[Federal Register: June 7, 2006 (Volume 71, Number 109)]
[Rules and Regulations]
[Page 32849-32853]
[DOCID:fr07jn06-20]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2006-0404; FRL-8069-5]

Methoxyfenozide; Pesticide Tolerance

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation establishes a tolerance for residues of
methoxyfenozide in or on soybean aspirated grain fractions, soybean
forage, soybean hay, soybean hulls, and soybean seed. Dow AgroSciences
requested this tolerance under the Federal Food, Drug, and Cosmetic Act
(FFDCA), as amended by the Food Quality Protection Act of 1996 (FQPA).

DATES: This regulation is effective June 7, 2006. Objections and
requests for hearings must be received on or before August 7, 2006, and
must be filed in accordance with the instructions provided in 40 CFR
part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

ADDRESSES: EPA has established a docket for this action under docket
identification (ID) number EPA-HQ-OPP-2006-0404. All documents in the
docket are listed in the index for the docket. Although listed in the
index, some information is not publicly available, e.g., Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Certain other material, such as copyrighted
material, is not placed on the Internet and will be publicly available
only in hard copy form. Publicly available docket materials are
available in the electronic docket athttp://www.regulations.gov, or, if

only available in hard copy, at the OPP Regulatory Public Docket in Rm.
S-4400, One Potomac Yard (South Building), 2777 S. Crystal Drive,
Arlington, VA. The Docket Facility is open from 8:30 a.m. to 4 p.m.,
Monday through Friday, excluding legal holidays. The Docket telephone
number is<PHONE_NUMBER>.

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

I. General Information

A. Does this Action Apply to Me?

    You may be potentially affected by this action if you are an
agricultural producer, food manufacturer, or pesticide manufacturer.
Potentially affected entities may include, but are not limited to:
     Crop production (NAICS 111), e.g., agricultural workers;
greenhouse, nursery, and floriculture workers; farmers.
     Animal production (NAICS 112), e.g., cattle ranchers and
farmers, dairy cattle farmers, livestock farmers.
     Food manufacturing (NAICS 311), e.g., agricultural
workers; farmers; greenhouse, nursery, and floriculture workers;
ranchers; pesticide applicators.
     Pesticide manufacturing (NAICS 32532), e.g., agricultural
workers; commercial applicators; farmers; greenhouse, nursery, and
floriculture workers; residential users.
    This listing is not intended to be exhaustive, but rather provides
a guide for readers regarding entities likely to be affected by this
action. Other types of entities not listed in this unit could also be
affected. The North American Industrial Classification System (NAICS)
codes have been provided to assist you and others in determining
whether this action might apply to certain entities. If you have any
questions regarding the applicability of this action to a particular
entity, consult the person listed underFOR FURTHER INFORMATION CONTACT.

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

    In addition to accessing an electronic copy of this Federal
Register document through the electronic docket at http://www.regulations.gov
, you may access this ``Federal Register'' document

electronically through the EPA Internet under the ``Federal Register''
listings athttp://www.epa.gov/fedrgstr. You may also access a

frequently updated electronic version of 40 CFR part 180 through the
Government Printing Office's pilot e-CFR site at http://www.gpoaccess.gov/ecfr
.

C. Can I File an Objection or Hearing Request?

    Under section 408(g) of the FFDCA, as amended by the FQPA, any
person may file an objection to any aspect of this regulation and may
also request a hearing on those objections. The EPA procedural
regulations which govern the submission of objections and requests for
hearings appear in 40 CFR part 178. You must file your objection or
request a hearing on this regulation in accordance with the
instructions provided in 40 CFR part 178. To ensure proper receipt by
EPA, you must identify docket ID number EPA-HQ-OPP-2006-0404 in the
subject line on the first page of your submission. All requests must be
in writing, and must be mailed or delivered to the Hearing Clerk on or
before August 7, 2006.
    In addition to filing an objection or hearing request with the
Hearing Clerk as described in 40 CFR part 178, please submit a copy of
the filing that does not contain any CBI for inclusion in the public
docket that is described in ADDRESSES. Information not marked
confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA
without prior notice. Submit your copies, identified by docket ID
number EPA-HQ-OPP-2006-0404, by one of the following methods.
     Federal eRulemaking Portal: http://www.regulations.gov.

Follow the on-line instructions for submitting comments.
     Mail: Office of Pesticide Programs (OPP) Regulatory Public
Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania
Ave., NW., Washington, DC 20460-0001.
     Delivery: OPP Regulatory Public Docket (7502P),
Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South
Building), 2777 S. Crystal Drive, Arlington, VA. Deliveries are only
accepted during the Docket's normal hours of operation (8:30 a.m. to 4
p.m., Monday through Friday, excluding legal holidays). Special
arrangements should be made for deliveries of boxed information. The
Docket telephone number is<PHONE_NUMBER>.

II. Background and Statutory Findings

    In the Federal Register of August 13, 2004 (69 FR 50192) (FRL-7364-
9), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21
U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP
3F6794) by DowAgroSciences, 9330 Zionsville Road 308-2E225,
Indianapolis, IN 46268-1054. The petition requested that 40 CFR 180.544
be amended by establishing a tolerance for residues of the insecticide
methoxyfenozide per se; benzoic acid, 3-methoxy-2-methyl-, 2-(3,5-
dimethylbenzoyl)-2-(1,1-dimethylethyl) hydrazide, in or on soybean
aspirated grain at 200 parts per million (ppm), soybean forage at 45
ppm, soybean hay at 65 ppm, soybean hulls at 3.0 ppm, soybean meal at
0.1 ppm, soybean oil at 1.0 ppm, and soybean seed at 2.0 ppm. That
notice included a summary of the petition prepared by Dow AgroSciences,
the registrant. There were no comments received in response to the
notice of filing.
    The registrant subsequently revised Section F of the petition to
concur with the tolerances found to be supported by the Agency based on
the available data used for the risk assessment. In the revised Section
F, Dow AgroSciences requested that 40 CFR 180.544 be amended by
establishing a tolerance for residues of the insecticide
methoxyfenozide per se; benzoic acid, 3-methoxy-2-methyl-, 2-(3,5-
dimethylbenzoyl)-2-(1,1-dimethylethyl) hydrazide, in or on soybean
aspirated grain at 160 ppm, soybean forage at 30 ppm, soybean hay at 80
ppm, soybean hulls at 2.0 ppm, and soybean seed at 1.0 ppm.
    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a
tolerance (the legal limit for a pesticide chemical residue in or on a
food) only if EPA determines that the tolerance is ``safe.'' Section
408(b)(2)(A)(ii) of FFDCA defines ``safe'' to mean that ``there is a
reasonable certainty that no harm will result from aggregate exposure
to the pesticide chemical residue, including all anticipated dietary
exposures and all other exposures for which there is reliable
information.'' This includes exposure through drinking water and in
residential settings, but does not include occupational exposure.
Section 408(b)(2)(C) of FFDCA requires EPA to give special
consideration to exposure of infants and children to the pesticide
chemical residue in establishing a tolerance and to ``ensure that there
is a reasonable certainty that no harm will result to infants and
children from aggregate exposure to the pesticide chemical residue. . .
.''
    EPA performs a number of analyses to determine the risks from
aggregate exposure to pesticide residues. For further discussion of the
regulatory requirements of section 408 of FFDCA and a complete
description of the risk assessment process, see http://www.epa.gov/fedrgstr/EPA-PEST/1997/November/Day-26/p30948.htm
.

III. Aggregate Risk Assessment and Determination of Safety

    Consistent with section 408(b)(2)(D) of FFDCA, EPA has reviewed the
available scientific data and other relevant information in support of
this action. EPA has sufficient data to assess the hazards of and to
make a determination on aggregate exposure, consistent with section
408(b)(2) of FFDCA, for a tolerance for residues of methoxyfenozide on
soybean aspirated grain at 160 ppm, soybean forage at 30 ppm, soybean
hay at 80 ppm, soybean hulls at 2.0 ppm, and soybean seed at 1.0 ppm.
EPA's assessment of exposures and risks associated with establishing
the tolerance follows.

