1 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D. C. 20460 OFFICE OF PREVENTION, PESTICIDES AND TOXIC SUBSTANCES MEMORANDUM DATE: April 28, 2004 SUBJECT: Zinc Pyrithione ( Zinc Omadine): AD Response to Registrants " Error Correction" Comments Chemical No. 088002. Case No. 2480. DP Barcode: D301374 FROM: Deborah Smegal, MPH, Toxicologist/ Risk Assessor Timothy F. McMahon, Ph. D., Senior Toxicologist Doreen Aviado, Biologist Kathryn Montague, M. S. Biologist Najm Shamim, Ph. D. Chemist Siroos Mostaghimi, Ph. D. Environmental Engineer Antimicrobials Division ( 7510C)

THRU: Norm Cook, Chief Risk Assessment and Science Support Branch Antimicrobials Division ( 7510C)

TO: Tony Kish Team 34, Reregistration Antimicrobials Division ( 7510C)

General All error comments were corrected and many of the other registrant comments were also addressed. For example, the Agency has refined its environmental modeling using the Marine Antifoulant Model Predicted Environmental Concentration ( MAM PEC) model. The revised 2 PECs range from 0.0144 to 0.101 ppb, compared to the previous value of 21.66 ppb. In addition, the ecological hazard and environmental risk assessment was revised to remove all discussion of the risks from the antifouling use, pending the submission of five ecological effects studies, which are required to support the antifouling use. The ecological risk assessment for the antifouling use will be revised upon submission of these ecotoxicity studies.

Registrant Comment: A. Executive Summary, page 1, 2nd paragraph reads "  for use in dandruff shampoos."

Should read "  for use in Anti dandruff shampoos."

Further, the following statement would provide a complete description of its use in this FDA approved application: " It is considered safe ands effective ( considered both GRAS and GRAE and Category I by USFDA) for the treatment of dandruff and seborrheic dermatitis with a history of over 40 years of human use."

EPA Response: The term dandruff shampoo was changed to " anti dandruff shampoo" throughout the document. The suggested language was adopted.

Registrant Comment:

B. Hazard, page 1, 2nd paragraph, 1st sentence states: " The oral LD 50 range from 460 630 mg/ kg"

Should read: The combined oral LD50 in rats is 269 mg/ kg ranging from 221   302 mg/ kg.

EPA Response: The oral rat LD50 was changed to 267 mg/ kg, based on an acceptable study conducted with 95% ai technical zinc omadine ( Tox record 003933).

Registrant Comment:

C. Hazard, page 1, 2nd paragraph, 2nd sentence: " Acute Toxicity by the inhalation route is also relatively low ( 0.61 mg/ L; Toxicity Category III)."

Should read: "  relatively low (> 0.61 mg/ L; " needs insertion of a " greater than" symbol.

Comment: Acute Inhalation LC50 for zinc pyrithione a. i. 100% powder is > 0.61 mg/ L ( only 1 out of 10 deaths at 0.24 mg/ L and 3 out of 10 deaths at 0.61 mg/ L, but in the interest in saving animals no further doses were tested and the Toxicity Category III classification for inhalation was accepted) and recent testing of the 48% zinc OMADINE

aqueous dispersion the acute inhalation LC50 was 5.08 mg/ L for the dispersion following a 4 hr. nose only exposure. 3 EPA Response: The suggested change was made.

Registrant Comment:

D. Hazard, page 1, last paragraph, last sentence, " Developmental toxicity using the oral route of administration show zinc OMADINE

to produce significant developmental effects which are greater in severity ( of developmental toxicity) at doses of 1.5 and 3.0 mg/ kg/ day than toxicity observed in maternal animals at these same dose levels".

Should read: " Developmental toxicity studies using the oral route, produced developmental toxicity at doses that produced significant maternal toxicity during sensitive times of development."

Comment: Based on the Data Evaluation Report ( DER); EPA Reviewer John E. Whalen in 1996, " A decrease in body weight gain ( p  0.01) during the dosing period for the mid ( 1.5 mg/ kg/ day) and high dosed ( 3.0 mg/ kg/ day) ( 41% and 99%, respectively) cannot be considered to be biologically significant since the absolute body weight changes were only ~ 4% and ~ 6%..."

The reference of 4 and 6% relates to the changes in absolute body weight over the entire gestation period days 0 29 and the 41% and 99% decrease in body weight gains were observed over gestation days 0 19, dosing ceased on gestation day 19 and yes there was a rebound in body weight after cessation of treatment. In addition, the DER stated that there was no corresponding decrease in food consumption. However, in the same DER report of the zinc OMADINE

Developmental Toxicity Study in the Rabbit Table 3.0 Food Consumption shows a statistically significant decrease in food consumption for gestation days 6 19. Body weight gains from gestation days 6 19 achieved statistical significance of p   0.01 that corresponded precisely to a decrease in food consumption of 16% ( mid dose, 1.5 mg/ kg/ day) and 23% ( high dose, 3.0 mg/ kg/ day). Therefore it should be concluded that severe maternal toxicity was observed in the mid and high dosed animals during a very sensitive time for development. The NOEL for maternal and developmental effects was 0.5 mg/ kg/ day based on severe maternal toxicity at 1.5 and 3.0 mg/ kg/ day.

EPA Response:

The following language was added to replace the language in question. " In both oral developmental studies in rats and rabbits, there was no quantitative evidence of increased susceptibility [ i. e., maternal and developmental no observed adverse effect levels ( NOAELs) were the same]. There was however, qualitative evidence of increased susceptibility ( i. e., fetal effects were considered to be more severe in the presence of minimal maternal toxicity). "

This language reflects both the rat and rabbit developmental studies, and is consistent with language in the ADTC 2004 and HIARC 1999 memos, which were reviewed by between 10 and 4 12 senior toxicologists. Maternal toxicity was minimal in the rat developmental study, as salivation was noted in 27% of the animals at 3 mg/ kg/ day.

Registrant Comment:

E. Hazard, page 2, 1st paragraph, 2nd & 3rd sentences, " Intravenous administration of 5mg/ kg zinc OMADINE

to female Yorkshire pigs produced cholinergic effects lasting for 30 60 minutes post dose ( HED document 003933). Increased salivation was reported immediately after dosing in the rat developmental toxicity study at a dose of 3 mg/ kg/ day ( MRID# 4287904)".

Should read: " Intravenous administration of 5mg/ kg zinc OMADINE

to female Yorkshire pigs produced symptoms similar to cholinergic effects lasting for 30 60 minutes post dose. Increased salivation was reported immediately after dosing in the rat developmental toxicity study at a dose of 3 mg/ kg/ day ( MRID# 4287904) ( possibly due to the fact that zinc pyrithione causes significant irritation to mucosal membranes and it is not uncommon to observe increased salivation following oral administration from such compounds)."

Comment: Another explanation for the observation of an increase in salivation could be the fact that zinc OMADINE

is severely irritating to mucosal membranes and it is not uncommon to observe increased salivation following oral gavage of such compounds. Reference to hindlimb weakness in the same paragraph seems suggestive that such an effect possibly is indicative of cholinergic effects. We would like to reiterate the fact that hindlimb weakness has only been observed in rats and rabbits and has never been observed in dogs or primates when tested at much higher concentrations for up to one year of exposure.

EPA Response: No change was made. The existing language is consistent with the EPA Data Evaluation Report ( DER) for this study.

Registrant Comment:

F. Toxicity Endpoints, page 2, 1st sentence reads "  to assessment potential risks "

Should read "  to assess potential risks "

EPA Response: The suggested change was made.

Registrant Comment:

G. Water Exposure & Risk, page 4, 1st sentence " AD has considered the registered uses of zinc OMADINE

and the available data on persistence and mobility" 5 Should read: " AD has considered the registered uses of zinc OMADINE

and used the available data on only abiotic hydrolysis conducted in the dark with sterile water"

Comment: Regarding mobility and potential impact on surface and ground water resources, it does not appear that the Agency has considered the available data on mobility ( Abs/ Des, Soil Column Leaching MRID#' s 44010402 & 45565201). Zinc OMADINE

is classified as immobile in sediments and soils and is not likely to get into ground water. Since recreational boating in seawater will not impact drinking water, only the implication of surface freshwater should be considered as it pertains to untreated drinking water. Arch disagrees with the statements made in the Water Exposure and risk section and further comments follow.

EPA Response: The language was modified to be consistent with the revised Environmental Fate Chapter.

Registrant Comment:

H. Water Exposure and Risk, page 4, 3rd sentence "  PEC of 21.66 ppb zinc OMADINE

was estimated using the Luttik Johnson model".

Should read " . PEC of 21.66 ppb zinc OMADINE

was estimated by using the Luttik Johnson model that used a leach rate input of 12.5 µ g/ cm2/ day and abiotic hydrolysis ( conducted in the dark with sterile water) half life of 123 days. Other models that allow use of relevant environmental parameters provide a PEC value of 0.12 ppb ( EXAMS). Luttik Johnson model using a composite degradation rate from multiple degradation pathways gives a PEC value of 0.16 ppb "

Comment: Arch strongly disagrees with agency's approach to calculation of the predicted environmental concentration ( PEC) of 21.66 ppb using the Luttik Johnson model. It is clear from the PEC calculation that the agency has not considered all available data on degradation and persistence. For assessing persistence, only hydrolysis in dark, sterile fresh water was considered by the agency. Accepted guideline studies on photolysis and aerobic and anaerobic metabolism ( MRIDs 44011501, 44010401, 44850002) show that zinc pyrithione has a short half life in the environment and these studies are more relevant to environmental fate than abiotic hydrolysis. ( On page 11 of the RED document, the Agency does take these studies into account and states that zinc OMADINE

has a " fairly short half life, ranging from hours to days"). Because incorrect parameters were used in the modeling, the resulting PEC of 21.66 ppb is ten fold higher than the highest measured concentration reported for a persistent co biocide ( the highest measured concentrations are 1.7   2.1 µ g/ L for Irgarol, MRID# 46101101). Since zinc pyrithone is short lived, logic dictates that its measured concentrations will be even lower. Although there have 6 been attempts to measure zinc OMADINE

in the environment, it has not been detected yet ( detection limit = 0.02 µ g/ L; MRID# 46101101).

