[Federal Register Volume 82, Number 30 (Wednesday, February 15, 2017)]
[Notices]
[Pages 10837-10842]
[FR Doc No: 2017-02991]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79994; File No. SR-ISE-2016-27]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Order Granting Approval of Proposed Rule Change, as Modified by
Amendment No. 1 Thereto, To Amend the Exchange's Rules Regarding
Routing of Orders, Cancellation of Orders, and Handling of Error
Positions, and Permit Nasdaq Execution Services, LLC To Become an
Affiliated Member of the Exchange To Perform Certain Routing and Other
Functions

February 9, 2017.

I. Introduction

    On December 9, 2016, the International Securities Exchange, LLC
(``ISE'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change related to the routing of orders,
cancellation of orders, and handling of error positions. The proposed
rule change would also permit Nasdaq Execution Services, LLC (``NES'')
to become an affiliated Member \3\ of the Exchange to perform certain
routing and other functions. On December 20, 2016, the Exchange filed
Amendment No. 1 to the proposed rule change, which amended and replaced
the original filing in its entirety. The proposed rule change, as
modified by Amendment No. 1, was published for comment in the Federal
Register on December 29, 2016.\4\ The Commission received no comments
on the proposed rule change. This order grants approval of the proposed
rule change, as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ A ``Member'' is an organization that has been approved to
exercise certain trading rights on the Exchange. See ISE Rule
100(a)(23).
    \4\ See Securities Exchange Act Release No. 79665 (December 22,
2016), 81 FR 96092 (``ISE Notice'').
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II. Background

    On June 21, 2016, the Commission approved a proposed rule change
relating to a corporate transaction in which Nasdaq, Inc. would become
the ultimate parent of ISE, ISE Gemini, LLC (``ISE Gemini''), and ISE
Mercury, LLC (``ISE Mercury'' and, together with ISE and ISE Gemini,
the ``ISE Exchanges'').\5\ The transaction closed on June 30, 2016.\6\
Nasdaq, Inc. is also the ultimate parent of NASDAQ BX, Inc. (``BX''),
The NASDAQ Stock Market LLC (``Nasdaq''), and NASDAQ PHLX LLC (``Phlx''
and, together with Nasdaq and BX, the ``Nasdaq Exchanges'').\7\ Nasdaq,
Inc. is also the ultimate parent of NES,\8\ a broker-dealer that is a
member, and affiliate, of each of the Nasdaq Exchanges.\9\ As a result
of this transaction, the ISE Exchanges and the Nasdaq Exchanges became
affiliates,\10\ and NES became an affiliate of the ISE Exchanges.\11\
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    \5\ See Securities Exchange Act Release No. 78119 (June 21,
2016), 81 FR 41611 (June 27, 2016) (SR-ISE-2016-11; SR-ISE Gemini-
2016-05; SR-ISE Mercury-2016-10) (order approving Nasdaq, Inc.'s
acquisition of ISE, ISE Gemini, and ISE Mercury) (``Nasdaq
Acquisition Order'').
    \6\ See http://ir.nasdaq.com/releasedetail.cfm?releaseid=977785
(Nasdaq press release announcing completion of its acquisition).
    \7\ See Nasdaq Acquisition Order, supra note 5, at 41611.
    \8\ See Securities Exchange Act Release No. 69233 (March 25,
2013), 78 FR 19352 (March 29, 2013) (SR-NASDAQ-2013-028) (order
approving a proposed rule change to make permanent a pilot program
to permit Nasdaq to accept inbound orders routed by NES from the BX
Equities market and PSX) at 19352 n.6 and accompanying text (``BX
Equity Routing Approval''). See also ISE Notice, supra note 4, at
96093.
    \9\ See Securities Exchange Act Release Nos. 79661 (December 22,
2016), 81 FR 96100 (December 29, 2016) (SR-BX-2016-068) at 96100;
79662 (December 22, 2016), 81 FR 96087 (December 29, 2016) (SR-
NASDAQ-2016-169) at 96087; and 79660 (December 22, 2016), 81 FR
96060 (December 29, 2016) (SR-Phlx-2016-120) at 96061. See also ISE
Notice, supra note 4, at 96093.
    \10\ See Nasdaq Acquisition Order, supra note 5, at 41611 n.8.
The Nasdaq Exchanges, together with ISE Gemini and ISE Mercury, are
referred to herein as ISE's ``Affiliated Exchanges.''
    \11\ See generally ISE Notice, supra note 4, at 96093
(discussing that NES is a broker-dealer owned and operated by
Nasdaq, Inc. and affiliated with ISE and the Affiliated Exchanges).
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    The Exchange has now proposed a rule change to amend its rules
relating to order routing, cancellation of orders, and handling of
error positions, and to permit NES to become a Member of the Exchange
to perform certain routing and other functions. ISE's proposed rules
are similar to rules of Phlx,\12\ as well as the other Nasdaq
Exchanges.\13\ Specifically, and as described in more detail below, the
Exchange proposed to: (1) Route outbound orders in options listed and
open for trading on the Exchange's system to away markets through NES,
either directly or through a third-party routing broker-dealer; (2)
permit the Exchange to receive inbound orders in options routed through
NES from the Affiliated Exchanges, pursuant to

certain limitations and conditions; (3) adopt rules regarding the
cancellation of orders and the handling of certain error positions,
including maintenance by NES of an error account; and (4) make related
conforming changes.\14\ In addition, the Exchange requested that the
Commission approve its proposal to permit NES to become a Member of the
Exchange, as required by ISE Rule 312,\15\ to perform certain functions
relating to the outbound routing of orders to away markets, routing
orders inbound from the Affiliated Exchanges, cancellation of orders,
and the maintenance of an error account.
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    \12\ See ISE Notice, supra note 4, at 96093, 96094-96096. See
also Phlx Rules 985(c)(2), 1080(m)(ii), (iii), and (v).
    \13\ See Nasdaq Rule 2160(c) and Nasdaq Options Rules, Chapter
VI, Section 11(d)-(g); and BX Rule 2140(c) and BX Options Rules,
Chapter VI, Section 11(d)-(g).
    \14\ See ISE Notice, supra note 4, at 96093.
    \15\ Id.
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III. Discussion and Commission Findings

    After careful review, the Commission finds, as discussed in more
detail below, that the proposed rule change, as modified by Amendment
No. 1, is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\16\ In particular, the Commission finds that the proposed
rule change, as modified by Amendment No. 1, is consistent with Section
6(b)(1) of the Act,\17\ which requires, among other things, that a
national securities exchange be so organized and have the capacity to
carry out the purpose of the Act, and to comply and enforce compliance
by its members and persons associated with its members, with the
provisions of the Act, the rules and regulations thereunder, and the
rules of the Exchange. Further, the Commission finds that the proposed
rule change, as modified by Amendment No. 1, is consistent with Section
6(b)(5) of the Act,\18\ which requires, among other things, that the
rules of a national securities exchange be designed to prevent
fraudulent and manipulative acts and practices; to promote just and
equitable principles of trade; to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, and processing
information with respect to, and facilitating transactions in
securities; to remove impediments to and perfect the mechanism of a
free and open market and a national market system; and, in general, to
protect investors and the public interest. Section 6(b)(5) also
requires that the rules of an exchange not be designed to permit unfair
discrimination among customers, issuers, brokers, or dealers.
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    \16\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \17\ 15 U.S.C. 78f(b)(1).
    \18\ 15 U.S.C. 78f(b)(5).
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A. Restriction on Affiliation

