        April 28, 2015
RLDWA Meeting with the American Foundry Society
Attendees
 American Foundry Society: Jerry Call, Steve Robison, Stephanie Salmon
 EPA: Brian D'Amico, Erik Helm, Jeff Kempic
 Cadmus: Laura Dufresne, Anne Jaffe Murray
 Neptune Technology Group: Jim Valentine
 Mueller Co: Steve Crawford, Christy McEldowney, Dave Woollums
 A Y McDonald: Steve Tefft
 Ford Meter Box: Mike Jones
Meeting Purpose
The American Foundry Society (AFS) and manufacturers from the metalcasting industry met with EPA on April 28, 2015. The meeting purpose was to obtain input to refine costs estimates for the Agency's regulation, which clarifies the requirements of the Reduction of Lead in Drinking Water Act (RLDWA).
EPA RLDWA Rulemaking Overview
Brian D'Amico provided an overview of EPA's rulemaking process related to the RLDWA. He made the following points:
 The impetus for EPA's rule is the RLDWA.
 The RLDWA:
 Reduces the allowable lead content of pipes, pipe fittings, plumbing fittings and fixtures to a maximum allowable lead content of 0.25% with respect to wetted surfaces.
 Provides exemptions based on use and type of product.
 Removes federal requirements for third-party certification.
 To address questions from industry, EPA developed frequently asked questions (FAQs). In the FAQs, EPA committed to developing a rule and when possible, to add requirements to make the law more consistent nationally.
 EPA held a webinar on April 14[th] (Regulations Implementing Section 1417 of the Safe Drinking Water Act Webinar) to get input on the options that EPA is considering and to ground check how implementable they are. EPA presented potential regulatory requirements including:
 Labeling options for potable and some exempted products.
 Third-party and/or self-certification to document compliance with the lead-free requirements.
 EPA is modeling the costs for these various options. Part of the purpose of today's discussion is to get information to help EPA develop the best rule possible from a feasibility and economic standpoint.
 EPA is in the option development stage and assessing the impact on regulated entities. The goal is to propose a rule some time in 2016.
Mr. D'Amico thanked the participants for the information they produced in advance to the meeting. In response to Brian D'Amico's overview, one participant asked if the April 30, 2015 deadline set to provide input on the April 14, 2015 webinar also applied to today's meeting. In response, Mr. D'Amico replied that the webinar and this meeting are on separate tracks and that there is no set deadline to provide feedback on today's meeting.
Solicited Questions and Feedback from Participants
Erik Helm explained that EPA is working to develop a costing model to assess impacts on manufacturers. In advance of the meeting, EPA distributed general costing questions to which some answers were provided prior to the call. Mr. Helm thanked the participants for the information and clarified that during the call, he will ask questions to get more targeted feedback.
Metalcasting Industry Overview
Below are questions posed by Erik Helm regarding the file, "Overview of US Metalcasting Industry - March 2015" and corresponding responses from foundry participants. When there are multiple responses, each bullet represents a different foundry participant.
 Erik Helm: The characterization of industry, payroll and total value are useful. On the first page, you indicate that 80% of firms have 100 or fewer employees. Why is this size breakout used when the Small Business Administration definition is 500 or fewer?

Response:
 Since such a large percentage is 100 or fewer employees we wanted to show this breakout. Small foundries make up the lion share and many are family owned.
 It is a good benchmark for when we talk to Congress.

 Erik Helm: As we look to grouping manufacturers by size, are there industry standards?

Responses:
 We can look into that.
 We do have some breakdown. Percent that have <= 50 employees, <= 25. We also have categories for 250 and 500 employees.

 Erik Helm: We have been researching employee size and revenue for our analyses, which has been difficult because so many producers are private companies. How many of these companies are privately owned?

Responses:
 We have 50 or fewer.
 We have 200 or fewer and can provide additional information to answer that question.

 Erik Helm: The pie chart on page 2 shows the end-use of metalcasting by industry sector. Does 20% of "valves, pipes, and fittings" output involve casting or is 20% of the metalcasting sector's total production represented by "values, pipe, and fittings"?

Responses:
 The latter.
 There is also 3% for municipal casting. That might be more pipe in terms of that segment.
 We also have manhole covers.

 Erik Helm: Do you know what percentage of the 23% might be involved in drinking water?

Responses:
 I can get back to you with more information.
 Some may be dual use. Some could be used for oil and gas sector.
      Reply from Erik Helm: It would be great to know dual use ones. I am trying to get a picture of how much of the industry is involved with casting drinking water products because it might impact our regulation.
 Erik Helm: Are there specific foundries that specialize just in type of castings that would be used for drinking water?