The Luttik Johnson model used is inadequate for generating environmentally relevant PECs. Refinement of modeling by the Agency is suggested as other International Government Agencies are using models ( MAM PEC, EXAMS, REMA) that are better predictors of realistic PECs. Some of the shortcomings of the Luttik Johnson model are:

a) No hydrodynamic water exchange component b) No consideration for effects of temp, salinity, pH c) Only one degradation pathway is input The key parameters that impact the PEC are the leach rate and the degradation rate. Arch has evaluated all the widely used models for risk assessment for antifoulant biocides and submitted a comprehensive document for agency to review ( MRID 46101101). That document has not been reviewed for the RED. ( see Calculation of Predicted Environmental Concentrations of Zinc Pyrithione in Antifouling Applications ( MRID 46101101). The input value of 12.5 µ g/ cm2/ day for the leach rate in the Luttik Johnson model is an abnormal value based on one paint that is not a commercial paint. Subsequent MRID submissions show actual data on commercial paints ( see range in following Table 1). MAM PEC which is a widely recognized model used for risk assessment of antifoulant paints uses 2.5 µ g/ cm2/ day for different biocides in assessing risk. The 2.5 µ g/ cm2/ day is based on mass balance and coating lifetime calculations. The leach rate of 12.5 µ g/ cm2/ day would mean a coating lifetime of 20% of that guaranteed by the paint company ( normally 5 yrs)   and therefore an impossibly high leach rate. The risks are directly proportional to the environmental concentrations, which are in turn directly proportional to biocide release rates and inversely proportional to biocide degradation and environmental transport rates.

Also the PEC derived from Luttik Johnson model should not be used for comparison to drinking water level of comparison ( DWLOC) as the model only relates to a marina or a harbor. Given the fast degradation through multiple pathways, it is unlikely that the PEC of 21.66 ppb could be a valid number for DWLOC. It is not realistic to assume that water from the marina can be used as potable water without treatment.

Because of the limitations of the Luttik Johnson model, European regulatory bodies have used more appropriate models like MAM PEC, EXAMS or REMA which all give lower PEC values for zinc OMADINE

in a marine paint application (< 0.1 ppb)

With a realistic PEC, which should be 100 1000 times lower, there is no risk. The leach rate of 12.5 µ g/ cm2/ day is an impossibly high leach rate for commercial AF paints leading to an improbable PEC of 21.66 ppb and it is simply incorrect to call this a " conservative" leach rate or call the PEC a " conservative" PEC. 7 The use of refined PEC values was discussed in July 2003 at a meeting between Arch and EPA personnel. At that meeting, EPA's Antimicrobial Division environmental and regulatory reviewers suggested that Arch submit a discussion, explanation and rationale for the refined PEC values and a justification for not relying on the ASTM release rate and for not using the present PEC values in the assessment of zinc pyrithione. Arch believes that this report ( MRID 46101101) fully satisfies that request and provides a definitive basis for use of a redefined PEC value.

Additionally, in an outdoor Microcosm Study ( 2003, MRID 45876501) it was shown that ZPT degraded rapidly with a half life of 36 minutes. This is similar to the half life seen in photolysis study ( half life of 13  17 minutes at 250C). At 4hr., no ZPT was detected in the water ( det. limit = 0.02 ppb). In the sediment, ZPT reached a maximum of 0.46% at day 1 and was not detected at and after day 7. The amount of bound residues was 5.6  6.9% at the end of the study. In a dark microcosm study, ZPT decreased to 4% of the starting dose at day 1 and was not detectable by day 7. The half life in this dark study is estimated to be 20 hr. In the sediment, ZPT was not detectable at day 7. The only significant degradation product after 30 days was 2 pyridine sulfonic acid accounting for 69 76% of the total radioactivity. Amount of bound residues ranged from 5 7% of the total radioactivity in the end of the study. This outdoor study simulating environmental conditions provides multiple environmental degradation pathways that show that zinc OMADINE

rapidly degrades in the environment.

Whereas the Agency assumed a release rate of 12.5 µ g/ cm2/ day, Arch used a value of 2.5 µ g/ cm2/ day which is in the range of leach rates obtained from commercially registered paint leach rate studies. The Agency release rate appears to be biased by the ASTM release rate of an early, experimental paint that was never commercialized and is not representative of commercial antifouling paints containing zinc pyrithione.

For the degradation rate of zinc pyrithione, the Agency used a half life of 123 days, which is extrapolated from a 30 day hydrolysis study carried out in sterile, synthetic seawater in the absence of light. The corresponding rate constant was entered into the Luttik Johnson emission model to obtain the PEC. In comparison, Arch input rate data from several environmental fate studies   hydrolysis, photolysis, aerobic and anaerobic aquatic metabolism, die away, adsorption/ desorption   into chemical fate models capable of integrating multiple degradation processes ( including the Luttik Johnson model) to give an overall degradation rate for a particular environmental scenario ( see Table 2). Because pyrithione undergoes biolysis, photolysis and sediment catalyzed degradations, it is necessary to use multi fate exposure models such as EXAMS and MAM PEC. EXAMS, with its extensive photolysis algorithms, was found to be the most suitable modeling program for zinc pyrithione. EXAMS calculates a half life of < 12 hours for the EPA scenario. Arch, using the same environmental scenario as the agency uses, but with more current data on release rates and degradation rates as input in different exposure models, calculated a PEC of 8 0.12ppb for zinc pyrithione vs. the agency value of 21.66 ppb. When appropriate release rates and degradation rates are input into the Luttik Johnson model, it gives a PEC of 0.16 ppb , which is orders of magnitude lower than the 21.66 ppb.

Arch requests that RASSB of the AD refine the PEC calculations using models that allow incorporation of relevant multiple environmental parameters ( e. g. EXAMS, MAM PEC). Arch modelers have done this exercise and the data are presented below ( Table 3) for consideration.

Validation of exposure modeling may only be done by comparison of PEC values with measured environmental concentrations. Despite some monitoring activity, zinc pyrithione has not been detected in the environment. For this reason, methods used to calculate the PEC of zinc pyrithione cannot be corroborated by measured concentrations. As an alternative, Arch has applied the zinc pyrithione modeling approach to calculate the PEC of a widely used, persistent antifouling biocide Irgaol), for which extensive monitoring data is available. Using MAM PEC and EXAMS, PEC values for Irgarol 1051 were calculated to be 1.3 and 3.4 µ g/ L, respectively. These are in agreement with the highest measured Irgarol concentrations of 2.1 µ g/ L ( Danish marinas). We are therefore confident that our modeling approach provides realistic PEC values.

The Agency PEC value of 21.66 µ g/ L for zinc pyrithione is 10 fold higher than the highest measured environmental concentration ( 2.1 µ g/ L) of Irgarol in a real worstcase marina. It is difficult to rationalize a scenario where the concentration of a biocide with a short half life could exceed the concentration of a persistent biocide having comparable market share. Arch's method not only generates PEC values that are more consistent with the relative persistence of Irgarol and pyrithione, but it is also consistent with measured environmental concentrations of Irgarol.

Therefore, Arch requests the Agency to refine or redefine its modeling approach and PEC calculations for zinc pyrithione recognizing that   in the absence of validated laboratory methods ( since the ASTM leach rate method over estimates the leach rates), release rates can be calculated from mass balance/ service life data for current, commercial paints   biocides like other chemicals undergo abiotic and biotic transformations in the environment  biodegradation and photolysis data from guideline studies that have been reviewed and accepted should be considered.   more sophisticated multi fate models such as EXAMS, MAM PEC or REMA are more appropriate for modeling biocides that degrade by multiple pathways.   calculated PEC values should be compared with measured environmental concentrations as a reality check, using a surrogate antifoulant if necessary. If the PEC values are significantly higher than actual environmental concentrations, it should be realized that there is a strong bias in the modeling approach and the resulting PEC should not be used to carry out risk assessments of either persistent or non persistent antifouling biocides. 9 The significance of using the appropriate leach rate and appropriate degradation rate are highlighted in the tables below.

Significance of Leach rate data Table 1. ASTM laboratory leach rates from paints formulated with zinc pyrithione ( from MRID 45821001, Table VII, p. 56)

Paint Leach Rate ( µ g/ cm2/ day) Period % ZnPT MRID Ecoloflex BEA369 Self polishing cuprous oxide based large vessel 6.5 ± 0.9 5.1 days 21 49 day 49 3.8 44877104 Ecoloflex BEA468 Self polishing cuprous oxide based large vessel 5.4 ± 0.8 3.9 days 21 49 day 49 3.8 44877105 Ecoloflex BEA469  Selfpolishing cuprous oxide based large vessel 4.3 ± 0.7 3.2 days 21 49 day 49 3.8 44877106 Ecoloflex BEA368 Self polishing cuprous oxide based paint for large vessels 7.2 ± 1.1 5.9 days 21 49 day 49 3.8 44877103 Ablative zinc oxide based resin/ wood rosin paint for aluminum hulls 7.2 ± 1.1 5.4 days 21 45 day 45 2.4 43864603 Long life cuprous oxide based paint, Vinyl Red naval formula 121 2.3 ± 0.5 1.9 days 21 45 day 45 5.9 43864603 E. Paint SN 1 Ablative zinc oxide solventbased paint 1.24 ± 0.23 1.01 days 22 49 day 49 2 44833310 E. Paint EP2000 Ablative zinc oxide waterbased paint 2.02 ± 0.72 1.12 days 22 49 day 49 4.7 44833310 10 Table 2. Environmental rate constants for zinc pyrithione MRID 45821001 Degradation Pathway Rate Constant day 1 Half life Guideline MRID Statusa Abiotic Hydrolysis < 0.0072 > 90 d 161 1 43864602 A Photolysis Indoor Outdoor 57.0   76.8 266  561 13   17.5 min 1.8   3.8 min 161 2 supplemental 44011501 45821001 A NR Biotic Water column biolysis 0.17   2.3 7.2   96 hr supplemental 45821001 NR Sediment catalyzed deg 28  33 0.5   0.6 hr 162 3 162 3 44850003 44850004 A A Sediment sorbed deg 0.17  0.87 18   96 hr 162 3 162 4 448500014 4850002 A A Microcosm Dark dosed Light dosed > 1.4 28 < 12 hr 0.6 hr supplemental supplemental 45876501 45876501 NR NR a. A is accepted; NR is not reviewed Table 3. PECs for EPA marina scenario calculated by 4 aquatic exposure models for zinc pyrithione and Irgarol 1051 vs. monitored concentrations, MRID 45821001 Predicted environmental concentrations, µ g/ L Monitored, µ g/ L concentrations, ug/ L Co biocide EXAMS MAMPEC Luttik Johnson Tidal Prism Highest reported Country Zinc Pyrithione 0.12 0.12 0.11 0.16 0.16 0.099 < 0.020 nd U. K. a < 2.0 nd Japanb Irgarol 1051 3.4 1.3 3.7 3.7 2.1 Denmarkc 1.42 U. K. a 1.7 Franced 0.64 Francee a Thomas et al, 2001; Appendix A in MRID 45821001; b Yasuba, 2000; Morita, 2001; c Århus A., 1997; d Readman et al, 1993; e Tolosa et al, 1996 11 Arch has also supplied PEC values using either EXAMS or MAM PEC to various international regulatory bodies and registrations have been approved for several countries. The modeling approach in Table 4 used realistic environmental scenarios and lab leach rate data generated from several commercial antifoulant paints and the PEC values ( 0.001 to 0.06 ppb) generated from such realistic scenarios are orders of magnitude lower than 21.66 ppb.

