[Federal Register Volume 76, Number 251 (Friday, December 30, 2011)]
[Rules and Regulations]
[Pages 82146-82152]
[FR Doc No: 2011-33477]

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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2010-0865; FRL-9330-2]

Tepraloxydim; Pesticide Tolerances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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

SUMMARY: This regulation establishes tolerances for residues of
tepraloxydim in or on the imported commodities ``Pea and bean, dried
shelled, except soybean, subgroup 6C'' and ``Sunflower subgroup 20B''.
BASF Corporation requested these tolerances under the Federal Food,
Drug, and Cosmetic Act (FFDCA). This regulation also removes
established tolerances for residues of tepraloxydim on ``Lentil, seed''
and ``Pea, dry, seed,'' as residues on these commodities will be
covered by the new tolerance on the pea and bean subgroup (6C).

DATES: This regulation is effective December 30, 2011. Objections and
requests for hearings must be received on or before February 28, 2012,
and must be filed in accordance with the instructions provided in 40
CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

ADDRESSES: EPA has established a docket for this action under docket
identification (ID) number EPA-HQ-OPP-2010-0865. All documents in the
docket are listed in the docket index available at http://www.regulations.gov. Although listed in the index, some information is
not publicly available, e.g., Confidential Business Information (CBI)
or other information whose disclosure is restricted by statute. Certain
other material, such as copyrighted material, is not placed on the
Internet and will be publicly available only in hard copy form.
Publicly available docket materials are available in the electronic
docket at http://www.regulations.gov, or, if only available in hard
copy, at the OPP Regulatory Public Docket in Rm. S-4400, One Potomac
Yard (South Bldg.), 2777 S. Crystal Dr., 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 (703)
305-5805.

FOR FURTHER INFORMATION CONTACT: Susan Stanton, Registration Division
(7505P), Office of Pesticide Programs, Environmental Protection Agency,
1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; telephone
number:<PHONE_NUMBER>; email address<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 those
engaged in the following activities:
     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 to
provide 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 under FOR FURTHER
INFORMATION CONTACT.

B. How can I get electronic access to other related information?

    You may access a frequently updated electronic version of EPA's
tolerance regulations at 40 CFR part 180 through the Government
Printing Office's e-CFR site at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl. To access the
harmonized test guidelines referenced in this document electronically,
please go http://www.epa.gov/ocspp and select ``Test Methods and
Guidelines.''

C. How can I file an objection or hearing request?

    Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an
objection to any aspect of this regulation and may also request a
hearing on those objections. You must file your objection or request a
hearing on this regulation in accordance with the instructions provided
in 40 CFR part 178. To ensure proper receipt by EPA, you must identify
docket ID number EPA-HQ-OPP-2010-0865 in the subject line on the first
page of your submission. All objections and requests for a hearing must
be in writing, and must be received by the Hearing Clerk on or before
February 28, 2012. Addresses for mail and hand delivery of objections
and hearing requests are provided in 40 CFR 178.25(b).
    In addition to filing an objection or hearing request with the
Hearing Clerk as described in 40 CFR part 178, please submit a copy of
the filing that does not contain any CBI for inclusion in the public
docket. Information not marked confidential pursuant to 40 CFR part 2
may be disclosed publicly by EPA without prior notice. Submit a copy of
your non-CBI objection or hearing request, identified by docket ID
number EPA-HQ-OPP-2010-0865, by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the on-line instructions for submitting comments.
     Mail: Office of Pesticide Programs (OPP) Regulatory Public
Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania Ave.
NW., Washington, DC 20460-0001.
     Delivery: OPP Regulatory Public Docket (7502P),
Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South
Bldg.), 2777 S. Crystal Dr., Arlington, VA. Deliveries are only
accepted during the Docket Facility's normal hours of operation (8:30
a.m. to 4 p.m., Monday through Friday, excluding legal holidays).
Special arrangements should be made for deliveries of boxed
information. The Docket Facility telephone number is<PHONE_NUMBER>.

II. Summary of Petitioned-For Tolerance

    In the Federal Register of December 15, 2010 (75 FR 78240) (FRL-
8853-1), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21
U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP
0E7788) by BASF Corporation, P.O. Box 13528, Research Triangle Park, NC
27709. The petition requested that 40 CFR 180.573 be amended by
establishing tolerances for residues of the herbicide tepraloxydim, 2-
[1-[[[(2E)-3-chloro-2-propen-1-yl]oxy]imino]propyl]-3-hydroxy-5-
(tetrahydro-2H-pyran-4-yl)-2-cyclohexen-1-one and its metabolites
convertible to GP (3-(tetrahydropyran-4-yl)pentane-1,5-dioic acid) and
OH-GP (3-hydroxy-3-(tetrahydropyran-4-yl)pentane-1,5-dioic acid),
calculated as tepraloxydim, in or on Pea and bean, dried shelled,
except soybean, subgroup 6C and Sunflower subgroup 20B at 0.10 parts
per million (ppm) and 0.25 ppm, respectively. That notice referenced a
summary of the petition prepared by BASF Corporation, the registrant,
which is available in the docket, http://www.regulations.gov. There
were no comments received in response to the notice of filing.
    Based upon review of the data supporting the petition, EPA has
reduced the proposed tolerance for Sunflower subgroup 20B from 0.25 ppm
to 0.20 ppm. The reason for this change is explained in Unit IV.C.

III. Aggregate Risk Assessment and Determination of Safety

    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a
tolerance (the legal limit for a pesticide chemical residue in or on a
food) only if EPA determines that the tolerance is ``safe.'' Section
408(b)(2)(A)(ii) of FFDCA defines ``safe'' to mean that ``there is a
reasonable certainty that no harm will result from aggregate exposure
to the pesticide chemical residue, including all anticipated dietary
exposures and all other exposures for which there is reliable
information.'' This includes exposure through drinking water and in
residential settings, but does not include occupational exposure.
Section 408(b)(2)(C) of FFDCA requires EPA to give special
consideration to exposure of infants and children to the pesticide
chemical residue in establishing a tolerance and to ``ensure that there
is a reasonable certainty that no harm will result to infants and
children from aggregate exposure to the pesticide chemical residue * *
*.''
    Consistent with section 408(b)(2)(D) of FFDCA, and the factors
specified in section 408(b)(2)(D) of FFDCA, EPA has reviewed the
available scientific data and other relevant information in support of
this action. EPA has sufficient data to assess the hazards of and to
make a determination on aggregate exposure for tepraloxydim including
exposure resulting from the tolerances established by this action.
EPA's assessment of exposures and risks associated with tepraloxydim
follows.

A. Toxicological Profile

    EPA has evaluated the available toxicity data and considered its
validity, completeness, and reliability as well as the relationship of
the results of the studies to human risk. EPA has also considered
available information concerning the variability of the sensitivities
of major identifiable subgroups of consumers, including infants and
children.
    Tepraloxydim has low acute toxicity via the oral, dermal, and
inhalation routes of exposure. It produces minimal