Responses:
 There are a number of foundries where drinking water would be a significant portion of their business.
 My company has captive manufacturing and we only product water meters.
 My company also has captive products and a lot match up with water meters.
 My company makes a captive lot for wastewater, drinking water and gas. Some plumbing products have non-potable applications.

 Erik Helm: How do you define "captive"?

Responses:
 We do not sell to other businesses. Captive products are ones we make for our business.
 The companies do not sell to other companies.

 Erik Helm: Are captive products packaged with other components at another facilities?

Responses:
 All are done at our facilities.
 We have other products outside drinking water. Some products are strictly consumed by their parent company.

 Erik Helm: What portion of facilities make primarily drinking water products, versus those that produce a variety of castings across other sectors and that are not heavily dependent on the drinking water sector?

Response: We will check on this.  Not sure if there are data.

 Erik Helm: On the third page, you describe value-added services of machining. How much work would be done in-house versus being subcontracted out if we required lettering on castings? In your report, finish machining is the most popular value added service. I can envision the most probable way to add or change lettering is to change molds or patterns. Would companies put the lead-free lettering into cast products in a post-casting production process?

Responses:
 Lettering would not be done in a machine shop.
 In general, we would add lettering to the pattern. Machining is more expensive.

 Erik Helm: How many foundries develop stamps or retool their molds in-house versus sending them out to be redone?

Responses:
 That would be a business decision. I don't think we can make a guess.
 It's a mix. Some would do in-house, some outside and some both. For companies that literally have 1000s of patterns to change, it would be a time-intensive and expensive process. The process would be affected by the inventory of products already made.

 Stephanie Salmon: Give us a sense of the existing inventory and how long a change like this would take.

Responses:
 We spent 15 years educating customers about the meaning of the symbol "NL". We have been selling lead-free products for about 15 years. Our volume increased with the enactment of California's lead-free law. We sell through distribution centers that sell to customers. There is extensive inventory out there already marked with "NL".
 There is the cost of changing the messaging and to reeducate the public.
 We would also be building inventory while making this change to be able to keep up with product demand.
 In terms of how long it would take to get new products out there, it would be hard to guess.  We have at least a year's worth of inventory.

  As a follow-up question Mr. Helm asked for clarification on inventory at the manufacturer.
          A participant said that the inventory is related to the product. They would turn it over multiple times a year. He doesn't have a good guess for the inventory at distribution centers.

 Erik Helm: So turnover a few times per year at the manufacturing facility and lengthier downstream?

Responses:
          Turnover for mainstream products but 20% are C and D-level products that are slower moving. When we went to low lead, we saw shipment of things that we had not seen for a while. We would have to scrap inventory if we have to change our markings by a cutoff date. Our end users may have inventory turnover once or twice per year.
          Normally we would produce C and D-level products when we get those orders.

 Erik Helm: Is lost-wax casting significant for drinking water products?

Response: I do not think investment casting is used in waterworks production. It is a premium process.
Metal Casting Industry Overview
Below are questions posed by Erik Helm regarding the file, EPA Q&A Mar 2015-rev and corresponding responses from foundry participants. When there are multiple responses, each bullet represents a different foundry participant.
 Erik Helm: My first question in this document was about the predominant form of labeling used by your industry. You indicated that the "NL" and "NSF 372" are prominent markings. In your comments on the FAQs (file: AFS Comments on EPA Draft FAQs for Reduction of Lead in Drinking Water June 2013) you also mentioned a few others like "LF". Can you give me rough percentages of those common markers? If EPA adopted one common mark, we could remove the percentage of industry that uses that mark from the cost model.

Response: Our main products predominantly use the "NSF 372". On smaller products, we use "NL".

 Erik Helm: Is it common that on a small part, manufacturers will use "NL"?
      Response:  Manufacturers who participated in an AWWA call indicated that they used three marks: "NL" for small products like service brass and meters, NSF 61-G and NSF 372 for larger products. People understand when they see these symbols that the products meet the low-lead requirements.
 Erik Helm: What percentage of cast products use one of these three marks?

Response: It should be 95% that use one of these three indicators.

 Erik Helm: What does larger versus smaller mean?
      Response: We use a sticker with NSF 372 on our products when they are > 2 inches. We have some fire hydrants where NL is on the hydrant and we also have a sticker. Every hydrant manufacturer is different.
 Erik Helm: What is the minimum size for lettering that is readable and can be reproduced in a sand cast?

Responses:
          The lettering has to be larger than 1/8" to be readable. However, the spacing between lettering is important too. Also cast indented lettering is not as easy to read as raised lettering. There is not a lot of real estate to add this. We use "NL" across the board on physical parts (100%). It's more than just size, it also depends on the design of the product
          We use NL across the board on the physical part, 100%.

