                             SUPPORTING STATEMENT
Protection of Stratospheric Ozone: Critical Use Exemption from the Phaseout of Methyl Bromide (Renewal)

1.  Identification of the Information Collection

a)	Title: Protection of Stratospheric Ozone: Critical Use Exemption from the Phaseout of Methyl Bromide

      EPA Number: 2031.06

      OMB Control Number 2060-0482

b)	Short Characterization:

      With this Information Collection Request (ICR), the Environmental Protection Agency's (EPA) Office of Air and Radiation (OAR) is seeking to renew the existing ICR for the methyl bromide critical use exemption program (CUE) under the Clean Air Act. This ICR seeks to characterize the burden associated with producing, importing, distributing, and using methyl bromide under the critical use exemption program as described in 40 CFR Part 82. In addition, it includes the burden associated with applying for the critical use exemption. Entities applying for this exemption are asked to submit to EPA applications with necessary data to evaluate the need for a critical use exemption.  This information collection is conducted to meet U.S. obligations under Article 2H of the Montreal Protocol on Substances that Deplete the Ozone Layer (Protocol) and to implement Section 604(d)(6) of the CAA, added by Section 764 of the 1999 Omnibus Consolidated and Emergency Supplemental Appropriations Act (Public Law No. 105-277; October 21, 1998).
      Since 2002, entities have applied to EPA for a critical use exemption that would allow for the continued production, import, and use of methyl bromide after the phaseout in January 2005.  This exemption allows for consumption only in those agricultural sectors that have demonstrated that there are no technically or economically feasible alternatives to methyl bromide.  The applications are rigorously assessed and analyzed by EPA experts from the Office of Pesticide Programs.  On an annual basis, EPA uses the data submitted by applicants to nominate future critical uses. The Department of State, on behalf of the U.S. Government, submits the nomination to the Ozone Secretariat for their review.  That review includes analyses by an international panel of experts and advisory bodies: the Methyl Bromide Technical Options Committee (MBTOC) and the Technical and Economic Assessment Panel (TEAP).  EPA makes the uses authorized internationally by the Parties to the Protocol available in the U.S. on an annual basis through the annual critical use exemption allocation rulemaking.

2.	Need For, and Use Of, the Collection

a)	Authority for the Collection

      This information collection is authorized under Section 604(d)(6) of the Clean Air Act Amendments of 1990, added by Section 764 of the 1999 Omnibus Consolidated and Emergency Supplemental Appropriations Act (Public Law No. 105-277; October 21, 1998).
      Because this action involves the controlled use of a pesticide, EPA's Office of Pesticide Programs collaborates in the exemption application process.  The regulation of pesticides is conducted under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), as amended by the Food Quality Protection Act (FQPA).

b)	Practical Utility/Users of the Data

      The applications enable EPA to:

         *       Maintain consistency with the Protocol by supporting critical use nominations to the Parties to the Protocol, in accordance with paragraph 2 of Decision IX/6 of the Protocol;
         *       Ensure that critical use exemptions comply with Section 604(d)(6), as added to the CAA in 1998;
         *       Provide EPA with necessary data to evaluate the technical and economic feasibility of methyl bromide alternatives in the circumstance of the specific use, as presented in an application for a critical use exemption.

      The reported data enable EPA to:

         *       Ensure that critical use exemptions comply with Section 604(d)(6) as added to the CAA in 1998;
         *       Maintain compliance with the Protocol requirements for annual data submission on the production of ozone depleting substances;
         *       Analyze technical use data to ensure that exemptions are used in accordance with requirements included in the annual allocation rulemakings.

3.	Nonduplication, Consultation, and Other Collection Criteria

a) 	Nonduplication

      All the information requested from respondents under this ICR is authorized by statute (CAA Sections 114 and 604(d)(6)) and is not available from other sources because it is proprietary or sensitive information.

b)	Public Notice

	EPA provided public notice and comment regarding this ICR with the publication of a notice in the Federal Register (76 FR 11447, 3/2/2011).  EPA received one comment generally opposed to a critical use exemption process for methyl bromide but without direct relevance to the burden imposed by the renewed information collection request.  This second notice is being submitted to the Federal Register concurrent with submission of this ICR request to the Office of Management and Budget (OMB).

c)        Consultations

      EPA consulted with Gary Obenauf of Agricultural Research Consulting, Paul Niday of Trical and Ann Oxford of Albemarle to seek input on the forms as well as the estimated burden numbers in the ICR supporting statement.
      Mr. Obenauf has prepared multiple CUE applications over the past several years.  He noted that the $100.86/hour cost for preparing the application forms is low.  EPA based that cost on the estimated hourly mean wage rate for management within the Pesticide, Fertilizer, & Other Agricultural Chemical Manufacturing sector (325300 Series NAICS code). Most CUE applications are prepared by consultants, not members of the agricultural chemical manufacturing sector. EPA has revised the cost estimate to reflect the estimated hourly mean wage rate of $136.93 for management within the Management, Scientific, and Technical Consulting Services sector (541600 Series NAICS code).
      Mrs. Oxford completes forms applicable to producers, distributors, and applicators and is thus familiar with the various forms authorized under this ICR. She noted that the $100.86/hour cost is a fair estimate of costs. She also found the hourly burden numbers to be accurate.  She commented that there is some redundancy between the forms, especially for businesses that complete multiple forms.  EPA reviewed the forms to determine whether redundant fields on forms can be deleted.  As a result, the revised producer and importer forms no longer contain "CSA allowance balance" fields.  Producers and importers cannot produce or import pre-phaseout inventory so these fields are unnecessary and the information is captured in the CSA form.  Mrs. Oxford also noted that the "Notification of Methyl Bromide Transfers" form contains an arithmetic error in the formula for calculating the offset.  EPA has corrected the error and clarified the equation in the new form.
      Mr. Niday also completes forms applicable to producers, distributors, and applicators and is familiar with the various forms authorized under this ICR. He also noted the redundancy between forms.  Mr. Niday also expressed confusion about whether the "Pre-2005 Stocks" and "Sales of Critical Use Methyl Bromide" forms are to be reported annually or quarterly.  While EPA has allowed quarterly reporting of these two forms, only a few companies did so and in some instances did both.  EPA's regulations only require annual reporting for these two pieces of information so EPA is clarifying in the new forms that they are only to be submitted annually.  EPA has also tried to simplify the sales form to make it more user-friendly.  EPA believes these changes will reduce confusion and burden for businesses completing these two forms.
      EPA welcomes continued input on the user-friendliness of the required forms.  For example, EPA has also revised all of the forms so that the cell with the original submittal and re-submittal check boxes has a white background.  Previously the background was black so any marks in the check boxes were not visible.