    As noted above, ISE proposed that NES be permitted to become a
Member of the Exchange to perform certain routing and other functions,
as described in more detail below.\19\ Absent Commission approval, ISE
Rule 312 would prohibit NES from becoming a Member of ISE because of
its affiliation with the Exchange and its affiliation with affiliates
of the Exchange. Specifically, pursuant to ISE Rule 312, without prior
Commission approval, a Member of the Exchange ``shall not be or become
an affiliate of the Exchange, or any facility of the Exchange, or any
entity with which the Exchange or any facility of the Exchange is
affiliated.'' \20\
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    \19\ See ISE Notice, supra note 4, at 96093. See also infra,
Sections III.B-D.
    \20\ See ISE Rule 312. See also ISE Notice, supra note 4, at
96093.
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    In the past, the Commission has expressed concern that the
affiliation of an exchange with one of its members raises potential
conflicts of interest and the potential for unfair competitive
advantage.\21\ Although the Commission continues to be concerned about
potential unfair competition and conflicts of interest between an
exchange's self-regulatory obligations and its commercial interest when
the exchange is affiliated with one of its members, the Commission
believes that it is consistent with the Act, as discussed in more
detail below, to permit NES, an affiliate of the Exchange, to be a
Member of the Exchange to perform each of the proposed functions,
subject to the proposed limitations and conditions. The Commission also
believes that the proposed limitations and conditions will mitigate its
concerns about potential conflicts of interest and unfair competitive
advantage,\22\ and that the Exchange's proposed rules are designed to
ensure that NES cannot use any information advantage it may have
because of its affiliation with ISE.\23\
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    \21\ See, e.g., Securities Exchange Act Release Nos. 54170 (July
18, 2006), 71 FR 42149 (July 25, 2006) (SR-NASDAQ-2006-006) (order
approving Nasdaq's proposal to adopt Nasdaq Rule 2140, restricting
affiliations between Nasdaq and its members); 53382 (February 27,
2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-77) (order
approving the combination of the New York Stock Exchange, Inc. and
Archipelago Holdings, Inc.); 58673 (September 29, 2008), 73 FR 57707
(October 3, 2008) (SR-Amex-2008-62 and SR-NYSE-2008-60) (order
approving the combination of NYSE Euronext and the American Stock
Exchange LLC); 59135 (December 22, 2008), 73 FR 79954 (December 30,
2008) (SR-ISE-2008-85) (order approving the purchase by ISE Holdings
of an ownership interest in Direct Edge Holdings LLC); 59281
(January 22, 2009), 74 FR 5014 (January 28, 2009) (SR-NYSE-2008-120)
(order approving a joint venture between NYSE and BIDS Holdings
L.P.); 58375 (August 18, 2008), 73 FR 49498 (August 21, 2008) (File
No. 10-182) (order granting the exchange registration of BATS
Exchange, Inc.); 61698 (March 12, 2010), 75 FR 13151 (March 18,
2010) (File Nos. 10-194 and 10-196) (order granting the exchange
registration of EDGX Exchange, Inc. and EDGA Exchange, Inc.); and
62716 (August 13, 2010), 75 FR 51295 (August 19, 2010) (File No. 10-
198) (order granting the exchange registration of BATS-Y Exchange,
Inc.).
    \22\ See infra note 59 and accompanying text and Section III.D.
    \23\ See infra note 60 and accompanying text. The Commission
also notes that the functions to be performed by NES for ISE, as
well as the related limitations and conditions, are consistent with
those previously approved by the Commission for other exchanges.
See, e.g., Securities Exchange Act Release Nos. 67256 (June 26,
2012), 77 FR 39277 (July 2, 2012) (SR-BX-2012-030) (order approving
rules relating to the establishment of the BX options market,
including the use of an affiliated member for outbound and inbound
routing of options orders) at 39280-82; and 67280 (June 27, 2012),
77 FR 39552 (July 3, 2012) (SR-BX-2012-034) (order approving a
proposed rule change with respect to the authority of the BX or NES
to cancel orders when a technical or systems issue occurs and the
operation of an error account); and BX Equity Routing Approval,
supra note 8.
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B. Outbound Routing

    ISE has proposed to establish NES as the Exchange's exclusive order
router.\24\ Currently, ISE utilizes Linkage Handlers \25\ unaffiliated
with the Exchange to route outbound orders.\26\ ISE has proposed to
amend ISE Rule 1903 to provide that ISE will no longer use Linkage
Handlers and instead, NES will route orders to other options exchanges,
either directly, or indirectly through unaffiliated third-party routing
brokers, on behalf of ISE.\27\ ISE explained that the Exchange will
have the option to direct NES to route orders

to certain exchanges through a third-party routing broker, in which
case NES will submit the orders to the third-party routing broker and
the third-party routing broker will route the orders in the third-party
routing broker's name.\28\ ISE noted that its proposed use of NES to
handle outbound routing for the Exchange is similar to the arrangement
utilized by Phlx.\29\
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    \24\ See proposed ISE Rule 1903(a).
    \25\ A ``Linkage Handler'' is a broker that is unaffiliated with
the Exchange with which the Exchange has contracted to provide
Routing Services, as that term is defined in ISE Rule 1903, by
routing ISO(s) to other exchange(s) as an agent on behalf of Public
Customer and Non-Customer Orders according to the requirements of
Rule 1901 (prohibition on trade-throughs) and Rule 1902 (prohibition
on locked and crossed markets). See ISE Rule 1901, Supplementary
Material .03. ISE Rules 100(a)(28) and (39) define ``Non-Customer
Order'' and ``Public Customer Order,'' respectively.
    \26\ See ISE Rule 1903(a).
    \27\ See proposed ISE Rule 1903(a). ISE has proposed to retain
the first portion of ISE Rule 1903, which provides that the Exchange
may automatically route ISOs to other exchanges under certain
circumstances, including pursuant to Supplementary Material .02 to
Rule 1901, which discusses the handling of orders when the automatic
execution of an incoming order would result in an impermissible
trade through. See proposed ISE Rule 1903. ISE noted that this
provision provides context to the proposed rule and is consistent
with the practice on Phlx, even though it is not contained in Phlx's
comparable rule. See ISE Notice, supra note 4, at 96094. ISE has
proposed to remove from this provision a reference to Supplementary
Material .03 to Rule 1901, which defines Linkage Handlers. See
proposed ISE Rule 1903.
    \28\ See ISE Notice, supra note 4, at 96094.
    \29\ See id. (citing Phlx Rule 1080(m)). The Commission notes
that ISE's proposal is also similar to Nasdaq's and BX's rules. See
Nasdaq Options Rules, Chapter VI, Section 11(d)-(f); BX Options
Rules, Chapter VI, Section 11(d)-(f).
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    Pursuant to the proposal, NES will serve as the routing facility of
the Exchange (``Routing Facility). The sole use of the Routing Facility
by the system will be to route orders in options listed and open for
trading on the system to away markets either directly or through one or
more third-party unaffiliated routing broker-dealers pursuant to
Exchange rules on behalf of the Exchange. The Routing Facility will be
subject to regulation as a facility of the Exchange, including the
requirement to file proposed rule changes under Section 19 of the Act,
as amended.\30\
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    \30\ See proposed ISE Rule 1903(a).
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    NES will be a member of an SRO unaffiliated with ISE that is its
designated examining authority.\31\ Also, the Exchange and NES will not
be permitted to use a routing broker for which the Exchange or any
affiliate of the Exchange is the designated examining authority.\32\
The use of NES to route orders to other market centers will be
optional.\33\ Parties that do not desire to use NES will need to
designate orders as Do-No-Route-Orders pursuant to ISE Rule 715(m).\34\
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    \31\ See id.
    \32\ See proposed ISE Rule 1903(c)(2). ISE noted that this
provision is intended to prevent any conflicts of interest that
might arise if an entity with regulatory oversight of ISE was privy
to trades conducted on ISE. See ISE Notice, supra note 4, at 96095.
    \33\ See proposed ISE Rule 1903(b).
    \34\ See id. See also ISE Notice, supra note 4, at 96095.
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    The Exchange will establish and maintain procedures and internal
controls reasonably designed to adequately restrict the flow of
confidential and proprietary information between the Exchange and the
Routing Facility, and any other entity, including any affiliate of the
Routing Facility; or, where there is a routing broker, the Exchange,
the Routing Facility and any routing broker, and any other entity,
including any affiliate of the routing broker.\35\ The books, records,
premises, officers, directors, agents, and employees of the Routing
Facility, as a facility of the Exchange, will be deemed to be the
books, records, premises, officers, directors, agents, and employees of
the Exchange for purposes of and subject to oversight pursuant to the
Act. Also, the books and records of the Routing Facility, as a facility
of the Exchange, will be subject at all times to inspection and copying
by the Exchange and the Commission.\36\
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    \35\ See proposed ISE Rule 1903(c). If the routing broker or any
of its affiliates engages in any other business activities other
than providing routing services to the Exchange, this provision will
apply to the flow of confidential and proprietary information
between the segment of the routing broker or affiliate that provides
the other business activities and the segment of the routing broker
that provides the routing services. See id.
    \36\ See proposed ISE Rule 1903(c)(1).
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    The Exchange will determine the logic that provides when, how, and
where orders are routed to other exchanges. Except as provided, the
routing broker(s) will not be able to change the terms of an order or
the routing instructions, nor will the routing broker have any
discretion about where to route an order.\37\ ISE explained that it may
choose to use a different routing broker by destination exchange,
depending upon the costs and technological efficiencies involved.\38\
ISE stated that, at a minimum, it anticipates using a third-party
routing broker to access certain markets where the costs of maintaining
a membership for NES or the costs of connectivity and execution do not
make sense based on the number or types of orders that the Exchange
typically routes to a particular market. ISE added that it will also
consider the ease of connectivity and execution and general reliability
when selecting a third-party routing broker.\39\ Entering Members whose
orders are routed to away markets will be obligated to honor such
trades that are executed on away markets to the same extent they would
be obligated to honor a trade executed on the Exchange.\40\
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    \37\ See proposed ISE Rule 1903(e).
    \38\ For such indirect routing, ISE stated that it would route
orders through NES to another routing broker where the Exchange
determines that it is appropriate. See ISE Notice, supra note 4, at
96095.
    \39\ See ISE Notice, supra note 4, at 96095.
    \40\ See proposed ISE Rule 1903(f). ISE noted that this
provision is substantively the same as its current Rule 1903(f), but
it is amending the provision to conform the text to Phlx Rule
1080(m)(ii).
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    In addition to the Exchange rules regarding routing away to trading
centers, NES will, pursuant to Rule 15c3-5 under the Act, implement
certain tests designed to mitigate risks associated with providing the
Exchange's Members with access to such away trading centers. Pursuant
to the policies and procedures developed by NES to comply with Rule
15c3-5, if an order or series of orders are deemed to be violative of
applicable pre-trade requirements of Rule 15c3-5, the order will be
rejected prior to routing and/or NES will seek to cancel any orders
that had been routed.\41\
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    \41\ See proposed ISE Rule 1903(d).
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    ISE also has proposed to make conforming changes to remove the term
Linkage Handler from its rules and replace it with references to NES or
third-party unaffiliated routing broker-dealers used by NES, as
appropriate.\42\ Further, ISE has proposed to remove ISE Rule
705(d)(4), which provides an exception to the limits on compensation in
ISE Rule 705(d) for Members to the extent such Members are acting as
Linkage Handlers.\43\ ISE explained that, unlike NES, Linkage Handlers
are not affiliated with ISE and the Exchange does not believe that such
an exception to compensation limits is necessary for NES.\44\
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    \42\ See proposed ISE Rule 1901, Supplementary Material .02(d),
.04(a), and .05(a); proposed ISE Rule 1903, Supplementary Material
.01, .02, and .03. ISE has proposed to delete its definition of
Linkage Handler at Rule 1901, Supplementary Material .03, and
reserve this provision. See proposed ISE Rule 1901, Supplementary
Material .03. With respect to the references to Linkage Handler in
ISE Rules 1904 and 1905, as discussed further below, ISE has
proposed to replace ISE Rule 1904 in its entirety and reserve ISE
Rule 1905. See proposed ISE Rules 1904 and 1905.
    \43\ See proposed ISE Rule 705(d).
    \44\ See ISE Notice, supra note 4, at 96095.
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    As a facility of ISE (as defined in Section 3(a)(2) \45\ of the
Act), NES will be subject to Exchange oversight, as well as Commission
oversight, and the Exchange will be responsible for ensuring that NES's
outbound routing function is operated consistent with Section 6 of the
Act and the Exchange's rules.\46\ A participant in ISE's system will be
free to route its orders to other market centers through alternative
means. The Commission notes that ISE's proposed rules for the operation
of NES as an affiliated outbound router on behalf of the Exchange are
consistent with the rules and conditions approved by the Commission for
other exchanges.\47\ In light of the protections