 Erik Helm: How much of your current lettering occurs on a flat versus a curved surface?

Responses:
          Ideally for casting, we would letter on a flat service that is parallel to the parting line (where the mold parts). This is the best case scenario but isn't always available.
          I am guessing it is 50-50. We use a flat surface if it is available.
          Some components are completely machined and we etch in the "NL" symbol.

 Erik Helm: If altering molds and patterns, what types of machining would you use? Would you use electrical discharge machining (EDM) to alter molds or use laser machining? If applying a stamp, would you have it custom made or use pre-made types that you would apply to the mold or pattern?

Responses:
 Most raised lettering are individual letters applied to the surface. We would have to grind the surface to remove the old lettering and apply new lettering.
 We might have to weld it, make a pocket to add lettering or remake the mold entirely.
 For smaller products, we would most likely create a new pattern. We could probably machine out the letters for larger castings.
 The method we choose will be based on economics. Some products may have a few impressions and others may have 50 letters or more. For the latter, it may make more sense to start over.

 Erik Helm: If machining is not an option the pattern would be remade. How often are patterns replaced?

Response: It varies based on the use. Higher volume ones are used and therefore replaced more often. Patterns that are not used often may take a while to replace.

 Erik Helm: What is the replacement rate for patterns of high volume products?

Responses:
 Twice per year or every 2 years.
 I agree that twice per year or every 2 years makes sense if we are making hundreds of thousands or millions of these products. For those where we make only 1,000 products per year, we may have the same patterns for 75 years.

 Erik Helm: What percent of all production and types of product are high volume?

Response: A very small percentage is high volume, such as some of our meters. I estimate that fewer than 5% are high volumes that necessitate the replacement of a pattern every two years. Most patterns last a long time.

 Erik Helm: What is the average life span of a pattern?

Responses:
 A higher number may have a replacement frequency of more than 10 years on average, so say 10 to 20 years.
 I think 15 to 20 years going by the average number of patterns we have (not the number of pieces we make).
 We change the pattern when the job comes up.  It took our shop 2 years to change over to the current lead-free symbol.
 I agree it took 2 years to make that change.

 Erik Helm: Do you ever use metal embossing bands to mark lettering on patterns?

Responses from two individuals: No. It is not desirable.

 Erik Helm: You don't usually screw on a machined metal product unless you are grinding out a location. Don't you normally attach it with screws to a pattern?

Responses from two individuals: Yes, we use screws. One elaborated that we will cast in a flat place to accomplish that.

 Erik Helm: Is that procedure followed for drinking water patterns?
      Response: I have not seen that but I don't know what others make.
 Erik Helm: Can you provide a time estimate to machine and develop an insert, and change a single pattern? Thinking through it, this would involve: 1) pulling the pattern, 2) setting it in a machine, 3) doing your machining, 4) setting your blank for lettering in another piece of equipment and 5) applying it to a pattern. This would be important in terms of estimating labeling costs.

Responses:
 This would be difficult to estimate, but everyone can try to provide an estimate
 There is tremendous variation in the number of individual parts to a pattern (e.g., one part or 30 parts). Each impression would need to be changed.

 Erik Helm: Can you estimate the number of plates on a production line as a rule of thumb, and the number of patterns on a plate?

       Response: The number of impressions on a plate depend on its size. As casting gets smaller, we can get more parts on a plate. How many parts we want for each impression is driven by economics.

 Erik Helm: What are the typical sizes of plates?

       Responses:
          It is driven by the type of equipment (e.g., if it is automated equipment).
          It will vary by machine tool. The pattern could be 10" x 20", 14" x 18", or 18" x 28".
          Most patterns are automated (Another agreed).
          Very few patterns in the US are done by hand for this industry. I think mostly use automated molding machines.
          My company did about 2% - 5% by hand and these were low volume applications. You have to consider more than just the cost of the new pattern.

 Erik Helm: When you're using a metal mold versus sandcasting on a production line, how many molds is that, or is it done individually?

       Responses:
 I don't know if much is done in water industry with metal molds. Most is sandcasting.
 On the casting side I agree. Could have some forgings that are metal forms but our group does not do that.

 Erik Helm: What about faucets. Are some mold castings?

       Response: None of the participants responded to this question.
 Erik Helm: Your response to my second question (in file EPA Q&A Mar 2015-rev) indicated that most parts are shipped with packaging. What method do you typically use - Tyvek, labeling, etc.
      Responses from two individuals: All products are boxed and a label is applied to the box that says no lead.
 Erik Helm: Are labels pre-printed?

Response: Yes, we print them as we make them.

 Erik Helm: Do you apply the labels using fully-automated or semi-automated machinery or do you apply them manually?