Zinc OMADINE

is now registered for antifoulant use in UK, Malta, Ireland, Hong Kong, Australia, New Zealand, Sweden, Switzerland, Finland, Holland, Belgium, Japan, S. Korea, and China.

Table 4. Arch submission to other Regulatory Bodies: Calculated PECs ( µ g/ L; ppb) using EXAMS or MAM PEC Agency Scenario PEC, ( µ g/ L; ppb)

Finland   SYKE Spring, Summer, Fall Typical Finnish Marina 0.045 Typical Finnish Harbor 0.0002 Worst Case Harbor 0.011 Sweden   KemI June July 0.001 Fiskebackskil marina 0.021, 0.061 Australia Harbor 0.007 Lake Geneva 0.001 Switzerland Feb,  Nov. Swiss Marina 0.027 Netherlands   CTB Fiskebackskil parameters 0.06 EPA Response:

EPA has now incorporated the antifoulant leaching studies into the Environmental Fate Chapter ( N. Shamim April 2004), and used these data to revise the predicted environmental concentrations ( PECs). The leaching studies submitted by the registrant have been reviewed and accepted by AD, and Data evaluation records ( DERs) have been written. The revised PECs range from 0.0144 to 0.101 ppb based on the MAM PEC model.

The microcosm study was reviewed and added to the Environmental fate chapter. Below is a brief summary of the Agency's review of the Zinc Pyrithione Outdoor Microcosm Study ( MRID 45876501):

This was submitted by the registrants and reviewed by the Agency, although it was not a required study. The study report states that it was conducted using OPPTS Guideline 835.3180 as guidance; however, the study does not fully meet the Guideline requirements. OPP is retaining the study as supplemental information on the degradation of zinc pyrithione under simulated 12 natural conditions. The results of the study indicate that pyrithione, added to seawater in a manner to simulate leaching from treated vessels, degrades rapidly and essentially completely within 24 hours, regardless of the time of day or night that leaching occurs. The half life of zinc pyrithione in the light dosed tank was 36 minutes, while the half life in the dark dosed tank was estimated to be approximately 20 hours. The study also indicates that zinc pyrithione shows little tendency to accumulate in sediment, particularly if light is present. These results provide additional support to the findings of laboratory studies conducted to evaluate the various degradation pathways for zinc pyrithione. The results of those studies will be incorporated into the revised modeling for the antifoulant use during the reassessment of the conditional registration of antifouling products.

Although the study was conducted as a microcosm study, it does not address the ecological effects parameters which would typically be addressed in OPPTS Guideline 850.1950, Field Testing for Aquatic Organisms ( e. g., actual toxic effects on aquatic organisms of various taxa, usually conducted as a microcosm or mesocosm study). Such field testing is not presently required for zinc pyrithione.

Registrant Comment:

I. Residential ( Non Occupational) Exposure & Risk, page 5, 2nd bullet states " residential handlers that paint using a brush ( antifoulant paint use for all boat sizes: Dermal MOE = 22 120)."

This statement should be stricken and the following should be considered.

Comment: Since 1994, the Health and Safety Executive ( HSE) of the UK has gathered information on human exposure to antifouling products in the professional and amateur ( residential; non occupational) sectors  the surveys and studies were as follows:

9 surveys applying copper based antifoulant to ships ( 40 exposure data; 1994) 5 surveys applying tin based antifoulants to ships ( 20 exposure data; 1996) 4 surveys applying various antifoulant to ships ( 10 exposure data; IOM 1996) 8 surveys applying various antifoulant to leisure craft ( 9 exposure data; 1997 99)

This information was utilized in providing exposure data for HSE to conduct a risk assessment that covered professional and amateur applicators of antifoulant paint that contained zinc OMADINE

. The assumptions that were used were: 4% active substance in the product; 1% dermal penetration value; and 4% or 1% clothing penetration.

Based on this assessment, HSE came up with a central tendency and worst case exposure for each application i. e., professional application with brush/ roller and amateur application with brush/ roller. The HSE uses Toxicity Exposure Ratios ( TERs) which are analogous to USEPAs MOEs. For amateur application using a 13 brush/ roller the central tendency for systemic exposure ( excluding inhalation) was 500 and for inhalation the TER was 17500. The worst case exposure for amateur using brush/ roller for systemic exposure was TER of 6. However, the central tendency represents the mean exposures and is based on actual field data for applying antifoulant paints and may prove useful for the USEPA. Especially, since the USEPA has indicated that data was extrapolated from the PHED database and has indicated that the confidence in the PHED data is C and is not based on actual application of antifoulant paints. Reference for some of the HSE Surveys: Garrod, A. N. I., Guiver, R., and Rimmer, D. A. Potential Exposure of Amateurs ( Consumers) Through Painting Wood Preservative and Antifoulant Preparations. Am. Occup. Hyg. Vol 44, No. 6: 421 426, ( 2000)

EPA Response: The Agency has reviewed the Garrod et al. 2000 study, and concluded that only the inhalation exposure data are of sufficient quality for inclusion into the risk assessment. A Data Evaluation Record ( DER) for this study has been prepared, see memo from T. Leighton, D301375, April 2004. The data from this study were used to supplement the current exposure and risk estimates from PHED. Based on this study, the Agency estimated a mean inhalation unit exposure ( UE) of 0.00087 mg/ m3/% ai and MOEs ranging from 5 140, depending on the boat size, duration of painting time ( 2,4 or 6 hours), and percent ai, where both EPA Reg. No. 2693 194 ( 47 percent ai) and EPA Reg. No. 64684 4 ( 4.8 percent ai) were evaluated.

Registrant Comment:

J. Residential ( Non Occupational) Exposure & Risk, page 5, last sentence before " Aggregate Exposure and Risk", states, " The estimated dermal MOE is 3,300 based on conservative assumptions, and the results of a study that measured concentrations of zinc OMADINE

in the urine for 5 days following a single shampoo application.

Should read, " The estimated dermal MOE is 3,300 based on conservative assumptions, and the results of a study that measured radioactivity associated with metabolized zinc OMADINE

in the urine for 5 days following a single shampoo application containing radiolabelled zinc OMADINE

.

Comment: Radioactivity was measured, not the zinc OMADINE

. The radioactivity was from metabolized zinc OMADINE

.

EPA Response: The suggested change was made.

Registrant Comment:

K. Aggregate Exposure & Risk, Acute, Page 5, last sentence "  acute PEC of 21.66 ppb":

Should read "  acute PEC of 0.12 ppb " 14 Comment: See discussion under " H" above.

EPA Response: The PEC was revised based on the MAM PEC model. The Agency estimated a range of PECs of 0.0144 to 0.101 ppb, based on a range of leaching rates.

Registrant Comment:

L. Aggregate Exposure & Risk, Oral, Page 6, states " The short and intermediate term oral aggregate risk for adult males and females do not exceed the Agency's level of concern. However, the DWLOC for infants/ children of 17 ppb is slightly less than the PEC of 21.66 ppb, indicating a potential for adverse risks of concern ".

Should read " The short and intermediate term oral aggregate risks for all population groups do not exceed the Agency's level of concern with a lower PEC of 0.12 ppb."

Comment: See discussion under " H" above.

EPA Response: The conclusions were modified based on the revised PEC for zinc omadine. All aggregate risks via the oral route of exposure are below the Agency's level of concern.

Registrant Comment:

M. Aggregate Exposure & Risk, Dermal & Inhalation, Page 6, in both of the Dermal and Inhalation sections the author indicates that due to the fact that the dosing for the Dermal 90 day study were log doses and the MOEs exceeded the level of concern ( LOC) and these MOEs were based on subchronic toxicity and doses were based on whole body exposures and a large gap between the NOEL and LOEL existed for the Dermal study indicated that the evaluation was very conservative.

Guidance requested: This verbiage suggested the need for shorter exposures etc. e. g. 5 day dermal study with evaluation of doses between 100 and 1000 mg/ kg/ day and the same for Inhalation toxicity looking at higher doses for a nose only 5 day exposure period instead of a 90 day whole body subchronic exposure. We request verification that conducting 5 day dermal and 5 day inhalation studies would be useful for assessing the hazard for paints.

EPA Response: No change necessary. No additional toxicity studies are requested at this time. This language was provided as part of risk characterization.

Registrant Comment:

N. Aggregate Exposure & Risk, Chronic, Page 7, 3nd sentence " However for infants/ children, the DWLOC of 15 ppb is slightly less than the PEC of 21.66 ppb, indicating the potential for aggregate chronic risks of concern" 15 Should be stricken or modified to have no potential for concern because the acute PEC is 0.12 ppb "

Comment: See discussion under " H" above.

EPA Response: The conclusions were modified based on the revised PEC for zinc omadine. All aggregate risks via the oral route of exposure are below the Agency's level of concern.

Registrant Comment:

O. Occupational Exposure and Risk, page 8, third bullet reads, " handling zinc OMADINE

 containing paint products using an airless sprayer application method ( inhalation MOEs = 4.4 and 44 with and without the use of a respirator as PPE, respectively, and dermal MOE = 74 without the use of gloves as PPE)."