d)       Effects of Less Frequent Collection

      EPA's timing for information collection is motivated by the U.S. Government's requirements under the Montreal Protocol.  First, the timeline for critical use applications coincides with the critical use nomination process established by the Parties to the Montreal Protocol.  Any deviation from that timeline would result in a forfeiture from inclusion in the U.S. nomination package and subsequent consideration by the Parties.  Second, the U.S. government is required to report data to the Ozone Secretariat on an annual basis.  EPA is requesting quarterly reporting from producers and importers of methyl bromide to monitor the likelihood of compliance throughout the year.  These entities typically prepare quarterly reports and prefer to report smaller data sets to EPA and not leave the entire task to the end of the year.  EPA is requesting annual reporting from entities such as distributors and fumigation companies because they typically have less regulatory compliance infrastructure and/or are less familiar with Protocol reporting requirements.  This annual request is now clear on the revised forms.

e)      General Guidelines

      This rule does not exceed any of the OMB guidelines found at 5 CFR 1320.5(d)(2).

f)       Confidentiality

      EPA informs respondents that they may assert claims of business confidentiality for any of the information they submit. Information claimed confidential will be treated in accordance with the procedures for handling information claimed as confidential under 40 CFR Part 2, Subpart b, and will be disclosed only if EPA determines that the information is not entitled to confidential treatment.  If no claim of confidentiality is asserted when the information is received by EPA, it may be made available to the public without further notice to the respondents (40 CFR 2.203).

g)	Sensitive Information

      Individual reporting data may be claimed as sensitive and will be treated as confidential information in accordance with procedures outlined in 40 CFR Part 2.

4.        The Respondents and the Information Requested

a)	Respondents NAICS Codes

	Respondents include producers, importers, distributors, and custom applicators of methyl bromide, organizations, consortia, and associations of methyl bromide users, as well as individual methyl bromide users. The appropriate North American Industry Classification System (NAICS) and Standard Industrial Classification (SIC) codes for these entities are:

              TABLE I: NAICS CLASSIFICATION OF REGULATED ENTITIES
                                   Category
                                  NAICS code
                                   SIC code
Agricultural production
1112- Vegetable and Melon farming
0171- Berry Crops

1113- Fruit and Nut Tree Farming
0172- Grapes

1114- Greenhouse, Nursery, and Floriculture Production
0173- Tree Nuts

0175- Deciduous Tree Fruits (except apple orchards and farms)

0179- Fruit and Tree Nuts

0181- Ornamental Floriculture and Nursery Products

0831- Forest Nurseries and Gathering of Forest Products

1119- Other Crop Farming

Storage Uses
115114- Postharvest Crop activities (except Cotton Ginning)

311211- Flour Milling
2041- Flour and Other Grain Mill Products

311212- Rice Milling
2044- Rice Milling

493110- General Warehousing and Storage
4225- General Warehousing and Storage

493130- Farm Product Warehousing and Storage
4221- Farm Product Warehousing and Storage
Distributors and Applicators
115112- Soil Preparation, Planting and Cultivating
0711- Soil Preparation Services

0721- Crop Planting, Cultivation, and Protection

0723- Crop Preparation Service for Market (except Cotton Ginning)

424910- Farm Supplies and Merchant Wholesalers

Producers and Importers
325320- Pesticide and Other Agricultural Chemical Manufacturing
2879- Pesticides and Agricultural Chemicals

b)	Information Requested

(i) Applications
	The Agency intends to continue seeking the same information as in previous years and will use the current application forms. The following information encompasses any information that will be requested from those entities seeking a critical use exemption, and includes applications for both pre-plant and post-harvest sectors:
*       Identity of contact person(s).  Unless otherwise specified, the person who submits the application will be considered the contact person for all matters relating to the critical use exemption.  Requests must identify by name and telephone number one or more qualified experts who may be contacted in case any questions arise concerning the application.
*       Description of the proposed use.  The applications shall provide information on the proposed use (crop/pest combination), the amount of methyl bromide to be used, the location of use, the method of application and any other use information requested by the Administrator.
*       Description of past use.  The applications shall provide information on past use (crop/pest combination), acreage, the amount of methyl bromide used, the method of application and other historical use data requested by the Administrator.
*       Consideration of alternatives (Technical).  The applicant must demonstrate what steps have been, and will be, taken to find and implement alternatives.  The applicant must also provide an explanation of, and data relating to, the technical feasibility of currently available alternatives for their proposed use and any other information required by the Administrator to determine whether technically feasible alternatives are available for the proposed use.
*       Consideration of alternatives (Economic).  To determine whether an applicant's proposed use has economically feasible alternatives, EPA will request information on historical revenue and available economic measures, such as operating costs.
*       Additional information.  Additional information required of applicants may include, but is not limited to, agricultural statistics, fumigation conditions and timeline, research proposals and funding levels, and transition plans.

(ii) Reporting
      EPA is requesting that entities provide the following information to the Agency:

Producers and importers
*    Quarterly: the quantity of methyl bromide produced or imported under the exemptions for Quarantine and Preshipment (QPS), critical uses, emergency uses, lab uses, and export to Article 5 countries;
*    Quarterly: the quantity of methyl bromide produced or imported for uses resulting in its transformation and/or destruction;
*    Quarterly: the number and type of expended and unexpended critical use allowances (CUAs)  and Article 5 allowances;
*    Annually: the total amount and type of methyl bromide sold directly to critical uses;
*    Annually: the total amount and type of critical use methyl bromide held in inventory for themselves or on behalf of a third party;
*    Annually: the total amount of methyl bromide that was produced/imported prior to January 1, 2005, that is held in inventory for themselves or on behalf of a third party;
*    Periodically, (likely less than annually): information that the Administrator may reasonably require in carrying out the critical use exemption program under Section 604(d)(6) of the Clean Air Act including management and composition of pre-phaseout inventory, price of methyl bromide and its alternatives, and fumigant emissions reductions practices.  EPA may also use the information gathering authority under Section 114 of the Clean Air Act to ensure compliance with existing regulations under the critical use exemption program.

Exporters
*     Quarterly: names and addresses of the exporter and the recipient of the exports, and the exporter's Employer Identification Number;
*       Quarterly: the quantity of methyl bromide exported under each exemption; the date on which, and the port from which, the controlled substances were exported from the United States or its territories; and the country to which the controlled substances were exported.

Distributors and Applicators
*       Annually: the total amount and type of methyl bromide purchased;
*       Annually: the total amount and type of methyl bromide sold directly to critical uses;
*       Annually: the total amount and type of critical use methyl bromide held in inventory for themselves or on behalf of a third party;
*       Annually: the total amount of methyl bromide that was produced/imported prior to January 1, 2005, that is held in inventory for themselves or on behalf of a third party;
*       Periodically, (likely less than annually): information that the Administrator may reasonably require in carrying out the critical use exemption program under Section 604(d)(6) of the Clean Air Act including management and composition of pre-phaseout inventory, price of methyl bromide and its alternatives, and fumigant emissions reductions practices.  EPA may also use the information gathering authority under Section 114 of the Clean Air Act to ensure compliance with existing regulations under the critical use exemption program.