eye irritation, is a slight dermal irritant, and is not a dermal
sensitizer.
    In subchronic and chronic toxicity studies, the main target organs
for tepraloxydim toxicity were the liver, the spleen/hematopoietic
system and reproductive system. Liver findings were reported in all
subchronic and chronic toxicity/carcinogenicity feeding studies and
included increased incidences of hepatocellular foci, abnormal liver
function parameters, increased relative liver weight, hepatocyte
hypertrophy, and increased hepatocellular neoplasms in the mouse and
rat carcinogenicity studies. Tepraloxydim also affected the
hematopoietic system. In dogs, hemolytic anemia was demonstrated by
depressed hematocrit, hemoglobin, and red blood cells (RBCs). These
changes were accompanied by compensatory responses, including splenic
hematopoiesis, femoral and sternal bone marrow hyperplasia, increased
erythroid precursors and hemosiderin-laden macrophages, and splenic
hemosiderosis. The reproductive system was affected by tepraloxydim at
relatively high doses (in excess of LOAELs (lowest observed adverse
effect levels) established in repeat-dose mouse, rat and dog studies).
Reproductive effects included morphological microscopic changes
indicative of reduced secretory activity in the seminal vesicles and
preputial glands in male mice; increased uterine sclerosis, decreased
corpora lutea, and decreased follicles in female mice; increased
incidences of focal calcification of the testes in the high dose group
in the rat carcinogenicity feeding study; and effects on male sex
organs at high doses in dogs.
    In the rat developmental toxicity study, fetal effects (reduced
fetal body weights, delayed ossification and the occurrence of
hydroureter) were seen at a dose threefold lower than the dose
resulting in maternal toxicity (reduced body weight and body weight
gain). Additional developmental anomalies or malformations (dilatation
of both heart ventricles and filiform tails that were observed
externally and corresponded to absent caudal and sacral vertebrae) were
observed at the maternal LOAEL in the study. The results indicate
potential increased quantitative and qualitative susceptibility of
fetuses to tepraloxydim exposure. In contrast, no developmental effects
were seen in the rabbit developmental toxicity study up to the highest
tested dose, the LOAEL for maternal toxicity (reduced body weight and
food consumption). In the multi-generation rat reproduction study,
there were no effects on any of the measured reproductive parameters up
to and including the highest tested dose and no evidence of
quantitative or qualitative susceptibility of the offspring.
    In both the acute and subchronic rat neurotoxicity studies, there
were mild changes in motor activity and grip strength indices. On day 0
of the acute oral neurotoxicity study in rats, motor activity was
decreased in all treated female groups, while forelimb grip strength
was slightly increased in all treated females. In the rat subchronic
neurotoxicity study, motor activity was increased in the high dose
females at day 50 and in both sexes on day 85 at the highest dose
tested. None of the studies, including both neurotoxicity studies,
reported treatment-related effects on brain weight or gross/microscopic
lesions in the tissues of the nervous system.
    In cancer studies conducted in rats and mice, there was weak and/or
conflicting evidence of carcinogenicity. In rats, there was some
evidence of carcinogenicity in the females based on an increased
incidence of liver tumors at the high dose only in the carcinogenicity
phase of the study, but this finding was not supported by the results
of the chronic phase in the same strain and sex of rats. In mice, liver
tumors were seen in females at an excessively toxic dose. EPA's concern
for carcinogenicity is low, and the Agency has determined that the
chronic population-adjusted dose (cPAD) of 0.05 milligrams/kilogram/day
(mg/kg/day) will adequately account for all chronic effects, including
carcinogenicity, likely to result from exposure to tepraloxydim. This
determination is based on the following considerations:
     The liver tumors in female rats were seen only at the high
dose (i.e., lack of dose response);
     The incidences of these tumors were within the ranges for
the historical controls;
     The rat liver tumors observed in one study were not seen
in a parallel study conducted at the same dose and duration (i.e.,
tumorogenic potential not replicated);
     In mice, liver tumors were seen only at excessive doses
(i.e., greater than the Limit Dose of 1,000 mg/kg/day) which may have
resulted in indirect effects that may not occur at lower doses;
     The liver tumors did not result in reduced latency in
either species;
     There is no concern for mutagenicity/genotoxicity; and
     The NOAEL (no observed adverse effect level) of 5 mg/kg/
day used for deriving the chronic reference dose (cRfD) is
approximately 55-fold lower than the lowest dose (272 mg/kg/day) that
induced liver tumors in rats.
    Specific information on the studies received and the nature of the
adverse effects caused by tepraloxydim as well as the NOAEL and the
lowest-observed-adverse-effect-level LOAEL from the toxicity studies
can be found at http://www.regulations.gov in the document ``Amended:
Tepraloxydim: Human Health Risk Assessment for New Tolerances on
Imported Dry Bean and Dry Pea Subgroup 6C and Sunflower Subgroup 20B''
at page 31 in docket ID number EPA-HQ-OPP-2010-0865.

B. Toxicological Points of Departure/Levels of Concern

    Once a pesticide's toxicological profile is determined, EPA
identifies toxicological points of departure (POD) and levels of
concern to use in evaluating the risk posed by human exposure to the
pesticide. For hazards that have a threshold below which there is no
appreciable risk, the toxicological point of departure (POD) is used as
the basis for derivation of reference values for risk assessment. PODs
are developed based on a careful analysis of the doses in each
toxicological study to determine the dose at which no adverse effects
are observed (the NOAEL) and the lowest dose at which adverse effects
of concern are identified (the LOAEL). Uncertainty/safety factors are
used in conjunction with the POD to calculate a safe exposure level--
generally referred to as a PAD or a RfD--and a safe margin of exposure
(MOE). For non-threshold risks, the Agency assumes that any amount of
exposure will lead to some degree of risk. Thus, the Agency estimates
risk in terms of the probability of an occurrence of the adverse effect
expected in a lifetime. For more information on the general principles
EPA uses in risk characterization and a complete description of the
risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm. A summary of the toxicological endpoints for
tepraloxydim used for human risk assessment is shown in the following
Table .

  Table--Summary of Toxicological Doses and Endpoints for Tepraloxydim for Use in Human Health Risk Assessment
----------------------------------------------------------------------------------------------------------------
                                     Point of departure and
         Exposure/scenario              uncertainty/safety   RfD, PAD, LOC for risk    Study and toxicological
                                             factors               asssessment                 effects
----------------------------------------------------------------------------------------------------------------
Acute dietary (General population    LOAEL = 500 (mg/kg/     Acute RfD = 0.5 mg/kg/  Acute neurotoxicity
 including infants and children).     day).                   day.                    screening battery LOAEL =
                                     UFA = 10x.............  aPAD = 0.5 mg/kg/day..   500 mg/kg/day based on
                                     UFH = 10x.............                           decreased motor activity
                                     FQPA SF retained as                              in females. (The NOAEL is
                                      UFL = 10x.                                      not identified.)
Acute dietary......................  NOAEL = 40 mg/kg/day    Chronic RfD = 0.4 mg/   Rat developmental toxicity
(Females 13-49 years of age).......  UFA = 10x.............   kg/day.                 LOAEL = 120 mg/kg/day
                                     UFH = 10x.............  cPAD = 0.4 mg/kg/day..   based on findings of
                                     FQPA SF = 1x..........                           reduced ossification
                                                                                indicative of delayed
                                                                                maturation, and the
                                                                                occurrence of hydroureter.
Chronic dietary (All populations)..  NOAEL = 5 mg/kg/day     Chronic RfD = 0.05 mg/  Rat carcinogenicity study
                                     UFA = 10x.............   kg/day.                 LOAEL = 30 mg/kg/day based
                                     UFH = 10x.............  cPAD = 0.05 mg/kg/day.   on male liver microscopic
                                     FQPA SF = 1x..........                           lesions (eosinophilic
                                                                                foci).
----------------------------------------------------------------------------------------------------------------
Cancer.............................   Weak and/or conflicting evidence of carcinogenicity in the rat and mouse;
(Oral, dermal, inhalation).........     the chronic population-adjusted dose of 0.05 mg/kg/day will adequately
                                              account for all chronic effects, including carcinogenicity.
----------------------------------------------------------------------------------------------------------------
UFA = extrapolation from animal to human (interspecies). UFH = potential variation in sensitivity among members
  of the human population (intraspecies). UFL = use of a LOAEL to extrapolate a NOAEL. UFS = use of a short-term
  study for long-term risk assessment. FQPA SF = Food Quality Protection Act Safety Factor. PAD = population
  adjusted dose (a = acute, c = chronic). RfD = reference dose. LOC = level of concern.