Should read: " handling zinc OMADINE

 containing paint products using an airless sprayer application method ( inhalation MOEs = 44 and 4.4 with and without the use of a dust mask as PPE, respectively, and dermal MOE = 74 without the use of gloves as PPE)."

Comment: For professional applicators, use of NIOSH/ MSHA approved respirator ( half or full face) commonly provide 50 to 100% reduction in exposures.

EPA Response: No change was made. The Agency assumes that the use of an organic vapor respirator provides approximately a 90% protection factor, which was used in the risk assessment. The Agency assumes that a dusk mask would provide approximately 80% protection factor. Risks would still be of concern for a dust mask .

Registrant Comment:

P. Environmental Risk, Environmental Fate page 9, 3rd sentence, " Half lives in buffered water were measured at 99, 120 and 123 days at pHs 5,7, and 9 respectively. In sea water, the half life was 96 days"

Should read: " Half lives in buffered water were extrapolated from 30 day studies to give 99, 120 and 123 days at pHs 5,7, and 9 respectively. In sea water, the extrapolated half life was 96 days".

EPA Response: The language was revised to address this comment. 16 Registrant Comment:

Q. Environmental Risk, Environmental Fate, page 9, 4th sentence, " These half lives indicate that zinc OMADINE

can be persistent in water under conditions of low microbial activity."

This sentence should be omitted since it incorrectly implies that the degradation of zinc pyrithione is solely dependent upon microbial activity. Degradation also occurs by photolysis and sediment catalyzed chemical reactions.

EPA Response: The language was revised to address this comment. The environmental fate chapter has been revised based on additional studies submitted by the registrant. Accordingly, the environmental fate assessment section had been rewritten.

Registrant Comment:

R. Environmental Risk, Environmental Fate page 9, 7th and 8th sentence, " In aerobic aquatic media, the half lives of zinc OMADINE

were 12.4 and 15 days for fresh water and sea water respectively. In the same media, the half lives under anaerobic conditions are 25 and 13.3 hours, respectively".

Should read, " In aerobic aquatic media, degradation was biphasic with t ½   = 30 90 min for freshwater and seawater and t ½   = 4 15 days for seawater and 15 days for freshwater. In the same media, degradation under anaerobic conditions was also biphasic with t ½   = 30 min for freshwater and seawater and t ½   = 25 hours for fresh water and 13.3 19 hours for seawater."

Comment: Data from accepted guideline studies was omitted so that range of half lives is not accurate ( MRID# s 44850002, 44010401). The half life values given are from aerobic and anaerobic aquatic metabolism studies done in water/ sediment at 3 ppm ( MRID# 44010403). These studies showed degradation in two distinct phases: an initial rapid rate of decline, during which ~ 50% ( aerobic) to ~ 80% ( anaerobic) of the pyrithione degraded over a period of 1 2 hours, followed by a slower rate of decline in the sediment. Only the longer second phase half lives are cited. However, the second phase half lives were shown to be largely the result of the conversion of zinc pyrithione to copper pyrithione by reaction with copper in the sediment. Degradation of the sequestered copper pyrithione, which is soluble only to the extent of 0.1 ppm, is inhibited by its precipitation from solution at the high dose level.

It is therefore not appropriate to use the second phase half lives from these studies.

Subsequent aerobic and anaerobic studies done with zinc pyrithione and copper pyrithione at lower concentrations have been submitted and accepted by the agency 17 ( MRID# s 44850002). These studies were conducted at a concentration of 50 ppb ( this concentration was chosen to allow detection of pyrithione with the existing analytical methods; even though the expected environmental concentrations are still orders of magnitude lower), which is below the solubility of copper pyrithione. Degradation was biphasic in these studies as well; however, the second phase of decline was much faster. The biphasic degradation at the lower concentration is attributed to the high affinity of pyrithione for sediment. In the aerobic system, the half lives for removal of pyrithione from water and from sediment was 0.024 days and 4.0 days, respectively. In the anaerobic system, the corresponding values were 0.020 days and 0.79 days. For the water and sediment combined, dissipation times were 0.89 days for 50% and 34 days for 90% in the aerobic system and 0.02 days for 50% and 0.79 days for 90% in the aerobic system. The degradation of zinc pyrithione and copper pyrithione, as well as the formation and decline of the metabolites, is identical. Based on the more recent studies done at 50 ppb, the half lives for pyrithione is 1 2 hours in water and 1 4 days in sediment.

EPA Response: The Environmental fate chapter has been rewritten and changes have been incorporated into the revised risk assessment.

Registrant Comment:

S. Environmental Risk, page 9, 6th sentence, " Photolytic measurements showed that zinc OMADINE

dissociates in 13 minutes in buffered medium "

Should read, " Photolytic measurements showed that zinc OMADINE

degrades in 13 minutes in buffered medium "

EPA Response: This change has been made in the environmental fate chapter and risk assessment.

Registrant Comment:

T. Environmental Risk, page 9, 2nd paragraph, 2nd sentence, " The octanol/ water partition coefficient is less than 1000, which makes it unlikely to bioaccumulate, although with its high Kds for sediments and a long hydrolytic half life, it can be persistent in soils and sediments containing little or no microbial population".

Should read " The octanol/ water partition coefficient is less than 1000 ( log Kow = 0.97, which makes it unlikely to bioaccumulate."

The remainder of the sentence referring to persistence in soils and sediments containing little or no microbial population is not correct and should be omitted. 18 EPA Response: The text was revised to address this comment.

Registrant Comment:

U. Environmental modeling/ Exposure, page 10 states " The boat antifoulant use, however, is expected to produce significant exposure to aquatic organisms, and environmental modeling was conducted to assess the exposure and risk from this use"

Should read: " The boat antifoulant use, however, is expected to produce low exposure to aquatic organisms, and appropriate and refined environmental modeling should be conducted to assess the exposure and risk from this use"

Comment: Refer to the previous discussion in section H of the refined modeling that includes more accurate leach rate data and multiple degradation rates that clearly demonstrates significantly lower PEC values than what AD generated using the Luttik Johnson model.

EPA Response: The predicted environmental concentrations ( PECs) for the antifoulant paint use have been revised based on previous comments and using the MAM PEC model. The ecological risks associated with the conditionally registered antifoulant paint use have been removed from this risk assessment and will be evaluated upon submission of the requested ecotoxicity studies.

Registrant Comment:

V. Ecological Hazard and Risk, page 10, 1st paragraph states " The antifoulant use of zinc OMADINE

is likely to result in adverse acute and chronic effects to fish and aquatic invertebrates, including endangered species. It also causes adverse impacts on freshwater and marine invertebrate reproduction and growth at very low levels. These reproductive impacts indicate that zinc OMADINE

is a potential endocrine disruptor."

Arch respectfully disagrees with these statements. and recommends that they be and be replaced with . " The anitfoulant use of zinc OMADINE

is unlikely to result in adverse effects to fish and aquatic invertebrates based on the refined PEC values of 0.12 ppb. Zinc OMADINE

at near lethal concentrations ( i. e. at or near the LC50 values reported for fish and invertebrates) was observed to produce limited effects to reproduction and minor effects to growth thus diminishing the concern for potential endocrine disruption."

Comment: a) If the phrase ` likely to result' is based on a PEC of 21.66 ppb, then it should be recognized that this number came from a preliminary risk assessment that needs further refinement, particularly since it is ten fold higher than measured concentrations of widely used antifouling biocides that are persistent as discussed in 19 earlier comments ( in section H). Efforts to detect zinc pyrithione in marinas have been unsuccessful to date ( MRID# 45821001; Table 3). The detectabilities of the monitoring methods were well below aquatic toxicity levels. Therefore the above conclusion of " likely to result in adverse acute and chronic effects" would appear to be based on a hazard assessment from erroneous data rather than a refined risk assessment.

Comment b): The results from testing zinc OMADINE

in the Early Life Stage Study of the fathead minnow resulted in a NOEC of 1.22 µ g/ L following 32 days of exposure with a LOEC of 2.82 µ g/ L. The sensitive toxic endpoints were survival and sublethal effects at hatch and days 7, 14, 21, and 28 post hatch. There was no apparent effect on reproduction but in the AD Preliminary Risk Assessment there is mention of developmental effects to the fish i. e. bent bodies. This effect only was observed at concentrations above 1.22 µ g/ L (  2.82 µ g/ L) and only became visible on days 5 10 and again on days 17 32 post hatching, strongly suggesting that repeated exposures to near lethal concentrations of zinc OMADINE

was responsible for this effect and not developmental toxicity. NOTE: The Acute LC50 in fathead minnow for zinc Omadine ® is 2.68 µ g/ L ( see table 13 page 42 of the AD Preliminary Risk Assessment). The results from testing zinc OMADINE

in the Chronic Toxicity to the Daphnid, Daphnia magna with Zinc OMADINE

demonstrated that the NOEC is 2.7 µ g/ L and the LOEC is 5.8 µ g/ L. Doses tested were 0, 2.7, 5.8, 12, 22, and 49 µ g/ L. The LC50 for Daphnid reported in the AD Preliminary Risk Assessment is 8.25 µ g/ L. The mean day to the first brood was delayed at 22 and 49 µ g/ L, concentrations that clearly produce significant toxicity to the Daphnid. At concentrations of 12 and 22 µ g/ L lengths were affected ( however, differences in length never achieved statistical significance; no animals survived to day 32 at 49 µ g/ L), again concentrations of zinc OMADINE

causing an effect to length also are producing significant toxicity i. e. LC50 8.25 µ g/ L ( significant mortality was observed at 49 µ g/ L starting on day 2 with near 100% mortality by day 6).

The Chronic Toxicity of Zinc OMADINE

to the Mysid, Americamysis bahia resulted in a NOEC of 2.28 µ g/ L and a LOEC of 4.20 µ g/ L. The LC50 for Mysid is 4.7 µ g/ L as reported in the AD Preliminary Risk Assessment. At concentrations of zinc OMADINE

that allowed survival equal or similar to control values, no reproductive effects were observed. Zinc OMADINE

appears to be more of an acute hazard over a chronic hazard, based on review of the acute LC50/ NOEC and chronic LOEC/ NOEC values. The chronic NOEC values are in every case similar to the acute NOEC values. The fact that only doses of zinc OMADINE

that were near or greater than the corresponding LC50 were resulting in effects in reproduction etc. strongly argues against any chronic hazard and definitely confounds any interpretation of possible endocrine disruption.