Responses:
 We do not do that. We have the identification on the product. (Another participant agreed.)
 Anyone can put a sticker on a product. We use our mark. Our customers want to see it physically cast in so they know we made that mark.
 For products that are packaged in a box, we apply labels manually. (Response from three participants.)

 Erik Helm: Besides applying a sticker to a product, how often do you use a tag versus using machining and etching "NL" into the product?

Response: A very small percentage would not be cast. As a wild guess about 1%.

 Erik Helm: Do you use acid or lasers for etching?

Responses:
 We looked at it, but have never been able to justify the cost of doing it that way.
 If it is not cast in, we stamp it. We take a hammer and metal stamp to apply the label.
 We don't use ink. (Response from four individuals). We want a permanent mark.
 We roll stamp some larger parts in our C&C machining process.

 Erik Helm: In one of your attachments, you indicated that you include markings to track products for scrapping or for internal process control. What are those markings and how do you change them?

Responses:
 We don't use bar codes.
 We may mark the casting so you can trace it back to when it was made.
 On some parts, we have some date coding but it is not the norm.
 Some have day codes on some of our products.

 Erik Helm: How do you use embossing tape? How do you change it out and could it be modified to include lead-free information?

Response: We use it on large products. I think it is a glued on the pattern. It is not practical for the majority of products because a large amount of real estate is needed.

 Erik Helm: Can you be more specific on the percentages for different type of labeling? You indicated that the majority are cast markings for foundry products. You indicated a small percent is etched. Seems like printing on products is rare. How about Tyvek tags?

Responses:
 We don't use Tyvek. We like casting or etching because a lot of this product gets buried into the ground so it has to last.
 From the waterworks side, tags can be removed or disintegrate. I have seen tags, stickers or bags for products that are used in the home. I have seen very small products in bags. It is about real estate. The goal is to use a method that allows the installers to see the lead-free mark. We only use tags when there is no other choice.

 Erik Helm: How often are patterns redesigned in general? How often are valves or other castings redesigned? How often do product manufacturers make changes to pattern design that you implement?

Responses:
          Valves and coupling patterns are rarely changed. Some are original ones or were changed when we went to low lead.
          We do not make product lines like computers, which are consistently changing. A lot of what we make will go into the ground for 50 to 100 years.

 Erik Helm: When you are looking to make lettering changes, do you have enough pattern plates to alter them without slowing down production. Do you have extras in case of problems?

Responses:
 No.
 No, only on high production products do we have multiples. We made new toolings when we transitioned to lead-free materials. We made permanent markings when we switched over. (Another participant agreed.)

 Erik Helm: Pouring is not a continuous process. Is there time to make changes in between pourings?

Responses:
          We will make changes to pattern before we make a product. We change the pattern and then make molds before making the product.
          There is time when it is not on the machine. Next time the part is ordered, we make the change prior to going into production.
          We had different tracking numbers when we switched to low lead. To track 1,500 patterns and different casting with different messaging would be a mess.

 Erik Helm: What percent of all plumbing products are cast or have cast parts? Are valves a cast product?

