[Federal Register Volume 87, Number 208 (Friday, October 28, 2022)]
[Notices]
[Pages 65200-65201]
[FR Doc No: 2022-23504]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 3509-042]

Little Falls Hydroelectric Associates, LP; Notice of Settlement
Agreement and Soliciting Comments

    Take notice that the following settlement agreement has been filed
with the Commission and is available for public inspection.
    a. Type of Application: Settlement Agreement.
    b. Project No.: 3509-042.
    c. Date filed: October 11, 2022.
    d. Applicant: Little Falls Hydroelectric Associates, LP (Little
Falls Associates).
    e. Name of Project: Little Falls Hydroelectric Project (Little
Falls Project).
    f. Location: The existing project is located on the Mohawk River,
in the City of Little Falls, Herkimer County, New York. The project
does not occupy federal land.
    g. Filed Pursuant to: Rule 602 of the Commission's Rules of
Practice and Procedure, 18 CFR 385.602.
    h. Applicant Contact: David H. Fox, Director, Licensing and
Compliance, Little Falls Hydroelectric Associates, LP, Eagle Creek
Renewable Energy, 7315 Wisconsin Avenue, Suite 1100W, Bethesda, MD
20814, [email protected]; Jody J. Smet, Vice President,
Regulatory Affairs, Little Falls Hydroelectric Associates, LP, Eagle
Creek Renewable Energy, 7315 Wisconsin Avenue, Suite 1100W, Bethesda,
MD 20814, [email protected]
    i. FERC Contact: Monir Chowdhury at<PHONE_NUMBER> or email at
[email protected].
    j. Deadline for filing comments: November 14, 2022. Reply comments
due November 24, 2022.
    The Commission strongly encourages electronic filing. Please file
comments using the Commission's eFiling system at http://www.ferc.gov/docs-filing/efiling.asp. Commenters can submit brief comments up to
6,000 characters, without prior registration, using the eComment system
at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your
name and contact information at the end of your comments. For
assistance, please contact FERC Online Support at
[email protected],<PHONE_NUMBER> (toll free), or (202) 502-
8659 (TTY). In lieu of electronic filing, you may submit a paper copy.
Submissions sent via the U.S. Postal Service must be addressed to:
Kimberly D. Bose, Secretary, Federal Energy Regulatory Commission, 888
First Street NE, Room 1A, Washington, DC 20426. Submissions sent via
any other carrier must be addressed to: Kimberly D. Bose, Secretary,
Federal Energy Regulatory Commission, 12225 Wilkins Avenue, Rockville,
Maryland 20852. The first page of any filing should include docket
number P-3509-042.
    The Commission's Rules of Practice require all intervenors filing
documents with the Commission to serve a copy of that document on each
person on the official service list for the project. Further, if an
intervenor files comments or documents with the Commission relating to
the merits of an issue that may affect the responsibilities of a
particular resource agency, they must also serve a copy of the document
on that resource agency.
    k. Little Falls Associates filed the Settlement Agreement on behalf
of itself, the U.S. Fish and Wildlife Service, and the New York State
Department of Environmental Conservation. The purpose of the Settlement
Agreement is to resolve, among the signatories, issues related to
operational, fisheries, wildlife, water quality, and recreation
resources associated with issuance of a new license and water quality
certification for the project. Specifically, the Settlement Agreement
includes proposed protection, mitigation, and enhancements measures to
address bypassed reach minimum flow, streamflow and water level
monitoring, downstream fish passage enhancements,

recreation facility enhancements, invasive species management, and bald
eagle protection. Little Falls Associates states that the terms of the
Settlement Agreement are an integrated and indivisible set of measures
intended to address and balance non-power and power values relating to
the project and requests that the Commission approve the Settlement
Agreement and incorporate the proposed measures set forth in section 3
into any new license issued.
    l. A copy of the Settlement Agreement may be viewed on the
Commission's website at http://www.ferc.gov using the ``eLibrary''
link. Enter the docket number, excluding the last three digits, in the
docket number field to access the document (i.e., P-3509). At this
time, the Commission has suspended access to the Commission's Public
Reference Room, due to the proclamation declaring a National Emergency
concerning the Novel Coronavirus Disease (COVID-19), issued by the
President on March 13, 2020. For assistance, contact FERC Online
Support.
    You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances
related to this or other pending projects. For assistance, contact FERC
Online Support.

    Dated: October 24, 2022.
Debbie-Anne A. Reese,
Deputy Secretary.
[FR Doc. 2022-23504 Filed 10-27-22; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 80, Number 40 (Monday, March 2, 2015)]
[Notices]
[Pages 11252-11254]
[FR Doc No: 2015-04181]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74357; File No. SR-CHX-2015-01]

Self-Regulatory Organizations; Chicago Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change
Concerning the Use of Market Data Feeds by the Exchange

February 24, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given
that, on February 12, 2015, the Chicago Stock Exchange, Inc. (``CHX''
or the ``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    CHX proposes to clarify for Participants and non-Participants the
Exchange's use of data feeds for order handling and execution, order
routing and regulatory compliance.\3\ On July 16, 2014, the Exchange
filed a proposed rule change that described its use of the consolidated
market data disseminated by the securities information processors
(``SIP data feeds'') for all operational and regulatory compliance
purposes (the ``initial rule filing'') with the Securities and Exchange
Commission (the ``Commission'').\4\ The Exchange now submits this
supplemental filing.\5\ The Exchange has designated this proposed rule
change as non-controversial and provided the Commission with the notice
required by Rule 19b-4(f)(6)(iii) under the Act.\6\
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    \3\ CHX Article 1, Rule 1(s) defines ``Participant,'' in
pertinent part, as ``any Participant Firm that holds a valid Trading
Permit and any person associated with a Participant Firm who is
registered with the Exchange under Articles 16 and 17 as a Market
Maker Trader or Institutional Broker Representative, respectively. A
Participant shall be considered a `member' of the Exchange for
purposes of the Exchange Act.''
    \4\ See Securities Exchange Act Release No. 72711 (July 29,
2014), 79 FR 45570 (August 5, 2014) (SR-CHX-2014-10). Other national
securities exchanges filed similar proposals. See e.g., Securities
Exchange Act Release Nos. 72710 (July 29, 2014), 79 FR 45511 (August
5, 2014) (SR-NYSE-2014-38), and 72684 (July 28, 2014), 79 FR 44956
(August 1, 2014) (SR-NASDAQ-2014-072).
    \5\ The Exchange understands that other national securities
exchanges will file similar proposed rule changes with the
Commission to further describe their use of data feeds for order
handling and execution, order routing and regulatory compliance.
    \6\ 17 CFR 240.19b-4(f)(6)(iii).
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    The text of this proposed rule change is available on the
Exchange's Web site at (www.chx.com) and in the Commission's Public
Reference Room.