discussed above, including the regulation of NES as a facility of the
Exchange with respect to the routing of orders, the Commission believes
that ISE's proposed rules and use of NES to route orders to away
markets are consistent with the Act.
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    \45\ 15 U.S.C. 78c(a)(2).
    \46\ Further, the Commission notes that the Exchange will be
responsible for filing with the Commission proposed rule changes and
fees relating to NES's outbound routing function and NES's outbound
routing function will be subject to exchange non-discrimination
requirements.
    \47\ See, e.g., Securities Exchange Act Release No. 62716, supra
note 21 at 51303-04. The proposed rules are also consistent with the
rules of the Nasdaq Exchanges. See, e.g., Phlx Rule 1080(m)(ii) and
(iii); Nasdaq Options Rules, Chapter VI, Section 11(d)-(f); BX
Options Rules, Chapter VI, Section 11(d)-(f). See also Securities
Exchange Act Release No. 59995 (May 28, 2009), 74 FR 26750 (June 3,
2009) (SR-Phlx-2009-32) (order approving enhancements to Phlx's
trading system, including use of outbound routing facility) at
26756-57.
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C. Inbound Routing

    As discussed above, NES is currently a member of each Nasdaq
Exchange. NES also operates as a facility of each of Nasdaq, Phlx, and
BX that provides outbound options routing to other market centers,
subject to certain conditions.\48\ ISE Gemini and ISE Mercury have also
proposed that NES operate as a facility of each that provides outbound
options routing to other market centers, subject to similar
conditions.\49\ The operation of NES as a facility of each of the
Affiliated Exchanges providing outbound routing services will be
subject to oversight by ISE Gemini, ISE Mercury, Nasdaq, BX, and Phlx,
respectively, as well as Commission oversight. Each of the Affiliated
Exchanges will be responsible for ensuring that NES's outbound options
routing services are operated consistent with Section 6 of the Act and
with the respective Affiliated Exchange's rules. In addition, the
Affiliated Exchanges must each file with the Commission rule changes
and fees relating to their outbound options routing services provided
by NES.
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    \48\ See supra note 47 (citing Phlx Rule 1080(m)(ii) and (iii);
Nasdaq Options Rules, Chapter VI, Section 11(d)-(f); and BX Options
Rules, Chapter VI, Section 11(d)-(f)). The Commission notes that
these conditions are consistent with the conditions the Commission
is approving today for ISE's operation of NES as a facility of the
Exchange for outbound options routing to other market centers. See
supra Section III.B.
    \49\ See Securities Exchange Act Release Nos. 79664 (December
22, 2016), 81 FR 96136 (December 29, 2016) (SR-ISEGemini-2016-16);
and 79663 (December 22, 2016), 81 FR 96089 (December 29, 2016) (SR-
ISEMercury-2016-22). The Commission is also today approving these
proposed rules changes. See Securities Exchange Act Release No.
79995 (February 9, 2017) (``ISE Gemini and ISE Mercury Exchange
Routing Order'').
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    Recognizing that the Commission previously expressed concern that
the affiliation of an exchange with one of its members raises the
potential for unfair competitive advantage and potential conflicts of
interest between an exchange's self-regulatory obligations and its
commercial interest, ISE proposed the following limitations and
conditions to permit the Exchange to accept inbound options orders that
NES routes in its capacity as a facility of the Affiliated Exchanges:
\50\
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    \50\ See ISE Notice, supra note 4, at 96093-96094.
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     First, ISE and the Financial Industry Regulatory Authority
(``FINRA'') will maintain a Regulatory Services Agreement (``RSA''), as
well as an agreement pursuant to Rule 17d-2 under the Act (``17d-2
Agreement'').\51\ Pursuant to the RSA and the 17d-2 Agreement, FINRA
will be allocated regulatory responsibilities to review NES's
compliance with certain Exchange rules.\52\ Pursuant to the RSA,
however, the Exchange retains ultimate responsibility for enforcing its
rules with respect to NES.
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    \51\ 17 CFR 240.17d-2.
    \52\ NES is also subject to independent oversight by FINRA, its
designated examining authority, for compliance with financial
responsibility requirements.
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     Second, FINRA will monitor NES for compliance with the
Exchange's trading rules, and will collect and maintain certain related
information.\53\
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    \53\ Pursuant to the RSA, both FINRA and the Exchange will
collect and maintain all alerts, complaints, investigations and
enforcement actions in which NES (in its capacity as a facility of
each of the Affiliated Exchanges routing orders to the Exchange) is
identified as a participant that has potentially violated applicable
Commission or Exchange rules. The Exchange and FINRA will retain
these records in an easily accessible manner in order to facilitate
any potential review conducted by the Commission's Office of
Compliance Inspections and Examinations. See ISE Notice, supra note
4, at 96094 n.13 and accompanying text.
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     Third, FINRA will provide a report to the Exchange's chief
regulatory officer (``CRO''), on a quarterly basis, that: (i)
Quantifies all alerts (of which the Exchange or FINRA is aware) that
identify NES as a participant that has potentially violated Commission
or Exchange rules, and (ii) lists all investigations that identify NES
as a participant that has potentially violated Commission or Exchange
rules.
     Fourth, ISE proposed to amend ISE Rule 312 to add ISE Rule
312(c), which will provide that Nasdaq, Inc., as the holding company
owning both the Exchange and NES, shall establish and maintain
procedures and internal controls reasonably designed to ensure that NES
does not develop or implement changes to its system, based on non-
public information obtained regarding planned changes to the Exchange's
systems as a result of its affiliation with the Exchange, until such
information is available generally to similarly situated Exchange
Members, in connection with the provision of inbound routing to the
Exchange.\54\
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    \54\ See proposed ISE Rule 312(c).
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    The Commission finds that ISE's proposed rule change to permit the
Exchange to accept inbound options orders routed by NES from its
Affiliated Exchanges, including the related change to ISE Rule 312, are
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.
Specifically, the Commission finds that the proposed rule change is
consistent with Section 6(b)(1) of the Act \55\ and Section 6(b)(5) of
the Act.\56\
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    \55\ 15 U.S.C. 78f(b)(1). See also supra note 17 and
accompanying text.
    \56\ 15 U.S.C. 78f(b)(5). See also supra note 18 and
accompanying text.
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    In the past, the Commission has expressed concern that the
affiliation of an exchange with one of its members raises potential
conflicts of interest and the potential for unfair competitive
advantage.\57\ Although the Commission continues to be concerned about
potential unfair competition and conflicts of interest between an
exchange's self-regulatory obligations and its commercial interest when
the exchange is affiliated with one of its members, for the reasons
discussed below, the Commission believes that it is consistent with the
Act to permit NES, in its capacity as a facility of each of the
Affiliated Exchanges, to route options orders inbound to ISE, subject
to the limitations and conditions described above.\58\
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    \57\ See supra note 21 and accompanying text.
    \58\ The Commission notes that these limitations and conditions
are consistent with those previously approved by the Commission for
other exchanges. See, e.g., Securities Exchange Act Release Nos.
67256, supra note 23, at 39281-82; and 69229 (March 25, 2013), 78 FR
19337 (March 29, 2013) (SR-Phlx-2013-15) (order approving a proposed
rule change to make permanent a pilot program to permit PSX to
accept inbound orders routed by NES from BX); and BX Equity Routing
Approval, supra note 8.
---------------------------------------------------------------------------

    The Commission believes that these limitations and conditions will
mitigate its concerns about potential conflicts of interest and unfair
competitive advantage. In particular, the Commission believes that a
non-affiliated SRO's oversight of NES,\59\ combined with a non-
affiliated SRO's monitoring of NES's compliance with the Exchange's
rules and quarterly reporting to the Exchange, will help to protect the
independence of ISE's regulatory responsibilities with respect to NES.
The Commission also believes that the Exchange's proposed ISE Rule
312(c) is designed to ensure that NES cannot use any information
advantage it may have because of its affiliation with ISE.\60\
---------------------------------------------------------------------------

    \59\ This oversight will be accomplished through the 17d-2
Agreement between FINRA and the Exchange and the RSA.
    \60\ See supra note 54 and accompanying text.
---------------------------------------------------------------------------

