[Federal Register Volume 88, Number 190 (Tuesday, October 3, 2023)]
[Notices]
[Pages 68258-68261]
[FR Doc No: 2023-21785]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98560; File No. SR-FINRA-2023-012]

Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing and Immediate Effectiveness of a
Proposed Rule Change To Extend Temporary Supplementary Material .17
(Temporary Relief To Allow Remote Inspections for Calendar Years 2020,
2021, 2022, and 2023) Under FINRA Rule 3110 (Supervision) To Include
Calendar Year 2024

September 27, 2023.
    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 September 22, 2023, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by FINRA.
FINRA has designated the proposed rule change as constituting a ``non-
controversial'' rule change under paragraph (f)(6) of Rule 19b-4 under
the Act,\3\ which renders the proposal effective upon receipt of this
filing by the Commission. 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.
    \3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    FINRA is proposing to extend temporary Supplementary Material .17
(Temporary Relief to Allow Remote Inspections for Calendar Years 2020,
2021, 2022, and 2023) under FINRA Rule 3110 (Supervision) to include
calendar year 2024 inspection obligations through the earlier of the
effective date of the remote inspections pilot program proposed in File
No. SR-FINRA-2023-007, if approved, or June 30, 2024 within the scope
of the supplementary material.\4\ FINRA is proposing to extend Rule
3110.17 to provide member firms continuity related to conducting
inspections as part of satisfying the obligations of Rule 3110(c)
(Internal Inspections) at offices and locations requiring inspection
during the first half of calendar year 2024.\5\ By statute, the
Commission has until the end of December 2023 to approve or disapprove
the Remote Inspections Pilot Program Proposal.\6\ Given the uncertainty
as to whether the Commission will approve or disapprove the Remote
Inspections Pilot Program Proposal by the end of calendar year 2023,
FINRA believes that the proposed extension is necessary to provide
firms the time to prepare for either the resumption of on-site
inspections if the Commission disapproves the Remote Inspections Pilot
Program Proposal, or alternatively, the implementation of the proposed
remote inspections pilot program (``Pilot Program'') if the Commission
approves the Remote Inspections Pilot Program Proposal.
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    \4\ See Securities Exchange Act Release No. 97398 (April 28,
2023), 88 FR 28620 (May 4, 2023) (Notice of Filing of File No. SR-
FINRA-2023-007) and Securities Exchange Act Release No. 98046
(August 2, 2023), 88 FR 53569 (August 8, 2023) (Notice of Filing of
Amendment No. 1 and Order Instituting Proceedings To Determine
Whether To Approve or Disapprove File No. SR-FINRA-2023-007)
(``Remote Inspections Pilot Program Proposal'').
    \5\ SEC staff and FINRA have stated in guidance that inspections
must include a physical, on-site review component. See SEC National
Examination Risk Alert, Volume I, Issue 2 (November 30, 2011) and
Regulatory Notice 11-54 (November 2011) (joint SEC and FINRA
guidance stating, a ``broker-dealer must conduct on-site inspections
of each of its office locations; [OSJs] and non-OSJ branches that
supervise non-branch locations at least annually, all non-
supervising branch offices at least every three years; and non-
branch offices periodically.'') (footnote defining an OSJ omitted).
See also SEC Division of Market Regulation, Staff Legal Bulletin No.
17: Remote Office Supervision (March 19, 2004) (stating, in part,
that broker-dealers that conduct business through geographically
dispersed offices have not adequately discharged their supervisory
obligations where there are no on-site routine or ``for cause''
inspections of those offices).
    \6\ 15 U.S.C. 78s(b)(2); see also note 4, supra.
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    Below is the text of the proposed rule change. Proposed new
language is in italics; proposed deletions are bracketed.
* * * * *
3000. SUPERVISION AND RESPONSIBILITES RELATING TO ASSOCIATED PERSONS
3100. SUPERVISORY RESPONSIBILITIES
3110. Supervision
    (a) through (f) No Change.
