: 2015-12741]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 866

[Docket No. FDA-2015-N-1072]

Medical Devices; Immunology and Microbiology Devices;
Classification of Multiplex Nucleic Acid Assay for Identification of
Microorganisms and Resistance Markers From Positive Blood Cultures

AGENCY: Food and Drug Administration, HHS.

ACTION: Final order.

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SUMMARY: The Food and Drug Administration (FDA) is classifying
multiplex nucleic acid assay for identification of microorganisms and
resistance markers from positive blood cultures into class II (special
controls). The special controls that will apply to this device are
identified in this order and will be part of the codified language for
the multiplex nucleic acid assay for identification of microorganisms
and resistance markers from positive blood cultures. The Agency is
classifying the device into class II (special controls) in order to
provide a reasonable assurance of safety and effectiveness of the
device.

DATES: This order is effective May 27, 2015. The classification was
applicable June 26, 2012.

FOR FURTHER INFORMATION CONTACT: Kimberly J. Sconce, Center for Devices
and Radiological Health, Food and Drug Administration, 10903 New
Hampshire Ave., Bldg. 66, Rm. 5506, Silver Spring, MD 20993-0002, 301-
796-6679.

SUPPLEMENTARY INFORMATION:

I. Background

    In accordance with section 513(f)(1) of the Federal Food, Drug, and
Cosmetic Act (the FD&C Act) (21 U.S.C. 360c(f)(1)), devices that were
not in commercial distribution before May 28, 1976 (the date of
enactment of the Medical Device Amendments of 1976), generally referred
to as postamendments devices, are classified automatically by statute
into class III without any FDA rulemaking process. These devices remain
in class III and require premarket approval, unless and until the
device is classified or reclassified into class I or II, or FDA issues
an order finding the device to be substantially equivalent, in
accordance with section 513(i) of the FD&C Act, to a predicate device
that does not require premarket approval. The Agency determines whether
new devices are substantially equivalent to predicate devices by means
of premarket notification procedures in section 510(k) of the FD&C Act
(21 U.S.C. 360(k)) and part 807 (21 CFR part 807) of the regulations.
    Section 513(f)(2) of the FD&C Act, as amended by section 607 of the
Food and Drug Administration Safety and Innovation Act (Pub. L. 112-
144, July 9, 2012), provides two procedures by which a person may
request FDA to classify a device under the criteria set forth in
section 513(a)(1). Under the first procedure, the person submits a
premarket notification under section 510(k) of the FD&C Act for a
device that has not previously been classified and, within 30 days of
receiving an order classifying the device into class III under section
513(f)(1) of the FD&C Act, the person requests a classification under
section 513(f)(2). Under the second procedure, rather than first
submitting a premarket notification under section 510(k) of the FD&C
Act and then a request for classification under the first procedure,
the person determines that there is no legally marketed device upon
which to base a determination of substantial equivalence and requests a
classification under section 513(f)(2) of the FD&C Act. If the person
submits a request to classify the device under this second procedure,
FDA may decline to undertake the classification request if FDA
identifies a legally marketed device that could provide a reasonable
basis for review of substantial equivalence with the device or if FDA
determines that the device submitted is not of ``low-moderate risk'' or
that general controls would be inadequate to control the risks and
special controls to mitigate the risks cannot be developed.
    In response to a request to classify a device under either
procedure provided by section 513(f)(2) of the FD&C Act, FDA will
classify the device by written order within 120 days. This
classification will be the initial classification of the device.
    In accordance with section 513(f)(1) of the FD&C Act, FDA issued an
order on June 12, 2012, classifying the Verigene[supreg] Gram Positive
Blood Culture Nucleic Acid Test (BC-GP) into class III, because it was
not substantially equivalent to a device that was introduced or
delivered for introduction into interstate commerce for commercial
distribution before May 28, 1976, or a device which was subsequently
reclassified into class I or class II. On June 15, 2012, Nanosphere,
Inc., submitted a request for classification of Verigene[supreg] Gram
Positive Blood Culture Nucleic Acid Test (BC-GP) under section
513(f)(2) of the FD&C Act. The manufacturer recommended that the device
be classified into class II.
    In accordance with section 513(f)(2) of the FD&C Act, FDA reviewed
the request in order to classify the device under the criteria for
classification set forth in section 513(a)(1) of the FD&C Act. FDA
classifies devices into class II if general controls by themselves are
insufficient to provide reasonable assurance of safety and
effectiveness, but there is sufficient information to establish special
controls to provide reasonable assurance of the safety and
effectiveness of the device for its intended use. After review of the
information submitted in the de novo request, FDA determined that the
device can be classified into class II with the establishment of
special controls. FDA believes these special controls, in addition to
general controls, will provide reasonable assurance of the safety and
effectiveness of the device.
    The device is assigned the generic name multiplex nucleic acid
assay for identification of microorganisms and resistance markers from
positive blood cultures, and it is identified as a qualitative in vitro
device intended to simultaneously detect and identify microorganism
nucleic acids from blood cultures that test positive by Gram stain or
other microbiological stains. The device detects specific nucleic acid
sequences for microorganism identification as well as for antimicrobial
resistance. This device aids in the diagnosis of bloodstream infections
when used in conjunction with other clinical and laboratory findings.
However, the device does not replace traditional methods for culture
and susceptibility testing.
    Multiplex nucleic acid assay for identification of microorganisms
and resistance markers from positive blood cultures is a prescription
device.
    FDA has identified the following risks to health associated with
this type of device and the measures required to mitigate these risks
in table 1:

                               Table 1--Identified Risks and Required Mitigations
----------------------------------------------------------------------------------------------------------------
                         Identified risks                                       Required mitigations
----------------------------------------------------------------------------------------------------------------
False negative result............................................  The FDA document entitled ``Class II Special
                                                                    Controls Guideline: Multiplex Nucleic Acid
                                                                    Assay for Identification of Microorganisms
                                                                    and Resistance Markers from Positive Blood
                                                                    Cultures,'' which addresses this risk
                                                                    through: Device description containing the
                                                                    information specified in the special control
                                                                    guideline, performance characteristics, and
                                                                    labeling.
False positive result............................................  The FDA document entitled ``Class II Special
                                                                    Controls Guideline: Multiplex Nucleic Acid
                                                                    Assay for Identification of Microorganisms
                                                                    and Resistance Markers from Positive Blood
                                                                    Cultures,'' which addresses this risk
                                                                    through: Device description containing the
                                                                    information specified in the special control
                                                                    guideline, performance characteristics, and
                                                                    labeling.
Errors in interpretation.........................................  The FDA document entitled ``Class II Special
                                                                    Controls Guideline: Multiplex Nucleic Acid
                                                                    Assay for Identification of Microorganisms
                                                                    and Resistance Markers from Positive Blood
                                                                    Cultures,'' which addresses this risk
                                                                    through: Device description containing the
                                                                    information specified in the special control
                                                                    guideline, performance characteristics, and
                                                                    labeling.
----------------------------------------------------------------------------------------------------------------

    FDA believes that the measures set forth in the special controls
guideline entitled ``Class II Special Controls Guideline: Multiplex
Nucleic Acid Assay for Identification of Microorganisms and Resistance
Markers from Positive Blood Cultures'' are necessary, in addition to
general controls, to mitigate the risks to health described in table 1.
    Therefore, effective June 26, 2012, FDA issued an order to the
requestor classifying the device into class II. FDA is codifying the
classification of the device by adding Sec.  866.3365.

II. 510(k) Premarket Notification

    Following the effective date of this final classification order,
any firm submitting a 510(k) premarket notification for this device
type will need to comply with the special controls.
    Section 510(m) of the FD&C Act provides that FDA may exempt a class
II device from the premarket notification requirements under section
510(k) of the FD&C Act if FDA determines that premarket notification is
not necessary to provide reasonable assurance of the safety and
effectiveness of the device. For this type of device, FDA has
determined that premarket notification is necessary to provide
reasonable assurance of the safety and effectiveness of the device.
Therefore, this device type is not exempt from premarket notification
requirements. Persons who intend to market this type of device must
submit to FDA a premarket notification, prior to marketing the device,
which contains information about the multiplex nucleic acid assay for
identification of microorganisms and resistance markers from positive
blood cultures they intend to market.