A. Toxicological Profile

    EPA has evaluated the available toxicity data and considered its
validity, completeness, and reliability as well as the relationship of
the results of the studies to human risk. EPA has also considered
available information concerning the variability of the sensitivities
of major identifiable subgroups of consumers, including infants and
children. Specific informationon the studies received and the nature of
the toxic effects caused by methoxyfenozide as well as the no observed
adverse effect level (NOAEL) and the lowest observed adverse effect
level (LOAEL) from the toxicity studies can be found at http://www.epa.gov/EPA-PEST/2002/September/Day-20/p23996.htm
.

B. Toxicological Endpoints

    For hazards that have a threshold below which there is no
appreciable risk, the dose at which no adverse effects are observed
(the NOAEL) from the toxicology study identified as appropriate for use
in risk assessment is used to estimate the toxicological level of
concern (LOC). However, the lowest dose at which adverse effects of
concern are identified (the LOAEL) is sometimes used for risk
assessment if no NOAEL was achieved in the toxicology study selected.
An uncertainty factor (UF) is applied to reflect uncertainties inherent
in the extrapolation from laboratory animal data to humans and in the
variations in sensitivity among members of the human population as well
as other unknowns.
    The linear default risk methodology (Q*) is the primary method
currently used by the Agency to quantify non-threshold hazards such as
cancer. The Q* approach assumes that any amount of exposure will lead
to some degree of cancer risk, estimates risk in terms of the
probability of occurrence of

additional cancer cases. More information can be found on the general
principles EPA uses in risk characterization at http://www.epa.gov/pesticides/health/human.htm
.

    A summary of the toxicological endpoints for methoxyfenozide used
for human risk assessment is shown in Table 1 of this unit:

   Table 1.--Summary of Toxicological Dose and Endpoints for Methoxyfenozide for Use in Human Risk Assessment
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          Exposure/Scenario                Dose (mg/kg/day)             Endpoint                  Study
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Acute dietary                          None                     No appropriate endpoint  None
                                                                 was identified in the
                                                                 oral toxicity studies
                                                                 including the acute
                                                                 neurotoxicity study in
                                                                 rats and
                                                                 thedevelopmental
                                                                 toxicity studies in
                                                                 rats and rabbits
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                                       UF = N/A                            Acute RfD = Not Applicable
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Chronic dietary (Non cancer)           NOAEL = 10.2 mg/kg/day   Hematological changes    2--Year combined
                                                                 (decreased RBC,          chronic feeding/
                                                                 hemoglobin and/or        carcinogenicity, rats
                                                                 hematocrit), liver
                                                                 toxicity (increased
                                                                 weights, hypertrophy),
                                                                 histopathological
                                                                 changes in thyroid
                                                                 (increased follicular
                                                                 cell hypertrophy,
                                                                 altered colloid),
                                                                 possible adrenal
                                                                 toxicity (increased
                                                                 weights).
                                      --------------------------------------------------------------------------
All population subgroups               UF =100 FQPA = 1X        Chronic RfD = 0.10 mg/kg/day Chronic Population
                                                                 Adjusted Dose (cPAD) = 0.10 mg/kg/day This cPAD
                                                                 applies to All population subgroups.
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Short-Term, Intermediate- Term, and    None                     No systemic toxicity     None
 Long-Term (Dermal)                                              was seen at the limit
                                                                 dose following
                                                                 repeated dermal
                                                                 application to rats
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Short-Term, Intermediate-Term, and     None                     Based on low vapor       None
 Long-Term (Inhalation)                                          pressure, the low
                                                                 acute toxicity of both
                                                                 the technical and
                                                                 formulated products as
                                                                 well as the
                                                                 application rate and
                                                                 application method,
                                                                 there is minimal
                                                                 concern for inhalation
                                                                 exposure.
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Cancer                                 None                     Methoxyfenozide has      None
                                                                 been classified as
                                                                 ``not likely to be a
                                                                 human carcinogen.''
                                                                 The classification is
                                                                 based on the lack of
                                                                 evidence of
                                                                 carcinogenicity in
                                                                 male and female rats
                                                                 as well as in male and
                                                                 female mice and on the
                                                                 lack of genotoxicity
                                                                 in an acceptable
                                                                 battery of
                                                                 mutagenicity studies
----------------------------------------------------------------------------------------------------------------

C. Exposure Assessment

    1. Dietary exposure from food and feed uses. Tolerances have been
established (40 CFR 180.544) for the residues of methoxyfenozide, in or
on a variety of raw agricultural commodities, animal (cattle, goat,
hog, horse, poultry, and sheep) meats and fats, and milk. Risk
assessments were conducted by EPA to assess dietary exposures from
methoxyfenozide in food as follows:
    i. Acute exposure. Quantitative acute dietary exposure and risk
assessments are performed for a food-use pesticide, if a toxicological
study has indicated the possibility of an effect of concern occurring
as a result of a 1-day or single exposure. No appropriate endpoint was
identified in the oral toxicity studies including the acute
neurotoxicity study in rats and the developmental toxicity studies in
rats and rabbits. Therefore, acute dietary exposure assessments were
not conducted.
    ii. Chronic exposure. In conducting the chronic dietary exposure
assessment EPA used the Dietary Exposure Evaluation Model software with
the Food Commodity Intake Database (DEEM-FCID\TM\), which incorporates
food consumption data as reported by respondents in the USDA 1994-1996
and 1998 Nationwide Continuing Surveys of Food Intake by Individuals
(CSFII), and accumulated exposure to the chemical for each commodity.
The following assumptions were made for the chronic exposure
assessments: Drinking water will contain the highest estimate drinking
water concentration (EDWC), 100% of all existing and proposed crops are
treated, and all resulting residues are at tolerance levels.
    iii. Cancer. Because methoxyfenozide has been classified as ``not
likely to be a human carcenogen,'' an exposure assessment for the
purpose of assessing cancer risk is not needed.
    2. Dietary exposure from drinking water. The Agency lacks
sufficient monitoring exposure data to complete a comprehensive dietary
exposure analysis and risk assessment for methoxyfenozide in drinking
water. Because the Agency does not have comprehensive monitoring data,
drinking water concentration estimates are made by reliance on
simulation or modeling taking into account data on the physical
characteristics of methoxyfenozide. Further information

regarding EPA drinking water models used in pesticide exposure
assessment is discussed in Unit III.C.2 of the final rule previously
published in the Federal Register of July 5, 2000 (65 FR 41355) (FRL-
6496-5).
    Based on the Pesticide Root Zone Model/Exposure Analysis Modeling
System and Screening Concentrations in Groundwater models, the
estimated environmental concentrations (EECs) of methoxyfenozide for
acute exposures are estimated to be 43 parts per billion (ppb) for
surface water and 3.5 ppb for ground water. The EECs for chronic
exposures are estimated to be 30 ppb, based on surface water.
    3. From non-dietary exposure. The term ``residential exposure'' is
used in this document to refer to non-occupational, non-dietary
exposure (e.g., for lawn and garden pest control, indoor pest control,
termiticides, and flea and tick control on pets).
    Methoxyfenozide is not registered for use on any sites that would
result in residential exposure.
    4. Cumulative effects from substances with a common mechanism of
toxicity. Section 408(b)(2)(D)(v) of the FFDCA requires that, when
considering whether to establish, modify, or revoke a tolerance, the
Agency consider ``available information'' concerning the cumulative
effects of a particular pesticide's residues and ``other substances
that have a common mechanism of toxicity.''
    Unlike other pesticides for which EPA has followed a cumulative
risk approach based on a common mechanism of toxicity, EPA has not made
a common mechanism of toxicity finding as to methoxyfenozide and any
other substances and methoxyfenozide does not appear to produce a toxic
metabolite produced by other substances. For the purposes of this
tolerance action, therefore, EPA has not assumed that methoxyfenozide
has a common mechanism of toxicity with other substances. For
information regarding EPA's efforts to determine which chemicals have a
common mechanism of toxicity and to evaluate the cumulative effects of
such chemicals, see the policy statements released by EPA's Office of
Pesticide Programs concerning common mechanism determinations and
procedures for cumulating effects from substances found to have a
common mechanism on EPA's website athttp://www.epa.gov/pesticides/cumulative
.