(iii)  Recordkeeping

EPA is requiring the following records are kept for three years.
Producers, importers, and exporters
*       Self certification form for each sale that indicates the buyer will only sell or use methyl bromide for approved critical uses;
*       Order forms and invoices for methyl bromide;

Distributors and Applicators
*       Self certification form for each sale that indicates the buyer will only sell/use the methyl bromide for approved critical uses;
*       Order forms and invoices for methyl bromide;

5.	The Information Collected, Agency Activities, Collection Methodology, and Information Management

a)	Agency Activities

(i)	Applications

	Submitted critical use exemption applications are received by the Stratospheric Program Implementation Branch (SPIB), of the Stratospheric Protection Division (SPD) of the Office of Atmospheric Programs (OAP).  The Biological and Economic Assessment Division (BEAD) of the Office of Pesticide Programs (OPP) conducts a technical review of the applications.  Both a biologist and an economist review each application, and the applications are grouped according to agricultural sector.  Specifically, the review determines whether or not there is sufficient information to support the contention that "no technically or economically feasible alternatives exist" for the specified methyl bromide use. The review also determines if a lack of methyl bromide availability would cause a significant market disruption.  These requirements for critical use exemptions were agreed to by the Parties to the Protocol at their Seventh Meeting, and are delineated in Decision IX/6, as well as Section 604(d) of the Clean Air Act (CAA).  This review may require additional consultation with the applicants if further clarification is needed.
	EPA, in consultation with the U.S. Department of Agriculture and the Department of State, compiles a nomination package containing all uses to be nominated by the U.S. as "critical."  This package is submitted to the Ozone Secretariat of the Protocol, reviewed by MBTOC and TEAP, and later authorized by the Parties at their annual meeting. Typically, EPA must respond to one or two rounds of questions from MBTOC as that body conducts a technical review of the U.S. Nomination.
	In order to complete the application process, EPA must:

*       Publish a Federal Register notice announcing the availability of applications
*       Collect, compile, and analyze submitted applications
*       Review applications for completeness and inform applicants if application is not complete
*       Review applications for critical need for methyl bromide (e.g., data supporting a finding that there is no technically or economically feasible alternative)
*       Transpose data from the applications into the required nomination format (as consistent with the MBTOC Handbook)
*       Compile applications into U.S. nomination package for submission to the Ozone Secretariat

(ii)	Reported Data

Reported data are received by the Stratospheric Program Implementation Branch (SPIB), of the Stratospheric Protection Division (SPD) of the Office of Atmospheric Programs (OAP).
*       All reported data are reviewed by EPA for completeness and accuracy, often through follow-up with the reporting entity.
*       EPA ensures that compliance has been maintained with U.S. production and consumption levels of exempted material at the national and sector levels.
*       EPA reports annually to the Ozone Secretariat, through the U.S. Department of State, on U.S. compliance with allowable production and consumption levels.
*       EPA uses data on actual use levels and material in inventory to adjust future nomination and allocation amounts.
*       Data are maintained in EPA data electronic tracking system and file room.

b)	Collection and Methodology and Management

(i)	Applications

	When applications for methyl bromide critical uses are received by EPA, they are assigned a CUE number and tracked in a spreadsheet as active submissions through the process, after which applications become historical files.

(ii)	Reported Data

      Data are tracked by industry and are provided to EPA on a quarterly and/or annual basis on forms provided by the Agency on EPA's website (www.epa.gov/ozone/record/mbr.html).  EPA will use our electronic tracking system to update company specific and overall U.S. compliance with production, consumption, and use. Confidential business information are stored in appropriately controlled areas.

c)	Small Entity Flexibility

      This information collection is authorized by statute under Section 604 of the Clean Air Act and is required in order to ensure U.S. compliance with international treaty obligations under the Montreal Protocol.
      Methyl bromide was phased out under the Montreal Protocol and the Clean Air Act in 2005, except for limited exemptions. The application information collection provides meaningful relief for those users of methyl bromide who do not have technically or economically feasible alternatives.  Applying for the exemption is voluntary and only those entities that believe they have a critical use will submit an application.  While the exemption itself will relieve burden on affected entities, the burden on all affected entities associated with applying for the exemption, and especially the burden on small entities, has been reduced to every extent possible.  EPA encouraged small businesses to participate in and/or form representative organizations that will serve to aid in gathering information and completion of applications. Today, most applications received are submitted by such organizations.
      Bearing in mind U.S. obligations under the Protocol, EPA designed a reporting and recordkeeping system that would remove almost all burden from the end users of methyl bromide, some of whom are small entities. This program seeks to place the burden instead on chemical manufacturers, distributors, and applicators who are not small entities.  EPA created a system that requires end users to sign a short form (1-2 pages in length) certifying that they are buying the exempted material for an allowable use and will use it accordingly. The form is kept by the supplier, not the end user. Participation in this exemption program is voluntary and constitutes a benefit.

d)	 Collection Schedule

(i)	Applications

	EPA annually publishes a notice in the Federal Register announcing the availability of the pre-plant and post-harvest applications.  Entities have between 60 and 90 days from the date of publication to submit an application.  Applications for exemptions are requested with three years of anticipation due to the international process and EPA's notice-and-comment rulemaking procedures. For example, the first time EPA requested applications, in May 2002, the exemptions were requested for the use of methyl bromide during the 2005 calendar year.  The applications requested in May 2003 were for use in the 2006 calendar year, etc.  Once applications are submitted to EPA, the following schedule takes place:
*       August, Year 1: Applications due
*       September-December, Year 1: Review of applications and development of U.S. nomination
*       January, Year 2: Inter-Agency review of nomination package
*       January 24, Year 2: U.S. nomination submitted to Ozone Secretariat
*       February-June, Year 2: Advisory body (MBTOC/TEAP) review
*       November-December, Year 2: Parties authorize critical uses
*       January-December, Year 3: EPA publishes critical uses and allocates allowances in notice-and-comment rulemaking

	Subsequent collection schedules depend on the timetables established by the Parties.  In some instances additional ("Extraordinary") meetings have been required, delaying the schedule.

(ii)	Reported Data

      The information is to be submitted on an annual or quarterly basis (see section 5a) to EPA beginning in the last quarter of 2011 and continuing for the life of the exemption.