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

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

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

1. Purpose
    On June 5, 2014, Chair White requested that all national securities
exchanges develop proposed rule changes to disclose their use of data
feeds to execute and route orders and comply with regulatory
requirements.\7\ In addition, on June 20, 2014, the Commission's
Division of Trading and Markets requested that the Exchange file
proposed rule changes that disclose its usage of particular market data
feeds, among other things.\8\ In response to these requests, the
Exchange filed an initial rule filing with the Commission on July 16,
2014.\9\ The Exchange now submits this supplemental filing concerning
the use of SIP data feeds for the CHX Routing Services,\10\ which is
not yet operational, and the pricing of cross orders marked Midpoint
Cross.\11\
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    \7\ See Mary Jo White, Chair, Securities and Exchange
Commission, Speech at Sandler O'Neil & Partners L.P. Global Exchange
and Brokerage Conference (June 5, 2014).
    \8\ See letter from Stephen Luparello, Division of Trading and
Markets, Securities and Exchange Commission, to John K. Kerin, Chief
Executive Officer and President, Chicago Stock Exchange, Inc., dated
June 20, 2014.
    \9\ See supra note 4.
    \10\ See Exchange Act Release No. 73150 (September 19, 2014), 79
FR 57603 (September 25, 2014) (SR-CHX-2014-15).
    \11\ CHX Article 1, Rule 2(b)(2)(D) defines ``Midpoint Cross''
as follows:
    a cross order modifier with an instruction to execute it at the
midpoint between the NBBO. If the NBBO is locked at the time a
Midpoint Cross is received, the Midpoint Cross will execute at the
locked NBBO. If the NBBO is crossed at the time a Midpoint Cross is
received, the Midpoint Cross will be automatically cancelled. A
Midpoint Cross order may only be executed in an increment permitted
by Article 20, Rule 4(a)(7)(b).
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Initial Rule Filing
    Under the initial rule filing, the Exchange adopted Article 1, Rule
4, which provides that the consolidated market data disseminated by the
securities information processors shall be the only market data feed
utilized by the Exchange for all operational and regulatory compliance
purposes.\12\ The Exchange also noted the following:
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    \12\ At the time SR-CHX-2014-10 was filed, the SIP data feeds
were the only data feeds utilized by the Exchange for operational
and regulatory compliance purposes.
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     The SIP data feeds are the only data feeds utilized by the
Exchange to calculate the National Best Bid and Offer (``NBBO'') for
the purposes of compliance with Regulation NMS and Regulation SHO. The
Exchange does not utilize direct feeds from away markets for such
purposes.
     In addition to the SIP data feeds, the Exchange uses its
own internal data for operational and regulatory compliance purposes.
     The Exchange does not ignore or modify SIP quote data for
the purposes of establishing the NBBO under any circumstances where the
SIP data feed shows an uncrossed market.\13\
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    \13\ Where the SIP data feeds show a crossed NBBO, the
Exchange's NBBO calculation protocol ignores crossing quotes and
executes orders up to the first uncrossed NBBO. See paragraph .01(d)
of CHX Article 20, Rule 5
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     The Exchange does not offer outbound routing of orders,
but that if the Exchange were to adopt such functionality in the
future, the Exchange would only utilize the SIP data feeds for routing
purposes.
     The Exchange does not offer pegged orders that have limit
prices that track the NBBO.

The Exchange continues to utilize the SIP data feeds for all
operational and regulatory compliance purposes, as described under
initial filing, and submits the following updates and points of
clarification.
CHX Routing Services
    On September 8, 2014, the Exchange filed SR-CHX-2014-15, through
which the Exchange adopted rules concerning the CHX Routing Services,
an outbound order routing service that is not yet operational.\14\ As
described in the initial rule filing, the CHX Routing Services will
only utilize the SIP data feeds for order routing purposes.
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    \14\ See supra note 10.
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    Thus, the Exchange proposes to amend Article 1, Rule 4(a) to
explicitly provide that the consolidated market

data disseminated by the securities information processor shall be the
only market data feeds utilized by the Exchange for the handling,
execution and routing of orders, as well as for the regulatory
compliance processes related to those functions.\15\
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    \15\ The Exchange may utilize other data feeds in conducting
manual reviews of Matching System activity.
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Midpoint Cross
    Under the initial rule filing, the Exchange noted that it does not
offer pegged orders that have limit prices that track the NBBO. To
clarify, the Exchange has never offered single-sided orders that are
continuously repriced to follow changes to the NBBO (``single-sided
pegged orders''). The Exchange does, however, offer Midpoint Cross,
which is a cross order (i.e., two-sided order) modifier that instructs
the Matching System to execute the order at the midpoint of the
NBBO.\16\ Unlike single-sided pegged orders, cross orders marked
Midpoint Cross are not continuously repriced to follow changes to the
NBBO because cross orders are always handled Immediate Or Cancel
(``IOC'').\17\
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    \16\ See supra note 11.
    \17\ See CHX Article 1, Rule 2(a)(2).
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    Mechanically, upon receipt of a cross order marked Midpoint Cross,
the Matching System will utilize the NBBO calculated from the SIP data
feed and internal CHX book data in the subject security to identify the
NBBO midpoint price. The Matching System utilizes the internal CHX book
data in the subject security, in addition to the SIP data feed, because
the internal CHX book data always reflects the most recent CHX quote(s)
in the subject security, which may not yet be reflected in the SIP data
feed. Assuming that the order is otherwise executable within the CHX
book, the Matching System will immediately execute the order at the
NBBO midpoint. Incidentally, the Exchange clarifies that it does not
ignore or modify SIP quote data concerning away market quotes under any
circumstances where the SIP data feed shows an uncrossed market. The
Exchange may, however, ignore SIP quote data regarding its own market
if the Exchange's internal data in the subject security is different
from what is received from the SIP, such as when pricing the Midpoint
Cross order.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with the
requirements of the Act and the rules and regulations thereunder that
are applicable to a national securities exchange, and, in particular,
with the requirements of Section 6(b) of the Act.\18\ In particular,
the proposal is consistent with Section 6(b)(5) of the Act,\19\ because
it would promote just and equitable principles of trade, remove
impediments to, and perfect the mechanism of, a free and open market
and a national market system. Specifically, the Exchange believes that
the proposed update and clarifications concerning the Exchange's use of
the SIP data feeds in the context of the CHX Routing Services and the
Midpoint Cross order modifier will enhance transparency concerning the
operation of the Exchange. This will, in turn, promote the public
confidence and strengthen the national market system.
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    \18\ 15 U.S.C. 78f(b).
    \19\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change
implicates any competitive issues. To the contrary, the Exchange
anticipates that other national securities exchanges will also make
similar clarifications concerning their respective use of data feeds
and this proposed rule will ensure consistent treatment of this subject
matter in the respective rulebooks.

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

    No written comments were either solicited or received.

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

    Because the proposed rule change does not (i) significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \20\ and Rule 19b-4(f)(6)
thereunder.\21\
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    \20\ 15 U.S.C. 78s(b)(3)(A).
    \21\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and the text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission.
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    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CHX-2015-01 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CHX-2015-01. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CHX-

2015-01 and should be submitted on or before March 23, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-04181 Filed 2-27-15; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 82, Number 216 (Thursday, November 9, 2017)]
[Notices]
[Pages 52079-52082]
[FR Doc No: 2017-24369]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82009; File No. SR-OCC-2017-008]

Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing of Proposed Rule Change Related to The Options
Clearing Corporation's Collateral Risk Management Policy

November 3, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of
1934,\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that on
October 27, 2017, The Options Clearing Corporation (``OCC'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I, II, and III below, which Items
have been prepared by OCC. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change

    This proposed rule change by The Options Clearing Corporation
(``OCC'') would formalize and update OCC's Collateral Risk Management
Policy (``CRM Policy''). This policy would promote compliance with Rule
17Ad-22(e)(5), which generally requires a covered clearing agency to
have policies and procedures reasonably designed to, among other
things, limit the assets it accepts as collateral to those with low
credit, liquidity, and market risks and subject such assets to
appropriate haircuts and concentration limits that are reviewed for
continued sufficiency not less than annually.\3\ The Collateral Risk
Management Policy is included as confidential Exhibit 5 of the filing.
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    \3\ 17 CFR 240.17Ad-22(e)(5).
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    The proposed rule change does not require any changes to the text
of OCC's By-Laws or Rules. All terms with initial capitalization that
are not otherwise defined herein have the same meaning as set forth in
the OCC By-Laws and Rules.\4\
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    \4\ OCC's By-Laws and Rules can be found on OCC's public Web
site: http://optionsclearing.com/about/publications/bylaws.jsp.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change

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

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

(1) Purpose
Background
    On September 28, 2016, the Commission adopted amendments to Rule
17Ad-22 \5\ and added new Rule 17Ab2-2 \6\ pursuant to Section 17A of
the Securities Exchange Act of 1934, as amended, (``Act'') \7\ and the
Payment, Clearing, and Settlement Supervision Act of 2010 (``Payment,
Clearing and Settlement Supervision Act'') \8\ to establish enhanced
standards for the operation and governance of those clearing agencies
registered with the Commission that meet the definition of a ``covered
clearing agency,'' as defined by Rule 17Ad-22(a)(5) \9\ (collectively,
the new and amended rules are herein referred to as ``CCA'' rules). The
CCA rules require that a covered clearing agency, among other things,
establish, implement, maintain, and enforce written policies and
procedures reasonably designed to:
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    \5\ 17 CFR 240.17Ad-22.
    \6\ 17 CFR 240.17Ab2-2.
    \7\ 15 U.S.C. 78q-1.
    \8\ 12 U.S.C. 5461 et seq.
    \9\ 17 CFR 240.17Ad-22(a)(5).