D. Safety Factor for Infants and Children

    1. In general. Section 408 of FFDCA provides that EPA shall apply
an additional tenfold margin of safety for infants and children in the
case of threshold effects to account for prenatal and postnatal
toxicity and the completeness of the data base on toxicity and exposure
unless EPA determines based on reliable data that a different margin of
safety will be safe for infants and children. Margins of safety are
incorporated into EPA risk assessments either directly through use of a
margin of exposure analysis or through using uncertainty (safety)
factors in calculating a dose level that poses no appreciable risk to
humans. In applying this provision, EPA either retains the default
value of 10X when reliable data do not support the choice of a
different factor, or, if reliable data are available, EPA uses a
different additional safety factor value based on the use of
traditional uncertainty factors and/or special FQPA safety factors, as
appropriate.
    2. Prenatal and postnatal sensitivity. There is no evidence of
prenatal or postnatal sensitivity, as discussed in Unit IV.C. of the
final rule previously published in the Federal Register of August 31,
2005 (70 FR 51597) (FRL-7732-3).
    3. Conclusion. There is a complete toxicity data base
formethoxyfenozide and exposure data are complete or are estimated
based on data that reasonably accounts for potential exposures. The
Agency has determined that the FQPA Safety Factor can be reduced to 1X
in assessing the risk posed by this chemical. The basis for this
determination is discussed in Unit IV.C.5 of the final rule previously
published in the Federal Register of August 31, 2005.

E. Aggregate Risks and Determination of Safety

    1. Acute risk. No appropriate endpoint was identified in the oral
toxicity studies including the acute neurotoxicity study in rats and
the developmental toxicity studies in rats and rabbits. Therefore, no
acute dietary risk is expected.
    2. Chronic risk. Using the exposure assumptions described in this
unit for chronic exposure, EPA has concluded that exposure to
methoxyfenozide from food and drinking water will utilize 23% of the
cPAD for the U.S. population, 32% of the cPAD for all infants < 1-year
old, and 56% of the cPAD for children 1-2 years old, the highest
exposed subgroup. There are no residential uses for methoxyfenozide
that result in chronic residential exposure to methoxyfenozide.
    3. Short-term and Intermediate-term risk. Short-term and
intermediate-term aggregate exposure takes into account residential
exposure plus chronic exposure to food and water (considered to be a
background exposure level). Methoxyfenozide is not registered for use
on any sites that would result in residential exposure. Therefore, the
aggregate risk is the sum of the risk from food and water, which does
not exceed the Agency's level of concern.
    4. Aggregate cancer risk for U.S. population. Methoxyfenozide has
been classified as ``not likely'' to be a human carcinogen. The
classification is based on the lack of evidence of carcinogenicity in
male and female rats as well as in male and female mice and on the lack
of genotoxicity in an acceptable battery of mutagenicity studies.
Therefore, methoxyfenozide is not expected to pose a cancer risk.
    5. Determination of safety. Based on these risk assessments, EPA
concludes that there is a reasonable certainty that no harm will result
to the general population, and to infants and children from aggregate
exposure to methoxyfenozide residues.

IV. Other Considerations

A. Analytical Enforcement Methodology

    Adequate enforcement methodology (TR 34-00-28) was previously
developed by Rohm and Haas; high performance liquid chromatography
(HPLC) with positive ion electrospray (E.I.) tandem mass spectrometry
(LC/MS/MS)) is available to enforce the tolerance expression. The
method may be requested from: Chief, Analytical Chemistry Branch,
Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350;
telephone number:<PHONE_NUMBER>; e-mail address:
<EMAIL_ADDRESS>

B. International Residue Limits

    There are no established or proposed Codex, Canadian, or Mexican
limits for residues of methoxyfenozide in or on plant or animal
commodities. Therefore, no compatibility issues exist regarding the
proposed U.S. tolerances.

V. Conclusion

    Therefore, the tolerance is established for residues of
methoxyfenozide per se; benzoic acid, 3-methoxy-2-methyl-2-(3,5-
dimethylbenzoyl)-2-(1,1-dimethylethyl)hydrazide, in or on soybean
aspirated grain at 160 ppm, soybean forage at 30 ppm, soybean hay at 80
ppm, soybean hulls at 2.0 ppm, and soybean seeds at 1.0 ppm. The
original petition (PP 3F6794) and notice of filing (Docket
identification number OPP-2004-0184) contained additional proposed
tolerances for soybean, oil and

soybean, meal. Dow AgroSciences the registrant submitted a revised
Section F of the petition for the removal of soybean, oil and soybean,
meal from the tolerance expression.

VI. Statutory and Executive Order Reviews

    This final rule establishes a tolerance under section 408(d) of
FFDCA in response to a petition submitted to the Agency. The Office of
Management and Budget (OMB) has exempted these types of actions from
review under Executive Order 12866, entitled Regulatory Planning and
Review (58 FR 51735, October 4, 1993). Because this rule has been
exempted from review under Executive Order 12866 due to its lack of
significance, this rule is not subject to Executive Order 13211,
Actions Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use (66 FR 28355, May 22, 2001). This final rule does
not contain any information collections subject to OMB approval under
the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq., or impose
any enforceable duty or contain any unfunded mandate as described under
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law
104-4). Nor does it require any special considerations under Executive
Order 12898, entitled Federal Actions to Address Environmental Justice
in Minority Populations and Low-Income Populations (59 FR 7629,
February 16, 1994); or OMB review or any Agency action under Executive
Order 13045, entitled Protection of Children from Environmental Health
Risks and Safety Risks (62 FR 19885, April 23, 1997). This action does
not involve any technical standards that would require Agency
consideration of voluntary consensus standards pursuant to section
12(d) of the National Technology Transfer and Advancement Act of 1995
(NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). Since
tolerances and exemptions that are established on the basis of a
petition under section 408(d) of FFDCA, such as the tolerance in this
final rule, do not require the issuance of a proposed rule, the
requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et
seq.) do not apply. In addition, the Agency has determined that this
action will not have a substantial direct effect on States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government, as specified in Executive Order 13132, entitled Federalism
(64 FR 43255, August 10, 1999). Executive Order 13132 requires EPA to
develop an accountable process to ensure ``meaningful and timely input
by State and local officials in the development of regulatory policies
that have federalism implications.'' ``Policies that have federalism
implications'' is defined in the Executive order to include regulations
that have ``substantial direct effects on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.'' This final rule directly regulates growers, food
processors, food handlers and food retailers, not States. This action
does not alter the relationships or distribution of power and
responsibilities established by Congress in the preemption provisions
of section 408(n)(4) of FFDCA. For these same reasons, the Agency has
determined that this rule does not have any ``tribal implications'' as
described in Executive Order 13175, entitled Consultation and
Coordination with Indian Tribal Governments (65 FR 67249, November 6,
2000). Executive Order 13175, requires EPA to develop an accountable
process to ensure ``meaningful and timely input by tribal officials in
the development of regulatory policies that have tribal implications.''
``Policies that have tribal implications'' is defined in the Executive
order to include regulations that have ``substantial direct effects on
one or more Indian tribes, on the relationship between the Federal
Government and the Indian tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes.''
This rule will not have substantial direct effects on tribal
governments, on the relationship between the Federal Government and
Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes, as specified in
Executive Order 13175. Thus, Executive Order 13175 does not apply to
this rule.

VII. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of this final rule in the Federal Register. This final
rule is not a ``major rule'' as defined by 5 U.S.C. 804(2).

List of Subjects in 40 CFR Part 180

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

    Dated: May 22, 2006.
Lois Rossi,
Director, Registration Division, Office of Pesticide Programs.

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

PART 180--AMENDED

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

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

0
2. Section 180.544 is amended by alphabetically adding commodities to
the table in paragraph (a)(1) to read as follows:

Sec.  180.544  Methoxyfenozide; tolerances for residues.