6)	Estimating the Burden and Cost of Collection

a)	Estimating the Burden

      The basis of the burden analysis is EPA's experience with implementing the critical use exemption program since 2002 and EPA's previous ICR analyses for the CUE program.  EPA expects that the burden estimate is conservatively high as the Agency believes that the respondents are familiar with EPA's regulations and likely have an established system for complying with those requirements.
      The burden analyzed is that associated with the application, reporting, and recordkeeping requirements of the program. As in previous ICRs, EPA identified the steps involved in applying for and complying with the requirements of the CUE program. This includes identifying the principal information needed to support U.S. nominations to Parties to the Protocol.  The burden has been estimated by identifying the number of times the step will be undertaken and the number of hours required to complete each step.

b) 	Estimating the Respondent Cost

i)	Applications

      To determine the respondent cost, EPA used an hourly industry wage rate of $136.93 per hour, including benefits and overhead. This is the estimated hourly mean wage rate for management within the Management, Scientific, and Technical Consulting Services sector (541600 Series NAICS code). This rate was developed by the Office of Pesticide Programs within EPA and is based on the National Industry-Specific Occupational Employment and Wage Estimates from the Bureau of Labor Statistics (BLS) at http://www.bls.gov/oes/current/oes_nat.htm. Based on consultations on this ICR, EPA is no longer using the Pesticide, Fertilizer, & Other Agricultural Chemical Manufacturing sector (325300 Series NAICS code) for estimating the respondent cost for completing the applications. EPA anticipates this rate to overestimate the burden on the whole universe of respondents, as the wage rates are lower for growers, applicators, and other respondents within the Critical Use Exemption program.
      Burden hours needed to complete each application that is forwarded to EPA is estimated to be 38.  The number of applications has been declining from a maximum of 61 to 33 applications last year. EPA does not anticipate new users or groups to submit applications and therefore does not expect the number to increase from 33.  EPA is conservatively estimating 40 applicants for the next three years. Total burden hours have decreased from previous ICRs as the prior ICR estimated 75 respondents.  EPA believes that the number of hours may be an overestimate as there have been minimal formatting /data changes to the application form, encouragement of electronic submissions, reduced requirements for repeat applicants, frequent communication with stakeholders, and nine years of implementation. EPA has also found that the majority of users have applied through their consortia, and that these consortia represent many growers.

ii)	Reported Data

      To determine respondent costs for recordkeeping and reporting, EPA used an hourly industry wage rate of $100.86 per hour as described above. Some activities, such as rule familiarization, are one time activities therefore total respondent burden hours indicated in Table II (below) may be overestimated.  This renewal, as compared to the existing ICR, reduces the expected burden for the respondents compiling and reporting data on an annual basis. The number of distributors of methyl bromide has decreased as the amount of critical use methyl bromide sold in the U.S. has decreased.  Second, this ICR increases the number of responses for quarterly reporting to more accurately reflect the number of responses EPA has received in recent years. Prior ICRs had estimated 4 quarterly reports per year per respondent, but some respondents submit more than 4 reports as they are producers, importers, and distributors and must file separate reports for each. As discussed above, the number of applications submitted the last three years has declined.  This corresponds to a similar decrease in the end user universe which EPA now estimates to be approximately 1800.

                  TABLE II- RESPONDENT BURDEN HOURS PER YEAR
Collection Activity
No. of Respondents
Total No. of Responses
Hours per Response
Total Hours
i)  Applications
Read CAA Request for applications
                                                                             40
                                                                             40
                                                                            0.5
                                                                             20
Process, compile, and review the requested data for accuracy and appropriateness
                                                                             40
                                                                             40
                                                                             30
                                                                           1200
Generate application correspondence (and any follow-up information requested)
                                                                             40
                                                                             40
                                                                              7
                                                                            280
Store, file, or maintain the information
                                                                             40
                                                                             40
                                                                            0.5
                                                                             20
Total burden for applications
                                                                             40
                                                                             40
                                                                             38
                                                                          1,520

ii)  Recordkeeping and Reporting
Rule Familiarization
                                                                             75
                                                                             75
                                                                              2
                                                                            150
Data Compilation (quarterly basis)
                                                                              4
                                                                             40
                                                                              4
                                                                            160
Data Compilation (annual basis)
                                                                             75
                                                                             75
                                                                            8.5
                                                                          637.5
Data Reporting (quarterly basis)
                                                                              4
                                                                             40
                                                                            0.5
                                                                             20
Data Reporting (annual basis)
                                                                             75
                                                                             75
                                                                              1
                                                                             75
Reporting on Allowance Trading Activities
                                                                              4
                                                                             16
                                                                            0.5
                                                                              8
Responding to periodic questions regarding CUE program and fumigation industry
                                                                             75
                                                                             75
                                                                              1
                                                                             75
Self Certification Activities by Producers, Importers, and Distributors
                                                                             75
                                                                            150
                                                                           0.25
                                                                           37.5
Self Certification Activities by End Users
                                                                          1,800
                                                                          2,300
                                                                           0.25
                                                                            575
Total Burden for reporting and recordkeeping
                                                                          1,879
                                                                           2846
                                                                             18
                                                                        1,738.0
COMBINED TOTAL BURDEN HOURS
                                                                           1919
                                                                           2886
                                                                             56
                                                                        3,258.0

      There are no capital and operating costs associated this action.

                    TABLE III- CAPITAL AND OPERATING COSTS

Activity
No of Entities Affected
Estimated Annual Cost per entity
Total Estimated Annual Cost
TOTAL CAPITAL AND OPERATING COSTS
0
0
0

c)	Estimating Agency Burden and Cost

	The estimated cost to the Federal Government of the critical use exemption process consists of two components.  The first is the number of hours and costs incurred by the Agency to review each application.  The second is the number of hours and costs incurred by the Agency in reviewing reporting data, preparing nominations, submitting data to the Ozone Secretariat on U.S. compliance, distributing critical use allowances, and developing guidance for regulated entities.
      The calculations below are based on combined OAR/OPP experience implementing the CUE program over the past nine years.  The Agency burden in reviewing the applications has decreased from those in the previous ICR as the Agency has developed a regular system over the course of implementing the CUE program over the last nine years.  In addition, the number of sectors applying to the program has decreased.  The values in this renewal for recordkeeping and reporting are also less than the sum of the burdens listed in the prior ICR. Some steps analyzed in prior ICRs, such as writing the reporting forms and determining the historic baseline, have already been completed are unnecessary for this renewal.
	The hourly wage rates for EPA clerical, technical and managerial staff were derived from the 2010 OPM pay table multiplied by 1.6, the standard government benefits multiplier.  The hourly wage rates are as follows:  EPA estimates an average hourly labor cost of $76.38 (GS-15 level) for managerial costs, $54.94 (GS-13 level) for technical staff, and $21.02 (GS-5 level) for clerical staff based on 2010 figures.  While the number of occurrences of each activity is shown per application, EPA intends to continue grouping applications according to agricultural sectors.  Each hour of extramural (contractor) time is valued at $120.00 per hour including overhead and fringe benefits.