    ``[l]imit the assets it accepts as collateral to those with low
credit, liquidity, and market risks, and set and enforce
appropriately conservative haircuts and concentration limits if the
covered clearing agency requires

collateral to manage its or its participants' credit exposure; and
require a review of the sufficiency of its collateral haircuts and
concentration limits to be performed not less than annually.'' \10\
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    \10\ 17 CFR 240.17Ad-22(e)(5).

    OCC meets the definition of a covered clearing agency, and is
therefore subject to the requirements of the CCA rules, including Rule
17Ad-22(e)(5).\11\
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    \11\ Id.
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Collateral Risk Management Policy
    OCC proposes to formalize and update its CRM Policy. The purpose of
the CRM Policy is to describe OCC's framework for collateral
acceptability, valuations and haircuts, and collateral maintenance. The
CRM Policy, as proposed, is designed to promote compliance with the
Rule 17Ad-22(e)(5) \12\ requirements that mandate that covered clearing
agencies have written policies and procedures that are reasonably
designed to limit collateral to assets with low credit, liquidity, and
market risks, and that establish appropriately conservative haircuts
and concentration limits that are reviewed no less than annually. OCC
notes that the CRM Policy is part of a broader framework regarding
collateral risk management, including OCC's By-Laws, Rules, and other
policies, that are designed to ensure that OCC accepts appropriate
collateral to remain resilient in times of market stress.\13\
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    \12\ Id.
    \13\ Securities Exchange Act Release No. 78961 (September 28,
2016), 81 FR 70786, 70812 (October 13, 2016) (``CCA Adopting
Release'') (noting that the requirements of Rule 17Ad-22(e)(5) are
``intended to ``help ensure that a covered clearing agency is
resilient in times of market stress . . . .'').
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    With regard to a covered clearing agency's policies and procedures
that address collateral, the Commission noted in the release adopting
the CCA rules that such policies and procedures generally should take
into account whether the covered clearing agency has: (1) Limited the
assets it accepts to those with low credit, liquidity, and market
risks; (2) established prudent valuation practices and developed
haircuts that are regularly tested and take into account stressed
market conditions; (3), established stable and conservative haircuts to
reduce the need for pro-cyclical adjustments; (4) avoided concentrated
holdings of certain assets where such holdings would significantly
impair the ability to liquidate the assets quickly and without
significant adverse price affects; (5) mitigated risks associated with
the use of cross-border collateral, as applicable, and ensured that the
collateral can be used in a timely manner; and (6) uses a collateral
management system that is well designed and operationally flexible.\14\
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    \14\ Id. at 70816.
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    Certain descriptions in the CRM Policy are included to promote
compliance with the Commission's guidance and Rule 17Ad-22(e)(5). For
example, consistent with the guidance regarding cross-border
collateral, the CRM Policy provides that OCC has the authority to
reduce the haircut value of Canadian government securities if it
observes increased credit risk, and that OCC applies an additional
haircut to such securities to cover exchange rate risk. Consistent with
the Commission's guidance that collateral risk management systems
should remain operationally flexible, the CRM Policy also describes the
authority of the Financial Risk Management department (``FRM'') to
reject a collateral withdrawal request if OCC determines that a
Clearing Member's reasonably anticipated settlement obligations exceed
available liquidity resources.
    The descriptions below provide a general overview of the three
substantive sections of OCC's CRM Policy.
Collateral Acceptability
    The CRM Policy describes the categories of risk that are considered
by OCC in determining which asset classes should be acceptable forms of
collateral as margin assets and Clearing Fund contributions. OCC's
assessment of an asset class generally includes an evaluation of market
risk, credit risk, liquidity risk. This assessment is conducted by the
Credit and Liquidity Risk Working Group (``CLRWG''), which is a cross
functional group comprised of representatives from multiple departments
as noted in the Credit and Liquidity Risk Working Group Procedure. The
CRM Policy further provides that the CLRWG establishes criteria for
each asset class considered an acceptable form of collateral that
evaluates additional risks with respect to the asset class such as
execution risk, custody risk, and operational risk. With respect to
market risks, the CRM Policy provides that eligible assets classes are
accepted after consideration of their liquidity, price transparency,
price volatility, offset potential with contracts cleared by OCC,
modeling implications and projected inventories.
    With respect to credit risk, the CRM Policy separately considers
counterparty risk and sovereign credit risk. For example, to safeguard
against counterparty risk, the CRM Policy provides that FRM evaluates
the creditworthiness of counterparties, including custodial agents and
settlement banks, against existing qualification standards and monitors
the health of such counterparties on an ongoing basis through
established processes, supported by a separate policy within OCC.\15\
With respect to sovereign credit risk,\16\ the CRM Policy provides that
CLRWG assess such risks against existing minimum sovereign ratings and
by evaluating, among other characteristics, credit, market, liquidity,
and exchange rate risks.
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    \15\ Specifically, evaluations of OCC's counterparties are
supported by the Counterparty Credit Risk Management Policy.
    \16\ Sovereign credit risk refers primarily to the risk
associated with accepting a foreign country's debt as collateral or
the impact sovereign risk could have on the credit risk of OCC's
counterparties.
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    Pursuant to the CRM Policy, OCC mitigates liquidity risk \17\ by
limiting acceptable collateral to asset classes with low liquidity
risk, giving no value to a participant for its own (or its affiliate's)
debt or equity securities\18\ and limiting the amount of a particular
asset type that a participant may pledge.\19\ The CRM Policy also
provides that OCC takes other risks, such as execution risk,\20\
custody risk,\21\ and operational risk,\22\ into consideration when
managing collateral risk.
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    \17\ Liquidity risk generally refers to the potential price
impact that may be observed when selling a collateral position whose
size surpasses the market's current depth.
    \18\ Giving no value to a participant's own securities or its
affiliate's securities is a means of addressing wrong-way risk. See
CCA Adopting Release, supra note 11, at n.317 (discussing wrong-way
risk). Notwithstanding this prohibition, equity securities of
participants can be used to hedge options positions on such equity
securities. See OCC Rules 601 and 610.
    \19\ Limiting the amount of a particular asset type a
participant may pledge is also a means of addressing concentration
risk. Specifically, the CRM Policy provides that OCC mitigates
concentration risk by limiting the aggregation or concentration of
large positions relative to market depth for a security and,
consistent with OCC's liquidation assumptions, restricts the value
given to collateral assets beyond amounts that are determined to
serve as a hedge to a Clearing Member's portfolio.
    \20\ Execution risk generally refers to the risk that a
counterparty fails to deliver cash or securities when required.
    \21\ Custody risk refers to, for example, the risk that a
custodian holding OCC collateral becomes insolvent.
    \22\ Operational risk generally refers to the risk that
collateral cannot be delivered on a timely basis.
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Valuations and Haircuts
    The CRM Policy describes OCC's approach to valuing collateral and
setting and applying haircuts. With respect to valuation, the CRM
Policy provides that OCC's key considerations focus on its pricing
process, the period of time between collateral revaluations