C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary
exposure to tepraloxydim, EPA considered exposure under the petitioned-
for tolerances as well as all existing tepraloxydim tolerances in 40
CFR 180.573. EPA assessed dietary exposures from tepraloxydim in food
as follows:
    i. Acute exposure. Quantitative acute dietary exposure and risk
assessments are performed for a food-use pesticide, if a toxicological
study has indicated the possibility of an effect of concern occurring
as a result of a 1-day or single exposure. Such effects were identified
for tepraloxydim. As shown in the Table above, EPA identified different
points of departure for assessing acute dietary exposure for the
general population (including infants and children) and women of
childbearing age (13 to 49).
    In estimating acute dietary exposure, EPA used food consumption
information from the United States Department of Agriculture (USDA)
1994-1996 and 1998 Nationwide Continuing Surveys of Food Intake by
Individuals (CSFII). As to residue levels in food, EPA assumed that
residues are present in all commodities at the tolerance level and that
100% of commodities are treated with tepraloxydim.
    ii. Chronic exposure. In conducting the chronic dietary exposure
assessment EPA used the food consumption data from the USDA 1994-1996
and 1998 CSFII. As to residue levels in food, EPA assumed that residues
are present in all commodities at the tolerance level and that 100% of
commodities are treated with tepraloxydim.
    iii. Cancer. Based on the data summarized in Unit III.A., EPA has
concluded that tepraloxydim does not pose a cancer risk to humans.
Therefore, a dietary exposure assessment for the purpose of assessing
cancer risk is unnecessary.
    2. Dietary exposure from drinking water. The Agency used screening
level water exposure models in the dietary exposure analysis and risk
assessment for tepraloxydim in drinking water. These simulation models
take into account data on the physical, chemical, and fate/transport
characteristics of tepraloxydim. Further information regarding EPA
drinking water models used in pesticide exposure assessment can be
found at http://www.epa.gov/oppefed1/models/water/index.htm.
    Based on the First Index Reservoir Screening Tool (FIRST) and
Screening Concentration in Ground Water (SCI-GROW) models, the
estimated drinking water concentrations (EDWCs) of tepraloxydim for
acute exposures are estimated to be 1.4 parts per billion (ppb) for
surface water and 0.002 ppb for ground water. EDWCs for chronic
exposures for non-cancer assessments are estimated to be 0.7 ppb for
surface water and 0.002 ppb for ground water.
    Modeled estimates of drinking water concentrations were directly
entered into the dietary exposure model. For acute dietary risk
assessment, the water concentration value of 1.4 ppb was used to assess
the contribution to drinking water. For chronic dietary risk
assessment, the water concentration of value 0.7 ppb was used to assess
the contribution to drinking water.
    3. From non-dietary exposure. The term ``residential exposure'' is
used in this document to refer to non-occupational, non-dietary
exposure (e.g., for lawn and garden pest control, indoor pest control,
termiticides, and flea and tick control on pets). Tepraloxydim is not
registered for any specific use patterns that would result in
residential exposure.
    4. Cumulative effects from substances with a common mechanism of
toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when
considering whether to establish, modify, or revoke a tolerance, the
Agency consider ``available information'' concerning the cumulative
effects of a particular pesticide's residues and ``other substances
that have a common mechanism of toxicity.'' EPA has not found
tepraloxydim to share a common mechanism of toxicity with any other
substances, and tepraloxydim does not appear to produce a toxic
metabolite produced by other substances. For the purposes of this
tolerance action, therefore, EPA has assumed that tepraloxydim does not
have a common mechanism of toxicity with other substances. For
information regarding EPA's efforts to determine which chemicals have a
common mechanism of toxicity and to evaluate the cumulative effects of
such chemicals, see EPA's Web site at http://www.epa.gov/pesticides/cumulative.

 D. Safety Factor for Infants and Children

    1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA
shall apply an additional tenfold (10x) margin of

safety for infants and children in the case of threshold effects to
account for prenatal and postnatal toxicity and the completeness of the
database on toxicity and exposure unless EPA determines based on
reliable data that a different margin of safety will be safe for
infants and children. This additional margin of safety is commonly
referred to as the FQPA Safety Factor (SF). In applying this provision,
EPA either retains the default value of 10x, or uses a different
additional safety factor when reliable data available to EPA support
the choice of a different factor.
    2. Prenatal and postnatal sensitivity. As discussed in Unit III.A,
there was evidence of increased qualitative and quantitative
susceptibility of fetuses in the rat developmental toxicity study.
There was no evidence of increased susceptibility seen in the rabbit
developmental toxicity study or multi-generation rat reproduction
study. The degree of concern is low for the increased susceptibility
seen in the developmental study in rats (prenatal exposure), since a
clear NOAEL/LOAEL was established for developmental toxicity and the
endpoints of concern are used to assess exposure for the most sensitive
population of concern (i.e., Females 13to 49). There is no residual
uncertainty for prenatal and/or postnatal toxicity.
    3. Conclusion. EPA has determined that reliable data show the
safety of infants and children would be adequately protected if the
FQPA SF were reduced to 1x for all exposure scenarios, except acute
dietary exposure of the general population.
    A 10x FQPA Safety Factor in the form of a UFL is
retained for assessing acute dietary risk for the general population,
including infants and children, to account for the uncertainty
resulting from using a LOAEL, rather than a NOAEL, as the POD (i.e., a
NOAEL was not identified in the critical study). The critical effect
(decreased motor activity in females) observed at the LOAEL of 500 mg/
kg/day in the acute neurotoxicity study was neither severe nor
irreversible; and the dose-responsive decrease in motor activity was
observed in females on Day 0 in the absence of any other treatment-
related clinical signs (including functional observation battery) or
neurohistopathological effects. The dose-response relationship of
tepraloxydim indicates that an uncertainty factor of 10x is
sufficiently protective against the critical effect and any other
adverse effects at the aRfD.
    The decision to reduce the FQPA SF to 1x for all other exposure
scenarios is based on the following findings:
    i. The toxicity database is complete except for immunotoxicity
testing (OPPTS Guideline 870.7800). Recent changes to 40 CFR part 158
make this testing required for pesticide registration. In the absence
of specific immunotoxicity studies, EPA has evaluated the available
tepraloxydim toxicity database to determine whether an additional
database uncertainty factor is needed to account for potential
immunotoxicity. No evidence of immunotoxicity was found. Treatment-
related effects seen in the spleen (splenic hematopoiesis) and bone
marrow (hyperplasia) are compensatory responses to tepraloxydim-induced
hemolytic anemia.
    Considering the lack of evidence of immunotoxicity in the database
for tepraloxydim, EPA does not believe that conducting an
immunotoxicity study will result in a NOAEL less than that (5 mg/kg/
day) used to derive the current cRfD. Consequently, the EPA believes
the existing data are sufficient for endpoint selection for exposure/
risk assessment purposes and for evaluation of the requirements under
the FQPA, and an additional database uncertainty factor is unnecessary.
    ii. In both the acute and subchronic rat neurotoxicity studies,
there were mild changes in motor activity and grip strength indices.
However, EPA has concluded that there is no need for a developmental
neurotoxicity (DNT) study or additional UFs to account for
neurotoxicity, based on the following considerations:
     Neurotoxic effects were seen at high doses of 500 mg/kg
(\1/4\ of the limit dose), 1,000 mg/kg, and 2,000 mg/kg following bolus
(gavage) dosing in the acute neurotoxicity study and at 428 mg/kg/day
in males and 513 mg/kg/day in females following dietary administration
in the subchronic neurotoxicity study.
     In the two-generation reproduction study, no clinical
signs indicative of neurotoxicity were seen in the parental animals or
offspring; nor was there evidence for increased susceptibility of
offspring.
     Because a DNT study would necessarily be conducted at high
doses in order to elicit neurotoxicity, it would not yield a POD lower
than those currently used for acute (40 mg/kg [aPAD = 0.40 mg/kg] and
500 mg/kg [cPAD = 0.5 mg/kg]) and chronic (5 mg/kg/day) risk
assessments.
    iii. Although there was evidence of increased qualitative and
quantitative susceptibility of fetuses in the rat developmental
toxicity study, the concern for the increased susceptibility is low,
and EPA did not identify any residual uncertainties after establishing
toxicity endpoints and traditional UFs to be used in the risk
assessment of tepraloxydim.
    iv. There are no residual uncertainties identified in the exposure
databases. The dietary food exposure assessments were performed based
on 100% crop treated (CT) and tolerance-level residues. EPA made
conservative (protective) assumptions in the ground and surface water
modeling used to assess exposure to tepraloxydim in drinking water.
These assessments will not underestimate the exposure and risks posed
by tepraloxydim.