D. Cancellation of Orders and Error Accounts

    ISE has proposed to amend its rules concerning the cancellation of
orders

and error accounts. Currently, the Exchange may cancel orders as it
deems necessary to maintain fair and orderly markets if a technical or
systems issue occurs at the Exchange, a Linkage Handler in connection
with the routing services provided under ISE Rule 1903, or another
exchange to which an Exchange order has been routed.\61\ ISE permits
Linkage Handlers to maintain one or more accounts for the purpose of
liquidating unmatched trade positions that may occur in connection with
their routing of outbound orders.\62\
---------------------------------------------------------------------------

    \61\ See ISE Rule 1904. See also ISE Notice, supra note 4, at
96096.
    \62\ See ISE Rule 1905. See also ISE Notice, supra note 4, at
96096.
---------------------------------------------------------------------------

    As described above, ISE will no longer utilize Linkage Handlers and
will instead utilize NES as its Routing Facility to route orders to
away markets either directly or through one or more third-party
unaffiliated routing broker-dealers on behalf of the Exchange.\63\ In
its proposal, ISE stated that a technical or systems issue may occur at
the Exchange, NES, or a routing destination that causes the Exchange or
NES to cancel orders, if the Exchange or NES determines that such
action is necessary to maintain a fair and orderly market.\64\ ISE also
stated that a technical or systems issue that occurs at the Exchange,
NES, a routing destination, or a third-party unaffiliated routing
broker may result in NES acquiring an error position that it must
resolve.\65\ In conjunction with the proposed changes to outbound
routing described above, ISE has proposed to revise its rules
concerning the cancellation of orders and handling of error positions
and adopt proposed ISE Rule 1904.\66\ ISE noted that proposed ISE Rule
1904 is similar to Phlx's rule on this subject.\67\
---------------------------------------------------------------------------

    \63\ See supra notes 27-28 and accompanying text.
    \64\ See ISE Notice, supra note 4, at 96096. For examples of
some of the circumstances in which the Exchange or NES may decide to
cancel orders, see id., at 96096-97.
    \65\ See ISE Notice, supra note 4, at 96097. Specifically,
proposed ISE Rule 1904(b) defines ``error positions'' as ``positions
that result from a technical or systems issue at NES, the Exchange,
a routing destination, or a non-affiliate third-party Routing Broker
that affects one or more orders.'' For examples of some of the
circumstances that may lead to error positions, see ISE Notice,
supra note 4, at 96097.
    \66\ See proposed ISE Rules 1904 and 1905. ISE has proposed to
(i) combine its rules concerning cancellation of orders and error
accounts into proposed ISE Rule 1904, which it will retitle; and
(ii) remove and reserve ISE Rule 1905. See ISE Notice, supra note 4,
at 96095-96.
    \67\ See ISE Notice, supra note 4, at 96095-96 (citing Phlx Rule
1080(m)(v)). The Commission notes that ISE's proposed rule is also
similar to Nasdaq's and BX's rules. See Nasdaq Options Rules,
Chapter VI, Section 11(g); BX Options Rules, Chapter VI, Section
11(g).
---------------------------------------------------------------------------

    ISE has proposed to provide the Exchange or NES with general
authority to cancel orders to maintain fair and orderly markets when a
technical or systems issue occurs at the Exchange, NES, or a routing
destination.\68\ NES will maintain an error account for the purpose of
addressing error positions, according to the specified procedures for
resolving such error positions.\69\ Specifically, the Exchange or NES
will be able to cancel orders as either deems necessary to maintain
fair and orderly markets if a technical or systems issue occurs at the
Exchange, NES, or a routing destination.\70\ The Exchange or NES will
be required to provide notice of the cancelation to all affected
Members as soon as practicable.\71\
---------------------------------------------------------------------------

    \68\ See proposed ISE Rule 1904(a).
    \69\ See proposed ISE Rule 1904(b).
    \70\ See proposed ISE Rule 1904(a).
    \71\ See id.
---------------------------------------------------------------------------

    Pursuant to the proposal, NES will be required to maintain an error
account for the purpose of addressing error positions that result from
a technical or systems issue at the Exchange, NES, a routing
destination, or an unaffiliated third-party routing broker.\72\ For
purposes of this rule, an error position will not include any position
that results from an order submitted by a Member to the Exchange that
is executed on the Exchange and automatically processed for clearance
and settlement on a locked-in basis.\73\ NES will not be permitted to
(i) accept any positions in its error account from a Member's account
or (ii) permit any Member to transfer any positions from the Member's
account to NES's error account.\74\ In other words, NES may not accept
from a Member positions that are delivered to the Member through the
clearance and settlement process, even if those positions may have been
related to a technical or systems issue at the Exchange, NES, a routing
destination of NES, or an unaffiliated third-party routing broker.\75\
If, however, a technical or systems issue results in the Exchange not
having valid clearing instructions for a Member to a trade, NES may
assume that Member's side of the trade so that the trade can be
automatically processed for clearance and settlement on a locked-in
basis.\76\
---------------------------------------------------------------------------

    \72\ See proposed ISE Rule 1904(b).
    \73\ See proposed ISE Rule 1904(b)(1).
    \74\ See proposed ISE Rule 1904(b)(2).
    \75\ See ISE Notice, supra note 4, at 96097-98 n.30. This
provision would not apply if NES incurred a short position to settle
a Member's purchase, as the Member would not have had a position in
its account as a result of the purchase at the time of NES's action.
Similarly, if a systems issue occurred that caused one Member to
receive an execution for which there is not an available
counterparty, action by NES would be required for the positions to
settle into that Member's account. See id.
     If error positions result in connection with the Exchange's use
of a third-party routing broker for outbound routing and those
positions are delivered to NES through the clearance and settlement
process, NES would be permitted to resolve those positions. If,
however, such positions were not delivered to NES through the
clearance and settlement process, then the third-party routing
broker would resolve the error positions itself, and NES would not
be permitted to accept the positions. See ISE Notice, supra note 4,
at 96096 n.23.
    \76\ See proposed ISE Rule 1904(b)(3).
---------------------------------------------------------------------------

    In connection with a particular technical or systems issue, the
Exchange or NES will be required to either (i) assign all resulting
error positions to Members or (ii) have all resulting error positions
liquidated. Any determination to assign or liquidate error positions,
as well as any resulting assignments, will be made in a
nondiscriminatory fashion.\77\ The Exchange or NES will be required to
assign all error positions resulting from a particular technical or
systems issue to the Members affected by that technical or systems
issue if the Exchange or NES:
---------------------------------------------------------------------------

    \77\ See proposed ISE Rule 1904(c).
---------------------------------------------------------------------------

    (i) Determines that it has accurate and sufficient information
(including valid clearing information) to assign the positions to all
of the Members affected by that technical or systems issue;
    (ii) Determines that it has sufficient time pursuant to normal
clearance and settlement deadlines to evaluate the information
necessary to assign the positions to all of the Members affected by
that technical or systems issue; and
    (iii) Has not determined to cancel all orders affected by that
technical or systems issue in accordance with proposed ISE Rule
1904(a).\78\
---------------------------------------------------------------------------

    \78\ See proposed ISE Rule 1904(c)(A)(i)-(iii).
---------------------------------------------------------------------------

    If the Exchange or NES is unable to assign all error positions
resulting from a particular technical or systems issue to all of the
affected Members, or if the Exchange or NES determines to cancel all
orders affected by the technical or systems issue, then NES will be
required to liquidate the error positions as soon as practicable.\79\
NES will be required to provide complete time and price discretion for
the trading to liquidate the error positions to a third-party broker-
dealer, and would be prohibited from attempting to exercise any
influence or control over the timing or methods of such trading.\80\
Further, NES will be required to establish and enforce policies and
procedures that are reasonably designed to restrict the flow of
confidential and proprietary information between the third-party
broker-dealer, on one hand, and the Exchange and NES, on the other,
associated with the liquidation of the

error positions.\81\ Also, the Exchange and NES will be required to
make and keep records to document all determinations to treat positions
as error positions; all determinations to assign error positions to
Members or to liquidate error positions; and the liquidation of error
positions through the third-party broker-dealer.\82\
---------------------------------------------------------------------------

    \79\ See proposed ISE Rule 1904(c)(B).
    \80\ See proposed ISE Rule 1904(c)(B)(i).
    \81\ See proposed ISE Rule 1904(c)(B)(ii).
    \82\ See proposed ISE Rule 1904(d).
---------------------------------------------------------------------------

    The Commission recognizes that technical or systems issues may
occur, and believes that proposed ISE Rule 1904, in allowing the
Exchange or NES to cancel orders affected by technical or systems
issues, should provide a reasonably efficient means for the Exchange to
handle such orders, and appears reasonably designed to permit the
Exchange to maintain fair and orderly markets.\83\ The Commission also
believes that allowing the Exchange to resolve error positions through
the use of an error account maintained by NES pursuant to the
procedures set forth in the rule, and as described above, is consistent
with the Act. The Commission notes that the rule establishes criteria
for determining which positions are error positions,\84\ and that the
Exchange or NES, in connection with a particular technical or systems
issue, will be required to either assign or liquidate all resulting
error positions.\85\ Also, the Exchange or NES will assign error
positions that result from a particular technical or systems issue to
Members only if all such error positions can be assigned to all of the
Members affected by that technical or systems issue.\86\ If the
Exchange or NES cannot assign all error positions to all Members, NES
will liquidate all of those error positions.\87\ In this regard, the
Commission believes that the new rule appears reasonably designed to
further just and equitable principles of trade and the protection of
investors and the public interest, and to help prevent unfair
discrimination, in that it should help assure the handling of error
positions will be based on clear and objective criteria, and that the
resolution of those positions will occur promptly through a transparent
process.
---------------------------------------------------------------------------