(which are at least daily), established haircuts to mitigate market
risk, and the periodic re-evaluation of the adequacy of existing
haircuts. OCC's pricing information, as described in the CRM Policy,
feeds into OCC's processes for establishing margin levels or haircuts,
daily mark-to-market valuation of collateral, and intraday valuation of
collateral. Given the importance of pricing data to inform these
processes, OCC maintains redundant information feeds from multiple
sources to ensure accuracy and quality. The CRM Policy further
summarizes OCC's two approaches for valuing collateral: Collateral in
Margins (``CiM'') and haircuts.\23\ For collateral that is not managed
using the CiM process, the CRM Policy provides that OCC subjects such
collateral to percentage haircuts established at the time the
collateral is accepted by OCC and that are monitored regularly to
ensure the haircuts remain adequate.
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    \23\ Under the CiM approach, the current market value of margin
assets is included as a positive asset value in the calculation of a
portfolio's net asset value within OCC's System for Theoretical
Analysis and Numerical Simulations (``STANS''). OCC then offsets
this positive asset value based on, among other things, the expected
shortfall and stress test charges associated with an account,
resulting in a net excess or net deficit.
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Collateral Management Process
    The CRM Policy also outlines the three parts of OCC's collateral
management processes: (1) Systems and processing; (2) reconciliation;
and (3) reporting. With respect to systems and processing, the CRM
Policy provides, among other things, that OCC's collateral management
system has controls intended to ensure that no Clearing Member goes
into collateral deficit and that it is designed to report the excess/
deficit status for each account in real-time. OCC also stress tests the
system annually to ensure that it can accommodate a large number of
automated transactions. With respect to reconciliation, the CRM Policy
provides that OCC performs daily balancing of collateral against
activity and inventory data from custodial banks and depositories. The
CRM Policy further provides that OCC regularly reviews collateral
deposited pursuant to a letter of credit or depository receipt, and the
escrow deposit banks, to ensure that acceptable and sufficient
collateral is maintained. With respect to reporting, the CRM Policy
provides that OCC systematically delivers end-of-day activity and
inventory reports to Clearing Members and custody banks and that
reports regarding intraday activity can also be obtained.
    Finally, the CRM Policy provides an overview of OCC's collateral
re-investment options, collateral re-hypothecation and substitution
ability, existing cross-margining agreements and margin offsets, which
are detailed separately in OCC's Cash and Investment Management Policy.
Governance and Annual Review
    The CRM Policy provides that the CLRWG reviews the policy's
performance and adequacy on at least an annual basis, including with
respect to collateral eligibility, concentration limits, collateral
haircuts and monitoring processes. Recommendations for changes are
presented to OCC's Management Committee and then the Risk Committee.
The CRM Policy also specifies that collateral haircuts and
concentration limits are reviewed on an annual basis by persons who are
independent of OCC management and that adding a new asset class as
acceptable collateral requires approval from OCC's Management
Committee, Board of Directors and the Commission.
(2) Statutory Basis
    Section 17A(b)(3)(F) of the Act \24\ requires, among other things,
that the rules of a clearing agency be designed to promote the prompt
and accurate clearance and settlement of securities transactions, and,
in general, protect investors and the public interest. The CRM Policy
sets forth the processes that OCC uses to limit collateral to assets
with low credit, liquidity, and market risks, and to establish
appropriately conservative haircuts and concentration limits. OCC
believes that the proposed rule change is consistent with Section
17A(b)(3)(F) because the CRM Policy is reasonably designed to protect
investors and the public interest by setting forth the processes that
OCC uses to limit the collateral assets that OCC accepts to
appropriate, risk-adjusted assets that, in turn, promote the prompt and
accurate clearance and settlement of securities transactions by
supporting OCC's ability to use the collateral to meet settlement
obligations, as necessary, even in times of market stress.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78q-1(b)(3)(F).
---------------------------------------------------------------------------

    Rule 17Ad-22(e)(5) \25\ requires that OCC establish, implement,
maintain and enforce written policies and procedures that are
reasonably designed to ``[l]imit the assets it accepts as collateral to
those with low credit, liquidity, and market risks.'' As described in
more detail above in the subsection discussing Collateral
Acceptability, the CRM Policy provides that in determining assets that
are acceptable as collateral OCC evaluates market, credit and liquidity
risk as well as additional risks, such as execution, custody and
operational risk. Rule 17Ad-22(e)(5) \26\ also requires OCC to set and
enforce appropriately conservative haircuts and concentration limits.
In this regard, the CRM Policy describes that, with respect to
collateral valuation, OCC's key considerations focus on its pricing
process, the period between collateral revaluations (which are at least
daily), established haircuts to mitigate market risk and the periodic
re-evaluation of the adequacy of existing haircuts. Moreover, OCC
mitigates concentration risk by limiting the aggregation or
concentration of large positions relative to market depth for a
security and, consistent with OCC's liquidation assumptions, restricts
the value given to collateral assets beyond amounts that are determined
to serve as a hedge to a Clearing Member's portfolio. Finally, Rule
17Ad-22(e)(5) \27\ provides that OCC must require a review of the
sufficiency of its collateral haircuts and concentration limits to be
performed not less than annually. The CRM Policy is consistent with
this provision because it requires its performance and adequacy to be
reviewed on at least an annual basis, including with regard to
collateral eligibility, concentration limits, collateral haircuts and
related monitoring processes. For these reasons, OCC believes that the
proposed rule change is consistent with Rule 17Ad-22(e)(5).\28\
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    \25\ 17 CFR 240.17Ad-22(e)(5).
    \26\ Id.
    \27\ Id.
    \28\ Id.
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    The proposed rule change is not inconsistent with the existing
rules of OCC, including any other rules proposed to be amended.

(B) Clearing Agency's Statement on Burden on Competition

    Section 17A(b)(3)(I) of the Act \29\ requires that the rules of a
clearing agency not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act. OCC does not
believe that the proposed rule change would impact or impose any burden
on competition.\30\ The proposed rule change sets forth the framework,
as described in the CRM Policy, that OCC already uses pursuant to its
approved By-Laws and Rules to accept collateral with low credit,
liquidity, and market risks, and to set and enforce

appropriately conservative haircuts and concentration limits. The
framework further requires that a review of the sufficiency of OCC's
collateral haircuts and concentration limits be performed not less than
annually. Under this framework, and as provided for in its By-Laws and
Rules, all Clearing Members are subject to the same limitations on
acceptable collateral as well as to the same haircuts and concentration
limits. Consequently, no Clearing Member is provided a competitive
advantage over any other Clearing Member. Further, the proposed rule
change would not affect Clearing Member's access to OCC's services or
impose any direct burdens on Clearing Members. Accordingly, the
proposed rule change would not unfairly inhibit access to OCC's
services or disadvantage or favor any particular user in relationship
to another user.
---------------------------------------------------------------------------

    \29\ 15 U.S.C. 78q-1(b)(3)(I).
    \30\ Id.
---------------------------------------------------------------------------

    For the foregoing reasons, OCC believes that the proposed rule
change is in the public interest, would be consistent with the
requirements of the Act applicable to clearing agencies, and would not
impact or impose a burden on competition.

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

    Written comments on the proposed rule change were not and are not
intended to be solicited with respect to the proposed rule change and
none have been received.

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

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-OCC-2017-008 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-OCC-2017-008. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available
for inspection and copying at the principal office of OCC and on OCC's
Web site at http://www.theocc.com/components/docs/legal/rules_and_bylaws/sr_occ_17_008.pdf. All comments received will be
posted without change. Persons submitting comments are cautioned that
we do not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number SR-OCC-
2017-008 and should be submitted on or before November 30, 2017.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated Authority.\31\
Eduardo A. Aleman,
Assistant Secretary.
---------------------------------------------------------------------------

    \31\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2017-24369 Filed 11-8-17; 8:45 am]
 BILLING CODE 8011-01-P


Page 1 of 15 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D. C. 20460 OFFICE OF PREVENTION, PESTICIDES AND TOXIC SUBSTANCES April 8, 2002 MEMORANDUM FROM: Kathryn Boyle, CoChair IIFG and Kerry Leifer, CoChair IIFG TO: Robert Forrest, Chief Minor Use, Inerts, and Emergency Response Branch SUBJECT: January 8, 2002 Meeting of the IIFG Decision Memo Please find attached the Inert Ingredient Focus Group recommendations for the inert ingredients associated with the "plant and animal byproducts" grouping. Page 2 of 15 INERT INGREDIENT FOCUS GROUP DECISION DOCUMENT for the Plant and Animal By Product Grouping Chemical Name: Several, see below.