E. Aggregate Risks and Determination of Safety

    EPA determines whether acute and chronic dietary pesticide
exposures are safe by comparing aggregate exposure estimates to the
aPAD and cPAD. For linear cancer risks, EPA calculates the lifetime
probability of acquiring cancer given the estimated aggregate exposure.
Short-, intermediate-, and chronic-term risks are evaluated by
comparing the estimated aggregate food, water, and residential exposure
to the appropriate PODs to ensure that an adequate MOE exists.
    1. Acute risk. Using the exposure assumptions discussed in this
unit for acute exposure, the acute dietary exposure from food and water
to tepraloxydim will occupy 2.2% of the aPAD for children, 1 to 2 years
old, the population group receiving the greatest exposure. The acute
dietary exposure from food and water to tepraloxydim will occupy 1.0%
or less of the aPAD for all other population subgroups, including
females 13 to 49 years old.
    2. Chronic risk. Using the exposure assumptions described in this
unit for chronic exposure, EPA has concluded that chronic exposure to
tepraloxydim from food and water will utilize 9.6% of the cPAD for
children, 1 to 2 years old, the population group receiving the greatest
exposure. There are no residential uses for tepraloxydim.
    3. Short-term risk. Short-term aggregate exposure takes into
account short-term residential exposure plus chronic exposure to food
and water (considered to be a background exposure level). A short-term
adverse effect was identified; however, tepraloxydim is not registered
for any use patterns that would result in short-term residential
exposure. Short-term risk is assessed based on short-term residential
exposure plus chronic dietary exposure. Because there is no short-term
residential exposure and chronic dietary exposure has already been
assessed under the appropriately

protective cPAD (which is at least as protective as the POD used to
assess short-term risk), no further assessment of short-term risk is
necessary, and EPA relies on the chronic dietary risk assessment for
evaluating short-term risk for tepraloxydim.
    4. Intermediate-term risk. Intermediate-term aggregate exposure
takes into account intermediate-term residential exposure plus chronic
exposure to food and water (considered to be a background exposure
level). An intermediate-term adverse effect was identified; however,
tepraloxydim is not registered for any use patterns that would result
in intermediate-term residential exposure. Intermediate-term risk is
assessed based on intermediate-term residential exposure plus chronic
dietary exposure. Because there is no intermediate-term residential
exposure and chronic dietary exposure has already been assessed under
the appropriately protective cPAD (which is at least as protective as
the POD used to assess intermediate-term risk), no further assessment
of intermediate-term risk is necessary, and EPA relies on the chronic
dietary risk assessment for evaluating intermediate-term risk for
tepraloxydim.
    5. Aggregate cancer risk for U.S. population. Based on the results
of two adequate rodent carcinogenicity studies and the explanation
given in Unit III.A, tepraloxydim is not expected to pose a cancer risk
to humans.
    6. Determination of safety. Based on these risk assessments, EPA
concludes that there is a reasonable certainty that no harm will result
to the general population, or to infants and children from aggregate
exposure to tepraloxydim residues.

IV. Other Considerations

A. Analytical Enforcement Methodology

    Adequate enforcement methodology (gas chromatography/mass
spectrometry (GC/MS) BASF Analytical Method D9701/1) is available to
enforce the tolerance expression. The method may be requested from:
Chief, Analytical Chemistry Branch, Environmental Science Center, 701
Mapes Rd., Ft. Meade, MD 20755-5350; telephone number:<PHONE_NUMBER>;
email address<EMAIL_ADDRESS>
B. International Residue Limits

    In making its tolerance decisions, EPA seeks to harmonize U.S.
tolerances with international standards whenever possible, consistent
with U.S. food safety standards and agricultural practices. EPA
considers the international maximum residue limits (MRLs) established
by the Codex Alimentarius Commission (Codex), as required by FFDCA
section 408(b)(4). The Codex Alimentarius is a joint U.N. Food and
Agriculture Organization/World Health Organization food standards
program, and it is recognized as an international food safety
standards-setting organization in trade agreements to which the United
States is a party. EPA may establish a tolerance that is different from
a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain
the reasons for departing from the Codex level.
    The Codex has not established a MRL for tepraloxydim.

C. Revisions to Petitioned-For Tolerances

    EPA has reduced the proposed tolerance for Sunflower subgroup 20B
from 0.25 ppm to 0.20 ppm to harmonize with the established MRL in
Canada. Since the highest average field trial residue and maximum field
trial residue for sunflower seed were 0.14 ppm and 0.18 ppm,
respectively, EPA has determined that the Canadian level is adequate to
cover expected residues on commodities in subgroup 20B.
    EPA is also revising the introductory text of Sec.  180.573(a)(1),
(a)(2) and (c), which contain the tolerance expression for the existing
and new tolerances, to clarify the chemical moieties that are covered
by the tolerances and specify how compliance with the tolerances is to
be determined. Tolerances for plant commodities are currently expressed
in terms of the combined residues tepraloxydim, 2-[1-[[[(2E)-3-chloro-
2-propen-1-yl]oxy]imino]propyl]-3-hydroxy-5-(tetrahydro-2H-pyran-4-yl)-
2-cyclohexen-1-one, and its metabolites convertible to GP (3-
(tetrahydropyran-4-yl)pentane-1,5-dioic acid) and OH-GP (3-hydroxy-3-
(tetrahydropyran-4-yl)pentane-1,5-dioic acid), calculated as
tepraloxydim. Livestock tolerances are currently expressed in terms of
the combined residues of tepraloxydim and its metabolites convertible
to GP, OH-GP, and GL (3-(2-oyotetrahydropyran-4-yl)-1,5-dioic acid),
calculated as tepraloxydim. The tolerance expression for plants is
being revised to make clear that the tolerances cover residues of
tepraloxydim, including its metabolites and degradates, but that
compliance with the tolerances is to be determined by measuring only
the combined residues of tepraloxydim and its metabolites convertible
to GP and OH-GP, calculated as tepraloxydim. Similarly, the tolerance
expression for livestock commodities is being revised to clarify that
the tolerances cover residues of tepraloxydim, including its
metabolites and degradates, but that compliance with the tolerance
levels will be determined by measuring only the combined residues of
tepraloxydim and its metabolites convertible to GP, OH-GP, and GL,
calculated as tepraloxydim. EPA has determined that it is reasonable to
make these changes final without prior proposal and opportunity for
comment, because public comment is not necessary, in that the changes
have no substantive effect on the tolerances, but rather are merely
intended to clarify the existing tolerance expressions.
    Finally, EPA is removing established tolerances for residues of
tepraloxydim on ``Lentil, seed'' and ``Pea, dry, seed'' because
residues on these commodities are covered by the new tolerances for
residues of tepraloxydim on the pea and bean subgroup 6C.

V. Conclusion

    Therefore, the established tolerances for residues of tepraloxydim
on ``Lentil, seed'' and ``Pea, dry, seed'' are removed, and new
tolerances are established for residues of tepraloxydim, including its
metabolites and degradates, in or on ``Pea and bean, dried shelled,
except soybean, subgroup 6C'' and ``Sunflower subgroup 20B'' as set
forth in the regulatory text.

VI. Statutory and Executive Order Reviews

    This final rule establishes tolerances under section 408(d) of
FFDCA in response to a petition submitted to the Agency. The Office of
Management and Budget (OMB) has exempted these types of actions from
review under Executive Order 12866, entitled Regulatory Planning and
Review (58 FR 51735, October 4, 1993). Because this final rule has been
exempted from review under Executive Order 12866, this final rule is
not subject to Executive Order 13211, entitled Actions Concerning
Regulations That Significantly Affect Energy Supply, Distribution, or
Use (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled
Protection of Children from Environmental Health Risks and Safety Risks
(62 FR 19885, April 23, 1997). This final rule does not contain any
information collections subject to OMB approval under the Paperwork
Reduction Act (PRA), 44 U.S.C. 3501 et seq., nor does it require any
special considerations under Executive Order 12898, entitled Federal
Actions to Address Environmental Justice in Minority Populations and
Low-Income Populations (59 FR 7629, February 16, 1994).
    Since tolerances and exemptions that are established on the basis
of a petition

under section 408(d) of FFDCA, such as the tolerances in this final
rule, do not require the issuance of a proposed rule, the requirements
of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) do not
apply.
    This final rule directly regulates growers, food processors, food
handlers, and food retailers, not States or tribes, nor does this
action alter the relationships or distribution of power and
responsibilities established by Congress in the preemption provisions
of section 408(n)(4) of FFDCA. As such, the Agency has determined that
this action will not have a substantial direct effect on States or
tribal governments, on the relationship between the national government
and the States or tribal governments, or on the distribution of power
and responsibilities among the various levels of government or between
the Federal Government and Indian tribes. Thus, the Agency has
determined that Executive Order 13132, entitled Federalism (64 FR
43255, August 10, 1999) and Executive Order 13175, entitled
Consultation and Coordination with Indian Tribal Governments (65 FR
67249, November 9, 2000) do not apply to this final rule. In addition,
this final rule does not impose any enforceable duty or contain any
unfunded mandate as described under Title II of the Unfunded Mandates
Reform Act of 1995 (UMRA) (Pub. L. 104-4).
    This action does not involve any technical standards that would
require Agency consideration of voluntary consensus standards pursuant
to section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272
note).