Response: I don't know if we can answer that here. Waterworks brass is almost 100% cast. Plumbing in the home is a mixed bag. An extremely high percentage of products from the water main to water meter including the water meter are cast. After the water meter to the faucet is a PMI question.
Third-Party Certification
EPA and foundry participants discussed estimated costs for third-party certification and three NSF standards associated with lead. These discussions are provided below.
 Estimated Cost for Third-Party Certification
 Erik Helm: What is the typical cost for third-party certification for a product line?
      Response: It depends on the certification. Standard 372 certification is very straight forward. The certifier tests the product for lead. Performance-based assessment to NSF Standard 61 is very expensive. It is probably $10,000 per product. There are reoccurring costs for audits that include travel. When you have multiple product lines, can be 6 figures.
NSF Standards
EPA and foundry participants also discussed the NSF standards that pertain to lead. One participant explained the differences among NSF Standard 61, NSF Standard 61-G, and NSF Standard 372 and made additional points as follows:
 NSF Standard 61-G was the predecessor to NSF Standard 372. A product that meets NSF Standard 61-G meets both the performance and lead-free standard. A product that meets NSF Standard 372 meets the lead-free standard only.
 A product with NSF Standard 61 on the packaging or product itself, may not comply with the current lead-free requirements.
 I would be against specifying NSF Standard 61 as a marking for this rule. We took the NSF Standard 61 marking off products we sell for gas because these products contain lead. We marked them as non-potable because we don't want people to get confused. I think there are still some that are certified to NSF Standard 61 that do not comply with lead-free requirement.
Another participant explained how the lead leaching testing is done for the NSF Standard 61. He thought it was virtually impossible to meet the leaching standard in NSF Standard 61 and not meet the lead-free requirements of NSF Standard 61 (Note that another participant disagreed with this statement). He also provided additional information on the different standards:
 At one point we had NSF Standard 372 that provides the lead-free calculation method and then we had Annex G to Standard 61 that is identical to NSF Standard 372.
 NSF is still supporting NSF 61-G mark but are doing away with Annex G. There are many end users that require NSF 61 and NSF 372 so instead of having two marks, NSF 61-G indicates that a product meet both requirements.
Other comments included:
 I was surprised during the April 14, 2015 webinar that EPA has not decided which standard will be used for compliance. AFS would like to be part of that discussion.
 NSF Standard 61 is a leaching standard. NSF Standard 372 is a standard made specifically for the new lead-free laws. I think it is a huge leap to require compliance with NSF Standard 61.
 End user can go to the certifier's websites and see what products are certified.
 The comments I provided on the webinar discuss the idea of imported materials and the need for regulations to also apply to imports. There needs to be a level playing field.
   In response to these other comments, Brian D'Amico explained that EPA wants feedback on third-party certification pertaining to questions asked during the webinar and not on the standard itself. Please provide your feedback to website provided during the webinar<EMAIL_ADDRESS>
Wrap-Up and Action Items
Erik Helm thanked the meeting participants for their time and helpful input. He asked the participants to provide any costing information they had related to labeling or marking changes to meet the requirements of the RLDWA.
Mike Jones from Ford Meter Box indicated that his company is willing to provide tour at his facility for Erik Helm.
Below is a table with action items from the meeting:
Action Item
Responsibility
Provide list of meeting attendees to Erik Helm.
Stephanie Salmon
Provide meeting summary to Stephanie Salmon for distribution to foundry participants.
Erik Helm
Provide additional information to Erik Helm:
 The number of privately owned firms.
 Percentage of valves, pipes, fittings, and metal castings that pertain to drinking water and percentage that are dual use.
 Number of facilities where primary output is for drinking water versus castings across other sectors and are less dependent on revenue from the water sector.
 Industry employee size categories.
 Time estimates to: 1) pull the pattern, 2) set it in a machine, 3) do the machining, 4) set the blank for lettering in another piece of equipment and 5) apply it to a pattern.
 Costing information related to labeling or marking changes to meet the requirements of the RLDWA.
Stephanie Salmon/Steve Robinson (#1-3)

Foundry participants (#4-#6)
Provide clarifications or corrections to meeting summary to Erik Helm
All participants
RESPONSES TO ACTION ITEMS:
 The number of privately owned firms.
 That is difficult to define and AFS cannot clearly identify the total number of privately owned firms vs. publically traded corporate firms. AFS estimates that 80% of the foundries have 100 or less employees Generally speaking, only the largest foundries (250+) would be publicity or corporately owned.
 AFS estimates that there are currently about 1965 metal casters in the US. According to the chart below about 58% of those are 60 or less employees and are probably all privately owned. In addition, some of the medium size facilities (60-250) are also privately owned and a few of the large foundries (250+).  I would think it is safe to say that probably more than the 80% of the foundries in the U.S. are privately owned and operated.
 Percentage of valves, pipes, fittings, and metal castings that pertain to drinking water and percentage that are dual use.
 No data on this issue.
 Number of facilities where primary output is for drinking water versus castings across other sectors and are less dependent on revenue from the water sector.
 AFS produces estimates for the total weight and dollar value of shipments into each casting use sector, but does not keep figures on how many foundries are dedicated to a particular sector or product line.
 AFS marketing report estimates that in 2015, $187 million of copper-base alloy castings we will produced for component application in NAICS 332913 (Plumbing fixtures fitting and trim manufacturing). Another $436.76 million will be produced for NAICS 332911 (Industrial valve manufacturing) which is primarily water works with some industrial valves that might be used in non-water applications.

 Industry employee size categories.

(Source: AFS Metalcasting Directory database (ca. 2013 data).

 Time estimates to: 1) pull the pattern, 2) set it in a machine, 3) do the machining, 4) set the blank for lettering in another piece of equipment and 5) apply it to a pattern.
  I don't think this reflects a complete understanding of the process for changing lettering on tooling such as would be necessary for designating a nonleaded alloy with cast-in lettering.
 Changing the pattern to replace letters for cast-in lettering probably rarely involves machining. More often the existing lettering is ground or sanded off and new letters glued or screwed on. It is a more manual operation than machining. On some larger metal patterns, there may be a machined insert that can be removed and then a new insert attached.
 Costing information related to labeling or marking changes to meet the requirements of the RLDWA.
 Varies widely with the number of patterns on the mold. For a larger part, with only one or two patterns on the tooling, only the two patterns need to be changes. For smaller poarts, that may have b 10 or 20 (or more) patterns on the tooling plate, this becomes much more complex and difficult.