Category: Plant and Animal Byproducts CAS Reg. No.: Several, see below.

Introduction:

The meeting of the Inert Ingredient Focus Group (IIFG) to discuss the "plant and animal byproducts" grouping was held on January 8, 2002. Focus Group members in attendance were: Kathryn Boyle (RD), Kerry Leifer (RD), Robert Forrest (RD), Jeanie McAndrews (RD), Steve Schaible (RD), HarryCraven (EFED), Diana Locke (HED), Michael Doherty( HED), Melba Morrow (AD), Tom Brennan (HED), Mark Perry (SRRD), and Larry Schnaubelt (SRRD). The presenters were: Mark Perry and Larry Schnaubelt (SRRD). The Executive Secretaries for the meeting were Jeanie McAndrews and Steve Schaible (RD). Also in attendance at the meeting were Marianne Lewis, Judy Loranger, and Ben Gregg, all of SRRD.

At this meeting, the available information on twenty five different plant and animal byproduct substances was discussed to determine if sufficient information was available to make tolerance reassessment decisions on the various materials and to make the determination as to whether the various materials should be classified as List 4A or List 4B substances. The 25 substances discussed do not represent the universe of plant and animal byproduct inert ingredients, but instead are a subset which have existing tolerance exemptions listed in 40 CFR Part 180 and can therefore be counted towards tolerance reassessment. The available information consisted of information retrieved from various websites such as TOXNET, FirstGov, and NTP, as specified in the methodology for lower toxicity chemicals. General Internet searches on the substance names and their toxicity were also used.

Information handed out at this meeting included: (1) a short summary dividing the substances into 25 groups for discussion purposes; (2) an animal toxicity data summary for linseed oil; and (3) a summary of developmental, reproductive, and chronic toxicity studies for gum arabic. Page 3 of 15 For purposes of evaluation in accordance with the newly developed inert ingredient methodology, manyinert substances undergoing tolerance or tolerance exemption reassessment have been placed into groups based on possible common characteristics or potential similarity based on the fact that they are derived from materials that may generally be considered similar to each other. The term" plant and animal byproducts" is used by the Agency to describe a group of chemical substances that are derived fromplant and animal sources. Some of the substances in this group, such as walnut shells or coconut shells, are only minimally processed from the direct plant material. This is usually a change only in the physical formof the substance, and is accomplished by activities such as grinding or chopping. Some, however, require more significant processing in order to generate the endproduct such as lecithin from oil, or glue from animal collagen. The plant and animal byproduct substances considered by the IIFG are used for a variety of purposes as inert ingredients. In pesticide products, these substances are used as surfactants, thickeners, carriers, emulsifiers, adhesive, dispersing agents, and many other uses.

Ecological Effects:

The substances in this group are derived fromnaturally occurring plant and animal materials and no adverse ecological effects were reported in the available literature. However, it was considered that three compounds (guar gum, sodiumalginate, and soap bark, which act as a foaming agent, foam stabilizer, and stabilizer/ thickener, respectively) could have ecological impacts. After consultation with OPPT and using Structural Activity Relationships (SARs), the IIFG believes that these compounds are of low concern for ecotoxicity. The IIFG believes that no significant adverse ecological effects are anticipated from exposure to any of these substances.

Discussion Abrief summation of the available information was given for each of the chemical substances. If available, the CAS RegistryNumber is given in parenthesis. Comments made during the discussion or after the meeting that pertained only to a specific group are in italics below. Current List classification is also in italics.

1. Animal Glue:

S manufactured from collagen derived from animal hides S glue may be slightly allergenic to individuals with sensit ivity to certain proteins; allergic reactions are reversible.

Animal glue is a protein, and alien proteins may cause allergic reactions. However, these contact (dermally induced) reactions are reversible and are generally not life threatening.

2. Coconut Shells, Douglas Fir Bark (List 4A), Walnut Shells (List 4A):

S coconut shells used to make activated charcoal (carbon)

S Douglas fir bark commonly used as a landscaping mulch Page 4 of 15 These compounds are minimally processed from their natural forms, in most cases being only ground or shredded more finely. As these substances are in effect naturally occurring, it is not expected that pesticidal use of these substances will result in adverse exposure to humans or the environment.

3. Coffee Grounds: (CAS: 68916 18 7) (List 4A)

As the extract from ground coffee beans is widely consumed, it is unlikely that use of coffee grounds as an inert ingredient in a pesticide formulation will result in unacceptable risk to humans.

3. Licorice Root: (CAS: 68916 18 7) (List 3 "licorice extract")

S contains glycyrrhizinic acid which exhibits actions similar to natural mineralocorticoids of the adrenal cortex S licorice root is one of the most commonly used herbs in the world; licorice extracts are used as a food additive flavoring agent in mouthwash, root beer, chewing gum, candy, ice cream, baked goods, and as a pharmaceutical additive S licorice and licorice derivatives are on FDA's list of direct food substances affirmed as generally recognized as safe (GRAS) (21 CFR 184.1408); maximumlevels permitted in food are specified S according to ToxNet, licorice extract is characterized as being "slightly toxic" by the oral route; toxicity endpoints are as follows: LD50 rat oral = 14,200 mg/ kg, LD50 rat inter peritoneal = 1420 mg/ kg, LD50 rat subcutaneous = 4200 mg/ kg, LD50 mouse inter peritoneal = 1500 mg/ kg.

S cases of poisonings are mostly chronic in nature, not acute; chronic exposure longer than 4 6 weeks may cause hypokalemia (low potassium levels), hypernatremia (high sodium levels), hypertension, myopathy, and cardiac problems S "licorice extract" (CAS: 97676 23 8) is classified as List 3; this CAS Number actually refers to "oils, licorice"

S no serious adverse reactions have been published about licorice root; single chemical extracts have caused serious adverse reactions on occasion when used in medicine or candy, but the whole root does not cause these serious reactions.

Exposure to licorice root from use as an inert ingredient in pesticidal products will be well below those levels of licorice extract already considered safe by other federal agencies.

4. Sperm Oil: (CAS: 8002 24 2)

S liquid wax derived from sperm whale blubber.

S used as a lubricant for watches and other delicate instruments, in leather treatment products and soap making S sperm oil is a food additive permitted for direct application to food for human consumption (21 CFR 172.210) as well as an indirect food additive in adhesives, paper and paperboard components, and polymers (21 CFR Parts 175, 176, and 177) Page 5 of 15 Barring incidence data on adverse effects after exposure to spermoil, this chemical should be added to List 4A. According to Jerome Blondell (HED) and Norman Spurling, there are no records for sperm oil in the Incidence Data System database.

5. Wood Flour (Wood Dust):.

S according to health and safety guidelines put out by the Occupational Safety and Health Administration (OSHA), acute exposure to red cedar dust may result in irritation of the eyes, skin and respiratory tract. Chronic occupational exposure may result in dermatitis reactions, asthma, pneumonitis, bronchitis and nasal cancer.

S it is believed that toxicity is dependant on wood type, with nasal cancer and more severe respiratory effects being associated with exposure to dust from hardwoods such as beech, walnut, and oak S OSHA permissible exposure limit (PEL) for red cedar dust is 15 mg/ m 3 for total dust, and 5 mg/ m 3 for respirable fractions (nuisance dust)

S National Institute of Occupational Safety and Health (NIOSH) recommended exposure limit (REL) is 1 mg/ m 3 (as a time weighted average (TWA) for up to 10 hour workday and a 40 hour work week), based on pulmonary dysfunction and other respiratory effects Exposure to wood dust or wood flour in a formulated pesticide product is likely to be well below the levels which result in chronic effects fromdaily occupational inhalation exposure to rawwood dust.