    \83\ The Commission notes that ISE stated that the proposed
amendments to ISE Rule 1904 are designed to maintain fair and
orderly markets, ensure full trade certainty for market
participants, and avoid disrupting the clearance and settlement
process. See ISE Notice, supra note 4, at 96099. The Commission also
notes that ISE stated that a decision to cancel orders due to a
technical or systems issue is not equivalent to the Exchange
declaring self-help against a routing destination pursuant to ISE
Rule 1901(b)(1)(i). See id. at 96097 n.29.
    \84\ See proposed ISE Rule 1904(b).
    \85\ See proposed ISE Rule 1904(c).
    \86\ See proposed ISE Rule 1904(c)(A).
    \87\ See proposed ISE Rule 1904(c)(B).
---------------------------------------------------------------------------

    In addition, the Commission notes that it has previously expressed
concern about the potential for unfair competition and conflicts of
interest between an exchange's self-regulatory obligations and its
commercial interest when the exchange is affiliated with one of its
members.\88\ The Commission has also previously expressed its concern
about the potential for misuse of confidential and proprietary
information.\89\ The Commission believes that the requirement that NES
provide complete time and price discretion for the liquidation of error
positions to a third-party broker-dealer, including that NES not
attempt to exercise any influence or control over the timing or methods
of such trading, combined with the requirement that the Exchange
establish and enforce policies and procedures that are reasonably
designed to restrict the flow of confidential and proprietary
information to the third-party broker-dealer liquidating such
positions, should help mitigate the Commission's concerns. In
particular, the Commission believes that these requirements should help
assure that none of the Exchange, NES, or the third-party broker-dealer
is able to misuse confidential or proprietary information obtained in
connection with the liquidation of error positions for its own benefit.
The Commission also notes that the Exchange and NES would be required
to make and keep records to document all determinations concerning
error positions and resulting assignments or liquidations.\90\ In
addition, the Commission notes that the proposed procedures for
cancelling orders and the handling of error positions are consistent
with procedures the Commission has approved for other exchanges.\91\
---------------------------------------------------------------------------

    \88\ See supra notes 21 and 57 and accompanying text.
    \89\ See, e.g., Securities Exchange Act Release No. 67280, supra
note 23, at 39554.
    \90\ See proposed ISE Rule 1904(d).
    \91\ See, e.g., Securities Exchange Act Release Nos. 66963 (May
10, 2012), 77 FR 28919 (May 16, 2012) (SR-NYSEArca-2012-22); 67010
(May 17, 2012), 77 FR 30564 (May 23, 2012) (SR-EDGX-2012-08); 67011
(May 17, 2012), 77 FR 30562 (May 23, 2012) (SR-EDGA-2012-09); and
67280, supra note 23. The Commission also notes that ISE's proposed
rule is consistent with the corresponding rules of the Nasdaq
Exchanges. See Phlx Rule 1080(m)(v); Nasdaq Options Rules, Chapter
VI, Section 11(g); BX Options Rules, Chapter VI, Section 11(g).
---------------------------------------------------------------------------

IV. Implementation of Proposed Rule Change

    ISE stated that it intends to begin implementation of the proposed
rule change in the second quarter of 2017, in tandem with a technology
migration to Nasdaq INET architecture, and that the migration will be
on a symbol-by-symbol basis. ISE has represented that it will issue an
alert to Members to announce the relevant migration date for specific
symbols.\92\ ISE explained that the rules in ISE Chapter 19, including
ISE Rules 1901, 1903, 1904, and 1905, are incorporated by reference
into the rulebooks of ISE Gemini and ISE Mercury.\93\ ISE Gemini and
ISE Mercury submitted proposed rule changes that, among other things,
would permit ISE Gemini and ISE Mercury to each use NES to route
options orders outbound to away markets, route options orders inbound
from the Affiliated Exchanges, and utilize the same procedures for
cancellation of orders and handling of error accounts described
herein.\94\ ISE stated that it intends to begin implementation of the
proposed rule changes for ISE Gemini and ISE Mercury in the first
quarter and third quarter of 2017, respectively, on a symbol-by-symbol
basis. ISE further represented that it will add notations in each
rulebook to cross-reference the amended rule text and clarify the
respective implementation dates.\95\
---------------------------------------------------------------------------

    \92\ See ISE Notice, supra note 4, at 96098.
    \93\ See id.
    \94\ See Securities Exchange Act Release Nos. 79664, supra note
49; and 79663, supra note 49. The Commission is also today approving
these proposed rule changes. See ISE Gemini and ISE Mercury Exchange
Routing Order, supra note 49.
    \95\ See ISE Notice, supra note 4, at 96098.
---------------------------------------------------------------------------

III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\96\ that the proposed rule change (SR-ISE-2016-27), as modified by
Amendment No. 1, be, and hereby is, approved.
---------------------------------------------------------------------------

    \96\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\97\
---------------------------------------------------------------------------

    \97\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02991 Filed 2-14-17; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register: March 15, 2006 (Volume 71, Number 50)]
[Notices]
[Page 13388-13389]
[DOCID:fr15mr06-108]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OPP-2006-0193; FRL-7768-2]

Notice of Filing of a Pesticide Petition for the Establishment of
an Exemption from the Requirement of Regulations for Residues of
Quillaja Saponaria in or on All Food Commodities

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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

SUMMARY: This notice announces the initial filing of a pesticide
petition proposing the establishment of an exemption from the
requirement of regulations for residues of Quillaja Saponaria extract
in or on all food commodities.

DATES: Comments must be received on or before April 14, 2006.

ADDRESSES: Submit your comments, identified by docket identification
(ID) number EPA-HQ-OPP-2006-0193 and pesticide petition number (PP)
5F6982, by one of the following methods:
     http://www.regulations.gov/. Follow the on-line

instructions for submitting comments.
     Mail: Public Information and Records Integrity Branch
(PIRIB) (7502C), Office of Pesticide Programs (OPP), Environmental
Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-
0001.
     Hand Delivery: Public Information and Records Integrity
Branch (PIRIB) (7502C), Office of Pesticide Programs (OPP),
Environmental Protection Agency, Rm. 119, Crystal Mall 2, 1801
S. Bell St., Arlington, VA, Attention: Docket ID number EPA-HQ-OPP-
2006-0193. The Docket Facility is open from 8:30 a.m. to 4 p.m., Monday
through Friday, excluding legal holidays. The telephone number for the
Docket Facility is<PHONE_NUMBER>. Such deliveries are only accepted
during the Docket's normal hours of operation, and special arrangements
should be made for deliveries of boxed information.
    Instructions: Direct your comments to docket ID number EPA-HQ-OPP-
2006-0193. EPA's policy is that all comments received will be included
in the public docket without change and may be made available on-line
at http://www.regulations.gov/, including any personal information

provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through regulations.gov or e-
mail. The http://www.regulations.gov website is an ``anonymous access''

system, which means EPA will not know your identity or contact
information unless you provide it in the body of your comment. If you
send an e-mail comment directly to EPA without going at
regulations.gov, your e-mail address will be captured automatically and
included as part of the comment that is placed in the public docket and
made available on the Internet. If you submit an electronic comment,
EPA recommends that you include your name and other contact information
in the body of your comment and with any disk or CD ROM you submit. If
EPA cannot read your comment due to technical difficulties and cannot
contact you for clarification, EPA may not be able to consider your
comment. Electronic files should avoid the use of special characters,
any form of encryption, and be free of any defects or viruses. For
additional information about EPA's public docket, visit the EPA Docket
Center homepage at http://www.epa.gov/epahome/dockets.htm/.

    Docket: All documents in the docket are listed in the
regulation.gov index. Although listed in the index, some information is
not publicly available, e.g., CBI or other information whose disclosure
is restricted by statute. Certain other material, such as copyrighted
material, will be publicly available only in hard copy. Publicly
available docket materials are available either electronically at
http://www.regulations.gov or in hard copy at the Public Information

and Records Integrity Branch (PIRIB) (7502C), Office of Pesticide
Programs (OPP), Environmental Protection Agency, Rm. 119, Crystal Mall
2, 1801 S. Bell St., Arlington, VA. The Docket Facility is
open from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal
holidays. The Docket Facility telephone number is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Driss Benmhend, Biopesticides and
Pollution Prevention Division, (7511C), Office of Pesticide Programs,
U. S. Environmental Protection Agency, 1200 Pennsylvania Ave., NW.,
Washington, DC 20460-0001;<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 code 111).
     Animal production (NAICS code 112).
     Food manufacturing (NAICS code 311).
     Pesticide manufacturing (NAICS code 32532).
    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 at the end of the pesticide petition
summary of interest.