Follow-up Questions from Eric Helm (06-03-15 email):
As part of the follow-up to our AFS conference call I was hoping that you could give me a cost estimate for changing a pattern to include additional lettering.  I believe  -  but you know better and feel free to correct me  -  that the steps to changing a single pattern would be:

 adjusting CAD drawings for the pattern
 Probably no CAD work needed, except perhaps to correct the CAD model for future reference.
 setting up pattern and tool in CNC machine
 Would typically not be done on a CNC machining. More likely a manual process (see above response).
 grinding out and area for application of new lettering blank or tag (this is based on info AFS members gave in our conference call)
 making the blank (sub steps include machining and EDM work)
 More likely done in a pattern shop rather than the machine shop. If the pattern is a machined insert, then a new insert would need to be machined. (see above response)
 applying the lettering tag to the pattern by epoxy or screws
 If the raised lettering is not an insert, but letters applied singly, would need to procure lettering and applied to each pattern. If the raised lettering is applied manually, would need to procure lettering and apply manually.  (see above response)

If you could give me the time required for each step and the general cost of each step that would be most helpful in more accurately estimating the costs to your industry of any proposed lead free marking changes.
 Not certain we can get information to estimate each step that precisely since it will vary tremendously with the pattern size. See above response about large vs smaller patterns. We will try to see if we can obtain a better estimate or time and cost.
I forgot to mention, you can assume hardened tool steel for the pattern and the tag to be inserted, and the insert would be on a curved surface and the insert would be 3/8 by (3/4) inch.
 Steel or aluminum tooling. If a separate insert is used, the insert size will be determined by the size of the pattern.


[Federal Register Volume 82, Number 247 (Wednesday, December 27, 2017)]
[Notices]
[Pages 61304-61306]
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``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.'' The Agency will
review this copy, including the claimed confidential information, in
its consideration of comments. The second copy, which will have the
claimed confidential information redacted/blacked out, will be
available for public viewing and posted on https://www.regulations.gov.
Submit both copies to the Dockets Management Staff. If you do not wish
your name and contact information to be made publicly available, you
can provide this information on the cover sheet and not in the body of
your comments and you must identify this information as
``confidential.'' Any information marked as ``confidential'' will not
be disclosed except in accordance with 21 CFR 10.20 and other
applicable disclosure law. For more information about FDA's posting of
comments to public dockets, see 80 FR 56469, September 18, 2015, or
access the information at: https://www.gpo.gov/fdsys/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
    Docket: For access to the docket to read background documents or
the electronic and written/paper comments received, go to https://www.regulations.gov and insert the docket number, found in brackets in
the heading of this document, into the ``Search'' box and follow the
prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane,
Rm. 1061, Rockville, MD 20852.
    You may submit comments on any guidance at any time (see 21 CFR
10.115(g)(5)).
    Submit written requests for single copies of the draft guidance to
the Office of Communication, Outreach and Development, Center for
Biologics Evaluation and Research (CBER), Food and Drug Administration,
10903 New Hampshire Ave., Bldg. 71, Rm. 3128, Silver Spring, MD 20993-
0002. Send one self-addressed adhesive label to assist the office in
processing your requests. The draft guidance may also be obtained by
mail by calling CBER at 1-800-835-4709 or<PHONE_NUMBER>. See the
SUPPLEMENTARY INFORMATION section for electronic access to the draft
guidance document.

FOR FURTHER INFORMATION CONTACT: Jonathan McKnight, Center for
Biologics Evaluation and Research, Food and Drug Administration, 10903
New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993-0002,
240-402-7911.

SUPPLEMENTARY INFORMATION:

I. Background

    FDA is announcing the availability of a draft document entitled
``Implementation of Pathogen Reduction Technology in the Manufacture of
Blood Components in Blood Establishments: Questions and Answers; Draft
Guidance for Industry.'' The draft guidance provides blood
establishments that collect or process blood and blood components with
recommendations for implementing pathogen reduction technology in the
manufacture of pathogen-reduced blood components. The draft guidance
also provides recommendations to licensed manufacturers on reporting
the manufacturing changes associated with implementation of pathogen
reduction technology under 21 CFR 601.12. Currently, the
INTERCEPT[supreg] Blood System for Platelets and Plasma has been
approved for the manufacture of certain pathogen-reduced platelet and
plasma products. The draft guidance provides answers to frequently
asked questions from blood establishments concerning the implementation
of the INTERCEPT[supreg] Blood System for Platelets and Plasma. If the
product platform for this device changes or FDA approves another device
with a similar intended use in the future, the Agency will consider
providing additional recommendations to blood establishments.
    This draft guidance is being issued consistent with FDA's good
guidance practices regulation (21 CFR 10.115). The draft guidance, when
finalized, will represent the current thinking of FDA on implementation
of pathogen reduction technology in the manufacture of blood components
in blood establishments. It does not establish any rights for any
person and is not binding on FDA or the public. You can use an
alternative approach if it satisfies the requirements of the applicable
statutes and regulations. This guidance is not subject to Executive
Order 12866.