    (a) General. (1) * * *

------------------------------------------------------------------------
                                                              Parts per
                         Commodity                             million
------------------------------------------------------------------------
                                * * * * *
Soybean, aspirated grain fractions.........................          160
Soybean, forage............................................           30
Soybean, hay...............................................           80
Soybean, hulls.............................................          2.0
Soybean, seed..............................................          1.0
                                * * * * *
------------------------------------------------------------------------

* * * * *

[FR Doc. E6-8828 Filed 6-6-06; 8:45 am]

BILLING CODE 6560-50-S


[Federal Register Volume 85, Number 219 (Thursday, November 12, 2020)]
[Notices]
[Page 71989]
[FR Doc No: 2020-24989]

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DEPARTMENT OF TRANSPORTATION

Pipeline and Hazardous Materials Safety Administration

Hazardous Materials: Notice of Applications for Modifications to
Special Permit

AGENCY: Pipeline and Hazardous Materials Safety Administration (PHMSA),
DOT.

ACTION: List of applications for modification of special permits.

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SUMMARY: In accordance with the procedures governing the application
for, and the processing of, special permits from the Department of
Transportation's Hazardous Material Regulations, notice is hereby given
that the Office of Hazardous Materials Safety has received the
application described herein. Each mode of transportation for which a
particular special permit is requested is indicated by a number in the
``Nature of Application'' portion of the table below as follows: 1--
Motor vehicle, 2--Rail freight, 3--Cargo vessel, 4--Cargo aircraft
only, 5--Passenger-carrying aircraft.

DATES: Comments must be received on or before November 27, 2020.

ADDRESSES: Record Center, Pipeline and Hazardous Materials Safety
Administration U.S. Department of Transportation, Washington, DC 20590.
    Comments should refer to the application number and be submitted in
triplicate. If confirmation of receipt of comments is desired, include
a self-addressed stamped postcard showing the special permit number.

FOR FURTHER INFORMATION CONTACT: Donald Burger, Chief, Office of
Hazardous Materials Approvals and Permits Division, Pipeline and
Hazardous Materials Safety Administration, U.S. Department of
Transportation, East Building, PHH-30, 1200 New Jersey Avenue
Southeast, Washington, DC 20590-0001,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: Copies of the applications are available for
inspection in the Records Center, East Building, PHH-30, 1200 New
Jersey Avenue Southeast, Washington DC.
    This notice of receipt of applications for special permit is
published in accordance with part 107 of the Federal hazardous
materials transportation law (49 U.S.C. 5117(b); 49 CFR 1.53(b)).

    Issued in Washington, DC, on October 29, 2020.
Donald P. Burger,
Chief, General Approvals and Permits Branch.

                                              Special Permits Data
----------------------------------------------------------------------------------------------------------------
                                                                   Regulation(s)         Nature of the Special
           Application No.                    Applicant               affected              Permits thereof
----------------------------------------------------------------------------------------------------------------
7573-M...............................  Department of Defense   172.1, 175.1.........  To modify the special
                                        (Military Surface                              permit to update
                                        Deployment &                                   references to the new
                                        Distribution Command).                         AFMAN manual. (mode 4)
9232-M...............................  Department of Defense   Parts 172 and 175....  To modify the special
                                        US Army (Military                              permit to update
                                        Surface Deployment &                           references to the new
                                        Distribution Command).                         AFMAN manual. (modes 4,
                                                                                5)
14313-M..............................  Airgas USA LLC........  172.203(a),            To modify the special
                                                                172.301(c),            permit to authorize an
                                                                173.302a(b), 180.205.  additional UE test system
                                                                                to re-qualify certain DOT
                                                                                and permitted cylinders.
                                                                                (modes 1, 2, 3, 4, 5)
16146-M..............................  Department of Defense   171.22(e), 172.101(j)  To modify the permit to
                                        (Military Surface                              reference update
                                        Deployment &                                   references to the 24
                                        Distribution Command).                         series of the Air Force
                                                                                regulations. (mode 4)
20851-M..............................  Call2Recycle, Inc.....  172.200, 172.600,      To modify the special
                                                                172.700(a).            permit to authorize the
                                                                                transportation of end-of-
                                                                                life lithium batteries up
                                                                                to 1,200 Wh to be shipped
                                                                                in PG II fiberboard
                                                                                boxes. (mode 1)
20904-M..............................  Piston Automotive, LLC  172.101(j),            To modify the special
                                                                173.185(b)(5).         permit to authorize the
                                                                                use of alternative
                                                                                packaging which complies
                                                                                with Sec.   173.185(b)(5)
                                                                                and Packing Instruction
                                                                                965 Section 1A.2. (mode
                                                                                4)
----------------------------------------------------------------------------------------------------------------

[FR Doc. 2020-24989 Filed 11-10-20; 8:45 am]
BILLING CODE 4909-60-P


[Federal Register Volume 82, Number 207 (Friday, October 27, 2017)]
[Notices]
[Page 49799]
[FR Doc No: 2017-23414]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. EL18-11-000]

Cooperative Energy; Notice of Petition for Partial Waiver

    Take notice that on October 19, 2017, pursuant to section 292.402
of the Federal Energy Regulatory Commission's (Commission) Rules of
Practices and Procedures 18 CFR 292.402 (2017), Cooperative Energy on
behalf of itself and its eleven electric distribution cooperative
members-owners (collectively, the Members),\1\ submitted a request that
the Commission waive certain obligations imposed on Cooperative Energy
and the Members under sections 292.303(a) and 292.303(b) of the
Commission's Regulations \2\ implementing section 210 of the Public
Utility Regulatory Policies Act of 1978 \3\ as amended, as more fully
explained in its petition.
---------------------------------------------------------------------------

    \1\ Cooperative Energy's eleven Member-owners are: Coahoma EPA
(Lyon, MS); Delta EPA (Greenwood, MS); Twin County EPA (Hollandale,
MS); Yazoo Valley EPA (Yazoo City, MS); Southwest MS EPA (Lorman,
MS); Southern Pine Electric Cooperative (Taylorsville, MS); Magnolia
EPA (McComb, MS); Dixie EPA (Laurel, MS); Pearl River Valley EPA
(Columbia, MS); Coast EPA (Kiln, MS); and Singing River Electric
Cooperative (Lucedale, MS).
    \2\ 18 CFR 292.303(a) and (b) (2017).
    \3\ 16 U.S.C. 824a-3 (2012).
---------------------------------------------------------------------------

    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. Such notices,
motions, or protests must be filed on or before the comment date.
Anyone filing a motion to intervene or protest must serve a copy of
that document on the Applicant.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper using the eFiling link at http://www.ferc.gov. Persons unable to file electronically should submit an
original and 5 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street NE., Washington, DC
20426.
    This filing is accessible on-line at http://www.ferc.gov, using the
``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an eSubscription link
on the Web site that enables subscribers to receive email notification
when a document is added to a subscribed docket(s). For assistance with
any FERC Online service, please email [email protected], or
call<PHONE_NUMBER> (toll free). For TTY, call<PHONE_NUMBER>.
    Comment Date: 5:00 p.m. Eastern time on November 9, 2017.