B. What Should I Consider as I Prepare My Comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through
regulations.gov or e-mail. Clearly mark the part or all of the
information that you claim to be CBI. For CBI information in a disk or
CD ROM that you mail to EPA, mark the outside of the disk or CD ROM as
CBI and then identify electronically within the disk or CD ROM the
specific information that is claimed as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
    2. Tips for preparing your comments. When submitting comments,
remember to:
    i. Identify the document by docket ID number and other identifying
information (subject heading, Federal Register date and page number).
    ii. Follow directions. The Agency may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
    iii. Explain why you agree or disagree; suggest alternatives and
substitute language for your requested changes.
    iv. Describe any assumptions and provide any technical information
and/or data that you used.
    v. If you estimate potential costs or burdens, explain how you
arrived at your estimate in sufficient detail to allow for it to be
reproduced.

    vi. Provide specific examples to illustrate your concerns and
suggest alternatives.
    vii. Explain your views as clearly as possible, avoiding the use of
profanity or personal threats.
    viii. Make sure to submit your comments by the comment period
deadline identified.

II. What Action is the Agency Taking?

    EPA is printing a summary of each pesticide petition received under
section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21
U.S.C. 346a, proposing the establishment or amendment of regulations in
40 CFR part 180 for residues of pesticide chemicals in or on various
food commodities. EPA has determined that this pesticide petition
contains data or information regarding the elements set forth in FFDCA
section 408(d)(2); however, EPA has not fully evaluated the sufficiency
of the submitted data at this time or whether the data support granting
of the pesticide petition. Additional data may be needed before EPA
rules on this pesticide petition.
    Pursuant to 40 CFR 180.7(f), a summary of the petition included in
this notice, prepared by the petitioner along with a description of the
analytical method available for the detection and measurement of the
pesticide chemical residues is available on EPA's Electronic Docket at
http://www.regulations.gov/. To locate this information on the home

page of EPA's Electronic Docket, select ``Quick Search'' and type the
OPP docket ID number. Once the search has located the docket, clicking
on the ``Docket ID'' will bring up a list of all documents in the
docket for the pesticide including the petition summary.

New Exemption from Tolerance

    PP 5F6982. Desert King Chile, Ltd., Antonio Bellet 77 OF.401,
Providencia, Santiago, Chile 6640209 (submitted by Technology Sciences
Group, Inc., 1101 17th Street, NW, Suite 500, Washington, DC 20026),
proposes to establish an exemption from the requirement of a tolerance
for residues of the biopesticide Quillaja Saponaria, extract in or on
all food commodities. Because this petition is a request for an
exemption from the requirement of a tolerance without numerical
limitations, no analytical method is required.

List of Subjects

    Environmental protection, Agricultural commodities, Feed additives,
Food additives, Pesticides and pests, Reporting and recordkeeping
requirements.

    Dated: March 7, 2006.
Janet L. Andersen,
Director, Biopesticides and Pollution Prevention Division, Office of
Pesticide Programs.
[FR Doc. E6-3738 Filed 3-14-06; 8:45 am]

BILLING CODE 6560-50-S


[Federal Register Volume 79, Number 63 (Wednesday, April 2, 2014)]
[Proposed Rules]
[Pages 18494-18497]
[FR Doc No: 2014-07387]

=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 131

[EPA-HQ-OW-2009-0596; FRL-9908-18-OW]
RIN 2040-AF50

Water Quality Standards for the State of Florida's Lakes and
Flowing Waters; Withdrawal

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

SUMMARY: The Environmental Protection Agency (EPA) is proposing to
withdraw federal water quality standards applicable to waters of the
state of Florida now that Florida has adopted and EPA has approved
relevant state standards. On December 6, 2010, EPA published a rule
finalizing numeric nutrient standards for Florida's lakes, springs, and
flowing waters outside of the South Florida Nutrient Watershed Region.
EPA established these water quality standards to protect Florida's
Class I and III freshwaters from nitrogen and phosphorus pollution. On
November 30, 2012, June 27, 2013, and September 26, 2013, EPA approved
numeric nutrient standards adopted by the state of Florida for certain
waters in the state.
    Some of the water body types and provisions covered by state-
adopted water quality standards were also included in EPA's final
inland waters rule (criteria for Florida's lakes and springs,
approaches to protect downstream lakes, and a provision for developing
Site-Specific Alternative Criteria). EPA is now proposing to withdraw
the overlapping federally-promulgated water quality standards to allow
Florida to implement their state-adopted, EPA-approved water quality
standards to address nutrient pollution in Florida's waters.
Additionally, EPA is not finalizing three 2012 federal proposed rules
related to nutrient pollution in Florida.

DATES: Comments must be received on or before June 2, 2014.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-OW-
2009-0596, by one of the following methods:
    1. www.regulations.gov: Follow the on-line instructions for
submitting comments.
    2. Email<EMAIL_ADDRESS>    3. Mail to: Water Docket, U.S. Environmental Protection Agency,
Mail code: 2822T, 1200 Pennsylvania Avenue NW., Washington, DC 20460,
Attention: Docket ID No. EPA-HQ-OW-2009-0596.
    4. Hand Delivery: EPA Docket Center, EPA West Room 3334, 1301
Constitution Avenue NW., Washington, DC 20004, Attention Docket ID No.
EPA-HQ-OW-2009-0596. Such deliveries are only accepted during the
Docket's normal hours of operation, and special arrangements should be
made for deliveries of boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OW-2009-
0596. EPA's policy is that all comments received will be included in
the public docket without change and may be made available online at
www.regulations.gov, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through www.regulations.gov or email. The
www.regulations.gov Web site is an ``anonymous access'' system, which
means EPA will not know your identity or contact information unless you
provide it in the body of your comment. If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment and with any disk or CD-ROM you
submit. If EPA cannot read your comment due to technical difficulties
and cannot contact you for clarification, EPA may not be able to
consider your comment. Electronic files should avoid the use of special
characters, any form of encryption, and be free of any defects or
viruses. For additional information about EPA's public docket visit the
EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    Docket: All documents in the docket are listed in the
www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in www.regulations.gov or in hard copy at a docket facility. The Office
of Water (OW) Docket Center is open from 8:30 a.m. until 4:30 p.m.,
Monday through Friday, excluding legal holidays. The OW Docket Center
telephone number is<PHONE_NUMBER>, and the Docket address is OW
Docket, EPA West, Room 3334, 1301 Constitution Avenue NW., Washington,
DC 20004. The 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 Public Reading Room is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Erica Fleisig, U.S. EPA Headquarters,
Office of Water, Mailcode: 4305T, 1200 Pennsylvania Avenue NW.,
Washington, DC 20460; telephone number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: This proposed rule is organized as follows:

I. General Information
    A. Which water bodies are affected by this action?
    B. What entities may be affected by this action?
    C. What should I consider as I prepare my comments for EPA?
    D. How can I get copies of this document and other related
information?
II. Background
    A. Background on EPA's Inland Rule, Amended Determinations, and
Approval of State Criteria
    B. 2014 District Court Ruling and Modification of Consent Decree
    C. Proposed Withdrawal of Federal Criteria for Lakes, Springs,
and DPVs
III. Statutory and Executive Order Reviews
    A. Executive Orders 12866 (Regulatory Planning and Review) and
13563 (Improving Regulation and Regulatory Review)
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132 (Federalism)
    F. Executive Order 13175 (Consultation and Coordination With
Indian Tribal Governments)
    G. Executive Order 13045 (Protection of Children From
Environmental Health and Safety Risks)
    H. Executive Order 13211 (Actions That Significantly Affect
Energy Supply, Distribution, or Use)
    I. National Technology Transfer Advancement Act of 1995
    J. Executive Order 12898 (Federal Actions To Address
Environmental Justice in

Minority Populations and Low-Income Populations)

I. General Information

A. Which water bodies are affected by this action?

    In this document, EPA is proposing to withdraw federally
promulgated water quality standards (WQS) from a group of inland waters
of the United States within Florida. Specifically, as defined below and
in EPA's December 6, 2010 final inland waters rule (40 CFR 131.43), EPA
is proposing to withdraw the federal criteria for Florida's Class I and
III \1\ freshwater lakes and springs, as well as downstream protection
values (DPVs) to protect downstream lakes and a provision for
developing site-specific alternative criteria (SSAC) in all water
bodies.
---------------------------------------------------------------------------

    \1\ Subsection 62-302.400(1), Florida Administrative Code
(F.A.C.) provides as follows:
    All surface waters of the state have been classified according
to designated uses as follows:
    CLASS I Potable Water Supplies
    CLASS II Shellfish Propagation or Harvesting
    CLASS III Fish Consumption; Recreation, Propagation and
Maintenance of a Healthy, Well-Balanced Population of Fish and
Wildlife.
---------------------------------------------------------------------------

    EPA's final inland waters rule defined ``Predominantly fresh
waters'' to mean surface waters in which the chloride concentration at
the surface is less than 1,500 milligrams per liter (mg/L). EPA defined
``Lake'' as a slow-moving or standing body of freshwater that occupies
an inland basin that is not a stream, spring, or wetland. Finally, EPA
defined ``Spring'' as a site at which ground water flows through a
natural opening in the ground onto the land surface or into a body of
surface water.

B. What entities may be affected by this action?

    This action proposes to withdraw federal WQS applicable to certain
waters in Florida for which the state has adopted criteria that EPA has
determined are consistent with the CWA and EPA's implementing
regulations. Citizens concerned with water quality, as well as the
state of Florida--who was previously required to implement federal
numeric nutrient criteria before this withdrawal, but will no longer be
required to do so after this withdrawal is finalized--may be interested
in this rulemaking. Also, entities discharging nitrogen or phosphorus
to waters of Florida may be interested in this rulemaking because WQS
are used in determining National Pollutant Discharge Elimination System
(NPDES) permit limits. If you have questions regarding the
applicability of this action to a particular entity, consult the person
listed in the preceding FOR FURTHER INFORMATION CONTACT section.