                            TABLE IV- AGENCY BURDEN HOURS

No. of Responses
Managerial hours per response
Technical hours per response
Clerical hours per response
Extramural hours per response
i)  Applications
Read and review the applications for completeness; make appropriate amount of electronic/paper copies
                                                                             40
                                                                              0
                                                                              1
                                                                              1
                                                                           0.25
Review information submitted for accuracy
                                                                             40
                                                                              0
                                                                             10
                                                                              0
                                                                              0
Perform economic and technical analysis and compile nomination on proposed exemption to the Ozone Secretariat
                                                                             40
                                                                              5
                                                                             40
                                                                             45
                                                                              0
Respond to 2 rounds of questions on Nomination from MBTOC/TEAP (advisory bodies to Parties to Protocol)
                                                                             80
                                                                              2
                                                                             10
                                                                              0
                                                                              0
Final decision on each sector
                                                                             12
                                                                             10
                                                                             15
                                                                              0
                                                                              0
Store, file, and maintain applications
                                                                             40
                                                                              0
                                                                              1
                                                                              1
                                                                           0.25
TOTAL per response (applications)

                                                                             17
                                                                             77
                                                                             47
                                                                            0.5
TOTAL per year (applications)

                                                                            480
                                                                          3,060
                                                                          1,880
                                                                             20

i)  Reporting and Recordkeeping
Process annual reports
                                                                             75
                                                                           0.25
                                                                              1
                                                                              0
                                                                           0.25
Process quarterly reports
                                                                             40
                                                                           0.25
                                                                              1
                                                                              0
                                                                           0.25
Report to the Ozone Secretariat
                                                                              1
                                                                           0.25
                                                                             10
                                                                              0
                                                                              1
Provide Guidance
                                                                             30
                                                                           0.25
                                                                              1
                                                                              0
                                                                              0
Seek information on CUE program and fumigation industry
                                                                             75
                                                                           0.25
                                                                           0.25
                                                                              0
                                                                              0
TOTAL per response (recordkeeping and reporting)

                                                                           1.25
                                                                          13.25
                                                                              0
                                                                            1.5
TOTAL per year (recordkeeping and reporting)

                                                                          55.25
                                                                         173.75
                                                                              0
                                                                          29.75

TOTAL FOR ALL AGENCY ACTION PER YEAR

                                                                            535
                                                                          3,234
                                                                          1,880
                                                                             50

d)	Estimating the Respondent Universe

	EPA's estimate of the number of regulated entities is based upon the Agency's experience regulating those entities under the CUE program for the last nine years. This program does not require reporting or recordkeeping from end users of methyl bromide, but the Agency is able to make an estimation based on self reported data from entities who requested an exemption.
	As mentioned above, the number of applications has been declining, and was 33 last year.  The number of applicants for the exemption is much less than the estimated end user universe of 1,800 as the majority of end users apply through their consortia, not individually. EPA continues to encourage users with similar circumstances to utilize grower and user organizations to aid in completion of the application, thereby reducing both the burden on applicants (particularly small businesses) and the Agency.  The registration of additional alternatives in the U.S. has also resulted in fewer applications received.
	There are 4 producers and importers of methyl bromide who report quarterly and up to 75 distributors/ applicators of methyl bromide who may report annually. Thus the total number of respondents is estimated to be 1,919 (1800 end users, 40 applicants, 75 distributors/applicators, and 4 producers/importers).

e)	Bottom Line Burden Hours and Cost Tables

      i) The burden hour portion of the respondent application, reporting, and recordkeeping burden and operating/capital costs are estimated in Tables II and III respectively. The dollar estimate associated with this burden is displayed in Table V below. The total annual labor cost burden is $988,840.

                  TABLE V- RESPONDENT BURDEN HOURS AND COSTS
                                   Response
                                No of Responses
                              Hours per response
                                   Cost/Hour
                                  Total Cost
Application
                                                                             40
                                                                             38
                                                                       $136.93
                                                                      $208,134
Recordkeeping and Reporting
                                                                            396
                                                                             18
                                                                       $100.86
                                                                      $718,930
Self certification: producers, importers, distributors, end users
                                                                          2,450
                                                                           0.25
                                                                       $100.86
                                                                       $61,777
Total

                                                                      $988,840

	ii) Agency burden is reported in Table IV.  This includes technical review of each application as well as distributing critical use allowances, reviewing reporting data, submitting data to the Ozone Secretariat on U.S. compliance, preparing nominations, and developing guidance for regulated entities. The total annual labor cost burden below in Table VI is $6,577 per application and $1,003 per recordkeeping and reporting response.  Total annual cost to the Agency is $264,032.

                TABLE VI- ANNUAL AGENCY BURDEN HOURS AND COSTS

Managerial Hours Annual Total
Technical Hours Annual  Total
Clerical Hours Annual Total
Extramural Hours Annual Total
Total Agency Hours per Response
Total Agency Costs per response

$76.38
$54.94
$21.02
$120.00

Part I.  Hours per response
     -Application
                                                                             17
                                                                             77
                                                                             47
                                                                           0.50
                                                                            142
                                                                         $6,577
     -Recordkeeping and reporting
                                                                           1.25
                                                                          13.25
                                                                              0
                                                                           1.50
                                                                          16.00
                                                                         $1,003
Part II. Hours per year
     -Application
                                                                            480
                                                                          3,060
                                                                          1,880
                                                                             20
                                                                          5,440

     -Recordkeeping and reporting
                                                                             55
                                                                            174
                                                                              0
                                                                             30
                                                                         258.75

TOTAL HOURS
                                                                            535
                                                                          3,234
                                                                          1,880
                                                                             50
                                                                          5,699

TOTAL COSTS
                                                                        $40,882
                                                                       $177,662
                                                                        $39,518
                                                                         $5,970
                                                                       $264,032

f)	Reasons for Change in Burden

	There is a decrease of 1,660 hours in the total estimated respondent burden compared with the burden currently approved by OMB. The primary reason for the decrease in burden hours is a decrease in the number of applicants. There also reflects a decline in the number of end users. Other reasons for burden reduction include increased stakeholder familiarity with the critical use exemption program, the encouragement of electronic submission of applications and other data and frequent EPA communication with methyl bromide stakeholders.

g)	Burden Statement

	The annual public reporting and recordkeeping burden for this collection of information is estimated to average 1 hour per response.  Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency.  This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information.  An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.  The OMB control numbers for EPA's regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 15.
	To comment on the Agency's need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimizing respondent burden, including the use of automated collection techniques, EPA has established a public docket for this ICR under Docket ID No. EPA-HQ-OAR-2011-0085, which is available for public viewing at the Air and Radiation Docket and Information Center in the EPA Docket Center (EPA/DC), EPA West, Room 3334, 1301 Constitution Ave., NW, Washington, DC. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays.  The telephone number for the Reading Room is<PHONE_NUMBER>, and the telephone number for the Air and Radiation Docket and Information Center is<PHONE_NUMBER>.  An electronic version of the public docket is available at www.regulations.gov.  This site can be used to submit or view public comments, access the index listing of the contents of the public docket, and to access those documents in the public docket that are available electronically.  When in the system, select "search," then key in the Docket ID Number identified above.  Also, you can send comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW, Washington, DC 20503, Attention: Desk Office for EPA.  Please include the EPA Docket ID No. EPA-HQ-OAR-2011-0085 and OMB control number 2060-0482 in any correspondence.