VII. Congressional Review Act

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

List of Subjects in 40 CFR Part 180

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

    Dated: December 14, 2011.
Lois Rossi,
Director, Registration Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

PART 180--[AMENDED]

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

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

0
2. Amend Sec.  180.573 as follows:
0
a. Revise the introductory text in paragraphs (a)(1), (a)(2), and (c);
0
b. Remove the commodities ``Lentil, seed'' and ``Pea, dry, seed'' from
the table in paragraph (a)(1);
0
c. Add alphabetically the commodities ``Pea and bean, dried shelled,
except soybean, subgroup 6C'' and ``Sunflower subgroup 20B'' and add
footnote 1 to the table in paragraph (a)(1).
    The revised and added text read as follows:

Sec.  180.573  Tepraloxydim; tolerances for residues.

    (a) General. (1) Tolerances are established for residues of
tepraloxydim, including its metabolites and degradates, in or on the
commodities in the table below. Compliance with the tolerance levels
specified below is to be determined by measuring only the combined
residues of tepraloxydim, (2-[1-[[[(2E)-3-chloro-2-propen-1-
yl]oxy]imino]propyl]-3-hydroxy-5-(tetrahydro-2H-pyran-4-yl)-2-
cyclohexen-1-one) and its metabolites convertible to GP (3-
(tetrahydropyran-4-yl)pentane-1,5-dioic acid) and OH-GP (3-hydroxy-3-
(tetrahydropyran-4-yl)pentane-1,5-dioic acid), calculated as
tepraloxydim, in or on the commodities.

------------------------------------------------------------------------
                                                               Parts per
                          Commodity                             million
------------------------------------------------------------------------

                                 * * * *
Pea and bean, dried shelled, except soybean, subgroup 6C \1\.       0.10

                                 * * * *
Sunflower subgroup 20B \1\...................................       0.20

                                * * * *
------------------------------------------------------------------------
\1\ There are no U.S. registrations for commodities in this subgroup.

    (2) Tolerances are established for residues of tepraloxydim,
including its metabolites and degradates, in or on the commodities in
the table below. Compliance with the tolerance levels specified below
is to be determined by measuring only the combined residues of
tepraloxydim (2-[1-[[[(2E)-3-chloro-2-propen-1-yl]oxy]imino]propyl]-3-
hydroxy-5-(tetrahydro-2H-pyran-4-yl)-2-cyclohexen-1-one) and its
metabolites convertible to GP (3-(tetrahydropyran-4-yl)pentane-1,5-
dioic acid), OH-GP (3-hydroxy-3-(tetrahydropyran-4-yl)pentane-1,5-dioic
acid), and GL (3-(2-oxotetrahydropyran-4-yl)-1,5-dioic acid),
calculated as tepraloxydim, in or on the commodities.
* * * * *
    (c) Tolerances with regional registrations. A tolerance with
regional registration, as defined in Sec.  180.1(l), is established for
residues of tepraloxydim, including its metabolites and degradates, in
or on the commodities in the table below. Compliance with the tolerance
levels specified below is to be determined by measuring only the
combined residues of tepraloxydim (2-[1-[[[(2E)-3-chloro-2-propen-1-
yl]oxy]imino]propyl]-3-hydroxy-5-(tetrahydro-2H-pyran-4-yl)-2-
cyclohexen-1-one) and its metabolites convertible to GP (3-
(tetrahydropyran-4-yl)pentane-1,5-dioic acid) and OH-GP (3-hydroxy-3-
(tetrahydropyran-4-yl)pentane-1,5-dioic acid), calculated as
tepraloxydim, in or on the commodities.
* * * * *
[FR Doc. 2011-33477 Filed 12-29-11; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 77, Number 2 (Wednesday, January 4, 2012)]
[Notices]
[Pages 279-280]
[FR Doc No: 2011-33719]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER12-682-000]

Erie Wind, LLC; Supplemental Notice That Initial Market-Based
Rate Filing Includes Request for Blanket Section 204 Authorization

    This is a supplemental notice in the above-referenced proceeding of
Erie Wind, LLC's application for market-based rate authority, with an
accompanying rate tariff, noting that such application includes a
request for blanket authorization, under 18 CFR part 34, of future
issuances of securities and assumptions of liability.
    Any person desiring to intervene or to protest should file with the
Federal Energy Regulatory Commission, 888 First Street NE., Washington,
DC 20426, in accordance with Rules 211 and 214 of the Commission's
Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone
filing a motion to intervene or protest must serve a copy of that
document on the Applicant.
    Notice is hereby given that the deadline for filing protests with
regard to the applicant's request for blanket authorization, under 18
CFR part 34, of future issuances of securities and assumptions of
liability, is January 17, 2012.

    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
14 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426.
    The filings in the above-referenced proceeding are accessible in
the Commission's eLibrary system by clicking on the appropriate link in
the above list. They are also available for review in the Commission's
Public Reference Room in Washington, DC. There is an eSubscription link
on the Web site that enables subscribers to receive email notification
when a document is added to a subscribed docket(s). For assistance with
any FERC Online service, please email<EMAIL_ADDRESS>or
call<PHONE_NUMBER> (toll free). For TTY, call<PHONE_NUMBER>.

    Dated: December 28, 2011.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2011-33719 Filed 1-3-12; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 85, Number 114 (Friday, June 12, 2020)]
[Notices]
[Pages 35962-35966]
[FR Doc No: 2020-12685]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89027; File No. SR-NASDAQ-2020-027]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Proposed Rule Change To Apply Additional Initial
Listing Criteria for Companies Primarily Operating in Restrictive
Markets

June 8, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 29, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``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.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to apply additional initial listing criteria
for companies primarily operating in a jurisdiction that has secrecy
laws, blocking statutes, national security laws or other laws or
regulations restricting access to information by regulators of U.S.-
listed companies.
    The text of the proposed rule change is available on the Exchange's
website at http://nasdaq.cchwallstreet.com, at the principal office of
the Exchange, and at 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 Exchange 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. The Exchange 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
    Nasdaq's listing requirements include a number of criteria which,
in the aggregate, are designed to ensure that a security listed on
Nasdaq has sufficient liquidity and public interest to support a
listing on a U.S. national securities exchange. These requirements are
intended to ensure that there are sufficient shares available for
trading to facilitate proper price discovery in the secondary market.
In recent years, U.S. investors have increasingly sought exposure to
emerging markets companies as part of a diversified portfolio. As a
result of this interest, emerging market companies have sought to raise
funds in the U.S. and list on Nasdaq. While many of these listings have
similar trading attributes and rates of compliance concerns compared to
U.S. companies with similar profiles, the lack of transparency from
certain emerging markets raises concerns about the accuracy of
disclosures, accountability, and access to information, particularly
when a company is based in a jurisdiction that has secrecy laws,
blocking statutes, national security laws or other laws or regulations
restricting access to information by regulators of U.S.-listed
companies in such jurisdiction (a ``Restrictive Market'').
    These concerns can be compounded when the company lists on Nasdaq
through an initial public offering (``IPO'') or business combination
with a small offering size or a low public float percentage because
such companies may not attract market attention and develop sufficient
public float, investor base, and trading interest to provide the depth
and liquidity necessary to promote fair and orderly trading. As a
result, the securities may trade infrequently, in a more volatile
manner and with a wider bid-ask spread, all of which may result in
trading at a price that may not reflect their true market value. In
addition, foreign issuers are more likely to issue a portion of an
offering to investors in their home country, which raises concerns that
such investors will not contribute to the liquidity of the security in
the U.S. secondary market.
    Less liquid securities may be more susceptible to price
manipulation, as a relatively small amount of trading activity can have
an inordinate effect on market prices. The risk of price manipulation
due to insider trading is more acute when a company principally
administers its business in a Restrictive Market (a ``Restrictive
Market Company'') because regulatory investigations into price
manipulation, insider trading and compliance concerns may be impeded.
In such cases, investor protections and remedies may be limited due to
obstacles encountered by U.S. authorities in bringing or enforcing
actions against the companies and insiders.\3\
---------------------------------------------------------------------------