6. Camphor: (CAS: 76 22 2) (List 3)

S derived from the camphor tree, Cinnamomum camphora S Japanese white camphor oil (CAS: 8008 51 3) and d camphor (CAS: 464 49 3) permitted as a food additive permitted for direct addition to food for human consumption (21 CFR 172.510 and 172.515, respectively)

S reported uses include as an ingredient in non alcoholic beverages, baked goods, condiments, and in over the counter medications to relieve muscle aches, nasal congestion and cold sores; also used in the manufacture of plastics, lacquers/ varnishes, pyrotechnics and embalming fluid S currently present in approximately 950 non pesticidal products S ingredient in insecticides and moth and mildew preventatives S OSHA PEL: TWA 2 mg/ m 3 S NIOSH REL: TWA 2 mg/ m 3 S tolerance exemption specifies that camphor not compose more than 5% (w/ w) of pesticide formulation.

Camphor is rapidly absorbed through the skin, respiratory and GI tracts. Camphor readily crosses the placenta and cases of fetal death after ingestion by mother have been reported. Ingestion of 0.7 to 1. 0 g has proven fatal in children. Human fatalities have also been reported as a result of dermal and respiratory exposure. A Poisindex review of camphor ingestions (estimated to exceed 2 mg/ kg) showed that 90% of patients remained asymptomatic, 4% developed minor symptoms and 6% developed major symptoms. Humans are considered more susceptible to the effects of camphor than other species. Camphor is irritating to skin, upper respiratory tract, and the gastrointestinal Page 6 of 15 tract. It is toxic and reacts rapidly; exposure may result in dizziness, tension, hallucinations and mental confusion. Chronic camphor poisoning is uncommon due to its high toxicity and rapid action.

A developmental toxicity study in rabbits (with d camphor) showed no fetal or maternal toxicity at 400 mg/ kg/ day, yet an associated range finding study found 60% maternal mortalityat 500 mg/ kg/ day. Another developmental toxicity study in rats (d camphor) demonstrated that camphor does not affect fetal growth, viability or morphological development at doses which caused only minor maternal toxicity (800 mg/ kg/ day).

Camphor will be further evaluated using a more formal (Tier 2) assessment process.

7. Mixed Phytosterols (plant sterols):

S phytosterols (e. g., campesterol, sitosterol, and stigmasterol) are ubiquitous compounds in plant s similar to animal sterols but having an extra methyl or ethyl substituent in the side chain; plant sterols are found in plant cell walls and in plant oils; the content of sterols in plant oilsrange fromhundredsofmg per100 g tolessthan10 mg S the tolerance exemption expression in 40 CFR180.1001( d) is for use in pesticide products of "mixed phytosterols (consisting of campest erol, sitosterol, and stigmasterol, with minor amounts of associated plant sterols) derived from edible vegetable oils" as a surfactant S most information describes potential benefits derived from dietary consumption mixed phytosterols and phytosterol esters lower total blood cholesterol and LDL C; it is believed that phytosterols interfere with dietary and endogenous (biliary) cholesterol absorption 8. Soapbark (Quillaja Saponin): (CAS: 1393 03 9) (List 3)

S derived from soapbark tree S contains saponins which are natural detergents/ surfactants that have been used to make soap and used as a foaming agent in certain beverages (like root beer)

S permitted as a food additive permitted for direct addition to food for human consumption (21 CFR 172.510)

S liquid solutions and dusts reported to cause reversible eye irritation and respiratory sensitization S no adverse effect on death rate or incidence of histopathological findings (including tumors) were observed in mice (both sexes) fed quillaja extract for 84 weeks; at high dose there was decreased body weight gain and differences in hematological examinations and in some absolute and relative organ weights of both sexes Soap bark may be associated with formulations of fire retardants which may have ecological impacts. After consultation with OPPT and using Structural Activity Relationships (SARs) the IIFG believes that these compounds are of low concern for ecotoxicity. Therefore, the IIFG believes that no significant adverse ecological effects are anticipated from exposure to soapbark.

9. Wool Fat (anhydrous lanolin): (CAS: 8006 54 0) (List 4A lanolin)

S lanolin is a greasy, yellow substance extracted fromsheep wool; a mixture of cholesterol and Page 7 of 15 the esters of several fatty acids S anhydrous lanolin refers to lanolin which contains less than 0. 25% water S used as an ointment base in cosmetics and pharmaceuticals, as a lubricant, and in finishing and preserving leather; also a constituent of some varnishes and paint S lanolin is regulated by FDAas a food additive permitted for direct addition to food for human consumption (21 CFR 172.615), as well as an indirect food additive (21 CFR Parts 175 178)

S dermal sensitivity to lanolin has been reported, with a high incidence of lanolin allergy amongst eczema patients; ToxNet reports that lanolin should not be used in ointments intended for use by sensitive individuals S lanolin is considered practically non toxic by the oral route, according to ToxNet.

S pesticidal uses of lanolin as an active ingredient were canceled in 1998 as there were no active product registrations containing the substance S "lanolin" (CAS: 8020 84 6) is classified as List 4A The focus group believes that this substance is not an allergen, but that there was individual sensitivity to the substance.

10. Castor oil: (CAS: 8001 79 4) (List 4B)

S a natural oil obtained from the seed of the castor bean; after the hulls are removed the seeds are cold pressed S medicinal castor oil is prepared from the yield of the first pressing; this is used as a purgative and laxative; oil from the second pressing is used as a lubricant for machinery, as a softening agent in making artificial leather, in the dressing of genuine leather, in brake fluids, and in paints and plastic materials S FDA direct food additive permitted in food for human consumption, as a releasing and antisticking agent, not to exceed 500 ppmin hard candy (21 CFR 172.876); as a natural flavoring substance or substance used in conjunction with flavors (172.510); and as an indirect food additive (numerous citations in 21 CFR Parts 175 178); also used in cosmetics and pharmaceuticals S EPA FIFRA 25b active ingredient S Irritating to rabbit skin; slightly toxic by oral route. Another source considers castor oil to be "moderately toxic" by ingestion. Contraindicated for pregnant women; overdose has caused stillbirth and kidney damage.

As referenced on National Toxicology Program's (NTP) web site, animal feeding studies (up to 10% in diet for 13 wks.) in rats and mice resulted in no significant adverse effects. Genotoxicity studies were negative for mutation induction in Salmonella typhimurium, for induction of sister chromatid exchanges and for induction of micro nuclei in mice peripheral blood erythrocytes.

Dietary exposure to residues of castor oil from pesticidal use as an inert ingredient will not approach levels regulated by FDA as a direct or indirect food additive or ingredient in cosmetics.

11. Hydrogenated Castor Oil: (CAS: 8001 78 3) (List 3) Page 8 of 15 S manufactured by hydrogenation of castor oil in the presence of nickel catalyst with pressure and temperature; a hard, brittle wax that is extremely insoluble and is well suited for products needing resistance to water, oils, petroleum, and petroleum derivatives S mainly used in manufacturing greases, but also used in paper coatings for food packaging The tolerance exemption in 40 CFR 180.1036 for hydrogenated castor oil reads as follows:

"The adhesive hydrogenated castor oil is exempt from the requirement of a tolerance for residues in or on the raw agricultural commodity cottonseed when used as an inert adhesive for formulations of the attractant gossyplure to disrupt the mating of the pink bollworm."

12. Boiled Linseed Oil: (CAS: 8001 26 1) (List 4A linseed oil)

S an amber colored, fatty oil extracted from the cotyledons and inner coats of the linseed, the seed of the flax plant (Linum usitatissimum); also known as flaxseed oil S raw oil is pale in color and practically odorless and t asteless; boiled oil is darker and has a bitter taste and unpleasant odor S used as a drying agent in paints, varnishes, adhesives, inks and resins S linseed oil (not boiled) is an EPA FIFRA 25b active ingredient S linseed oil (not boiled) is an FDA prior sanctioned food ingredient; "substances classified as drying oils, when migrating fromfood packaging material (as components of finished resins) shall include... linseed oil" (21 CFR 181.26)

S according to ToxNet, boiled linseed oil should not be taken internally, due to the addition of lead and other toxic element; the boiled oil may cause skin, eye and respiratory tract irritation through the inhalation route. Consumption of boiled linseed oil is contraindicated since lead, manganese and/ or cobalt is often added S rats fed boiled linseed oil during lactation and gestation had most offspring die within 3 days of birth: 6 month old Wistar rats were fed boiled linseed oil during gestation and lactation (compared to a control group fed fresh linseed oil or peanut oil); mortality in the young was higher than normal, it was assumed cyclic monomers det ect ed in the liver fatty acids were responsible for toxicity in the boiled oil S the fresh oil does not have the toxicity concerns that are associated with the boiled oil The tolerance exemption in 40 CFR 180.1056 for boiled linseed oil reads as follows:

"Boiled linseed oil (containing no more than 0.33 percent manganese naphthenate and no more than 0.33 percent cobalt naphthenate) is exempt from the requirement of a tolerance when used as a coating agent for S ethyl hexahydro 1H azepine 1 carbothioate. No more than 15 percent of the pesticide formulation may consist of `boiled linseed oil. ' This exemption is limited to use on rice before edible parts form."