Part B of the Supporting Statement

      This Section is not applicable.


[Federal Register Volume 82, Number 178 (Friday, September 15, 2017)]
[Notices]
[Pages 43430-43432]
[FR Doc No: 2017-19586]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81573; File No. SR-NYSEARCA-2017-97]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE
Arca Equities Fees and Charges

September 11, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on August 29, 2017, NYSE Arca, Inc. (the ``Exchange'' or
``NYSE Arca'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    The Exchange proposes to amend the NYSE Arca Equities Fees and
Charges (the ``Fee Schedule'') to adopt a cap, for August and September
2017, on monthly fees for the use of ports connecting to NYSE Arca that
are added after August 18, 2017. The Exchange proposes to implement the
changes on August 29, 2017.\4\ The proposed rule change is available on
the Exchange's Web site at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
---------------------------------------------------------------------------

    \4\ The Exchange originally filed to amend the Fee Schedule on
August 18, 2017 (SR-NYSEArca-2017-91) and withdrew such filing on
August 29, 2017.
---------------------------------------------------------------------------

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

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

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

1. Purpose
    In connection with the introduction of new gateways on August 21,
2017, the Exchange proposes to amend its Fee Schedule to adopt a cap,
for August and September 2017, on monthly fees for the use of ports
connecting to NYSE Arca that are added after August 18, 2017.
    The Exchange currently makes ports available that provide
connectivity to the Exchange's trading systems (i.e., ports for the
entry of orders and/or quotes (``order/quote entry ports'')) and
charges $550 per port per month.\5\ The Exchange also currently makes
ports available for drop copies and charges $550 per port per month.\6\
---------------------------------------------------------------------------

    \5\ Port fees are not applicable to ports used for the
Exchange's Risk Management Gateway service. Further, no fee applies
to ports in the backup datacenter that are not utilized during the
relevant month. No fee applies to ports in the backup datacenter
that are utilized when the primary datacenter is unavailable.
However, if a port in the backup datacenter is utilized when the
primary datacenter is available, then the fee shall apply.
    \6\ No fee applies to ports in the backup datacenter if
configured such that it is duplicative of another drop copy port of
the same user. Only one fee per drop copy port applies, even if the
port receives drop copies from multiple order/quote entry ports and/
or drop copies for activity on both NYSE Arca Equities and NYSE Arca
Options.
---------------------------------------------------------------------------

    In order to facilitate an ETP Holder's transition to the Exchange's
new gateways on August 21, 2017, the Exchange proposes to add to its
Fee Schedule that, for the billing months of August and September 2017,
the total charge per firm for order/quote entry ports and drop copy
ports will be capped at the total number of such ports that the firm
has activated at the start of trading on August 18, 2017, the last
trading day prior to the introduction of the new gateways. This cap
would have the effect of waiving the port fees, for August and
September 2017, of any

new, additional ports that an ETP Holder may use.
    Additionally, the Exchange proposes that, effective October 1,
2017, the monthly fees for ports activated after August 18, 2017, would
be prorated to the number of trading days in a billing month, including
any scheduled early closing days, that a port is connected to the
Exchange.\7\
---------------------------------------------------------------------------

    \7\ The NASDAQ Stock Market LLC (``NASDAQ'') prorates Order
Entry Port fees for the first month for new requests for ports. See
NASDAQ Price List at https://www.nasdaqtrader.com/Trader.aspx?id=PriceListTrading2.
---------------------------------------------------------------------------

* * * * *
    The proposed changes are not otherwise intended to address any
other issues, and the Exchange is not aware of any problems that member
organizations would have in complying with the proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\8\ in general, and furthers the
objectives of Sections 6(b)(4) of the Act,\9\ in particular, because it
provides for the equitable allocation of reasonable dues, fees, and
other charges among its members, issuers and other persons using its
facilities and does not unfairly discriminate between customers,
issuers, brokers or dealers.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that the proposed cap for August and
September 2017 is reasonable because the proposed cap would allow ETP
Holders a transition period to adjust to the new gateways.\10\ Further,
to the extent that an ETP Holder needs an increasing number of ports to
maintain or expand its activity on the Exchange, the Exchange believes
without the proposed cap ETP Holders may be inhibited from growing
their activity on the Exchange. As a general principal, the Exchange
believes that greater participation on the Exchange by ETP Holders
improves market quality for all market participants. Thus, the proposed
cap balances the Exchange's desire to improve market quality against
the need to cover costs to support connectivity to the Exchange.
Finally, the Exchange believes that the proposed cap constitutes an
equitable allocation of fees because all similarly situated ETP Holders
would be eligible for the cap.
---------------------------------------------------------------------------

    \10\ The terms ``gateway'' and ``ports'' are used
interchangeably. Activating a port, for instance, essentially means
establishing a connection to a gateway.
---------------------------------------------------------------------------

    The Exchange further believes the proposal to charge fees for ports
activated after August 18, 2017 on a prorated basis based on the number
of trading days in a billing month the port is connected to the
Exchange is fair and reasonable because it would allow all Exchange
participants to subscribe to the most effective connectivity according
to their trading requirements and as a result will only be assessed
fees for the connectivity they utilize during any trading month
beginning October 1, 2017.\11\ The Exchange's proposal to pro-rate port
fees is also equitable since it would apply equally to all ETP Holders
that connect to the Exchange. As noted above, NASDAQ currently charges
new order entry ports on a prorated basis for the first month of
service. The Exchange notes, however, that fees for ports activated
before August 21, 2017 would not be pro-rated. The Exchange believes it
is fair, equitable and not unfairly discriminatory to charge flat fees
for ports activated before August 21, 2017 as such ports are expected
to be phased out within a short period of time after the introduction
of the new gateways. The Exchange believes the proposed proration of
fees for ports activated after August 18, 2017 would serve as an
incentive to ETP Holders to fully transition to the new gateways even
though the Exchange would continue to provide ETP Holders with the
ability to connect to the Exchange through ports activated before
August 21, 2017. The Exchange further notes that billing for ports
activated before August 21, 2017 will continue to be based on the
number of ports on the third business day prior to the end of the month
consistent with the Exchange's billing policy, and so firms that cancel
ports before the third business day prior to the end of the month will
not be billed for those ports.
---------------------------------------------------------------------------