    \3\ See SEC Chairman Jay Clayton, PCAOB Chairman William D.
Duhnke III, SEC Chief Accountant Sagar Teotia, SEC Division of
Corporation Finance Director William Hinman, SEC Division of
Investment Management Director Dalia Blass, Emerging Market
Investments Entail Significant Disclosure, Financial Reporting and
Other Risks; Remedies are Limited (April 21, 2020), available at
https://www.sec.gov/news/public-statement/emerging-market-investments-disclosure-reporting.
---------------------------------------------------------------------------

    Currently, Nasdaq may rely upon its discretionary authority
provided under Rule 5101 \4\ to deny initial listing or to apply
additional and more stringent criteria when Nasdaq is concerned that a
small offering size for an IPO may not reflect the company's initial
valuation or ensure sufficient liquidity to support trading in the
secondary market. Nasdaq is proposing to adopt new Rules 5210(l)(i) and
(ii) that would require a minimum offering size or public float for
Restrictive Market Companies listing on Nasdaq in connection with an
IPO or a business combination (as described in Rule 5110(a) or IM-5101-
2). Nasdaq is also proposing to adopt a new Rule 5210(l)(iii) to
provide that Restrictive Market Companies would be permitted to list on
the Nasdaq Global Select or Nasdaq Global Markets if they are listing
in connection with a Direct Listing (as defined in IM-5315-1), but
would not be permitted to list on the Nasdaq Capital Market, which has
lower requirements for Unrestricted Publicly Held Shares, in connection
with a Direct Listing.
---------------------------------------------------------------------------

    \4\ Listing Rule 5101 provides Nasdaq with broad discretionary
authority over the initial and continued listing of securities in
Nasdaq in order to maintain the quality of and public confidence in
its market, to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, and to
protect investors and the public interest. Nasdaq may use such
discretion to deny initial listing, apply additional or more
stringent criteria for the initial or continued listing of
particular securities, or suspend or delist particular securities
based on any event, condition, or circumstance that exists or occurs
that makes initial or continued listing of the securities on Nasdaq
inadvisable or unwarranted in the opinion of Nasdaq, even though the
securities meet all enumerated criteria for initial or continued
listing on Nasdaq.
---------------------------------------------------------------------------

I. Definition of Restrictive Market

    Nasdaq proposes to adopt a new definition of Restrictive Market in
Rule 5005(a)(37) to define a Restrictive

Market as a jurisdiction that Nasdaq determines to have secrecy laws,
blocking statutes, national security laws or other laws or regulations
restricting access to information by regulators of U.S.-listed
companies in such jurisdiction. Nasdaq also proposes to renumber the
remainder of Rule 5005(a) to ensure consistency in its rulebook.
    In determining whether a company's business is principally
administered in a Restrictive Market, Nasdaq may consider the
geographic locations of the company's: (a) Principal business segments,
operations or assets; (b) board and shareholders' meetings; (c)
headquarters or principal executive offices; (d) senior management and
employees; and (e) books and records.\5\ Nasdaq will consider these
factors holistically, recognizing that a company's headquarters may not
be the office from which it conducts its principal business activities.
---------------------------------------------------------------------------

    \5\ This threshold would capture both foreign private issuers
based in Restrictive Markets and companies based in the U.S. or
another jurisdiction that principally administer their businesses in
Restrictive Markets. The factors that Nasdaq would consider when
determining whether a business is principally administered in a
Restrictive Market is supported by SEC guidance regarding foreign
private issuer status, which suggests that a foreign company may
consider certain factures including the locations of: The company's
principal business segments or operations; its board and
shareholders' meetings; its headquarters; and its most influential
key executives (potentially a subset of all executives). See
Division of Corporation Finance of the SEC, Accessing the U.S.
Capital Markets--A Brief Overview for Foreign Private Issuers
(February 13, 2013), available at https://www.sec.gov/divisions/corpfin/internatl/foreign-private-issuers-overview.shtml#IIA2c.
---------------------------------------------------------------------------

    For example, Company X's headquarters could be located in Country
Y, while the majority of its senior management, employees, assets,
operations and books and records are located in Country Z, which is a
Restrictive Market. If Company X applies to list its Primary Equity
Security on Nasdaq in connection with an IPO, Nasdaq would consider
Company X's business to be principally administered in Country Z, and
Company X would therefore be subject to the proposed additional
requirements applicable to a Restrictive Market Company.

II. Minimum Offering Size or Public Float Percentage for an IPO

    As proposed, Rule 5210(l)(i) would require a company that is
listing its Primary Equity Security \6\ on Nasdaq in connection with
its IPO, and that principally administers its business in a Restrictive
Market, to offer a minimum amount of securities in a Firm Commitment
Offering \7\ in the U.S. to Public Holders \8\ that: (i) Will result in
gross proceeds to the company of at least $25 million; or (ii) will
represent at least 25% of the company's post-offering Market Value \9\
of Listed Securities,\10\ whichever is lower. For example, Company X is
applying to list on Nasdaq Global Market. Company X principally
administers its business in a Restrictive Market and its post-offering
Market Value of Listed Securities is expected to be $75,000,000. Since
25% of $75,000,000 is $18,750,000, which is lower than $25,000,000, it
would be eligible to list under the proposed rule based on a Firm
Commitment Offering in the U.S. to Public Holders of at least
$18,750,000. However, Company X would also need to comply with the
other applicable listing requirements of the Nasdaq Global Market,
including a Market Value of Unrestricted Publicly Held Shares \11\ of
at least $8 million.\12\
---------------------------------------------------------------------------

    \6\ Rule 5005(a)(33) defines ``Primary Equity Security'' as ``a
Company's first class of Common Stock, Ordinary Shares, Shares or
Certificates of Beneficial Interest of Trust, Limited Partnership
Interests or American Depositary Receipts (ADR) or Shares (ADS).''
    \7\ Rule 5005(a)(17) defines ``Firm Commitment Offering'' as
``an offering of securities by participants in a selling syndicate
under an agreement that imposes a financial commitment on
participants in such syndicate to purchase such securities.''
    \8\ Rule 5005(a)(36) defines ``Public Holders'' as ``holders of
a security that includes both beneficial holders and holders of
record, but does not include any holder who is, either directly or
indirectly, an Executive Officer, director, or the beneficial holder
of more than 10% of the total shares outstanding.''
    \9\ Rule 5005(a)(23) defines ``Market Value'' as ``the
consolidated closing bid price multiplied by the measure to be
valued (e.g., a Company's Market Value of Publicly Held Shares is
equal to the consolidated closing bid price multiplied by a
Company's Publicly Held Shares).''
    \10\ Rule 5005(a)(22) defines ``Listed Securities'' as
``securities listed on Nasdaq or another national securities
exchange.''
    \11\ See Rule 5005(a)(45) (definition of ``Unrestricted Publicly
Held Shares''), Rule 5005(a)(46) (definition of ``Unrestricted
Securities''), and Rule 5005(a)(37) (definition of ``Restricted
Securities'').
    \12\ See Rule 5405(b)(1)(C).
---------------------------------------------------------------------------

    In contrast, Company Y, which also principally administers its
business in a Restrictive Market, is applying to list on the Nasdaq
Global Select Market and its post-offering Market Value of Listed
Securities is expected to be $200,000,000. Since 25% of $200,000,000 is
$50,000,000, which is higher than $25,000,000, it would be eligible to
list under the proposed rule based on a Firm Commitment Offering in the
U.S. to Public Holders that will result in gross proceeds of at least
$25,000,000. However, Company Y would also need to comply with the
other applicable listing requirements of the Nasdaq Global Select
Market, including a Market Value of Unrestricted Publicly Held Shares
of at least $45 million.\13\
---------------------------------------------------------------------------

    \13\ See Rule 5315(f)(2)(C).
---------------------------------------------------------------------------