13. Carrageenan: (CAS: 9000 07 1) (List 4A)

S derived from red algae S used as a thickener/ stabilizer in foods such as chocolate, milk, ice cream, pudding, yogurt, Page 9 of 15 frostings and cream soups S FDA direct food additive (21 CFR 172.620) and a substance generally recognized as safe by FDA (21 CFR 182.7255)

S natural carrageenan, which has a molecular weight between 100,000 and 1, 000,000 can be chemically altered to form degraded carrageenan; degraded carrageenan has a molecular weight between 20,000 and 30,000, and has demonstrated significantly higher toxicity in animal studies, including malignancies in the gastrointestinal tract; degradation may occur in the human body S considered to be a "water absorbing polymer"

S algin gum (CAS: 9049 05 2), or calcium carrageenan, is included on List 3 Carrageenan will be further evaluated using a more formal (Tier 2) assessment process.

14. Dextrin: (CAS: 9004 53 9) (List 4A), Corn Dextrin S natural polymer used clinically as a peritoneal dialysis solution and as a controlled drug delivery formulation; also used in distilleries, breweries, and the manufacture of cotton goods, rayon, paper products, adhesives, explosives and steel S acute toxicity includes skin irritation, as well as inhalation and ingestion hazard (large amounts may cause gastro intestinal upset). Another source reported no adverse health effects expected from inhalation or skin contact however, dust may cause eye irritation (mechanical). Negative in a series of 10 mutagenicity studies (1992) which tested "indigestible dextrin".

S direct food additive affirmed as GRAS (21 CFR 184.1277)

15. Furcelleran: (CAS: 9000 21 9)

S extracted fromFurcellaria fastigiata (red seaweed) and used as an emulsifier, stabilizer, and thickener in foods S FDA direct food additive (21 CFR 172.655)

S a potential "water absorbing polymer"

Furcelleran will be further evaluated using a more formal (Tier 2) assessment process due to its relationship to carrageenan.

16. Guar Gum: (CAS: 9000 30 0) (List 4A)

S used as a surfactant and related adjuvant of surfactant; also used as a stabilizer/ thickener in foods, as a binding and disintegrating agent in tablets, and in suspensions, emulsions, lotions, creams, and toothpaste S a direct food additive affirmed as GRAS by FDA, with maximum permitted usage levels in foods (21 CFR 184.1339)

S acute toxicity: LD 50 (oral) rat  6770 mg/ kg, mouse  8100 mg/ kg, rabbit  7000 mg/ kg, hamster  6000 mg/ kg S guar dust may cause respiratory tract irritation and sensitization; and that some individuals may develop a respiratory allergic response, or persons with a history of respiratory allergies Page 10 of 15 may have those conditions aggravated, by exposure to guar dust. Negative in a series of 15 mutagenicity studies (1992), as well as four 1982 studies, and one pre 1980 study. Negative in rat (F344) and mouse (B6C3F1 ) in a National Cancer Institute (NCI) carcinogenesis bioassay S considered to be a "water absorbing polymer"

S FDAhas reportedly banned the use of guar gumas an active ingredient in drugs. Because this complex carbohydrate swells when wet it had been used in weight loss products to produce a feeling of fullness. One brand resulted in hospitalization of 10 patients and one death from a blood clot after surgery to remove a throat blockage. Guar gum can cause diarrhea, vomiting, bloating, and intestinal blockages.

17. Gum Arabic (Acacia): (CAS: 9000 01 5) (List 4A)

S A neutral, or slightly acidic, salt of a complex polysaccharide; derived from acacia tree sap S used in pharmaceuticals, adhesives, inks, textile printing, cosmetics, and as a thickening agent and colloidal in stabilizer in confectionary and food products; also used extensively in flavor emulsions S a direct food additive affirmed as GRAS by FDA (21 CFR 184.1330)

S gum arabic is considered to have low oral toxicity with LD50 values reported as follows: oral  >16 g/ kg  rat; >16 g/ kg  mouse; 8 g/ kg  rabbit; and > 18 g/ kg  hamster. Estimates of the probable oral lethal dose for humans are > 15,000 mg/ kg S gum arabic has been shown to be a severe allergen in the workplace and has led to skin lesions and sever asthmatic attacks in humans upon exposure to the dust S a 1971 study of 37 German printing workers exposed to gum arabic mist reported allergic reactions [" Printer's Asthma"], as well as well defined radiological findings in the lungs, with occasional chronic bronchitis and pulmonary congestion; hypersensitivity reactions upon dermal exposure to the dust have also been observed S two MSDS's reported eye irritation, one as severe with redness and pain S a potential "water absorbing polymer"

In a subchronic 13 week oral mouse study no compound related effects were observed. In a 13 week oral rat study no compound related effects were observed except for a reduction in feed consumption at the two highest dose in males and all doses in females, as compared with the control animals. The author reported NOAELs of 5, 200 mg/ kg/ day and 13,800 mg/ kg/ day, respectively, for male and female rats. The date of this study was reported as 1982.

In an NTP cancer study, there were no statistically significant differences obtained from oral administration of gumarabic when control rates were compared to those observed in treated groups.

The IIFG believes that while there are no concerns for exposure via the oral route, there could be a contact or a mist problem for occupational exposure, based on the presented information.

18. Lecithin: (CAS: 8002 43 5) (List 4A)

S a naturally occurring mixture of the phosphatides of choline, ethanolamine, and inositol; Page 11 of 15 isolated as a gum following hydration of solvent extracted soy, safflower, or corn oils.

S widely used in food and industrial applications; affirmed by FDA as GRAS, and used in foods with no limitations other than current good manufacturing practice (21 CFR 184.1400)

S in many products, lecithin is derived from soybean S acute toxicity: may cause transient eye irritation. Also, a 2 day study of mice exposed to aerosolized lecithin reported lungs showing focal endothelial cell swelling and interstitial edema Many products containing lecithin are derived from soy. While soybeans are considered to be allergens, the information available to the Agency indicates that the allergen invoking compound is not carried over in the extraction process that produces highly refined soybean oil. Therefore there are no allergen concerns associated with lecithin even though it is processed from soybeans. Studies support that most soy allergic individuals can safely eat products containing soy lecithin without experiencing any allergic reaction.

Tolerance reassessment and list classification decisions will also apply to "lecithins, soya" (CAS: 8030 76 0).