    \11\ Billing for ports is based on the number of ports on the
third business day prior to the end of the month. The level of
activity with respect to a particular port does not affect the
assessment of monthly fees, so even if a particular port that is
available to a participant is not used, the participant is still
billed for that port. See Securities Exchange Act Release No. 66110
(January 5, 2012), 77 FR 1766 (January 11, 2012) (SR-NYSEArca-2012-
01).
---------------------------------------------------------------------------

    The Exchange also believes the proposal furthers the objectives of
Section 6(b)(5) of the Act \12\ in that the proposed rule change is
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and, in general to protect investors and the
public interest and is not designed to permit unfair discrimination
between customers, issuers, brokers and dealers. In particular, the
Exchange believes that the Exchange's pro-rating of port fees is
consistent with Section 6(b)(5) of the Act since all ETP Holders would
receive the benefit of being charged only for the connectivity utilized
during any trading month beginning October 2017. As noted above, to the
extent an ETP Holder continues to use ports activated before August 21,
2017 to connect to the Exchange during October 2017 and any subsequent
months, the Exchange believes it is fair, equitable and not unfairly
discriminatory to continue to charge flat fees for such ports until
such time that connection to the Exchange through the use of old ports
is no longer available which the Exchange expects to occur within a
short period of time after the introduction of the new gateways.
---------------------------------------------------------------------------

    \12\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition. For these reasons, the Exchange
believes that the proposal is consistent with the Act.

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

    In accordance with Section 6(b)(8) of the Act,\13\ the Exchange
does not believe that the proposed rule change will impose any burden
on intermarket or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act in that it is
simply designed to set forth the Exchange's adoption of a fee cap and
pro-rata billing for ports without any change to the fees currently
charged by the Exchange for the use of ports to connect to the
Exchange's trading systems. ETP Holders may opt to disfavor the
Exchange's pricing if they believe that alternatives offer them better
value. Accordingly, the Exchange does not believe that the proposed
change will impair the ability of ETP Holders to maintain their
competitive standing in the financial markets. The Exchange believes
that fees for connectivity are constrained by the robust competition
for order flow among exchanges and non-exchange markets. Further,
excessive fees for connectivity, including port fees, would serve to
impair an exchange's ability to compete for order flow rather than
burdening competition. The Exchange also does not believe the proposed
rule change would impact intramarket competition as it would apply to
all ETP Holders equally that connect to the Exchange through the use of
new ports. To the extent an ETP Holder continues to use ports activated
before August 21, 2017 to connect to the Exchange during October 2017
and any subsequent

months, the Exchange believes the proposed rule change would not impact
intramarket competition as given that the Exchange would provide all
ETP Holders the ability to connect to the Exchange through ports that
are activated before August 21, 2017 and through ports that are
activated after August 18, 2017.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

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

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

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

    The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \14\ of the Act and subparagraph (f)(2) of Rule
19b-4 \15\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \16\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEARCA-2017-97 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEARCA-2017-97. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC, 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; 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-NYSEARCA-2017-97 and should
be submitted on or before October 6, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

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

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-19586 Filed 9-14-17; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 86, Number 175 (Tuesday, September 14, 2021)]
[Notices]
[Pages 51204-51206]
[FR Doc No: 2021-19725]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92893; File No. SR-ICC-2021-018]

Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of
Filing of Proposed Rule Change Relating to the ICC Back-Testing
Framework

September 8, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
\1\ and Rule 19b-4,\2\ notice is hereby given that on August 24, 2021,
ICE Clear Credit LLC (``ICC'') filed with the Securities and Exchange
Commission the proposed rule change as described in Items I, II and III
below, which Items have been prepared primarily by ICC. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------

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

I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change

    The principal purpose of the proposed rule change is to revise the
ICE CDS Clearing: Back-Testing Framework (``Back-Testing Framework'')
to include additional description on the lookback period for back-
testing and other clarifications. These revisions do not require any
changes to the ICC Clearing Rules (the ``Rules'').

II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

    In its filing with the Commission, ICC included statements
concerning the purpose of and basis for the proposed rule change,
security-based swap submission, or advance notice and discussed any
comments it received on the proposed rule change, security-based swap
submission, or advance notice. The text of these statements may be
examined at the places specified in Item IV below. ICC has prepared
summaries, set forth in sections (A), (B), and (C) below, of the most
significant aspects of these statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

(a) Purpose
    ICC proposes revising the Back-Testing Framework, which describes
ICC's back-testing approach and procedures and includes guidelines for
remediating poor back-testing results. The proposed amendments include
additional description on the lookback period for back-testing and
other clarifications. ICC believes that such revisions will facilitate
the prompt and accurate clearance and settlement of securities
transactions and derivative agreements, contracts, and transactions for
which it is responsible. ICC proposes to make such changes effective
following Commission approval of the proposed rule change. The proposed
revisions are described in detail as follows.
    ICC proposes a clarification change in Subsection 1.2. The Back-
Testing Framework discusses ICC's back-testing analysis, which verifies
that the number of actual losses is consistent with the number of
projected losses. The proposed clarification to Subsection 1.2
specifies that the ICC Risk Department may consider back-testing
analysis based on alternative statistical tests to assess the
performance of its models in terms of statistical reliability.
    ICC proposes new Subsection 2.1 to include additional description
on the lookback period for back-testing. Proposed Subsection 2.1
details the performance of back-testing analysis for Clearing
Participant (``CP'') related portfolios. The proposed language
discusses the maximum back-testing sample size, or the lookback period,
and the benefit of allowing for a greater sample size in terms of
assessing model performance. The proposed language also analyzes short
lookback periods in combination with high risk quantile estimates.
Moreover, ICC proposes to reference an alternative statistical test and
describe how the model is considered to pass or fail the test. Proposed
Figure 1 serves as an illustration under such alternative statistical
test across different sample sizes and risk quantiles. Following such
analysis, proposed Subsection 2.1 sets out ICC's rationale for the
minimum back-testing window length. Further, proposed Subsection 2.1
references the performance of additional analyses, as described in
Section 4 of the Back-Testing Framework, and includes language
concerning the reporting of back-testing results. ICC proposes to
renumber the following subsections accordingly.
    ICC proposes additional clarifications to the Back-Testing
Framework. The proposed amendments include a footnote in amended
Subsection 2.6 that references a relevant Commodity Futures Trading
Commission regulation with respect to ICC's performance of back-testing
analysis. ICC further proposes amendments to Section 4, which contains
guidelines for remediating poor back-testing results. Currently, poor
back-testing results require a peer review of the risk models by the
Risk Working Group (``RWG''), which is comprised of risk
representatives from ICC's CPs, and remedial actions to improve model
performance. The proposed changes describe an additional aspect
presented to the RWG and note an assessment that corresponds to the
performance of a back-testing analysis without overlapping periods. ICC
also proposes to update Section 5, containing a list of references, to
include a reference for the alternative statistical test described in
proposed Subsection 2.1.
(b) Statutory Basis
    ICC believes that the proposed rule change is consistent with the
requirements of Section 17A of the Act \3\ and the regulations
thereunder applicable to it, including the applicable