We agree that as the agency states, " when appropriate screening methods have been developed, ZPT will be tested against those protocols". 20 EPA Response: The ecological risks associated with the conditionally registered antifoulant paint use have been removed from this risk assessment and will be evaluated upon submission of the requested ecotoxicity studies.

Registrant Comment:

W. Ecological Hazard and Risk, page 10, 3rd paragraph, entire paragraph   acute and chronic LOCs have been exceeded"

This paragraph should be stricken because this is an incorrect conclusion based on an incorrect PEC calculation ( see section H).

Comment: As discussed previously in section H, the exposure modeling was a preliminary risk assessment that needs further refinement, particularly since it is tenfold higher than measured concentrations of widely used antifouling biocide, e. g. Irgarol, that is persistent. If the modeling is refined using the proper parameters for leach rate and degradation ( see section H, Table 3 and 4), the PEC will be a factor of 10 to a 1000 less than the NOEC of the most sensitive aquatic organisms. These refined PECs will not exceed the LOCs.

EPA Response: The ecological risks associated with the conditionally registered antifoulant paint use have been removed from this risk assessment and will be evaluated upon submission of the requested ecotoxicity studies.

Registrant Comment:

X. Section 2.0, Physical & Chemical Properties, page 11 listing of properties, " Kow 0.97 @ 25 deg. C": Should read " log Kow 0.97" " Koc 2000 3500" Should read " log Koc 2.9 4.0"

EPA Response: This suggested change was made.

Registrant Comment:

Y. Section 2.0, Physical & Chemical Properties, page 11, 2nd sentence, " However, it is fairly stable in fresh water and sea water under conditions of low microbial activity."

Should read, " However, it is fairly stable in filtered sterile fresh water and sterile sea water in the absence of light." 21 Comment: There are no instances of marinas and harbors that we are aware of that have little to no microbial activity . The marinas and harbors are very rich in microbial populations that would readily degrade any leached zinc OMADINE

.

EPA Response: The Environmental Fate chapter has been rewritten based on additional studies/ data provided by the registrant. The risk assessment was also revised to reflect this change.

Registrant Comment:

Z. Section 2.0, Physical & Chemical Properties, page 11, last sentence, "  it can be persistent in soils and sediments containing little or no microbial population."

Should read: "  it is not persistent in soils containing little or no microbial population, since it is degraded by sediment as well as by redox pathways"

Comment: The Agency makes an incorrect conclusion about degradation depending solely on the presence of microbes. The aerobic and anaerobic aquatic metabolism studies both showed biphasic degradation with a sediment catalyzed term that has a 30 minute half life, consistent with a chemical reaction and inconsistent with microbial degradation. The N oxide of zinc pyrithione is cleaved by reducing agents ( anaerobic sediment). Also the thiol group is readily oxidized by trace metals. It should also be noted that extensive degradation was observed in other guideline studies with sediment and soil ( ads/ des, soil leach). These studies were all conducted in the absence of light. If light is present, photolysis becomes an additional important degradation pathway.

EPA Response: The Environmental Fate chapter has been revised to reflect the incorporation of additional data. The risk assessment has also been revised.

Registrant Comment:

AA. Section 3.0, Hazard Characterization, Developmental Toxicity, page 12, 1st paragraph, " Developmental toxicity studies using the oral route of administration show zinc OMADINE

to produce significant developmental effect in rabbits which are greater in severity at doses of 1.5 and 3.0 mg/ kg/ day than toxicity observed in maternal animals at these same dose levels."

Should read: " No developmental effects were observed at concentrations below 1.5 mg/ kg/ day and severe maternal toxicity was observed at 1.5 and 3.0 mg/ kg/ day 22 Comment: In section 3.0 Hazard Characterization the reference to endocrine disruption is associated with the agencies concern for the potential of zinc OMADINE

to cause developmental effects based on the Developmental Toxicity study carried out in Rabbits with zinc OMADINE

. As mentioned under number 2.0 comment, the DER for the rabbit study indicates that the significant decrease in body weight gain in the does at the mid and high dose levels ( 44% and 99%) was not biologically relevant as the evaluation of the absolute body weights demonstrated only a modest ~ 4% and ~ 6% change in body weight over the entire gestation period days 0 29. In addition, the DER stated that there was no corresponding decrease in food consumption. However, in the same DER report of the zinc OMADINE

Developmental Toxicity Study in the Rabbit Table 3.0 Food Consumption shows a statistically significant decrease in food consumption for gestation days 6 19. Body weight gains from gestation days 6 19 achieved statistical significance of p   0.01 that corresponded to a decrease in food consumption of 16% ( mid dose, 1.5 mg/ kg/ day) and 23% ( high dose, 3.0 mg/ kg/ day).

This clearly indicates that severe maternal toxicity was present at the mid and highdosed levels and the developmental toxicity observed in this study was a result of the significant maternal toxicity and significant decrease in food consumption.

EPA Response:

The following language was added to replace the language in question. " In both oral developmental studies in rats and rabbits, there was no quantitative evidence of increased susceptibility [ i. e., maternal and developmental no observed adverse effect levels ( NOAELs) were the same]. There was however, qualitative evidence of increased susceptibility ( i. e., fetal effects were considered to be more severe in the presence of minimal maternal toxicity). "

This language reflects both the rat and rabbit developmental studies, and is consistent with language in the ADTC 2004 and HIARC 1999 memos, which were reviewed by between 10 and 12 senior toxicologists. Maternal toxicity was minimal in the rat developmental study, as salivation was noted in 27% of the animals at 3 mg/ kg/ day.

Registrant Comment:

BB. Section 3.0, Hazard Characterization, Developmental Toxicity, page 13, 2nd paragraph reference to Developmental Toxicity See Comment in section AA EPA Response: See Response in section AA. 23 Registrant Comment:

CC. Section 3.0, Hazard Characterization, Chronic Toxicity and Carcinogenicity, page 14, " Data on the carcinogenic potential of sodium OMADINE

showed no evidence of carcinogenicity, but one study was not tested to an adequate dose."

Should read: " The only study available to evaluate the carcinogenicity of zinc OMADINE

was a non guideline dietary oncogenicity study carried out with zinc OMADINE

that showed no evidence of carcinogenicity. Data from two guideline studies evaluating the potential of sodium OMADINE

showed no evidence of carcinogenicity, with one study failing to achieve significant toxicity at the high dose, other than irritation at the site of administration ( study considered unacceptable, but useful for risk assessment)".

Comment: The Agency's comment is misleading and suggests that only one study was carried out with sodium OMADINE

when in fact two cancer studies were carried out, one Chronic Carcinogenicity study in the rat via oral gavage and one Carcinogenicity study in the mouse via dermal exposure. The Chronic carcinogenicity study was accepted as core but the dermal carcinogenicity study in the mouse was considered inadequate due to not achieving a maximally tolerated dose. In addition, a two year dietary carcinogenicity study in rats was carried out with zinc OMADINE

, this study was carried out in the late 1950' s and would not be considered acceptable under today's standards. However, this study was negative for any increase in tumors over control animals. This study along with the two sodium OMADINE

studies provide additional confidence that the pyrithione's are not carcinogenic.

EPA Response: The zinc pyrithione cancer study will be mentioned in the text, along with the deficiencies. The two year rat study for zinc pyrithione from the 1950' s ( TOX Record 003933, Larson 1958) had several deficiencies including: small sample size ( n= 10/ sex/ dose), inadequate histopathological evaluation, no dietary analyses of dose levels administered, no clinical chemistry analysis, no food consumption data, clinical signs were not recorded and only 3 out of 10 male control rats survived.

The text will be clarified to acknowledge the oral and dermal cancer studies for sodium omadine.

Registrant Comment:

DD. Section 3.0 Hazard Characterization, Metabolism, page 14, last two sentences " The above data do not adequately characterize the disposition of zinc OMADINE

, as no dual labeled test material was studied . The data do suggest less in vivo dissociation of zinc OMADINE

vs. sodium OMADINE

and greater retention of zinc in tissues vs. the pyrithione moiety. 24 Remove both sentences, based on comments below Should read: " Klaasan utilized 14C ZPT and isotopic 65 zinc PT to study zinc OMADINE

. Klaasan's conclusions indicate that zinc and pyrithione go to different locations in the body and are eliminated at different rates and different routes,"

Comment: The work by Klaassan demonstrates that when zinc pyrithione is administered via oral, dermal, or intravenous routes, the pyrithione moiety separates from zinc and distributes differently in the body. In fact when it is administered orally, a majority of the zinc is excreted in the feces ( Klaassan, C. D. ( 1976). Absorption, distribution, and excretion of zinc pyridinethione in rabbits. Toxicology and Applied Pharmacology, 35, pp. 581 587.

Following oral gavage of 14C or 65Zn ZPT, the percentage of administered dose in each of the tissues analyzed was about one tenth of those concentrations seen following i. v. administration. The concentration of 14C was observed to be higher than 65Zn levels in liver, kidney, spleen, heart, lung, pancreas, intestine, stomach, and spinal cord but only by a small percentage in most cases. The concentration of 65Zn was observed to be higher in blood and plasma, as well as in eye and muscle. Six hours after oral administration of ZPT 1.35% of the 14C and 4.4% of the 65Zn was found in the major organs. The 14C levels in the blood were observed to decrease between 2 and 6 hours where levels of 65Zn were observed to be on the increase. Urinary excretion data showed that the 14C portion was excreted in the urine from 5% at 1 hr. to 50% at 6 hours with less than 1% of the 65Zn portion being excreted in the urine over 6 hours.

Klaassan concluded that based on the results from these experiments, it is apparent that the inorganic ( zinc) and organic ( pyrithione) portion of zinc pyrithione separate. He points to two facts that strongly demonstrate this point and they are the differences in zinc and pyrithione distribution in the major organs and the differences in their excretion profiles.