       Supplementary Material: ----------
    .01 through .16 No Change.
    .17 Temporary Relief to Allow Remote Inspections for Calendar Years
2020, 2021, 2022, [and] 2023, and Through the Earlier of the Effective
Date of the Remote Inspections Pilot Program, if Approved, or June 30,
2024.
    (a) Use of Remote Inspections. Each member obligated to conduct an
inspection of an office of supervisory jurisdiction, branch office or
non-branch location in the calendar years specified in this
supplementary material pursuant to, as applicable, paragraphs
(c)(1)(A), (B) and (C) under Rule 3110 may, subject to the requirements
of this Rule 3110.17, satisfy such obligation by conducting the
applicable inspection remotely, without an on-site visit to the office
or location. In accordance with Rule 3110.16, inspections for calendar
year 2020 must [be]have been completed on or before March 31, 2021.
Inspections for calendar year 2021 must [be]have been completed on or
before December 31, 2021, [and inspections] for calendar year 2022,
[must be completed] on or before December 31, 2022, and for calendar
year 2023, on or before December 31, 2023. With respect to a member's
obligation to conduct an inspection of an office or location in
calendar year [2023]2024, a member has the option to conduct those
inspections remotely through the earlier of the effective date of the
Remote Inspections [p]Pilot [p]Program proposed in File No. [SR-FINRA-
2022-021]SR-FINRA-2023-007, if approved, or [December 31, 2023]June 30,
2024. Notwithstanding Rule 3110.17, a member shall remain subject to
the other requirements of Rule 3110(c).
    (b) No Change.
    (c) Effective Supervisory System. The requirement to conduct
inspections of offices and locations is one part of the member's
overall obligation to have an effective supervisory system and
therefore, the member must continue with its ongoing review of the
activities and functions occurring at all offices and locations,
whether or not the member conducts inspections remotely. A member's use
of a remote inspection of an office or location will be held to the
same standards for review as set forth under Rule 3110.12. Where a

member's remote inspection of an office or location identifies any
indicators of irregularities or misconduct (i.e., ``red flags''), the
member may need to impose additional supervisory procedures for that
office or location or may need to provide for more frequent monitoring
of that office or location, including potentially a subsequent
physical, on-site visit on an announced or unannounced basis [when the
member's operational difficulties associated with COVID-19 abate,
nationally or locally as relevant, and the challenges a member is
facing in light of the public health and safety concerns make such on-
site visits feasible using reasonable best efforts]. The temporary
relief provided by this Rule 3110.17 does not extend to a member's
inspection requirements beyond the earlier of the effective date of the
Remote Inspections [p]Pilot [p]Program proposed in File No. [SR-FINRA-
2022-021]SR-FINRA-2023-007, if approved, or [December 31, 2023]June 30,
2024, and such inspections must be conducted in compliance with Rule
3110(c).
    (d) No Change.
* * * * *

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

    In its filing with the Commission, FINRA 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. FINRA 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
    In response to the COVID-19 global health crisis and the
corresponding need to restrict in-person activities, FINRA provided
temporary relief to member firms from certain regulatory requirements,
including those set forth under Rule 3110. To help alleviate the
attendant logistical challenges member firms were encountering to
satisfy the inspection component of their Rule 3110(c) requirements,
FINRA adopted Rule 3110.16 (Temporary Extension of Time to Complete
Office Inspections) to extend the time by which member firms were
required to complete their calendar year 2020 inspection obligations
under Rule 3110(c) to March 31, 2021 with the expectation that the
extension did not relieve firms from the on-site portion of the
inspections of their offices and locations,\7\ and subsequently adopted
Rule 3110.17 to provide member firms the option, subject to specified
requirements under the supplementary material, to complete remotely
specified calendar year inspection obligations without an on-site visit
to the office or location.\8\ Rule 3110.17 has been extended and is
currently set to end on December 31, 2023.\9\
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    \7\ See Securities Exchange Act Release No. 89188 (June 30,
2020), 85 FR 40713 (July 7, 2020) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2020-019).