standards under Rule 17Ad-22.\4\ In particular, Section 17A(b)(3)(F) of
the Act \5\ requires that the rule change be consistent with the prompt
and accurate clearance and settlement of securities transactions and
derivative agreements, contracts and transactions cleared by ICC, the
safeguarding of securities and funds in the custody or control of ICC
or for which it is responsible, and the protection of investors and the
public interest. The proposed amendments include additional description
on the lookback period for back-testing and other clarifications.
Proposed Subsection 2.1 sets out ICC's rationale for the minimum back-
testing window length. The new subsection is intended to provide
additional description and analysis on the lookback period for back-
testing and would not change the methodology. The additional revisions
further ensure clarity and transparency with respect to ICC's back-
testing approach, procedures, and guidelines for remediating poor back-
testing results. The proposed footnote references a relevant regulation
to ensure ICC's performance of back-testing analysis is in compliance
with applicable requirements. As such, ICC believes that the proposed
rule change would help assure the soundness of the model by ensuring
that back-testing analysis is conducted properly to assess the
performance of the model. The proposed rule change is therefore
consistent with the prompt and accurate clearing and settlement of the
contracts cleared by ICC, the safeguarding of securities and funds in
the custody or control of ICC or for which it is responsible, and the
protection of investors and the public interest, within the meaning of
Section 17A(b)(3)(F) of the Act.\6\
---------------------------------------------------------------------------

    \3\ 15 U.S.C. 78q-1.
    \4\ 17 CFR 240.17Ad-22.
    \5\ 15 U.S.C. 78q-1(b)(3)(F).
    \6\ Id.
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(2)(i) and (v) \7\ requires each covered clearing
agency to establish, implement, maintain, and enforce written policies
and procedures reasonably designed to provide for governance
arrangements that are clear and transparent and specify clear and
direct lines of responsibility. ICC's Back-Testing Framework clearly
assigns and documents responsibility and accountability for performing
back-testing analyses and remediating poor back-testing results.
Amended Subsection 4 describes an additional aspect presented to the
RWG and notes an assessment that corresponds to the performance of a
back-testing analysis without overlapping periods. ICC believes that
specifying these additional responsibilities would strengthen the
governance arrangements in the Back-Testing Framework and the Back-
Testing Framework would continue to ensure that ICC maintains clear and
transparent governance procedures and arrangements with respect to the
performance, review, and reporting of back-testing results and the
remediation of poor back-testing results. As such, in ICC's view, the
proposed rule change continues to ensure that ICC maintains policies
and procedures that are reasonably designed to provide for clear and
transparent governance arrangements and specify clear and direct lines
of responsibility, consistent with Rule 17Ad-22(e)(2)(i) and (v).\8\
---------------------------------------------------------------------------

    \7\ 17 CFR 240.17Ad-22(e)(2)(i) and (v).
    \8\ Id.
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(4)(ii) \9\ requires each covered clearing agency to
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to effectively identify, measure,
monitor, and manage its credit exposures to participants and those
arising from its payment, clearing, and settlement processes, including
by maintaining additional financial resources at the minimum to enable
it to cover a wide range of foreseeable stress scenarios that include,
but are not limited to, the default of the two participant families
that would potentially cause the largest aggregate credit exposure for
the covered clearing agency in extreme but plausible market conditions.
As discussed above, proposed Subsection 2.1 would provide additional
description and analysis on the lookback period for back-testing and
would not change the methodology. The additional revisions enhance the
clarity and transparency of the Back-Testing Framework, which would
strengthen the documentation and ensure that it remains up-to-date,
clear, and transparent. ICC believes that the proposed changes would
enhance ICC's ability to manage risks and maintain appropriate
financial resources, including by ensuring that back-testing analysis
is conducted properly to assess the performance of the model. As such,
the proposed amendments would strengthen ICC's ability to maintain its
financial resources and withstand the pressures of defaults, consistent
with the requirements of Rule 17Ad-22(e)(4)(ii).\10\
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    \9\ 17 CFR 240.17Ad-22(e)(4)(ii).
    \10\ Id.
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    Rule 17Ad-22(e)(6)(vi) \11\ requires each covered clearing agency
to establish, implement, maintain, and enforce written policies and
procedures reasonably designed to cover its credit exposures to its
participants by establishing a risk-based margin system that, at a
minimum, is monitored by management on an ongoing basis and is
regularly reviewed, tested, and verified by (A) conducting back-tests
of its margin model at least once each day using standard predetermined
parameters and assumptions; and (B) conducting a sensitivity analysis
of its margin model and a review of its parameters and assumptions for
back-testing on at least a monthly basis, and considering modifications
to ensure the back-testing practices are appropriate for determining
the adequacy of ICC's margin resources. The Back-Testing Framework
continues to require the performance of daily, weekly, monthly, and
quarterly portfolio-level back-testing analyses, the performance of
monthly parameter reviews and parameter sensitivity analyses, and the
remediation of poor-back-testing results. The proposed amendments
consist of additional description on the lookback period for back-
testing and other clarifications regarding back-testing analysis and
the remediation of poor back-testing results. These procedures in the
Back-Testing Framework continue to promote the soundness of ICC's model
and ensure that ICC's risk management system is effective and
appropriate in addressing the risks associated with discharging its
responsibilities. The proposed changes are thus consistent with the
requirements of Rule 17Ad-22(e)(6)(vi).\12\
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    \11\ 17 CFR 240.17Ad-22(e)(6)(vi).
    \12\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    ICC does not believe the proposed rule change would have any
impact, or impose any burden, on competition. The proposed changes to
ICC's Back-Testing Framework will apply uniformly across all market
participants. Therefore, ICC does not believe the proposed rule change
imposes any burden on competition that is inappropriate in furtherance
of the purposes of the Act.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants or Others

    Written comments relating to the proposed rule change have not been
solicited or received. ICC will notify the Commission of any written
comments received by ICC.

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

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

IV. Solicitation of Comments

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

Electronic Comments:

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-ICC-2021-018 on the subject line.

Paper Comments:

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

All submissions should refer to File Number SR-ICC-2021-018. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filings will also be available for inspection
and copying at the principal office of ICE Clear Credit and on ICE
Clear Credit's website at https://www.theice.com/clear-credit/regulation.
    All comments received will be posted without change. Persons
submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-ICC-2021-018 and should be
submitted on or before October 5, 2021.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-19725 Filed 9-13-21; 8:45 am]
BILLING CODE 8011-01-P