EPA Response: The text was revised to partially adopt some of the suggested changes. The language now states: " There were apparent sex differences in pharmacokinetics. Klaasan ( 1976) utilized 14C zinc pyrithione and isotopic65 zinc pyrithione to study zinc omadine. The author's conclusion indicate that zinc and pyrithione go to different locations in the body and are eliminated at different rates and different routes. The data do suggest less in vivo dissociation of zinc omadine vs. sodium omadine and greater retention of zinc in tissues vs. the pyrithione moiety. "

Registrant Comment:

EE. Section 3.2 FQPA Considerations, page 17, last sentence to page 18, 1st sentence "  the developmental toxicity database for zinc OMADINE

shows effects in offspring at similar dose levels as effects in adults,  ..". 25 Should say: " No developmental effects were observed at concentrations below 1.5 mg/ kg/ day and severe maternal toxicity was observed at 1.5 and 3.0 mg/ kg/ day for zinc OMADINE

,  ."

See comments under section AA EPA Response: No change was made. The NOAELs for developmental and maternal toxicity are identical. See response under section AA.

Registrant Comment:

FF. Section 3.3 Dose Response Assessment Table 3 Toxicological end points top of page 19 row Incidental oral  under column referring to toxicological effects"

Correction: Study reference should be for " Rats" and not Rabbits EPA Response: This suggested change was made.

Registrant Comment:

GG. Dietary Exposure and Risk 4.2, pg. 21, Table 4.

Correction: Table 4, 3rd column value should be 2.1 instead of 1.3 Comment: Footnote b does not include the aPAD values for females listed in Table 3, 0.0016 mg/ kg/ day, and this value was not used in the calculation, where the % aPAD for females would be 2.1 if the lower aPAD is used.

This error has a ripple effect into the DWLOC calculation for females and the aggregate risk calculations. The respective corrections would be in Section 5.1, Table 8 where the aPAD for females would be 0.00016, the Max Acute Water Exposure for Females would be 0.000157 mg/ kg/ day and the resulting DWLOC would be 47 µ g/ l EPA Response: This suggested change was made.

Registrant Comment: HH. Section 4.3 Drinking Water Exposure and Risk, page 22, 1st paragraph " Therefore, the Agency is presently relying on computer models ( PECs) of pesticides in surface water to estimate drinking water exposure to zinc OMADINE

"

This statement should be stricken.

Comment: Does the Agency mean that an individual may drink untreated surface water from a freshwater marina as opposed to the untreated water from a freshwater marina 26 being an individual's main source of drinking water? In our experience all surface waters are treated prior to being used for drinking water.

EPA Response: It is current policy to use computer models as a screening tool to estimate potential concentrations of pesticides in surface water that could be used for drinking water. The Agency has refined the PECs for zinc pyrithione using the MAM PEC model, and a number of conservative assumptions. Because of the lack of real data for fresh water, the PECs estimated by MAM PEC were used to assess potential drinking water exposures from antifoulant paint on boats in fresh water, such as lakes and rivers. The primary use of this model by the Agency at this stage is to provide a coarse screen for assessing whether a pesticide is likely to be present in drinking water at concentrations that would exceed the human health levels of concern. Based on the refined modeling, there are no oral aggregate risks of concern for food and water exposures to zinc pyrithione.

Registrant Comment:

II. Section 4.3 Drinking Water Exposure and Risk, page 22, 2nd paragraph, " .. ( PEC) is 21.66 ppb zinc OMADINE

based on Luttik Johnson Model."

Should read "  acute PEC of 0.12 ppb "

Comment: The Agency calculated PEC value is erroneous. See discussion under " H" above. Refined modeling with appropriate parameters is suggested to obtain realistic PECs EPA Response: The Agency has revised the Environmental modeling chapter, and estimated new predicted environmental concentrations ( PECs).

Registrant Comment:

JJ. Section 4.3 Drinking Water Exposure and Risk, page 22, 2nd paragraph, 5th sentence, " The primary use of this model by the agency at this stage is to provide a course screen "

Should read, " The primary use of this model by the agency at this stage is to provide a coarse screen "

EPA Response: The text was modified as suggested.

Registrant Comment:

KK. Section 4.3 Drinking Water Exposure and Risk, page 22, 3rd paragraph, last sentence, " A DWLOC may vary with drinking water consumption patterns ane body weight " 27 Should read, " A DWLOC may vary with drinking water consumption patterns and body weight "

EPA Response: The suggested change was made.

Registrant Comment:

LL. Section 4.4.2, Dandruff Shampoo Exposure, page 25 and top of page 26, all references to " Dandruff" shampoo should be " Anti Dandruff" shampoo.

Typographical error in last line of 2nd paragraph referring to " zine OMADINE

" , should be " zinc OMADINE

" .

EPA Response: This suggested change was made.

Registrant Comment:

MM. Section 4.4.2, Dandruff Shampoo Exposure, page 25, 2nd paragraph last sentence " . rather than from soluble zinc OMADINE

complexed with detergent in the commercial shampoo"

This part should be stricken because the zinc OMADINE

does not complex with detergent in the shampoo.

EPA Response: This change was made.

Registrant Comment:

NN. Section 5.1.1. Acute Aggregate Risk Assessment page 29, 3rd sentence " Drinking water... could occur from the antifoulant paint use"

This statement is incorrect. See comments under section H and HH.

EPA Response: See response under Section HH.

Registrant Comment:

OO. Section 5.1.2 Acute DWLOC Calculations, page 30, 2nd full paragraph " Using a conservative screening level model, the acute ( maximum) PEC for zinc OMADINE

in sea water is 21.66 ppb"

Should read: "..  acute PEC of 0.12ppb. 28 Also Table 8 on page 30, Table 9 on page 33 and Table 11 on page 36 contain erroneous PEC and should be replaced with 0.12 ppb Comment: See discussion on PEC under H above EPA Response: The Agency has revised the Environmental modeling chapter and estimated new predicted environmental concentrations ( PECs).

Registrant Comment:

PP. Section 5.2 Short and Intermediate Term Aggregate Risk, Oral Aggregate Risk Results, full paragraph 2 " However, the DWLOC for infants/ children of 17 µ g/ L is slightly less than the PEC of 21.66 µ g/ L"

This statement is incorrect when one considers a PEC of 0.12 ppb. In addition to the fact that surface water are routinely treated prior to use as drinking water.

Comments: See H and HH sections.

EPA Response: The Agency has revised the Environmental modeling chapter and estimated new predicted environmental concentrations ( PECs). All oral aggregate risks are below the Agency's level of concern.

Registrant Comment:

QQ. Section 5.3.2, Chronic ( non Cancer) DWLOC Calculations, page 35, last paragraph, " PEC for Zinc OMADINE

in sea water is 21.66 ppb"

Should read "  acute PEC of 0.12 ppb "

Comment: The erroneous PEC value should be replaced. See discussion on PEC under " H" above and DWLOC discussion under " HH" above .

EPA Response: The Agency has revised the Environmental modeling chapter and estimated new predicted environmental concentrations ( PECs). All oral aggregate risks are below the Agency's level of concern.

Registrant Comment:

RR. Section 9, Environmental Risk, Environmental Fate, page 41, 1st paragraph, 6th sentence, " Photolytic measurements showed that zinc OMADINE

dissociates in 13 minutes " 29 Should read " Photolytic measurements showed that zinc OMADINE

degrades in 13 minutes "

EPA Response: The suggested change has been incorporated.

Registrant Comment:

SS. Section 9, Environmental Risk, Ecological Hazard and Risk, page 42, 1st paragraph, " Zinc OMADINE

is very highly toxic on an acute basis to freshwater and marine fish and invertebrates, as well as to aquatic plant species".

Comment: Request that a sentence following the above sentence describing the conditions and measures taken to meet guidelines in maintaining test substance concentrations throughout the aquatic toxicity tests. The results are highly conservative based on the fact that under normal lighting in a laboratory greatly diminishes the concentration of zinc OMADINE

( through photolysis) and consequently would reduce the " real life" toxicity to fish and aquatic plants.

Even though Zinc OMADINE

LC50 values for fish and aquatic plants are less than 1.0 mg/ L and in many cases goes down to single digits of the µ g/ L; we want to point out that these values are highly conservative as in all of the fish and most of the aquatic plant studies light intensity was reduced by 75% and the use of filters to block the 350 355 nm wavelength ( sensitive wavelength of zinc OMADINE

) were utilized and the diluters were run at maximal capacity in an attempt to maintain test article concentration throughout the test period. Without these measures pyrithione levels drop dramatically and constant levels of zinc OMADINE

cannot be maintained over 6 hours let alone the usual 96 120 hours for acute toxicity tests.

EPA Response: The ecological hazard section of the document provides the data and endpoints used in the risk assessment. When an acute study is reviewed, the LC50 or EC50 endpoint is used to determine a toxicity, or " hazard" classification for the chemical, as outlined in OPP Standard Evaluation Procedures. Circumstances which may affect chemical behavior and, thereby, exposure and resulting risk in the natural environment, will be discussed in the risk assessment/ risk characterization. Since the antifouling use is being removed from the risk assessment in this RED, a discussion of photolytic breakdown of zinc pyrithione as it pertains to risk will not be included in this document, but will instead be included in the reassessment of the conditionally registered antifouling products after submission of the requested ecotoxicity studies.

Registrant Comment:

TT. In section 9.0 Environmental Risk subsection Ecological Hazard and Risk, page 42, a statement indicating that ".. zinc OMADINE

causes adverse impacts on freshwater and marine invertebrate reproduction and growth at very low levels. Thus, these 30 reproductive impacts indicate that zinc OMADINE

is a potential endocrine disruptor."

Should read: " Zinc OMADINE

at near lethal concentrations i. e. at or near the LC50 values reported for fish and invertebrates was observed to produce limited effects to reproduction and minor effects to growth. However, at doses at or near the NOEC for zinc OMADINE

no effects to reproduction or growth was observed in any aquatic species tested, fish or invertebrate thus diminishing any concern for the potential of endocrine disruption."

Comment: Ecological Toxicity: The results from testing zinc OMADINE

in the Early Life Stage Study of the fathead minnow resulted in a NOEC of 1.22 µ g/ L following 32 days of exposure with a LOEC of 2.82 µ g/ L. The sensitive toxic endpoints were survival and sublethal effects at hatch and days 7, 14, 21, and 28 post hatch. There was no apparent effect on reproduction but in the AD Preliminary Risk Assessment there is mention of developmental effects to the fish i. e. bent bodies. This effect only was observed at concentrations above 1.22 µ g/ L (  2.82 µ g/ L) and only became visible on days 5 10 and again on days 17 32 post hatching, strongly suggesting that repeated exposures to near lethal concentrations of zinc Omadine ® was responsible for this effect and not developmental toxicity. NOTE: The Acute LC50 in fathead minnow for zinc OMADINE

is 2.68 µ g/ L ( see table 13 page 42 of the AD Preliminary Risk Assessment).