    \8\ See Securities Exchange Act Release No. 90454 (November 18,
2020), 85 FR 75097 (November 24, 2020) (Notice of Filing and
Immediate Effectiveness of File No. SR-FINRA-2020-040).
    \9\ See Securities Exchange Act Release No. 96241 (November 4,
2022), 87 FR 67969 (November 10, 2022) (Notice of Filing and
Immediate Effectiveness of File No. SR-FINRA-2022-030) (extending
the relief through December 31, 2023); see also Securities Exchange
Act Release No. 94018 (January 20, 2022), 87 FR 4072 (January 26,
2022) (Notice of Filing and Immediate Effectiveness of File No. SR-
FINRA-2022-001) (extending the relief through December 31, 2022) and
Securities Exchange Act Release No. 93002 (September 15, 2021), 86
FR 52508 (September 21, 2021) (Notice of Filing and Immediate
Effectiveness of File No. SR-FINRA-2021-023) (extending the relief
through June 30, 2022).
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    The pandemic accelerated the industry's adoption of a broad remote
work environment and FINRA recognizes that the pandemic has profoundly
changed attitudes on where work can occur. As a result of this change
many firms have adopted, in varying scale, hybrid work models involving
personnel who are working at least part time from alternative work
locations (e.g., private residences). As part of FINRA's overall
efforts to modernize FINRA rules to reflect evolving technologies and
business models, in April 2023, FINRA filed the Remote Inspections
Pilot Program Proposal with the Commission to establish a voluntary,
three-year remote inspections pilot program that would allow eligible
firms to conduct inspections of all or some offices or locations,
remotely, subject to the specified terms therein.\10\
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    \10\ See note 4, supra.
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    If the Commission approves the Remote Inspections Pilot Proposal,
the proposed extension of Rule 3110.17 would allow both FINRA and the
firms that are planning to participate in the proposed Pilot Program
additional time to develop the technology and processes that will be
essential to operationalize compliance with the Pilot Program's
requirements. For example, firms will need to conduct an eligibility
review, and conduct and document a risk assessment for each office and
location that they elect to inspect remotely, and implement technology
to collect and report the required data and information to FINRA.
Further, FINRA guidance will be needed to guide implementation in
various circumstances.\11\ Firms that do not elect to participate or
would be excluded from participating in the proposed Pilot Program will
also be impacted and would need additional time to staff, schedule, and
resume on-site inspections of offices or locations \12\ within the
context of some lingering health concerns and fluid work
locations.\13\. If the Commission disapproves the Remote Inspections
Pilot Program Proposal, all firms would be impacted and would need
additional time to staff, schedule and resume conducting on-site
inspections of offices or locations.\14\
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    \11\ As part of the implementation process, FINRA intends to
publish a Regulatory Notice or other guidance about the operational
aspects of the proposed Pilot Program.
    \12\ See note 5, supra.
    \13\ While the World Health Organization declared an end to
COVID-19 as a public health emergency, COVID-19 remains an ongoing
public health problem. See WHO Director-General, Opening Remarks at
the Media Briefing on COVID-19 (May 5, 2023) (stating, in part, that
the ``virus is here to stay. It is still killing, and it's still
changing. The risk remains of new variants emerging that cause new
surges in cases and deaths.''), https://www.who.int/news-room/speeches/item/who-director-general-s-opening-remarks-at-the-media-briefing-5-may-2023; see also Benjamin J. Silk, et al., COVID-19
Surveillance After Expiration of the Public Health Emergency
Declaration--United States, May 11, 2023 (stating, among other
things, that ``[a]lthough COVID-19 no longer poses the societal
emergency that it did when it first emerged in late 2019, COVID-19
remains an ongoing public health challenge. By April 26, 2023, more
than 104 million U.S. COVID-19 cases, 6 million related
hospitalizations, and 1.1 million COVID-19-associated deaths were
reported to CDC[.]''), 72 MMWR Morb Mortal Wkly Rep, 523-528 (2023),
https://www.cdc.gov/mmwr/volumes/72/wr/pdfs/mm7219e1-H.pdf. Recent
data on hospitalizations from the CDC indicate that the number of
hospitalizations is up 7.7% (as of September 3 to September 9,
2023). See Centers for Disease Control and Prevents (``CDC''), COVID
Data Tracker, Data Update for the United States, https://covid.cdc.gov/covid-data-tracker/#datatracker-home (last visited
September 22, 2023).