    The Exchange believes that the proposal to require a Restrictive
Market Company conducting an IPO to offer a minimum amount of
securities in the U.S. to Public Holders in a Firm Commitment Offering
will provide greater support for the company's price, as determined
through the offering, and will help assure that there will be
sufficient liquidity, U.S. investor interest and distribution to
support price discovery once a security is listed. Nasdaq believes
there is a risk that substantial participation by foreign investors in
an offering, combined with insiders retaining significant ownership,
does not promote sufficient investor base and trading interest to
support trading in the secondary market. The risk to U.S. investors is
compounded when a company is located in a Restrictive Market due to
barriers on access to information and limitations on the ability of
U.S. regulators to conduct investigations or bring or enforce actions
against the company and non-U.S. persons, which create concerns about
the accuracy of disclosures, accountability and access to information.
Further, the Exchange has observed that Restrictive Market Companies
listing on Nasdaq in connection with an IPO with an offering size below
$25 million or public float ratio below 25% have a high rate of
compliance concerns.
    Nasdaq believes that these concerns may be mitigated by the company
conducting a Firm Commitment Offering of at least $25 million or 25% of
the company's post-offering Market Value of Listed Securities,
whichever is lower. Firm Commitment Offerings typically involve a book
building process that helps to generate an investor base and trading
interest that promotes sufficient depth and liquidity to help support
fair and orderly trading on the Exchange. Such offerings also typically
involve more due diligence by the broker-dealer than would be done in
connection with a best-efforts offering, which helps to ensure that
third parties subject to U.S. regulatory oversight are conducting
significant due diligence on the company, its registration statement
and its financial statements.\14\ The

Exchange believes that the proposal will help ensure that Restrictive
Market Companies seeking to list on the Exchange have sufficient
investor base and public float to support fair and orderly trading on
the Exchange.
---------------------------------------------------------------------------

    \14\ Certain Restrictive Markets impose national barriers on
access to information that limit the ability of U.S. regulators to
effectively conduct regulatory oversight of U.S.-listed companies
with operations in such countries, including the PCAOB's ability to
inspect the audit work and practices of auditors in those countries.
See SEC Chairman Jay Clayton, SEC Chief Accountant Wes Bricker and
PCAOB Chairman William D. Duhnke III, Statement on the Vital Role of
Audit Quality and Regulatory Access to Audit and Other Information
Internationally--Discussion of Current Information Access Challenges
with Respect to U.S.-listed Companies with Significant Operations in
China (December 7, 2018), available at https://www.sec.gov/news/public-statement/statement-vital-role-audit-quality-and-regulatory-access-audit-and-other (``Some of these laws, for example, act to
prohibit foreign-domiciled registrants in certain jurisdictions from
responding directly to SEC requests for information and documents or
doing so, in whole or in part, only after protracted delays in
obtaining authorization. Other laws can prevent the SEC from being
able to conduct any type of examination, either onsite or by
correspondence . . . Positions taken by some foreign authorities
currently prevent or significantly impair the PCAOB's ability to
inspect non-U.S. audit firms in certain countries, even though these
firms are registered with the PCAOB.'').
---------------------------------------------------------------------------

III. Minimum Market Value of Publicly Held Shares for a Business
Combination

    Nasdaq believes that a business combination, as described in Rule
5110(a) or IM-5101-2, involving a Restrictive Market Company presents
similar risks to U.S. investors as IPOs of Restrictive Market
Companies. However, such a business combination would typically not
involve an offering. Therefore, Nasdaq proposes to adopt a new Rule
5210(l)(ii) that would impose a similar new requirement as applicable
to IPOs, but would reflect that the listing would not typically be
accompanied by an offering. Specifically, proposed Rule 5210(l)(ii)
would require the listed company to have a minimum Market Value of
Unrestricted Publicly Held Shares following the business combination
equal to the lesser of: (i) $25 million; or (ii) 25% of the post-
business combination entity's Market Value of Listed Securities.
    For example, Company A is currently listed on the Nasdaq Capital
Market and plans to acquire a company that principally administers its
business in a Restrictive Market, in accordance with IM-5101-2.
Following the business combination, Company A intends to transfer to
the Nasdaq Global Select Market. Company A expects the post-business
combination entity to have a Market Value of Listed Securities of
$250,000,000. Since 25% of $250,000,000 is $62,500,000, which is higher
than $25,000,000, to qualify for listing on the Nasdaq Global Select
Market the post-business combination entity must have a minimum Market
Value of Unrestricted Publicly Held Shares of at least $25,000,000.
However, Company A would also need to comply with the other applicable
listing requirements of the Nasdaq Global Select Market, including a
Market Value of Unrestricted Publicly Held Shares of at least
$45,000,000.\15\
---------------------------------------------------------------------------

    \15\ See Rule 5315(f)(2)(C).
---------------------------------------------------------------------------

    In contrast, Company B is currently listed on Nasdaq Capital Market
and plans to combine with a non-Nasdaq entity that principally
administers its business in a Restrictive Market, resulting in a change
of control as defined in Rule 5110(a), whereby the non-Nasdaq entity
will become the Nasdaq-listed company. Following the change of control,
Company B expects the listed company to have a Market Value of Listed
Securities of $50,000,000. Since 25% of $50,000,000 is $12,500,000,
which is lower than $25,000,000, the listed company must have a minimum
Market Value of Unrestricted Publicly Held Shares following the change
of control of at least $12,500,000. However, the company would also
need to comply with the other applicable listing requirements of the
Nasdaq Capital Market, including a Market Value of Unrestricted
Publicly Held Shares of at least $5 million.\16\
---------------------------------------------------------------------------

    \16\ See Rule 5505(b)(3)(C).
---------------------------------------------------------------------------

    Market Value of Unrestricted Publicly Held Shares excludes
securities subject to resale restrictions from the calculation of
Publicly Held Shares because securities subject to resale restrictions
are not freely transferrable or available for outside investors to
purchase and therefore do not truly contribute to a security's
liquidity upon listing. Nasdaq believes that requiring the post-
business combination entity to have a minimum Market Value of
Unrestricted Publicly Held Shares of at least $25 million or 25% of its
Market Value of Listed Securities, whichever is lower, would help to
provide an additional assurance that there are sufficient freely
tradable shares and investor interest to support fair and orderly
trading on the Exchange when the target company principally administers
its business in a Restrictive Market. Nasdaq believes that this will
help mitigate the unique risks that Restrictive Market Companies
present to U.S. investors due to barriers on access to information and
limitations on the ability of U.S. regulators to conduct investigations
or bring or enforce actions against the company and non-U.S. persons,
which create concerns about the accuracy of disclosures, accountability
and access to information.

IV. Direct Listings of Restrictive Market Companies

    Nasdaq proposes to adopt Rule 5210(l)(iii) to provide that a
Restrictive Market Company would be permitted to list on the Nasdaq
Global Select Market or Nasdaq Global Market in connection with a
Direct Listing (as defined in IM-5315-1), provided that the company
meets all applicable listing requirements for the Nasdaq Global Select
Market and the additional requirements of IM-5315-1, or the applicable
listing requirements for the Nasdaq Global Market and the additional
requirements of IM-5405-1. However, such companies would be not be
permitted to list on the Nasdaq Capital Market in connection with a
Direct Listing notwithstanding the fact that such companies may meet
the applicable initial listing requirements for the Nasdaq Capital
Market and the additional requirements of IM-5505-1.
    Direct Listings are currently required to comply with enhanced
listing standards pursuant to IM-5315-1 (Nasdaq Global Select Market)
and IM-5405-1 (Nasdaq Global Market). If a company's security has had
sustained recent trading in a Private Placement Market,\17\ Nasdaq may
attribute a Market Value of Unrestricted Publicly Held Shares equal to
the lesser of (i) the value calculable based on a Valuation \18\ and
(ii) the value calculable based on the most recent trading price in the
Private Placement Market.\19\ Nasdaq believes that the price from such
sustained trading in the Private Placement Market for the company's
securities is predictive of the price in the market for the common
stock that will develop upon listing of the securities on Nasdaq and
that qualifying a company based on the lower of such trading price or
the Valuation helps assure that the company satisfies Nasdaq's
requirements.
---------------------------------------------------------------------------

    \17\ See Rule 5005(a)(34).
    \18\ See IM-5315-1(a)(1).
    \19\ See IM-5315-1(a)(1) (Nasdaq Global Select Market) and IM-
5405-1(a)(1) (Nasdaq Global Market).
---------------------------------------------------------------------------