III. Environmental Impact

    The Agency has determined under 21 CFR 25.34(b) that this action is
of a type that does not individually or cumulatively have a significant
effect on the human environment. Therefore, neither an environmental
assessment nor an environmental impact statement is required.

IV. Paperwork Reduction Act of 1995

    This final administrative order establishes special controls that
refer to previously approved collections of information found in other
FDA regulations. These collections of information are subject to review
by the Office of Management and Budget (OMB) under the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of
information in 21 CFR parts 50 and 56 have been approved under OMB
control number 0910-0755; the collections of information in 21 CFR part
807, subpart E, regarding premarket notification submissions have been
approved under OMB control number 0910-0120; the collections of
information in 21 CFR parts 801 and 809 regarding labeling have been
approved under OMB control number 0910-0485; the collections of
information in 21 CFR part 812 regarding investigational device
exemptions have been approved under OMB control number 0910-0078; the
collections of information in 21 CFR part 820 regarding quality systems
have been approved under OMB control number 0910-0073; and the
collections of information regarding Requests for Feedback
(``presubmissions'') have been approved under OMB control number 0910-
0756.

V. Clarifications to Special Controls Guidelines

    This special controls guideline reflects changes the Agency is
making to clarify its position on the binding nature of special
controls. The changes include referring to the document as a
``guideline,'' as that term is used in section 513(a) of the FD&C Act,
which the Secretary has developed and disseminated to provide a
reasonable assurance of safety and effectiveness for class II devices,
and not a ``guidance,'' as that term is used in 21 CFR 10.115. The
guideline uses mandatory language to emphasize that firms must comply
with special controls to legally market their class II devices. The
guideline clarifies that firms will need either to: (1) Comply with the
particular mitigation measures set forth in the special controls
guideline or (2) use alternative mitigation measures, but demonstrate
to the Agency's satisfaction that those alternative measures identified
by the firm will provide at least an equivalent assurance of safety and
effectiveness. These revisions do not represent a change in FDA's
position about the binding effect of special controls, but rather are
intended to address any possible confusion or misunderstanding.

List of Subjects in 21 CFR Part 866

    Biologics, Laboratories, Medical devices.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, 21 CFR part
866 is amended as follows:

PART 866--IMMUNOLOGY AND MICROBIOLOGY DEVICES

0
1. The authority citation for 21 CFR part 866 continues to read as
follows:

    Authority:  21 U.S.C. 351, 360, 360c, 360e, 360j, 371.

0
2. Add Sec.  866.3365 to subpart D to read as follows:

Sec.  866.3365  Multiplex nucleic acid assay for identification of
microorganisms and resistance markers from positive blood cultures.

    (a) Identification. A multiplex nucleic acid assay for
identification of microorganisms and resistance markers from positive
blood cultures is a qualitative in vitro device intended to
simultaneously detect and identify microorganism nucleic acids from
blood

cultures that test positive by Gram stain or other microbiological
stains. The device detects specific nucleic acid sequences for
microorganism identification as well as for antimicrobial resistance.
This device aids in the diagnosis of bloodstream infections when used
in conjunction with other clinical and laboratory findings. However,
the device does not replace traditional methods for culture and
susceptibility testing.
    (b) Classification. Class II (special controls). The special
control for this device is FDA's guideline document entitled ``Class II
Special Controls Guideline: Multiplex Nucleic Acid Assay for
Identification of Microorganisms and Resistance Markers from Positive
Blood Cultures.'' For availability of the guideline document, see Sec.
866.1(e).

    Dated: May 20, 2015.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2015-12741 Filed 5-26-15; 8:45 am]
 BILLING CODE 4164-01-P