II. Paperwork Reduction Act of 1995

    This draft guidance refers to previously approved collections of
information found in FDA regulations. The collections of information in
21 CFR part 601 have been approved under OMB control number 0910-0338;
the collections of information in 21 CFR part 606 have been approved
under OMB control number 0910-0116; and the collections of information
in 21 CFR

630.10 have been approved under OMB control number 0910-0795.

III. Electronic Access

    Persons with access to the internet may obtain the draft guidance
at either https://www.fda.gov/BiologicsBloodVaccines/GuidanceComplianceRegulatoryInformation/Guidances/default.htm or
https://www.regulations.gov.

    Dated: December 22, 2017.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2017-28043 Filed 12-26-17; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register Volume 85, Number 51 (Monday, March 16, 2020)]
[Notices]
[Pages 14987-14989]
[FR Doc No: 2020-05239]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88354; File No. SR-CboeBZX-2020-020]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Amend its Fee Schedule

March 10, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on March 2, 2020, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') 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 Exchange. 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\ 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

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') is filing
with the Securities and Exchange Commission (``Commission'') a proposed
rule change to amend its Fee Schedule. The text of the proposed rule
change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its fee schedule for its equity
options platform (BZX Options), effective March 2, 2020.
    The Exchange first notes that it operates in a highly competitive
market in which market participants can readily direct order flow to
competing venues if they deem fee levels at a particular venue to be
excessive or incentives to be insufficient. More specifically, the
Exchange is only one of 16 options venues to which market participants
may direct their order flow. Based on publicly available information,
no single options exchange has more than 21% of the market share and
currently the Exchange represents only 10% of the market share.\3\
Thus, in such a low-concentrated and highly competitive market, no
single options exchange, including the Exchange, possesses significant
pricing power in the execution of option order flow. The Exchange
believes that the ever-shifting market share among the exchanges from
month to month demonstrates that market participants can shift order
flow, or discontinue to reduce use of certain categories of products,
in response to fee changes. Accordingly, competitive forces constrain
the Exchange's transaction fees, and market participants can readily
trade on competing venues if they deem pricing levels at those other
venues to be more favorable.
---------------------------------------------------------------------------