The results from testing zinc OMADINE

in the Chronic Toxicity to the Daphnid, Daphnia magna with Zinc OMADINE

demonstrated that the NOEC is 2.7 µ g/ L and the LOEC is 5.8 µ g/ L. Doses tested were 0, 2.7, 5.8, 12, 22, and 49 µ g/ L. The LC50 for Daphnid reported in the AD Preliminary Risk Assessment is 8.25 µ g/ L. The mean day to the first brood was delayed at 22 and 49 µ g/ L, concentrations that clearly produce significant toxicity to the Daphnid. At concentrations of 12 and 22 µ g/ L lengths were affected ( however, differences in length never achieved statistical significance; no animals survived to day 32 at 49 µ g/ L), again concentrations of zinc OMADINE

causing an effect to length also are producing significant toxicity i. e. LC50 8.25 µ g/ L ( significant mortality was observed at 49 µ g/ L starting on day 2 with near 100% mortality by day 6). The Chronic Toxicity of Zinc OMADINE

to the Mysid, Americamysis bahia resulted in a NOEC of 2.28 µ g/ L and a LOEC of 4.20 µ g/ L. The LC50 for Mysid is 4.7 µ g/ L as reported in the AD Preliminary Risk Assessment. At concentrations of zinc OMADINE

that allowed survival equal or similar to control values, no reproductive effects were observed.

Conclusion: Zinc OMADINE

appears to be more of an acute hazard over a chronic hazard, based on review of the acute LC50/ NOEC and chronic LOEC/ NOEC values. The chronic NOEC values are in every case similar to the acute NOEC values. The fact that only doses of zinc Omadine ® that were near or greater than the 31 corresponding LC50 were resulting in effects in reproduction etc. strongly argues against any chronic hazard and definitely confounds any interpretation of possible endocrine disruption.

EPA Response: This comment is beyond what is considered " error correction."

Registrant Comment:

UU. Section 9.0, page 42, Table 13,

Corrections to Table. Waterflea LC50 should be 34 ppb and 95% confidence intervals should read 28   41 ( MRID 44921801). NOAEC should be 13 ppb.

EPA Response: The MRID number ( 44921801) and values reported refer to an acute study with Hyalella azteca, not the waterflea ( Daphnia magna). The Hyalella study was originally submitted toward fulfillment of acute sediment toxicity data requirements, as Hyalella is a sediment dwelling/ utilizing organism. However, the study was actually conducted as a water column toxicity study, and was therefore inappropriate to use to evaluate sediment toxicity. It was reviewed and classified as supplemental information, but was not included in the RED as it does not meet the requirements for either an acute freshwater invertebrate study or a freshwater sediment toxicity study. It will be added to the ecological hazard chapter and preliminary risk assessment as additional information, indicating that zinc pyrithione is highly toxic to freshwater invertebrates.

Registrant Comment:

VV. Section 9.0, page 43, Table 13,

Corrections to Table. Algae and aquatic plants. Freshwater algae NOAEC should be 7.8 ppb ( MRID# 43864609); Anabaena NOAEC should be 3.8 ppb ( MRID# 45564901); Navicula NOAEC should be 2.4 ppb ( MRID# 45565001); Lemna gibba NOAEC should be 4.0 ppb ( MRID# 45204104).

EPA Response: This table was revised to include these comments.

Registrant Comment:

WW. Section 9.0, page 43, Table 14, Freshwater fish early life stage toxicity data Correction to Table. Fathead minnow EC50 should be 1.9 ppb ( MRID# 44591204); NOAEC should be 1.22 ppb and the LOAEC is 2.82 ppb ( Table indicated 282 ppb for NOAEC) 32 EPA Response: We have no record of any zinc omadine study with an MRID # of 44591204. The acute fathead minnow study we have is MRID # 438646 06, which provided and LC50 of 2.68 ug ai/ L and a NOEC of 1.1 ug ai/ L. The chronic, MRID # 452041 02, provided a NOEC of 1.22 ppb, and a LOEC of 2.82 ppb. This latter study appears to be the study referred to in the registrants' comments. The incorrect value of 282 ppb appears to be a typographical error in the summary tables which was corrected.

Registrant Comment:

XX. Section 9.0, page 44, Table 14 Freshwater Invertebrate Life Cycle Toxicity Data Correction to Table Waterflea EC50 should be 29 ppb ( MRID# 44535401); and NOAEC should be 2.7 ppb and the LOAEC should be 5.8 ppb.; Mysid EC50 should be 5.2 ppb and NOAEC should be 2.3 ppb; LOAEC should be 4.2 ppb.

EPA Response While the EC50 values listed in the registrant comment are correct ( except the Mysid EC50 is 4.7 ppb), they are from chronic testing, and were therefore not included in the table 14. Fish early life stage and aquatic invertebrate life cycle studies provide two endpoints used to calculate chronic risk quotients: the NOAEC and the LOAEC. While the LC50/ EC50 values from chronic studies may be considered when assessing the study for scientific validity and in the risk characterization, they are not included in the tables in order to avoid any confusion with the acute values. The LC50 or EC50 from acute studies are used to calculate risk quotients in the assessment of acute risk, and are listed in a separate table. Table 14 will be modified to list only acute values, with the chronic endpoints placed in a new table 15 that does not have a LC50 column.

Registrant Comment:

YY. Section 9.0, page 46, 1st paragraph " Environmental  . invertebrates. The antifoulant use of zinc OMADINE

is likely to result in adverse effects to fish, aquatic plants and aquatic invertebrates, including endangered species.

This paragraph should be stricken because this is an incorrect conclusion based on an incorrect PEC calculation ( see section H).

Comment: As discussed previously in section H, the exposure modeling was a preliminary risk assessment that needs further refinement, particularly since it is tenfold higher than measured concentrations of widely used antifouling biocide, e. g. Irgarol, that is persistent. If the modeling is refined using the proper parameters for leach rate and degradation ( see section H, Table 3 and 4), the PEC will be a factor of 33 10 to a 1000 less than the NOEC of the most sensitive aquatic organisms. These refined PECs will not exceed the LOCs.

EPA Response: The antifouling use of zinc Omadine is being removed from the risk assessment in this RED for assessing ecological risks, and will be considered during the reassessment of the conditionally registered antifouling products.

Registrant Comment:

ZZ. Section 10.0, page 46 Data Deficiencies / Data Needs:

Comment: We have generated data on aquatic plants and whole sediment toxicity study to support our antifoulant use of zinc OMADINE

.

EPA Response: The ecological hazard chapter and preliminary risk assessment will be updated to include any data which have been submitted and accepted since the chapter was originally drafted. This will not include studies that are still in progress, however. Data from any in process studies will be reviewed and utilized in the revised risk assessment for the conditionally registered antifouling products.


[Federal Register Volume 87, Number 72 (Thursday, April 14, 2022)]
[Notices]
[Page 22200]
[FR Doc No: 2022-07983]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. EL21-77-002]

Tenaska Clear Creek Wind, LLC v. Southwest Power Pool, Inc.;
Notice of Protest and Amended Complaint

    Take notice that on April 1, 2022, Tenaska Clear Creek Wind, LLC
(Tenaska or Complainant) filed a protest to Southwest Power Pool,
Inc.'s (SPP or Respondent) March 11, 2022 compliance filing in the
above-captioned proceeding. Tenaska states that to the extent the
Commission deems its protest to be raising issues or arguments outside
the scope of its original complaint or SPP's compliance filing, it
submits the pleading as an amendment to its complaint against SPP,
pursuant to sections 206, 306, and 309 of the Federal Power Act, 16
U.S.C. 824e, 825e, and 825h and Rule 206 of the Federal Energy
Regulatory Commission's (Commission) Rules of Practice and Procedure,
18 CFR 385.206.
    The Complainant certifies that copies of the pleading were served
on the contacts listed for Respondent in the Commission's list of
Corporate Officials.
    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211, 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as appropriate. The Respondent's
answer and all interventions, or protests must be filed on or before
the comment date. The Respondent's answer, motions to intervene, and
protests must be served on the Complainant.
    The Commission strongly encourages electronic filings of comments,
protests and interventions in lieu of paper using the ``eFiling'' link
at http://www.ferc.gov. Persons unable to file electronically may mail
similar pleadings to the Federal Energy Regulatory Commission, 888
First Street NE, Washington, DC 20426. Hand delivered submissions in
docketed proceedings should be delivered to Health and Human Services,
12225 Wilkins Avenue, Rockville, Maryland 20852.
    In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
internet through the Commission's Home Page (http://www.ferc.gov) using
the ``eLibrary'' link. Enter the docket number excluding the last three
digits in the docket number field to access the document. At this time,
the Commission has suspended access to the Commission's Public
Reference Room, due to the proclamation declaring a National Emergency
concerning the Novel Coronavirus Disease (COVID-19), issued by the
President on March 13, 2020. For assistance, contact the Federal Energy
Regulatory Commission at [email protected], or call toll-free,
(886) 208-3676 or TYY,<PHONE_NUMBER>.
    Comment Date: 5:00 p.m. Eastern Time on April 21, 2022.

    Dated: April 8, 2022.
Kimberly D. Bose,
Secretary.
[FR Doc. 2022-07983 Filed 4-13-22; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register: August 28, 2007 (Volume 72, Number 166)]
[Notices]
[Page 49339-49341]
[DOCID:fr28au07-154]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56303; File No. SR-FICC-2007-08]

Self-Regulatory Organizations; Fixed Income Clearing Corporation;
Notice of Filing of Proposed Rule Change To Resume Interbank Clearing
for the General Collateral Finance Repo Service

August 22, 2007.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on July 11, 2007, the Fixed
Income Clearing Corporation (``FICC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II, and III below, which items have been prepared
by FICC. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FICC is seeking to resume interbank clearing for the General
Collateral Finance (``GCF'') Repo service.