    Dated: October 23, 2017.
Kimberly D. Bose,
Secretary.
[FR Doc. 2017-23414 Filed 10-26-17; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register Volume 85, Number 20 (Thursday, January 30, 2020)]
[Notices]
[Pages 5519-5525]
[FR Doc No: 2020-01610]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. SIPA-179A; File No. SIPC-2019-02]

Securities Investor Protection Corporation; Notice of Filing of
Proposed Bylaw Changes Relating to SIPC Member Assessments; Correction

January 24, 2020.
    Pursuant to Section 3(e)(1) of the Securities Investor Protection
Act of 1970 (``SIPA''),\1\ on November 19, 2019 the Securities Investor
Protection Corporation (``SIPC'') filed with the Securities and
Exchange Commission (``Commission'') proposed bylaw changes relating to
SIPC member assessments. On December 10, 2019, SIPC consented to a 90-
day extension of time before the proposed bylaw changes would take
effect pursuant to section 3(e)(1) of SIPA.\2\ Pursuant to section
3(e)(1)(B) of SIPA, the Commission finds that these proposed bylaw
changes involve a matter of such significant public interest that
public comment should be obtained.\3\ Therefore, pursuant to section
3(e)(2)(A) of SIPA,\4\ the Commission is publishing this notice to
solicit comment from interested persons on the proposed bylaw
changes.\5\
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    \1\ 15 U.S.C. 78ccc(e)(1).
    \2\ Id.
    \3\ 15 U.S.C. 78ccc(e)(1)(B).
    \4\ 15 U.S.C. 78ccc(e)(2)(A).
    \5\ This notice of SIPC's filing of proposed bylaw changes
relating to SIPC member assessments supersedes the notice originally
published in the Federal Register on January 23, 2020. See
Securities Investor Protection Corporation; Notice of Filing of
Proposed Bylaw Changes Relating to SIPC Member Assessments, Release
No. SIPA-179 (Jan. 16, 2020), 85 FR 3986 (Jan. 23, 2020). The notice
published on January 23, 2020 inadvertently omitted from the ``Text
of the Proposed Bylaw Change'' section deleted text in paragraph (g)
of Section 1 of Article 6 of the SIPC bylaws defining ``net
operating revenues from the securities business.'' This notice
reflects that the definition would remain the same but would move
from paragraph (g) of Section 1 of Article 6 of the SIPC bylaws to
paragraph (b)(ii) of Section 3 of Article 6 of the SIPC bylaws.
---------------------------------------------------------------------------

    In its filing with the Commission, SIPC included statements
concerning the purpose of and statutory basis for the proposed bylaw
changes as described below, which description has been substantially
prepared by SIPC.

I. SIPC's Statement of the Purpose of, and Statutory Basis for, SIPC
Proposed Bylaw Changes Relating to SIPC Member Assessments

    Pursuant to Section 3(e)(1) of SIPA, 15 U.S.C. 78ccc(e)(1),\6\ SIPC
hereby submits for filing with the Commission proposed amendments to
Article 6 of the SIPC Bylaws (``Bylaws''). Article 6 relates to the
assessments that SIPC imposes upon its members.
---------------------------------------------------------------------------

    \6\ For convenience, references hereinafter to provisions of
SIPA shall be to the United States Code and shall omit ``15 U.S.C.''
---------------------------------------------------------------------------

    As revised, Article 6 would maintain assessments at the current
rate of 0.15 percent of a member's net operating revenue from the
securities business until SIPC's unrestricted net assets reach $5
billion.\7\ ``Unrestricted net assets'' are comprised primarily of the
amount in the SIPC Fund at year end, minus the estimated cost to
complete pending liquidation proceedings, as reflected in SIPC's most
recent audited Statement of Financial Position. Once the aforementioned
condition is met, SIPC would commission a study to consider the
adequacy of the SIPC Fund, and would do so every four years thereafter.
The study would analyze a variety of factors, as set forth in the
proposed amended Bylaw. After consideration of the study and the report
thereon, and after consultation with the Commission and self-regulatory
organizations, SIPC could increase or decrease, within certain limits,
the appropriate assessment rate in order to maintain the Fund and
effect SIPA's purposes.
---------------------------------------------------------------------------

    \7\ ``Net operating revenues from the securities business'' is
``gross revenues from the securities business less interest and
dividend expenses, and includes those clarifications as are set
forth in the SIPC assessment forms and instructions.'' SIPC Bylaw
Article 6, Section 1(a)(3)(g) [sic].
---------------------------------------------------------------------------

    Pursuant to SIPA Section 78ddd(c)(2), SIPC has consulted with self-
regulatory organizations with respect to the proposed amendments. SIPC
has determined that the changes are necessary and appropriate to
maintain the SIPC Fund.

Background

    SIPC is a non-profit member organization created in 1970 under
SIPA, for the protection of customers of member broker-dealers placed
in liquidation under SIPA. With some exceptions set by statute, all
registered securities brokers or dealers are members of SIPC. SIPC
protects the customers of member firms in liquidation under SIPA. Among
other things, SIPC advances funds to satisfy the claims of customers.
Each customer is protected by SIPC up to $500,000 against the loss of
missing cash and/or securities entrusted by the customer to the broker.
The $500,000 includes a limit of up to $250,000 where the allowed claim
is for cash only. The advances by SIPC come from a ``Fund'' that SIPC
administers. The Fund largely is comprised of assessments paid to SIPC
by its members. The Fund also is used to pay the administrative
expenses of a liquidation proceeding where the debtor's general estate
is insufficient, and to finance the day-to-day operations of SIPC.

The Assessment Bylaw

    Article 6 of the Bylaws now imposes a yearly assessment rate of
0.15% of net operating revenues from the member's securities business
(``NOR'') where the balance of the SIPC Fund is less than $2.5 billion
and will remain at that amount for six months or more. If the SIPC Fund
has reached $2.5 billion but SIPC's unrestricted net asset amount is
less than $2.5 billion, then the yearly assessment rate is .15% of NOR.
Once the unrestricted net assets total at least $2.5 billion, then the
assessment rate is a minimum assessment of .02% of NOR.
    Currently, SIPC's only sources of funding are its Fund and a
possible Government loan. To ensure that SIPC has sufficient
independent resources to carry out its purposes (thus obviating the
need to borrow from the Federal Government), SIPC has determined to
keep the assessment rate at 0.15% of NOR until SIPC's unrestricted net
assets total $5 billion. This will accomplish a few things: (1) Provide
a larger cushion for unknown contingencies; (2) reduce the potential
volatility of member

assessments during periods of economic downturn or individual member
crisis; and (3) promote sound financial management in light of SIPC's
statutory mission.

Basis and Purpose of Proposed Changes

    There is no scientific basis for determining the exact adequacy of
the SIPC Fund. Nevertheless, SIPC's statutory obligation to protect
customers of failed firms, and in certain cases, to pay the costs and
expenses of administration of the liquidation proceeding, impose upon
SIPC a duty to take a responsible approach to calculating both the size
of the SIPC Fund, and the reasonableness of an assessment rate that
maintains and promotes adequate funding.
    As SIPC has witnessed over the past decade, risks abound--from a
large firm failure with encumbered assets, to a Ponzi scheme with
significant losses to customers, to risks presented by a cybersecurity
attack or the use of digital assets. Assessing the adequacy of the Fund
is especially challenging because the cost of a liquidation does not
necessarily correlate with any traditional measure of financial
exposure for broker-dealers. Instead, the Fund's adequacy depends
largely on member firms' compliance with customer protection or net
capital rules, the probability of which is challenging to quantify.
    SIPC's resources must enhance investor confidence. Given the risks
described above, and remaining vigilant regarding the uncertainties in
an ever-changing marketplace, SIPC believes that in order for its
mission of customer protection to succeed, SIPC must maintain a robust
Fund.