19. Sodium Alginate: (CAS: 9005 38 3)

S the sodiumsalt of alginic acid; produced from brown algae (Phaeophyceae) by processing to form alginic acid, then reacted with sodium hydroxide S a combustible, colorless or yellowish granular or powdery solid; insoluble in alcohol and ether; forms a viscous colloid in water S affirmed as GRAS by FDA, with maximum permitted usage levels in foods (21 CFR 184.1724)

S used as a foamstabilizer in brewing, a thickener and suspending agent in soft drinks, a binding agent in pharmaceutical tablets, and as a stabilizer in numerous food items S other than minor irritation of eyes and skin in some individuals, no other health effects are known to exist S according to ToxNet, practically non toxic S considered to be a "water absorbing polymer"

20. Xanthan Gum: (CAS: 11138 66 2) (List 4A)

S a water soluble, polysaccharide gum derived from Xanthomonas campestris; molecular weight between five and ten million S used in salad dressings and other products, and as a carrier for controlled release drugs S FDA direct food additive (21 CFR 172.695)

S a probable "water absorbing polymer", based on similar properties to the other gums in this group 21. Locust Bean Gum: (CAS: 9000 40 2) (List 4B)

S also known as carob gum; derived from the carob seed S affirmed GRAS by FDA (21 CFR 184.1343) Page 12 of 15 S used as a stabilizer, thickener, and binder in foods and cosmetics; a pharmaceutic agent; and in paints, textiles and paper manufacturing S acute oral LD50 values were reported as follows: 13 gm/ kg in rats and mice; 9100 mg/ kg in rabbits; and 10 gm/ kg in hamsters. When heated to decomposition this compound emits acrid smoke and fumes. Reported negative for both sexes of rats and mice in a NTP Carcinogenesis Bioassay. No further toxicity/ hazard information was reported.

S considered to be a "water absorbing polymer"

Discussion Tolerance reassessment decisions for camphor, carrageenan, and furcelleran have been deferred until these substances can be further evaluated. For the remaining substances, there are no concerns for ecotoxicity, or for most dietary or dermal human exposures. Tolerance exemptions can be reassessed for these 25 substances.

While there is the potential for adverse effects to wood flour or wood dust fromthe inhalation route, individuals are not likely to be exposed at the levels described by OSHA from pesticidal application of products containing wood dust or wood flour as an inert ingredient. OSHA PELs reflect full time jobs, that may lead to daily exposures (often indoors) over the course of many years; it is likely that these worker activities will create the possibility of respirable sized particles as a result of routine operations. By contrast, mixing/ loading and applying granular or dust pesticide products that have these same wood dust will not have the same level or types of exposures. The first major difference is the time and duration of exposure. For most cases the applicators will not be exposed on a daily basis. In fact, it is much more likely that pesticide handlers, both professional and homeowners, will only have short term exposures (from 1day/ month to 1day/ year). Additionally, the exposure to the substance as an inert ingredient is likely to be significantly less than levels experienced through occupational exposure.

Several of the plant products used as thickeners have been identified as being water absorbing polymers. This termrefers to substances which are able to absorb their weight in water, such as guar gum, sodiumalginate, and locust bean gum. Other related substances such as xanthan gum and gum arabic are also likely to have this property based on similar characteristics. These chemicals have been identified as posing moderate concern for human health through the inhalation route if the particle size is sufficiently small to be inhaled into deep lungs (< 10 microns), and if the substance is sufficiently present in the formulation. However, in their use as thickeners in pesticide formulations, they will have already absorbed water and "swelled" to a larger particle size, and will therefore not be of toxicological concern through an inhalation route.

The CAS Registry Number on List 3 for "licorice extract" is 97676 23 8. The CAS Number for "licorice extract" referenced in both ToxNet and by FDA is 68916 18 7. Using the National Institutes of Health, National Library of Medicine's, ChemIDplus Locator webpage, the CAS Number 97676 23 8 refers to the term" licorice oils" and the proper CAS Number for licorice extract Page 13 of 15 is 68916 18 7. Confusion around these terms will be cleared up by expanding the List classification term to include licorice and its derivatives.

Currently, boiled linseed oil is not included on any of the inert ingredient Lists, but has specific tolerance exemption language included in 180.1056; "linseed oil" (presumably unboiled) is included in List 4A. It appears that the CAS number is the same regardless of whether the substance is boiled or unboiled.

IIFG Determinations By consensus there were no objections to the following:

All existing tolerance exemptions for the plant and animal byproduct substances listed below can be reassessed. In 40 CFR180.1001( c): animal glue; coconut shells; coffee grounds; corn dextrin; dextrin; guar gum; gum arabic (acacia); lecithin; licorice root; sodium alginate; sperm oil; walnut shells; wood flour; and xanthan gum. In 40 CFR 180.1001( d): Douglas fir bark, ground; locust bean gum; mixed phytosterols (consisting of campesterol, sitosterol, and stigmasterol, with minor amounts of plant sterols) derived from edible vegetable oils; soapbark (quillaja); and wool fat (anhydrous lanolin). In 180.1001( e): castor oil, U. S. P.; dextrin; sodiumalginate; and xanthan gum. In 180.1036 and 180.1056, hydrogenated castor oil and boiled linseed oil, respectively.

Terms to be expanded or consolidated as part of the tolerance reassessment decision are as follows:

1. "Wool fat (anhydrous lanolin)" in 180.1001( d) shall become "lanolin (including anhydrous lanolin)"

2. "Dextrin" and "corn dextrin" in 180.1001( c) (both terms) and 180.1001( e) (dextrin only) will be combined into the term "dextrin (including corn dextrin)" and listed in both paragraphs.

3. The tolerance reassessment decision for "lecithin" will also apply to "lecithins, soya" and a tolerance exemption for this substance can be established.

By consensus the following List classifications have been determined:

1. Animal glue: Add to List 4A; contact allergenic reactions are likely to be reversible and the exposure levels and durations likely fromuse as an inert ingredient in pesticidal formulations do not justify classifying this substance as List 4B.

2. Coconut shells, walnut shells, and Douglas fir bark: List 4A based on the fact that these substances are naturally occurring and processing fromtheir natural formis minimal for their use as inert ingredients. Page 14 of 15 3. Coffee grounds: List 4A, no concern expected to humans or the environment.

4. Licorice root: Reclassify "licorice extract" from List 3 to List 4B, and change the List classification term to "Licorice and licorice derivatives" such that licorice root, licorice oils, and licorice extract are all reflected. CAS numbers for both licorice extract and licorice oils should be listed. Licorice is widely used in foods and pharmaceuticals; toxicity data for licorice extract suggests some chronic effects at high doses (doses not likelyto be experienced through inert ingredient use in pesticide formulations).

5. Spermoil: Classify as List 4A; derived from whale blubber, no incidence data exist in OPP's Incident Data System database for this substance.

6. Wood flour: Classify as List 4A; literature suggests potential chronic exposure concerns for wood dust frominhalation route in occupational setting. These exposure durations and levels will not be realized from use of wood dust in a pesticide formulated product.

7. Mixed phytosterols: Classify as List 4A based on the fact that no concerns were identified.

8. Soapbark (Quillaja Saponin): Reclassify from List 3 to List 4A; based on SAR, low concern for ecotoxicity, no concerns for human health.

9. Wool fat (anhydrous lanolin): Currently the term "lanolin" is included on List 4A it should remain on list 4A but the term should be expanded to "lanolin (including anhydrous lanolin)" and list both CAS numbers. There is no toxicologically significant difference between the two substances.

10. Castor oil: Reclassify from List 4B to List 4A.

11. Hydrogenated castor oil: Reclassify from List 3 to List 4B.

12. Boiled linseed oil: "Linseed oil, boiled" should be classified as List 4B. The existing "linseed oil" term in List 4A should remain on List 4A but be changed to specify "unboiled".

13. Dextrin and corn dextrin: Currently only dextrin in included in List 4A. Both should be reflected on List 4A under the term "dextrin (including corn dextrin)".

14. Guar gum: Keep on List 4A.

15. Gumarabic (Acacia): Reclassify fromList 4Ato List 4B, based on contact exposure concerns and occupational concerns with gum arabic mist.

16. Lecithin: Keep at List 4A; the pesticidal use of this substance is not expected to result in exposures near that from existing use of lecithin as a dietary supplement. "Lecithins, soya" Page 15 of 15 (CAS: 8030 76 0) should be added to List 4A.

17. Sodium Alginate: Add to List 4A; while this substance may be applied to water through use in fire retardant products, SARanalysis suggests that no significant adverse ecological effects are anticipated from exposure to this substance.

18. Xanthan gum: Keep on List 4A.

19. Locust Bean Gum: This substance is currently on List 4B, yet is added to all types of food. The group recommended that this compound be moved to List 4A.