C. What should I consider as I prepare my comments for EPA?

    1. Submitting CBI. Do not submit confidential business information
(CBI) to EPA through http://www.regulations.gov or email. Clearly mark
the part or all of the information that you claim to be CBI. For CBI
information in a disk or CD-ROM that you mail to EPA, mark the outside
of the disk or CD-ROM as CBI and then identify electronically within
the disk or CD-ROM the specific information that is claimed as CBI. In
addition to one complete version of the comment that includes
information claimed as CBI, a copy of the comment that does not contain
the information claimed as CBI must be submitted for inclusion in the
public docket. Information so marked will not be disclosed except in
accordance with procedures set forth in 40 CFR Part 2.
    2. Tips for Preparing Your Comments. When submitting comments,
remember to:
     Identify the rulemaking by docket number and other
identifying information (subject heading, Federal Register date, and
page number).
     Follow directions--The agency may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
     Explain why you agree or disagree; suggest alternatives
and substitute language for your requested changes.
     Describe any assumptions and provide any technical
information and/or data that you used.
     If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
     Provide specific examples to illustrate your concerns, and
suggest alternatives.
     Make sure to submit your comments by the comment period
deadline identified.

D. How can I get copies of this document and other related information?

    1. Docket. EPA has established an official public docket for this
action under Docket Id. No. EPA-HQ-OW-2009-0596. The official public
docket consists of the document specifically referenced in this action,
any public comments received, and other information related to this
action. Although a part of the official docket, the public docket does
not include CBI or other information whose disclosure is restricted by
statute. The official public docket is the collection of materials that
is available for public viewing at the OW Docket, EPA West, Room 3334,
1301 Constitution Ave. NW., Washington, DC 20004. This Docket Facility
is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding
legal holidays. The Docket telephone number is<PHONE_NUMBER>. A
reasonable fee will be charged for copies.
    2. Electronic Access. You may access this Federal Register document
electronically through the EPA Internet under the ``Federal Register''
listings at http://www.epa.gov/fedrgstr/. An electronic version of the
public docket is available through EPA's electronic public docket and
comment system, EPA Dockets. You may use EPA Dockets at http://www.regulations.gov to view public comments, access the index listing
of the contents of the official public docket, and access those
documents in the public docket that are available electronically. For
additional information about EPA's public docket, visit the EPA Docket
Center homepage at http://www.epa.gov/epahome/dockets.htm. Although not
all docket materials may be available electronically, you may still
access any of the publicly available docket materials through the
Docket Facility identified in Section I.D(1).

II. Background

A. Background on EPA's Inland Rule, Amended Determinations, and
Approval of State Criteria

    On December 6, 2010, pursuant to a January 14, 2009 EPA
determination and December 30, 2009 consent decree, EPA published the
inland waters rule to establish numeric nutrient criteria for Florida's
lakes, springs, and flowing waters outside of the South Florida
Nutrient Watershed Region.\2\ These criteria also included three
approaches for deriving DPVs, applicable to flowing waters at the point
where they enter downstream lakes, which would ensure protection of
downstream lakes as required by EPA's implementing regulations (40 CFR
131.10(b)).
---------------------------------------------------------------------------

    \2\ EPA defined the South Florida Nutrient Watershed Region as
the area south of Lake Okeechobee, the Caloosahatchee River
watershed (including Estero Bay) to the west of Lake Okeechobee, and
the St. Lucie watershed to the east of Lake Okeechobee.
---------------------------------------------------------------------------

    On November 30, 2012, EPA amended its January 14, 2009
determination stating that numeric criteria for downstream protection
are not necessary to meet CWA requirements in Florida. This was because
Florida's approach to downstream protection, in

combination with nutrient criteria for nutrient-sensitive downstream
water bodies, achieves timely and effective protection of downstream
waters. With the additional clarification provided in Florida's
``Implementation of Florida's Numeric Nutrient Standards'' rule-
referenced document on the scope of waters covered by state-adopted
numeric nutrient criteria, EPA amended its January 2009 determination
for a second time on June 28, 2013, concluding that numeric nutrient
criteria are not necessary for a limited number of waters in the state
of Florida (specifically, flowing waters in the South Florida Region,
marine lakes, tidally-influenced flowing waters, and conveyances
primarily used for water management purposes with marginal or poor
stream habitat components).
    These actions, coupled with EPA's November 30, 2012, June 27, 2013,
and September 26, 2013 approvals of Florida's numeric nutrient
criteria, result in Florida having EPA-approved numeric nutrient
criteria for all fresh water lakes, springs, estuaries and coastal
waters, and the majority of flowing waters in the state.

B. 2014 District Court Ruling and Modification of Consent Decree

    On January 7, 2014, the U.S. District Court for the Northern
District of Florida granted an EPA motion to modify the consent decree
(Case No. 4:08-cv-324-RH, Florida Wildlife Fed'n v. McCarthy, 2014 WL
51360 (N.D. Fla. Jan. 7, 2014)). As a result of this ruling, EPA is no
longer obligated to promulgate numeric nutrient criteria for any of
Florida's waters, and will therefore not be finalizing its November 30,
2012 federal proposed rules addressing Florida's estuaries and coastal
waters, inland waters in the South Florida Nutrient Watershed Region,
and the remanded portions of the inland waters rule (77 FR 74923 and 77
FR 74985, December 18, 2012). In addition, EPA will no longer be
finalizing its December 14, 2012 proposal to temporarily stay portions
of the inland waters rule. EPA can now withdraw already promulgated
federal criteria so Florida's nutrient criteria can take effect.
    For more specifics on the Agency and court actions leading to this
proposal, refer to the following:

EPA Determination Regarding Florida and Consent Decree: http://water.epa.gov/lawsregs/rulesregs/florida_consent.cfm.
Florida Adoption of Numeric Nutrient Criteria in 2012 and EPA Approval:
http://www2.epa.gov/aboutepa/epa-florida.
EPA's 2012 Proposed Rulemaking: http://water.epa.gov/lawsregs/rulesregs/florida_index.cfm.
2013 EPA and FDEP Agreement in Principle and Path Forward: http://content.govdelivery.com/bulletins/gd/FLDEP-713cfb.

C. Proposed Withdrawal of Federal Criteria for Lakes, Springs, and DPVs

    Florida now has state-adopted, EPA-approved criteria for lakes and
springs that are applicable for CWA purposes. Thus there is no need for
overlapping federal criteria for such waters. With respect to federal
DPVs, EPA determined on November 30, 2012 that numeric criteria for
downstream protection are not necessary in Florida and that same day
approved Florida's quantitative downstream protection approach.
Finally, since Florida has its own process for developing SSAC, a
federal SSAC process is unnecessary. Thus, EPA is proposing to withdraw
the federal criteria for lakes and springs, federal DPVs, and the
federal SSAC provision that took effect on January 6, 2013 (with the
exception of the federal SSAC provision that went into effect on
February 4, 2011) and solicits comments on this proposal.

III. Statutory and Executive Order Reviews

A. Executive Order 12866 (Regulatory Planning and Review) and Executive
Order 13563 (Improving Regulation and Regulatory Review)

    This action is not a ``significant regulatory action'' under the
terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is
therefore not subject to review under Executive Orders 12866 and 13563
(76 FR 3821, January 21, 2011).

B. Paperwork Reduction Act

    This rule does not impose any new information-collection burden
because it is administratively withdrawing federal requirements that
are no longer needed in Florida. It does not include any information-
collection, reporting, or recordkeeping requirements.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency
to prepare a regulatory flexibility analysis of any rule subject to
notice and comment rulemaking requirements under the Administrative
Procedure Act or any other statute unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities. Small entities include small businesses,
small organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) A small business as defined
by the Small Business Administration's (SBA) regulations at 13 CFR
121.201 (2) a small governmental jurisdiction that is a government of a
city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field.
    After considering the economic impacts of today's proposed rule on
small entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities. This
proposed rule will not impose any requirements on small entities. We
continue to be interested in the potential impacts of the proposed rule
on small entities and welcome comments on issues related to such
impacts.

D. Unfunded Mandates Reform Act

    This action contains no Federal mandates under the provisions of
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C.
1531-1538 for state, local, or tribal governments or the private
sector. The action imposes no enforceable duty on any state, local or
tribal governments or the private sector. Therefore, this action is not
subject to the requirements of sections 202 or 205 of the UMRA.
    This action is also not subject to the requirements of section 203
of UMRA because it contains no regulatory requirements that might
significantly or uniquely affect small governments. This rule proposes
to remove federally-promulgated water quality standards addressing
nutrient pollution in Florida in order to allow Florida to implement
their state-adopted, EPA-approved water quality standards.

E. Executive Order 13132 (Federalism)

    This action does not have federalism implications. It will not 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, as
specified in Executive Order 13132. This rule proposes to remove
federally-promulgated water quality standards addressing nutrient
pollution in Florida in order to allow Florida to implement their
state-adopted, EPA-approved water quality standards. Thus, Executive

Order 13132 does not apply to this action.
    In the spirit of Executive Order 13132, and consistent with EPA
policy to promote communications between EPA and state and local
governments, EPA specifically solicits comment on this proposed action
from state and local officials.

F. Executive Order 13175 (Consultation and Coordination With Indian
Tribal Governments)

    This action does not have tribal implications, as specified in
Executive Order 13175 (65 FR 67249, November 9, 2000). This rule
imposes no regulatory requirements or costs on any tribal government.
It does not have substantial direct effects on tribal governments, the
relationship between the Federal government and Indian tribes, or on
the distribution of power and responsibilities between the Federal
government and Indian tribes. Thus, Executive Order 13175 does not
apply to this action.