Historical Perspective

    The initial SIPC Fund totaled $77.6 million.\8\ In 1992, SIPC's
Board (``the Board'') raised the target balance of the SIPC Fund to $1
billion, and the SIPC Fund reached that amount in 1996. The Board last
sought to augment the size of the Fund in 2009, when, following the
commencement of the liquidation proceedings of Lehman Brothers Inc.
(``LBI''), and Bernard L. Madoff Investment Securities LLC (``BLMIS''),
the assessment rate was revised to cause the Fund to grow to $2.5
billion.
---------------------------------------------------------------------------

    \8\ Comprised of member assessments of $9.6 million, the
transfer of $3 million from the American Stock Exchange, Inc. trust
fund, and confirmed lines of credit totaling $65 million.
[GRAPHIC] [TIFF OMITTED] TN30JA20.000

    As the graph above reveals, before the liquidation of BLMIS in
2008, SIPC's Fund balance had doubled roughly every ten years. In
addition, during those years and until 2010, SIPC had a substantial
confirmed private line of credit.\9\ Due to the high cost and/or
unavailability, SIPC no longer has the private line of credit.
---------------------------------------------------------------------------

    \9\ SIPC's last credit agreement, a $500 million, 3-yr.
revolving credit facility, expired March 1, 2010.
---------------------------------------------------------------------------

The Risk Landscape

    The financial crisis of 2008, and the ensuing liquidation
proceedings of LBI and BLMIS, revealed clearly the need for SIPC to
increase the Fund balance. Although the LBI liquidation proceeding
ultimately did not require SIPC to advance funds to satisfy claims, or
pay for expenses of administration, any future failure of a global
enterprise and its broker-dealer affiliate could have a very different
outcome for SIPC. For example, had funds sought by LBI been encumbered
overseas, or had LBI been reducing artificially its segregated customer
reserve requirement through otherwise legal complex transactions, that
may have imposed significant demands on the SIPC Fund.
    The liquidation proceeding of BLMIS has required SIPC to make the
largest aggregate advance in its history. In statistical terms, the
amount is more than 100 standard deviations greater than the amounts
advanced by SIPC in all of its previous cases.\10\ Today, an event
statistically comparable to BLMIS would require advances to customers
amounting to between $4 billion and $5 billion.
---------------------------------------------------------------------------

    \10\ In addition, the amounts advanced by SIPC in the BLMIS
liquidation are more than 107 times greater than the average advance
of the ten next largest SIPC cases.
---------------------------------------------------------------------------

    SIPC faces risks beyond those posed by large Ponzi schemes or a
credit crisis. These additional risks, many of which are hard to
quantify, include, for example, technology-related failures, such as a
cyberattack on a large SIPC member that restricts access by customers
to their assets; or risks stemming from the delay in computing a
broker-dealer's reserve requirement. For example, SEC Rule 15c3-3, 17
CFR 240.15c3-3, which governs the protection of customer assets,
requires a broker-dealer to compute its cash reserve requirement on a
weekly, not daily, basis. Although a number of SIPC members voluntarily
rebalance their cash reserves on a daily basis, a large SIPC member
that does not might not have enough cash in its Rule 15c3-3(e) reserve
account due to an increase in its net cash obligations following its
last required reserve computation.
    Another factor underscoring SIPC concerns is the potential risk to
the solvency of the SIPC Fund under the Orderly Liquidation provisions
of the Dodd Frank Act, Title II. Dodd-Frank creates an important role
for SIPC in the event of the failure of a covered, large complex
securities broker-dealer that presents systemic risk. Under Dodd-Frank,
SIPC is designated as trustee for the liquidation of the broker-dealer
under SIPA. 12 U.S.C. 5385(A). As trustee, SIPC must determine and
satisfy claims against the broker-dealer consistent with SIPA. 12
U.S.C. 5385(D). While the FDIC has expressed a preference to use Dodd-
Frank to intervene at the holding company level,\11\ the law
nevertheless remains available to liquidate a systemically important
broker-dealer.
---------------------------------------------------------------------------

    \11\ Resolution of Systemically Important Financial
Institutions: The Single Point of Entry Strategy, 78 FR 76614 (Dec.
18, 2013).
---------------------------------------------------------------------------

Mechanism for Setting the Assessment Rate

    Once the unrestricted net asset amount is $5 billion, SIPC would,
as it

often has in the past,\12\ commission a study to review the adequacy of
the SIPC Fund. In the ordinary course, SIPC would commission the study
every four years. The study would entail consideration of such factors
as the overall state of the SIPC Fund, current and projected financial
market conditions and trends, historic and perceived risks and threats
to the viability of the SIPC Fund, any undue burden on members, or
members' customers, and other factors deemed appropriate by the SIPC
Board.
---------------------------------------------------------------------------

    \12\ At various times, the size of SIPC's Fund has been
independently reviewed. See, e.g., GAO Report, The Regulatory
Framework Has Minimized SIPC's Losses, September 1992; Review of
SIPC Risk Profile and Practices, Fitch Risk Management, 2003; Loss
Modeling and Capital Reserve Adequacy Study, Algorithmics Inc.,
2008; Task Force Recommendation Analysis: Methodology and Summary of
Results, Opera Solutions LLC, 2013.
---------------------------------------------------------------------------

    Upon consideration of the results of the study and the report
thereon that would issue, and after consultation with the Commission
and one or more self-regulatory organizations, SIPC would set the
appropriate assessment rate necessary to maintain the Fund and satisfy
SIPA's purposes.
    Other provisions of SIPC Bylaw Article 6 are unchanged such as the
rate when the Fund is less than $150 million, or less than $100
million, or the circumstances under which the rate imposed can be more
than \1/2\ of 1% of gross revenues from the securities business but not
more than 1% thereof.\13\ These provisions largely track the
requirements under SIPA Sections 78ddd(c)(3)(B) and 78ddd(d)(1)(A) and
B.
---------------------------------------------------------------------------

    \13\ ``Gross revenues from the securities business'' is defined
in SIPA Section 78lll(9).
---------------------------------------------------------------------------

    Given not only the risks described above, but the risk to members
that, by statute, a significant event could cause assessment rates
immediately to jump to at least 0.50% of gross revenues from the
securities business and possibly be as high as 1%, SIPC submits that
growing the Fund at a consistent pace lessens any negative impact on
members, with the attendant benefit of reaching $5 billion sooner.
Barring unforeseen sizeable expenditures, SIPC estimates that at the
current yearly assessment rate of .15% of NOR, SIPC's unrestricted net
assets, as reflected in SIPC's audited Statement of Financial Position,
would be $5 billion by no later than December 31, 2026. If SIPC did
nothing to address the adequacy of the Fund or the assessment rate,
then at a rate of 0.02% per annum, which would be the assessment under
the current version of the Assessment Bylaw, the $5 billion balance
would not be reached until the year 2040.

Impact on Members

    Adopting the modifications proposed by SIPC should have a limited
impact on member firms. As the chart below reveals, based on 2018 data,
SIPC staff estimates that two-thirds of the total difference in annual
assessments under the proposed assessment rate structure would be paid
by only 30 members for which the difference in the assessment payment
would amount, on average, only to .091% of their total revenue.
BILLING CODE 8011-01-P

[GRAPHIC] [TIFF OMITTED] TN30JA20.001

BILLING CODE 8011-01-C
    In the above chart, column 1 refers to the difference in amount
that a broker-dealer would pay as a result of being assessed at a rate
of .15% instead of .02%. Column 2 is the number of broker-dealers
impacted at that amount. Column 3 is the percentage that the broker-
dealers at a certain level represent relative to the total number of
broker-dealers. Column 4 is the total additional amount paid by all
broker-dealers at a given level. Column 5 is the percentage that the
payments reflect relative to all payments. Column 6 is the percentage
that the payments represent, on average, relative to the broker-
dealers' revenue.
    Thus, an assessment rate of .15%, as opposed to .02%, would cause
the largest 30 SIPC members to pay approximately $172 million more out
of their approximately $213 billion in revenue. This increase amounts
to approximately 8/100 of 1% of such members' revenue, and represents
\2/3\ of the total impact on all members. More than half of SIPC
members would see an increase of less than $2,500 in the amount of
their annual assessment, with more than 20% of members paying a
difference of less than $100. In other words, the impact of modifying
the assessment structure on both the total assessment burden, and the
distribution of the assessment burden, among individual broker-dealers,
would be comparatively limited.