    Nasdaq may require a company listing on the Nasdaq Global Select
Market that has not had sustained recent trading in a Private Placement
Market to satisfy the applicable Market Value of Unrestricted Publicly
Held Shares requirement and provide a Valuation evidencing a Market
Value of Publicly Held Shares of at least $250,000,000.\20\ For a
company that has not had sustained recent trading in a Private
Placement Market

and that is applying to list on the Nasdaq Global Market, Nasdaq will
generally require the company to provide a Valuation that demonstrates
a Market Value of Listed Securities and Market Value of Unrestricted
Publicly Held Shares that exceeds 200% of the otherwise applicable
requirement.\21\ Nasdaq believes that in the absence of recent
sustained trading in the Private Placement Market, the requirement to
demonstrate a Market Value of Publicly Held Shares of at least $250
million for a company seeking to list on Nasdaq Global Select Market,
or that the company exceeds 200% of the otherwise applicable price-
based requirement for a company seeking to list on Nasdaq Global
Market, helps assure that the company satisfies Nasdaq's requirement by
imposing a standard that is more than double the otherwise applicable
standard.
---------------------------------------------------------------------------

    \20\ See IM-5315-1(b).
    \21\ See IM-5405-1(a)(2) (Nasdaq Global Market).
---------------------------------------------------------------------------

    Thus, companies listing in connection with a Direct Listing on the
Nasdaq Global or Global Select Market tiers are already subject to
enhanced listing requirements and Nasdaq believes it is appropriate to
permit Restrictive Market Companies to list through a Direct Listing on
the Nasdaq Global Select Market or Nasdaq Global Market. On the other
hand, while companies ayaylisting [sic] in connection with a Direct
Listing on the Capital Market are also subject to enhanced listing
requirements, Nasdaq does not believe that these enhanced requirements
are sufficient to overcome concerns regarding sufficient liquidity and
investor interest to support fair and orderly trading on the Exchange
with respect to Restrictive Market Companies.\22\ Nasdaq believes that
Restrictive Market Companies present unique risks to U.S. investors due
to barriers on access to information and limitations on the ability of
U.S. regulators to conduct investigations or bring or enforce actions
against the company and non-U.S. persons, which create concerns about
the accuracy of disclosures, accountability and access to information.
Therefore, Nasdaq believes that precluding a Restrictive Market Company
from listing through a Direct Listing on the Capital Market will help
to ensure that the company has sufficient public float, investor base,
and trading interest likely to generate depth and liquidity necessary
to promote fair and orderly trading on the secondary market.
---------------------------------------------------------------------------

    \22\ For example, the Nasdaq Global Select Market and Nasdaq
Global Market require a company to have at least 1,250,000 and 1.1
million Unrestricted Publicly Held Shares, respectively, and a
Market Value of Unrestricted Publicly Held Shares of at least $45
million and $8 million, respectively. In contrast, the Nasdaq
Capital Market requires a company to have at least 1 million
Unrestricted Publicly Held Shares and a Market Value of Unrestricted
Publicly Held Shares of at least $5 million.
---------------------------------------------------------------------------

V. Conclusion

    Nasdaq believes that the U.S. capital markets can provide
Restrictive Market Companies with access to additional capital to fund
ground-breaking research and technological advancements. Further, such
companies provide U.S. investors with opportunities to diversify their
portfolio by providing exposure to Restrictive Markets. However, as
discussed above, Nasdaq believes that Restrictive Market Companies
present unique potential risks to U.S. investors due to national
barriers on access to information and limitations on the ability of
U.S. regulators to conduct investigations or bring or enforce actions
against the company and non-U.S. persons, which create concerns about
the accuracy of disclosures, accountability and access to
information.\23\ Nasdaq believes that the proposed rule changes will
help to ensure that Restrictive Market Companies have sufficient
investor base and public float to support fair and orderly trading on
the Exchange.
---------------------------------------------------------------------------

    \23\ See supra note 3.
---------------------------------------------------------------------------

2. Statutory Basis

    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\24\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\25\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and, in general to protect investors and the public interest. Further,
the Exchange believes that this proposal is not designed to permit
unfair discrimination between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission has previously opined on the importance of
meaningful listing standards for the protection of investors and the
public interest.\26\ In particular, the Commission stated:
---------------------------------------------------------------------------

    \26\ Securities Exchange Act Release No. 65708 (November 8,
2011), 76 FR 70799 (November 15, 2011) (approving SR-Nasdaq-2011-073
adopting additional listing requirements for companies applying to
list after consummation of a ``reverse merger'' with a shell
company).

    Among other things, listing standards provide the means for an
exchange to screen issuers that seek to become listed, and to
provide listed status only to those that are bona fide companies
with sufficient public float, investor base, and trading interest
likely to generate depth and liquidity sufficient to promote fair
and orderly markets. Meaningful listing standards also are important
given investor expectations regarding the nature of securities that
have achieved an exchange listing, and the role of an exchange in
overseeing its market and assuring compliance with its listing
standards.\27\
---------------------------------------------------------------------------

    \27\ Id at 70802.

    Nasdaq believes that requiring a minimum offering size or public
float percentage for Restrictive Market Companies seeking to list on
Nasdaq through an IPO or business combination will ensure that a
security to be listed on Nasdaq has adequate liquidity, distribution
and U.S. investor interest to support fair and orderly trading in the
secondary market, which will reduce trading volatility and price
manipulation, thereby protecting investors and the public interest.
    Similarly, Nasdaq believes that permitting Restrictive Market
Companies to list on Nasdaq Global Select Market or Nasdaq Global
Market, rather than the Nasdaq Capital Market, in connection with a
Direct Listing will ensure that such companies satisfy more rigorous
listing requirements, including the minimum amount of Publicly Held
Shares and Market Value of Publicly Held Shares, which will help to
ensure that the security has sufficient public float, investor base,
and trading interest likely to generate depth and liquidity sufficient
to promote fair and orderly trading, thereby protecting investors and
the public interest.
    While the proposal applies only to Restrictive Market Companies,
the Exchange believes that the proposal is not designed to permit
unfair discrimination among companies because Nasdaq believes that
Restrictive Market Companies present unique potential risks to U.S.
investors due to national barriers on access to information and
limitations on the ability of U.S. regulators to conduct investigations
or bring or enforce actions against the company and non-U.S. persons,
which create concerns about the accuracy of disclosures, accountability
and access to information. In addition, such companies may not develop
sufficient public float, investor base, and trading interest to provide
the depth and liquidity necessary to promote fair and orderly trading,
resulting in a security that is illiquid. Nasdaq is concerned because
illiquid securities may trade infrequently, in a more volatile manner
and with a wider bid-ask spread, all of

which may result in trading at a price that may not reflect their true
market value.
    Less liquid securities also may be more susceptible to price
manipulation, as a relatively small amount of trading activity can have
an inordinate effect on market prices. Price manipulation is a
particular concern when insiders retain a significant ownership portion
of the company. The risk of price manipulation due to insider trading
is more acute when a company principally administers its business in a
Restrictive Market and management lacks familiarity or experience with
U.S. securities laws. Therefore, Nasdaq believes that it is not
unfairly discriminatory to treat Restrictive Market Companies
differently under this proposal because it will help ensure that
securities of a Restrictive Market Company listed on Nasdaq have
sufficient public float, investor base, and trading interest to provide
the depth and liquidity necessary to promote fair and orderly markets,
thereby promoting investor protection and the public interest.

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

    The Exchange does not believe that the proposed rule changes will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. While the proposed rule changes
will apply only to companies primarily operating in Restrictive
Markets, Nasdaq and the SEC have identified specific concerns with such
companies that make the imposition of additional initial listing
criteria on such companies appropriate to enhance investor protection,
which is a central purpose of the Act. Any impact on competition,
either among listed companies or between exchanges, is incidental to
that purpose.

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

    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 Exchange consents, the Commission shall: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2020-027 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-NASDAQ-2020-027. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of 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. 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-NASDAQ-2020-027 and should be submitted
on or before July 6, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\28\
---------------------------------------------------------------------------

    \28\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-12685 Filed 6-11-20; 8:45 am]
BILLING CODE 8011-01-P