G. Executive Order 13045 (Protection of Children From Environmental
Health and Safety Risks)

    This rule is not subject to Executive Order 13045, entitled
``Protection of Children from Environmental Health Risks and Safety
Risks'' (62 FR 19885, April 23, 1997), because it is not economically
significant as defined in Executive Order 12866 and because the
environmental health or safety risks addressed by this action do not
present a disproportionate risk to children.
    The public is invited to submit comments or identify peer-reviewed
studies and data that assess effects of early life exposure.

H. Executive Order 13211 (Actions That Significantly Affect Energy
Supply, Distribution, or Use)

    This action is not subject to Executive Order 13211 (66 FR 28355
(May 22, 2001)), because it is not a significant regulatory action
under Executive Order 12866.

I. National Technology Transfer and Advancement Act of 1995

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note)
directs EPA to use voluntary consensus standards in its regulatory
activities, unless to do so would be inconsistent with applicable law
or otherwise impractical. Voluntary consensus standards are technical
standards (e.g., materials specifications, test methods, sampling
procedures, and business practices) that are developed or adopted by
voluntary consensus standards bodies. The NTTAA directs EPA to provide
Congress, through OMB, explanations when the Agency decides not to use
available and applicable voluntary consensus standards.
    This proposed rulemaking does not involve technical standards.
Therefore, EPA is not considering the use of any voluntary consensus
standards.

J. Executive Order 12898--Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629, February 16, 1994) establishes
federal executive policy on environmental justice. Its main provision
directs federal agencies, to the greatest extent practicable and
permitted by law, to make environmental justice part of their mission
by identifying and addressing, as appropriate, disproportionately high
and adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States.
    EPA has determined that this proposed rule will not have
disproportionately high and adverse human health or environmental
effects on minority or low-income populations because: (1) Florida's
WQS apply to waters across the state, and thus this action will not
disproportionately affect any one group over another, and (2) EPA has
previously determined, based on the most current science, that
Florida's adopted and EPA-approved criteria are protective of human
health and aquatic life.

List of Subjects in 40 CFR Part 131

    Environmental protection, Florida, Nitrogen and phosphorus
pollution, Nutrients, Water quality standards.

    Dated: March 26, 2014.
Gina McCarthy,
Administrator.

    For the reasons set out in the preamble, EPA proposes to amend 40
CFR part 131 as follows:

PART 131--WATER QUALITY STANDARDS

0
1. The authority citation for part 131 continues to read as follows:

    Authority: 33 U.S.C. 1251 et seq.

Subpart D--Federally Promulgated Water Quality Standards

Sec.  131.43  [Removed]

0
2. Section 131.43 is removed.

[FR Doc. 2014-07387 Filed 4-1-14; 8:45 am]
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[Federal Register Volume 79, Number 167 (Thursday, August 28, 2014)]
[Notices]
[Pages 51342-51343]
[FR Doc No: 2014-20482]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2014-D-1177]

International Cooperation on Harmonisation of Technical
Requirements for Registration of Veterinary Medicinal Products; Draft
Guidance for Industry on Electronic Exchange of Documents: File Format
Recommendations; Availability

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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

SUMMARY: The Food and Drug Administration (FDA) is announcing the
availability of a draft guidance for industry (GFI 225)
entitled ``Draft Guidance for Industry, Electronic Exchange of
Documents: File Format Recommendations'' (VICH GL53). This draft
guidance has been developed for veterinary use by the International
Cooperation on Harmonisation of Technical Requirements for Registration
of Veterinary Medicinal Products (VICH). This draft VICH guidance is
intended to provide recommendations to industry on electronic file
format specifications for individual documents and collections of
multiple related documents that need no subsequent editing and are
utilized for electronic exchange between industry and regulators in the
context of regulatory approval of veterinary medicinal products.

DATES: Although you can comment on any guidance at any time (see 21 CFR
10.115(g)(5)), to ensure that the Agency considers your comment on this
draft guidance before it begins work on the final version of the
guidance, submit either electronic or written comments on the draft
guidance by October 27, 2014.

ADDRESSES: Submit written requests for single copies of the guidance to
the Communications Staff (HFV-12), Center for Veterinary Medicine, Food
and Drug Administration, 7519 Standish Pl., Rockville, MD 20855. Send
one self-addressed adhesive label to assist that office in processing
your requests. See the SUPPLEMENTARY INFORMATION section for electronic
access to the draft guidance document.
    Submit electronic comments on the draft guidance to http://www.regulations.gov. Submit written comments to the Division of Dockets
Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane,
Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Scott Fontana, Center for Veterinary
Medicine (HFV-100), Food and Drug Administration, 7500 Standish Pl.,
Rockville, MD 20855,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Background

    FDA is announcing the availability of a draft guidance for industry
(GFI 225) entitled ``Draft Guidance for Industry, Electronic
Exchange of Documents: File Format Recommendations'' (VICH GL53). In
recent years, many important initiatives have been undertaken by
regulatory authorities and industry associations to promote the
international harmonization of regulatory requirements. FDA has
participated in efforts to enhance harmonization and has expressed its
commitment to seek scientifically based harmonized technical procedures
for the development of pharmaceutical products. One of the goals of
harmonization is to identify and then reduce differences in technical
requirements for drug development among regulatory agencies in
different countries.
    FDA has actively participated in the International Conference on
Harmonisation of Technical Requirements for Registration of
Pharmaceuticals for Human Use for several years to develop harmonized
technical requirements for the approval of human pharmaceutical and
biological products among the European Union, Japan, and the United
States. The VICH is a parallel initiative for veterinary medicinal
products. The VICH is concerned with developing harmonized technical
requirements for the approval of veterinary medicinal products in the
European Union, Japan, and the United States and includes input from
both regulatory and industry representatives.
    The VICH Steering Committee is composed of member representatives
from the European Commission;

European Medicines Evaluation Agency; European Federation of Animal
Health; Committee on Veterinary Medicinal Products; FDA; U.S.
Department of Agriculture; the Animal Health Institute; Japanese
Veterinary Pharmaceutical Association; Japanese Association of
Veterinary Biologics; and Japanese Ministry of Agriculture, Forestry,
and Fisheries.
    Four observers are eligible to participate in the VICH Steering
Committee: One representative from the government of Australia/New
Zealand, one representative from the industry in Australia/New Zealand,
one representative from the government of Canada, and one
representative from the industry in Canada. The VICH Secretariat, which
coordinates the preparation of documentation, is provided by the
International Federation for Animal Health (IFAH). An IFAH
representative also participates in the VICH Steering Committee
meetings.

II. Draft Guidance on Electronic Exchange of Documents: File Format
Recommendations

    In November 2013, the VICH Steering Committee agreed that a draft
guidance document entitled ``Draft Guidance for Industry, Electronic
Exchange of Documents: File Format Recommendations'' (VICH GL53) should
be made available for public comment. This draft VICH guidance document
is intended to provide recommendations to industry regarding electronic
file format specifications (e.g., file format, file size, file
security, and cross referencing) for individual documents and
collections of multiple related documents for the transfer of
electronic regulatory information in support of applications for the
approval of veterinary medicinal products. This draft guidance applies
to communication or data exchanged as documents in the context of all
regulatory procedures where regulators accept electronic transfer of
such documents. This may include, but is not limited to, applications
for initial marketing authorizations, related presubmission or post-
authorization procedures, applications for maximum residue limits,
clinical trial applications, drug/active substance master files, or
requests for regulatory or scientific advice.
    This draft guidance is a product of the Electronic File Format
Expert Working Group of the VICH. Comments about this draft guidance
document will be considered by FDA and the VICH Electronic File Format
Expert Working Group.

III. Significance of Guidance

    This draft guidance, developed under the VICH process, has been
revised to conform to FDA's good guidance practices regulation (21 CFR
10.115). For example, the document has been designated ``guidance''
rather than ``guideline.'' In addition, guidance documents must not
include mandatory language such as ``must,'' ``shall,'' ``require,'' or
``requirement'' unless FDA is using these words to describe a statutory
or regulatory requirement.
    This draft VICH guidance, when finalized, will represent the
Agency's current thinking on this topic. It does not create or confer
any rights for or on any person and does not operate to bind FDA or the
public. An alternative approach may be used if such approach satisfies
the requirements of the applicable statutes and regulations.

IV. Paperwork Reduction Act of 1995

    This draft guidance refers to previously approved collections of
information found in FDA regulations. These collections of information
are subject to review by the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The
collections of information in this guidance have been approved under
OMB control number 0910-0032.

V. Comments

    Interested persons may submit either electronic comments regarding
this document to http://www.regulations.gov or written comments to the
Division of Dockets Management (see ADDRESSES). It is only necessary to
send one set of comments. Identify comments with the docket number
found in brackets in the heading of this document. Received comments
may be seen in the Division of Dockets Management between 9 a.m. and 4
p.m., Monday through Friday, and will be posted to the docket at http://www.regulations.gov.

VI. Electronic Access

    Persons with access to the Internet may obtain the draft guidance
at either http://www.fda.gov/AnimalVeterinary/GuidanceComplianceEnforcement/GuidanceforIndustry/default.htm or http://www.regulations.gov.

    Dated: August 22, 2014.
Leslie Kux,
Assistant Commissioner for Policy.
[FR Doc. 2014-20482 Filed 8-27-14; 8:45 am]
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