Proposed Technical Changes

Clarification of Role of Collection Agent
    In addition to the above, SIPC proposes to amend that portion of
the Assessment Bylaw relating to Collection of General Assessments
(SIPC Bylaw Article 6, Section 1(c)).
    Under SIPA Section 78iii(a), each self-regulatory organization
(``SRO'') may act as the collection agent for SIPC to collect
assessments payable by members for which the SRO is the examining
authority. However, SIPA does not mandate that SIPC use a collection
agent to collect assessments, and SIPA does not restrict collection
exclusively to collection agents. See, e.g., SIPA Section 78ddd(c)(1)
(``Each member of SIPC shall pay to SIPC, or the collection agent for
SIPC . . . .[emphasis added]''). Furthermore, under SIPA Section
78ccc(b)(8), since SIPC has the power to ``do any and all other acts
and things as may be necessary or incidental to the conduct of its
business and the exercise of all other rights and powers granted to
SIPC,'' SIPC has the general authority

directly to collect assessments. Indeed, for more than 20 years--since
the mid-1990s--members have paid assessments directly to SIPC. Where
members have failed to pay their assessments, SIPC has referred the
delinquency to Commission staff and currently brings the matter to the
attention of FINRA for collection.
    In keeping with current practice, and in light of technological
developments and capabilities that have continued to improve
considerably, the proposed bylaw removes the provision that requires
members to pay assessments to collection agents. The proposed Bylaw
amendment re-letters the provisions that follow current Bylaw Article
6, Section 1(c). The re-lettered provisions include current Section
1(d) of Bylaw Article 6 (Report by Collection Agents). Section 1(d)
requires the SROs to report in writing to SIPC as to any member from
which the SRO has or has not been successful in collecting payment. In
this manner, SIPC can stay informed as to any member that continues to
be delinquent and refer the member, as needed, to the Commission for
further action under SIPA Section 78jjj(a).
Elimination of Interest Payment Period on Past-Due Payments
    Currently, the SIPC Bylaw provides that if a member's assessment
payment has not been received within 15 days of the due date, the
stated interest rate for late payments applies to unpaid amounts. In
January, 2019, SIPC developed an internet payment portal, whereby
members can pay SIPC directly online. SIPC is also presently working on
the development of a portal through which, among other things, members
can file assessment forms. The creation by SIPC of the means by which
members can make immediate payment obviates the need for a grace
period.
Conclusion
    Given the many risks that have arisen in the past two decades, and
the potential risks SIPC continues to face, SIPC must be prudent in
determining what constitutes a sufficient level of funding. Indeed,
maintaining the adequacy of the SIPC Fund is in everyone's interest--it
enhances investor protection. While SIPC could raise the assessment on
an ad hoc basis as the situation warrants, it believes that the
approach set forth herein is the better course of action, as it
promotes greater stability and predictability for both investors and
member firms.

II. Need for Public Comment

    Section 3(e)(1) of SIPA provides that the SIPC Board must file a
copy of any proposed bylaw change with the Commission, accompanied by a
concise general statement of the basis and purpose of the proposed
bylaw change.\14\ The proposed bylaw change will become effective
thirty days after the date of filing with the Commission or upon such
later date as SIPC may designate or such earlier date as the Commission
may determine unless: (A) The Commission, by notice to SIPC setting
forth the reasons for such action, disapproves the proposed bylaw
change as being contrary to the public interest or contrary to the
purposes of SIPA; or (B) the Commission finds that the proposed bylaw
change involves a matter of such significant public interest that
public comment should be obtained, in which case it may, after
notifying SIPC in writing of such finding, require that the procedures
for SIPC proposed rule changes in section 3(e)(2) of SIPA be followed
with respect to the proposed bylaw change.\15\
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78ccc(e)(1).
    \15\ 15 U.S.C. 78ccc(e)(1).
---------------------------------------------------------------------------

    The SIPC Fund, which is built from assessments on its members and
the interest earned on the Fund, is used for the protection of
customers of members liquidated under SIPA to maintain investor
confidence in the securities markets. In light of this fact and that
the bylaw change provides for a modified calculation of the assessment
rate and a change to collection practices, the Commission finds,
pursuant to section 3(e)(1)(B) of SIPA,\16\ that the proposed bylaw
change involves a matter of such significant public interest that
public comment should be obtained and is requiring that the procedures
applicable to SIPC proposed rule changes in section 3(e)(2) of SIPA
\17\ be followed. As required by section 3(e)(1)(B) of SIPA,\18\ the
Commission has notified SIPC of this finding in writing.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78ccc(e)(1)(B).
    \17\ 15 U.S.C. 78ccc(e)(2).
    \18\ 15 U.S.C. 78ccc(e)(1)(B).
---------------------------------------------------------------------------

III. Date of Effectiveness of the Proposed Bylaw Changes and Timing for
Commission Action

    Within 35 days of the date of publication of this notice in the
Federal Register, or within such longer period (A) as the Commission
may designate of not more than ninety days after such date if it finds
such longer period to be appropriate and publishes its reasons for so
finding or (B) as to which SIPC consents, the Commission shall: (i) By
order approve such proposed bylaw changes; or (ii) institute
proceedings to determine whether such proposed bylaw changes should be
disapproved.\19\
---------------------------------------------------------------------------

    \19\ 15 U.S.C. 78ccc(e)(2)(B).
---------------------------------------------------------------------------

IV. Text of Proposed Bylaw Change

    The text of the proposed bylaw changes is provided below. Proposed
new language is in italics; proposed deletions are in brackets.

Article 6

Assessments
Section 1. General
(a) Amount of Assessment
    (1) The amount of each member's assessment for the member's fiscal
year shall be the product of the assessment rate established by SIPC
for that fiscal year and either the member's gross [or net ]revenues or
net operating revenues from the securities business, as follows:
    (A) [The assessment rate shall be one-fourth (\1/4\) of one (1)
percent per annum of net operating revenues from the member's
securities business for each calendar year or part thereof unless SIPC
determines that the balance of the SIPC Fund, as defined in Section
4(a)(2) of the Act, exclusive of confirmed lines of credit,] If at any
time SIPC determines that SIPC's unrestricted net assets are:
    (i) Less than $5.0 billion but not less than $2.5 billion, and are
reasonably likely to remain less than $5.0 billion but not less than
$2.5 billion, the amount of each member's assessment shall be 0.15
percent per annum of net operating revenues from the member's
securities business for each calendar year or part thereof. [has
aggregated a balance of $2.5 billion, and]
    (ii) less than $2.5 billon, the amount of each member's assessment
shall be one-fourth (\1/4\) of one (1) percent per annum of net
operating revenues from the member's securities business for each
calendar year or part thereof. [will remain at or above $2.5 billion
for six months or more.]
    (B) Notwithstanding anything herein to the contrary, if at any time
SIPC determines that the balance of the SIPC Fund aggregates or is
reasonably likely to aggregate:
    (i) Less than $150,000,000--the amount of each member's assessment
shall be at an amount to be determined by SIPC, but in no case shall
the amount of each member's assessment be less than an assessment rate
of one-fourth (\1/4\) of one (1) percent per annum of such member's
gross revenues from the securities business.
    (ii) less than $100,000,000--the amount of each member's assessment
shall be at an amount to be determined by SIPC, but in no case shall
the amount of each member's assessment be less than an assessment rate
of one-half (\1/2\) of one (1) percent per annum of such