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

    In its filing with the Commission, FICC 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. FICC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of these
statements.\2\
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    \2\ The Commission has modified the text of the summaries
prepared by FICC.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Background
    The GCF Repo service allows FICC Government Securities Division
(``GSD'') dealer members to trade general collateral repos throughout
the day with inter-dealer broker netting members (``brokers'') on a
blind basis without requiring intraday, trade-for-trade settlement on a
delivery-versus-payment (DVP) basis. Standardized, generic CUSIP
numbers have been established exclusively for GCF Repo processing and
are used to specify the acceptable type of underlying Fedwire book-
entry eligible collateral, which includes Treasuries, Agencies, and
certain mortgage-backed securities.
    The GCF Repo service was developed as part of a collaborative
effort among FICC's predecessor, the Government Securities Clearing
Corporation (``GSCC''), its two clearing banks, The Bank of New York
(``BNY'') and The Chase Manhattan Bank, now JP Morgan Chase Bank,
National Association (``Chase''), and industry representatives.\3\ GSCC
introduced the GCF Repo service on an intraclearing bank basis in
1998.\4\ Under the intrabank service, dealer members could engage in
GCF Repo transactions only with other dealers that clear at the same
clearing bank.
---------------------------------------------------------------------------

    \3\ BNY and Chase remain the two clearing banks approved by FICC
to provide GCF Repo settlement services. In the future, other banks
that FICC in its sole discretion determines to meet its operational
requirements may be approved to provide GCF Repo settlement
services.
    \4\ Securities Exchange Act Release No. 40623 (October 30,
1998), 63 FR 59831 (November 5, 1998) (SR-GSCC-98-02).
---------------------------------------------------------------------------

    In 1999, GSCC expanded the GCF Repo service to permit dealer
members to engage in GCF Repo trading on an interclearing bank basis,
which allowed dealers using different clearing banks to enter into GCF
Repo transactions on a blind brokered basis.\5\ Because dealer members
that participate in the GCF Repo service do not all clear at the same
clearing bank, expanding the service to be interclearing bank
necessitated the establishment of a mechanism to permit after-hours
movements of securities between the two clearing banks because GSCC
would probably have unbalanced net GCF securities and unbalanced net
cash positions within each clearing bank. (In other words, it was
probable that at the end of GCF Repo processing each business day, the
dealers in one clearing bank would be net funds borrowers while the
dealers at the other clearing bank would be net funds lenders.) To
address this issue, GSCC and its clearing banks established a legal
mechanism by which securities would ``move'' across the clearing banks
without the use of the securities Fedwire.\6\ At the end of the day
after the GCF Repo net results were produced, securities were pledged
using a tri-party-like mechanism, and the interbank cash component was
moved through Fedwire. In the morning, the pledges were unwound with
the funds being returned to the net funds lenders and the securities
being returned to the net funds borrowers.
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    \5\ Securities Exchange Act Release No. 41303 (April 16, 1999),
64 FR 20346 (April 26, 1999) (SR-GSCC-99-01).
    \6\ Movements of cash did not present the same need because the
cash Fedwire is open later than the securities Fedwire.
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    However, as use of the service increased, certain payment systems'
risk issues from the interbank funds settlements arose. In 2003, FICC
shifted the service back to intrabank status to enable it to study the
risk issues presented and to devise a satisfactory solution to those
issues in order that it could bring the service back to interbank
status.\7\
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    \7\ Securities Exchange Act Release No. 48006 (June 10, 2003),
68 FR 35745 (June 16, 2003) (SR-FICC-2003-04).
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2. Proposal
    FICC is now seeking to return the GCF Repo service to interbank
status. The proposed rule change would address the

risk issues raised by the interbank funds movement by placing a
security interest on a dealer's ``net free equity'' (``NFE'') at the
clearing bank to collateralize its GCF Repo cash obligation to FICC on
an intraday basis \8\ and by making changes with respect to the morning
``unwind'' period. No changes are being proposed with respect to the
after-hours movement of securities occurring the previous day, which
was used when the interbank service was first introduced.
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    \8\ NFE is a methodology that clearing banks use to determine
whether an account holder, such as a dealer, has sufficient
collateral to enter a specific transaction. NFE allows the clearing
bank to place a limit on its customers' activity by calculating a
value on the customers' balances at the bank. Bank customers have
the ability to monitor their NFE balance throughout the day.
---------------------------------------------------------------------------

    Specifically, the interbank funds payment would not move during the
GCF morning unwind process. In lieu of making funds payments, each
interbank dealer (``Interbank Pledging Member'') at the GCF net funds
borrower bank would grant to FICC a security interest in its NFE-
Related Collateral \9\ in an amount equal to its pro rated share of the
total interbank funds debit (``Prorated Interbank Cash Amount'').
FICC's lien on this collateral would be pari passu to any lien created
by the dealer in favor of the relevant GCF clearing bank.
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    \9\ ``NFE-Related Collateral'' is the total amount of collateral
that a dealer has at its clearing bank.
---------------------------------------------------------------------------

    FICC would in turn grant to the other clearing bank that was due to
receive the funds a security interest in the NFE-Related Collateral to
support the debit in the FICC account. The debit in the FICC account
(``Interbank Cash Amount Debit'') would occur because the dealers that
are due to receive funds in the morning must receive those funds in
return for their release of collateral. The clearing banks would agree
to manage the collateral value of the NFE-Related Collateral as they do
today.
    The debit in the FICC account at the clearing bank referred to in
the previous paragraph would be satisfied during the end of day GCF
settlement process. Specifically, that day's new activity would yield a
new interbank funds amount that would move at end of day; however, this
new interbank funds amount would be netted with the amount that would
have been due in the morning, thus further reducing the interbank funds
movement. The NFE security interest would be released when the
interbank funds movement is made at end of day.
    As described above, on an intraday basis, FICC would have a
security interest in the dealers' NFE-Related Collateral. In the
unlikely event of an intraday GCF participant default, FICC would need
to have the NFE-Related Collateral liquidated and have use of the
proceeds. FICC would enter into an agreement with each of the clearing
banks whereby each bank would agree to liquidate the NFE-Related
Collateral both for itself as well as on behalf of FICC. FICC and each
bank would agree to share pro rata in the liquidation proceeds.
    Due the fact that the liquidation of the NFE-Related Collateral
might take longer than one day, GSD's typical collateral liquidation
timeframe, to be completed due to the nature of the various assets that
may be part of a particular dealer's NFE-Related Collateral, FICC would
establish standby liquidity facilities or other financing arrangements
with each of the clearing banks to be invoked as needed in the event of
the default of an interbank pledging member.
    FICC is also proposing to impose a collateral premium (``GCF
Premium Charge'') on the GCF portion of the Clearing Fund deposits of
all GCF participants to further protect FICC in the event of an
intraday default of a GCF participant. FICC would require GCF
participants to submit a quarterly ``snapshot'' of their holdings by
asset type to enable FICC Risk Management staff to determine the
appropriate Clearing Fund premium. GCF participants that do not submit
this required information by the deadlines established by FICC would be
subject to a fine and an increased Clearing Fund premium.
    Because the NFE-Related Collateral is held at the clearing banks
and because the clearing banks monitor the activity of their dealer
customers, FICC would have the right, using its sole discretion, to
cease to act for a member that is a GCF Repo participant in the event
that a clearing bank ceases to extend credit to such member.
    The proposal results in the need for the following specific GSD
rule changes.
    1. The new terms referred to above (GCF Premium Charge, Interbank
Cash Amount Debit, Interbank Pledging Member, NFE-Related Collateral,
and Prorated Interbank Cash Amount) would be added to Rule 1
(Definitions). A new term, ``NFE-Related Account,'' which is referred
to in the definition of ``NFE-Related Collateral,'' would also be
added.
    2. Section 3 (Collateral Allocation) of Rule 20 (Special Provisions
for GCF Repo Transactions), which governs the GCF Repo collateral
allocation process, would be amended to reflect the new process that
would occur on the morning of the unwind (to be referred to as the
morning of ``Day 2'' in the Rules).
    3. Section 3 of Rule 20 would be further amended to provide for the
following:
    (a) The granting of the security interest in the NFE-Related
Collateral to FICC by the dealers;
    (b) The granting of authority for FICC to provide instructions to
the clearing banks regarding the NFE-Related Collateral by the dealers;
    (c) The granting of the security interest in the NFE-Related
Collateral to the clearing banks by FICC; and
    (d) FICC's right to enter into agreements with the clearing banks
regarding the collateral management of the NFE-Related Collateral, the
liquidation of the NFE-Related Collateral, and the standby liquidity
facilities or other financing arrangements.
    4. Rule 4 (Clearing Fund, Watch List, and Loss Allocation) would be
amended to provide for the Clearing Fund premium that would be imposed
on GCF Repo participants. Rule 3 (Ongoing Membership Requirements)
would be amended to include the quarterly NFE reporting requirement
which, if not followed timely by the members, would result in fines and
Clearing Fund premium consequences.
    5. Rules 21 (Restrictions on Access to Services) and 22 (Insolvency
of a Member) would be amended to provide that FICC may, in its sole
discretion, cease to act for a member in the event that the member's
clearing bank has ceased to extend credit to the member.
    6. The schedule of GCF time frames would be amended to reflect
technical changes.
3. Statutory Basis
    FICC believes that the proposed rule change is consistent with the
requirements of section 17A of the Act \10\ and the rules and
regulations thereunder applicable to FICC because it should allow GCF
Repo participants to expand their use of the GCF Repo service to
include repos done with dealers that clear at a different clearing bank
in a manner that will support the prompt and accurate clearance and
settlement of securities transactions.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78q-1.
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    FICC does not believe that the proposed rule change would have any
impact or impose any burden on competition.

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

    Written comments have not been solicited with respect to the
proposed rule change, and none have been received. FICC will notify the
Commission of any written comments it receives.

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

    Within thirty-five days of the date of publication of this notice
in the Federal Register or within such longer period (i) As the
Commission may designate up to ninety days of such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (ii) as to which the self-regulatory organization consents,
the Commission will:
    (A) By order approve such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-FICC-2007-08 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-FICC-2007-08. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all

written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Section, 100 F. Street,
NE., Washington, DC 20549, on official business days between the hours
of 10 a.m. and 3 p.m. Copies of such filing also will be available for
inspection and copying at the principal office of FICC and on FICC's
Web site at http://www.ficc.com/gov/gov.docs.jsp?NS-query. All comments

received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-FICC-2007-08 and should be
submitted on or before September 18, 2007.

    For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-16958 Filed 8-27-07; 8:45 am]

BILLING CODE 8010-01-P