    \3\ See Cboe Global Markets U.S. Options Market Volume Summary
(February 20, 2020), available at https://markets.cboe.com/us/options/market_statistics/.
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    The Exchange's Fees Schedule sets forth standard rebates and rates
applied per contract. For example, the Exchange provides standard
rebates ranging from $0.25 up to $1.05 per contract for orders that add
liquidity in both Penny and Non-Penny Securities. The Exchange also
offers tiered pricing which provides Members opportunities to qualify
for higher rebates or reduced fees where certain volume criteria and
thresholds are met.\4\ The Exchange proposes to amend its fee schedule
to specify in new footnote 5 that when orders are submitted with a
``Designated Give Up'', as defined below, the applicable rebates (i.e.,
any standard rebate or applicable tier rebates) for such orders when
executed on the Exchange (yielding fee code NA, NF, NN, NY,\5\ PA, PF,
PN or PY) \6\ are provided to the Member who routed the order to the
Exchange.
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    \4\ For example, the Exchange currently offers eight Customer
Penny Pilot Add Tiers under footnote 1, which provide an enhanced
rebates between $0.35 and $0.53 per contract for qualifying Customer
orders which meet certain add liquidity thresholds and yield fee
code PY.
    \5\ Fee codes NA, NF, NN and NY are appended to liquidity adding
orders in Non-Penny Pilot securities that are Professional, Firm/
Broker Dealer/Joint Back Office, Away Market-Maker and Customer
orders, respectively.
    \6\ Fee codes PA, PF, PN and PY are appended to liquidity adding
orders in Penny Pilot Securities that are Professional, Firm/Broker
Dealer/Joint Back office, Away Market-Maker and Customer orders,
respectively.
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    The Exchange recently amended Rule 21.12 (Clearing Member Give Up)
to expand upon the procedure related to the ``give up'' of a Clearing
Member \7\ by Users \8\ on the Exchange.\9\ Effective March 2, 2020,
Rule 21.12 will provide that, in addition to its own Clearing Member
(or itself, if the firm is self-clearing), a User may identify to the
Exchange a Designated Give Up, as that term is defined in the Rule.
Specifically, amended Rule 21.12(b)(1) defines the term Designated Give
Up as any Clearing Member that a User (other than a Market Maker) \10\
identifies to the Exchange, in writing, as a Clearing Member the User
requests the ability to give up. With this change, a Member acting as
an options routing firm on behalf of one or more other Exchange Members
(a ``Routing Firm'') is able to route orders to the Exchange and to
immediately give up the party (a party other than the Routing Firm
itself or the Routing Firm's own clearing firm) who will accept and
clear any resulting transaction. Because the Routing Firm is
responsible for the decision to route the order to the Exchange, the
Exchange believes that such Member should be provided the rebate when
orders that yield fee code PY, PA, PF, PN, NY, NA, NF, or NN are
executed. In connection with this change, the Exchange proposes to
append new footnote 5 to fee codes PY, PA, PF, PN, NY, NA, NF, or NN in
the Fee Codes and Associated Fees table of the fee schedule.
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    \7\ A Clearing Member is defined as ``Options Member that is
self-clearing or an Options Member that clears BZX Options
Transactions for other Members of BZX Options.'' See Exchange Rule
16.1. An Option Member is defined as ``a firm, or organization that
is registered with the Exchange pursuant to Chapter XVII of these
Rules for purposes of participating in options trading on EDGX
Options as an `Options Order Entry Firm' or `Options Market
Maker.''' See Exchange Rule 16.1(a)(38) [sic].
    \8\ See Exchange Rule 1.5(cc).
    \9\ See Securities Exchange Act Release No. 87985 (January 16,
2020) 85 FR 4007 (January 23, 2020) (SR-CboeBZX-2020-002).
    \10\ See Exchange Rule 1.5(l).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder that are applicable to a national securities exchange, and,
in particular, with the requirements of Section 6 of the Act.\11\
Specifically, the Exchange believes that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\12\ in that it provides for
the equitable allocation of reasonable dues, fees and other charges
among members and other persons using any facility or system which the
Exchange operates or controls.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange notes that the U.S. options markets are highly
competitive, and the proposed fee structure is intended to provide an
incentive for Members to direct orders to the Exchange. The proposal
would only apply to fee codes PY, PA, PF, PN, NY, NA, NF, and NN,
related to liquidity adding orders, because these are the primary
rebates in place on the Exchange and reflect the primary liquidity that
the Exchange is seeking to attract from Routing Firms that are now able
to identify Designated Give Ups.\13\ The Exchange believes that the
proposed amendments to its fee schedule will enhance the Exchange's
competitive position and will result in increased liquidity on the
Exchange, to the benefit of all Exchange participants. Therefore, the
Exchange believes that providing rebates is equitable and reasonable
and not unfairly discriminatory as it would allow the Exchange, in the
context of the new give up procedure described above, to provide a
rebate directly to the party making the routing decision to direct
certain orders to the Exchange (i.e., the Routing Firm), which is
consistent with both the Exchange's historic practice and the purpose
behind a rebate (i.e., to incentivize the order being directed to the
Exchange). The Exchange lastly notes that the proposed change is
similar to a provision previously adopted by the Exchange's affiliate,
Cboe EDGX Exchange, Inc.\14\
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    \13\ The Exchange notes that Market-Makers may only give up its
respective Guarantor, as defined by Rule 21.12(b)(2). See Cboe BZX
Options Rule 21.12(b)(5).
    \14\ See Cboe EDGX Options Exchange Fee Schedule, Footnote 5.
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange believes its proposed amendments to its fee schedule
would not impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. The Exchange
does not believe that the

proposed change represents a significant departure from previous
pricing offered by the Exchange or its competitors. Additionally,
Members may opt to disfavor the Exchange's pricing if they believe that
alternatives offer them better value. The Exchange believes that its
proposal to incentivize Routing Firms that are utilizing the new give
up procedure to direct orders to the Exchange, and will enhance the
Exchange's competitive position by resulting in increased liquidity on
the Exchange, thereby providing more of an opportunity for customers to
receive best executions.

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

    The Exchange neither solicited nor received comments on the
proposed rule change.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \15\ and paragraph (f) of Rule 19b-4 \16\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
exception occurred on : 2020-05239.htm
exception occurred on : 2020-05239.htm
     Send an email to ru[email protected]. Please include
File Number SR-CboeBZX-2020-020 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-CboeBZX-2020-020. 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 (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for 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 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CboeBZX-2020-020 and should be submitted
on or before April 6, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-05239 Filed 3-13-20; 8:45 am]
 BILLING CODE 8011-01-P