member's gross revenues from the securities business.
    (iii) The amount of each member's assessment shall not exceed one-
half (\1/2\) of one (1) percent per annum of such member's gross
revenues from the securities business, unless SIPC determines that a
rate in excess of one-half (\1/2\) of one (1) percent during any twelve
(12) month period will not have a material adverse effect on the
financial condition of its members or their customers. No assessment
made pursuant to this section 1(a)(1) shall require payments during any
such period that exceed in the aggregate one (1) percent of any
member's gross revenues from the securities business for such period.
    [Notwithstanding the provisions of Section 1(a)(1)(A) herein, if
SIPC determines that the balance of the SIPC Fund, as defined in
Section 4(a)(2) of the Act, exclusive of confirmed lines of credit, (i)
has aggregated $2.5 billion, and (ii) will remain at or above $2.5
billion for six months or more, but SIPC's unrestricted net assets, as
reflected in SIPC's most recent audited Statement of Financial
Position, are less than $2.5 billion, the assessment rate shall be 0.15
percent per annum of net operating revenues from the member's
securities business for each calendar year or part thereof.]
    (C) SIPC shall commission a study (``Study'') every four years to
examine the adequacy of the balance of SIPC's unrestricted net assets
and the SIPC Fund and the appropriate assessment rate that is necessary
to fulfill the purposes of the Act. The Study will examine the overall
state of SIPC's unrestricted net assets and Fund balances, current and
projected financial market conditions and trends, historic and
perceived risks and threats to the viability of SIPC's unrestricted net
assets and Fund, any undue burden on members or members' customers, and
such other factors as the Board determines. The Study shall result in a
report (``Report'') to be furnished to SIPC. The first Study shall be
commissioned when SIPC reasonably anticipates that SIPC's unrestricted
net assets have reached a total of $5.0 billion. [If SIPC determines
that the balance of the SIPC Fund, as defined in Section 4(a)(2) of the
Act, exclusive of confirmed lines of credit, has aggregated $2.5
billion or more, and will remain at or above $2.5 billion for six
months or more, and SIPC's unrestricted net assets, as reflected in
SIPC's most recent audited Statement of Financial Position, are at or
above $2.5 billion, members shall pay a minimum assessment, which shall
be 0.02 percent of the net operating revenues from the securities
business for each calendar year or part thereof.]
    (D) Without limitation of SIPC's authority under 15 U.S.C. 78ccc
and 78ddd to set assessments, if SIPC determines that SIPC's
unrestricted net assets are $5.0 billion or more and are reasonably
likely to remain above $5.0 billion, and after review of the
information contained in the last Report at such time, and after
consultation with the Securities and Exchange Commission and self-
regulatory organizations, SIPC may not more than once in any four-year
period, increase or decrease the assessment rate by up to, but not more
than, twenty-five percent (25%) of the rate in effect at that time.
[Anything to the contrary herein notwithstanding, if at any time SIPC
determines that the balance of the SIPC Fund, as defined in Section
4(a)(2) of the Act, exclusive of confirmed lines of credit, aggregates
or is reasonably likely to aggregate:
    (i) Less than $2.5 billion and will likely remain less than $2.5
billion for a period of six (6) months or more--the amount of each
member's assessment shall be at an assessment rate of one-fourth (\1/
4\) of one (1) percent per annum of net operating revenue.
    (ii) less than $150,000,000--the amount of each member's assessment
shall be at an amount to be determined by SIPC, but in no case shall
the amount of each member's assessment be less than an assessment rate
of one-fourth (\1/4\) of one (1) percent per annum of such member's
gross revenues from the securities business.
    (iii) less than $100,000,000--the amount of each member's
assessment shall be at an amount to be determined by SIPC, but in no
case shall the amount of each member's assessment be less than an
assessment rate of one-half (\1/2\) of one (1) percent per annum of
such member's gross revenues from the securities business.
    (iv) The amount of each member's assessment shall not exceed one-
half (\1/2\) of one (1) percent per annum of such member's gross
revenues from the securities business, unless SIPC determines that a
rate in excess of one-half (\1/2\) of one (1) percent during any twelve
(12) month period will not have a material adverse effect on the
financial condition of its members or their customers. No assessment
made pursuant to this section 1(a)(1) shall require payments during any
such period that exceed in the aggregate one (1) percent of any
member's gross revenues from the securities business for such period.]
    (E) Any minimum assessment imposed upon each member of SIPC shall
be 0.02 percent of the net operating revenues from the securities
business of such member for each calendar year or part thereof.
    (2) Any change in assessments made in accordance with Section
1(a)(1) herein shall commence on the first day of the year following
the date on which SIPC announces its determination, or on such other
date if the exigency of the circumstances so warrants in SIPC's
determination, and continue until such time as SIPC provides otherwise.
    (3) Commencing on the first day of the month following the date on
which SIPC borrows moneys pursuant to Section 4(f) or Section 4(g) of
the Act, and continuing while any such borrowing is outstanding and
until such further time as SIPC provides otherwise, the amount of each
member's assessment shall be at an assessment rate of not less than
one-half (\1/2\) of one (1) percent per annum of such member's gross
revenues from the securities business.
    (b) Payments. Assessments shall be payable at such times and in
such manner as may be determined by SIPC's Vice President--Finance with
the approval of the Chairman.
    [(c) Collection of General Assessments. Each member of the
Corporation who is a member of a self-regulatory organization shall pay
assessments to its collection agent. In the case of members who are not
members of any self-regulatory organization, assessments shall be paid
directly to the Corporation.]
    [(d)](c) Report by Collection Agents. Within 45 days after each due
date, each self-regulatory organization that acts as[which is the]
collection agent for SIPC shall submit a written report to SIPC [ the
Corporation] as to any entity [for whom it acts as collection agent]
whose filing or assessment payment has not been received.
    [(e)](d) Interest on Assessments. If all or any part of an
assessment payable under Section 4 of the Act has not been timely
received [by the collection agent within 15 days after the due date
thereof], the member shall pay, in addition to the amount of the
assessment, interest at the rate of 20% per annum on the unpaid portion
of the assessment for each day it has been overdue. If any broker or
dealer has incorrectly filed a claim for exclusion from membership in
the Corporation, such broker or dealer shall pay, in addition to
assessments due, interest at the rate of 20% per annum on the unpaid
assessment for each day it has

not been paid since the date on which it should have been paid.
    [(f) Gross Revenues. The term ``gross revenues from the securities
business'' includes the revenues in the definition of gross revenues
from the securities business set forth in the applicable sections of
the Act.
    (g) Net Operating Revenues. The term ``net operating revenues from
the securities business'' means gross revenues from the securities
business less interest and dividend expenses, and includes those
clarifications as are set forth in the SIPC assessment forms and
instructions.]
Section 2. Overpayments
    If the final annual reconciliation filed by a terminated member
reflects an assessment overpayment carried forward that exceeds
$150.00, SIPC may refund such excess to the member upon receipt of the
member's written request therefor and after [the member's] SIPC
[collection agent] has confirmed [to SIPC]that all of the member's SIPC
assessment form filings and payments and reports required by SEC Rule
17a-5 covering periods through the termination date have been reviewed
and accepted.
Section 3. Interpretation of Terms
    (a) For purposes of calculating assessments [this article]:
    [(a)](i) The term ``securities in trading accounts'' shall mean
securities held for sale in the ordinary course of business and not
identified as having been held for investment.
    [(b)](ii) The term ``securities in investment accounts'' shall mean
securities that are clearly identified as having been acquired for
investment in accordance with provisions of the Internal Revenue Code
applicable to dealers in securities.
    [(c)](iii) The term ``fees and other income from such other
categories of the securities business'' shall mean all revenue related
either directly or indirectly to the securities business except revenue
included in Section 16(9)(A)-(K) and revenue specifically excepted in
Section 4(c)(3)(C).
    (b) For purposes of this Article:
    (i) Gross Revenues. The term ``gross revenues from the securities
business'' includes the revenues in the definition of gross revenues
from the securities business set forth in the applicable sections of
the Act.
    (ii) Net Operating Revenues. The term ``net operating revenues from
the securities business'' means gross revenues from the securities
business less interest and dividend expenses, and includes those
clarifications as are set forth in the SIPC assessment forms and
instructions.
    (iii) SIPC Fund or Fund. The term ``SIPC Fund'' or ``Fund'' is as
defined in Section 4(a)(2) of the Act, exclusive of confirmed lines of
credit.
    (iv) SIPC's unrestricted net assets. The term ``SIPC's unrestricted
net assets'' means the lesser of SIPC's unrestricted net assets as
reflected in SIPC's most recent audited Statement of Financial Position
or reasonably expected by SIPC to be reflected in its next audited
Statement of Financial Position.

V. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/other.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SIPC-2019-02 on the subject line.

Paper Comments

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

All comments should refer to File Number SIPC-2019-02. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's internet website (http://www.sec.gov/rules/other.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed bylaw changes that are filed
with the Commission, and all written communications relating to the
proposed bylaw changes between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Commission.
All comments received will be posted without change. Persons submitting
comments are cautioned that we do not redact or edit personal
identifying information from comment submissions. You should submit
only information that you wish to make available publicly.

    All submissions should refer to File Number SIPC-2019-02, and
should be submitted on or before February 20, 2020.
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    \20\ 17 CFR 200.30-3(f)(2)(i); 17 CFR 200.30-3(f)(3).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-01610 Filed 1-29-20; 8:45 am]
 BILLING CODE 8011-01-P