    \14\ See note 5, supra.
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    In sum, as calendar year 2024 is approaching its fourth quarter,
the proposed extension of Rule 3110.17 would provide firms continuity
in meeting their inspection obligations after the end of the
Commission's statutory deadline to approve or disapprove the Remote
Inspections Pilot Proposal. If the Commission approves the Remote
Inspections Pilot Proposal, the proposed additional time would allow
FINRA to operationalize the Pilot Program. Relatedly, the proposed

extension would give time for: (1) firms that are planning to
participate in the proposed Pilot Program to implement the processes
needed to comply with the proposed terms therein; and (2) firms that
are not planning to participate or are excluded from participating in
the proposed Pilot Program, to prepare to resume conducting on-site
inspections of their offices and locations as part of satisfying the
obligations of Rule 3110(c).
    FINRA is not proposing to amend the other conditions of the
temporary rule. The current conditions of the supplementary material
for firms that elect to conduct remote inspections would remain
unchanged: such firms must amend or supplement their written
supervisory procedures for remote inspections, use remote inspections
as part of an effective supervisory system, and maintain the required
documentation. FINRA continues to believe this temporary remote
inspection option is a reasonable alternative for firms to fulfill
their Rule 3110(c) obligations under the current circumstances
described above. This proposed extension is designed to maintain the
investor protection objectives of the inspection requirements under
these circumstances. As part of those objectives, firms should consider
whether, under their particular operating conditions, continued
reliance on Rule 3110.17 to conduct remote inspections would be
reasonable under the circumstances. For example, firms with offices
that are open to the public or that are otherwise doing business as
usual should consider whether some in-person inspections would be
feasible and add value to the firms' supervisory program. FINRA
emphasizes that the inspection requirement is one aspect of a firm's
overall supervisory system, and that the inspection, whether done
remotely under Rule 3110.17 or in accordance with the proposed Pilot
Program, or on-site, would be held to the existing standards of review
under Rule 3110.12 (Standards for Reasonable Review).\15\
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    \15\ Those standards provide, in part, that based on the factors
set forth under that supplementary material, members ``may need to
provide for more frequent review of certain locations.''
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    FINRA has filed the proposed rule change for immediate
effectiveness. FINRA is proposing to make the proposed rule change
operative on January 1, 2024.
2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\16\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, and, in general, to protect investors and the
public interest. The proposed rule change is intended to provide firms
certainty now as they plan their upcoming calendar year 2024 inspection
program. This temporary proposed supplementary material does not
relieve firms from meeting the core regulatory obligation to establish
and maintain a system to supervise the activities of each associated
person that is reasonably designed to achieve compliance with
applicable securities laws and regulations, and with applicable FINRA
rules that directly serve investor protection. In light of the planning
associated with firms resuming on-site visits to offices and locations
to satisfy Rule 3110(c)(1), if the Commission disapproves the Remote
Inspections Pilot Program Proposal, and the significant planning
requirements that the proposed Pilot Program, if approved, would entail
for FINRA and the firms that elect to participate, FINRA believes that
the proposed rule change provides sensibly tailored relief, while
continuing to serve and promote the protection of investors and the
public interest.
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    \16\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. The potential economic impacts
of Rule 3110.17 as described in File No. SR-FINRA-2020-040 continue to
have applicability to the proposed rule change herein. The proposed
rule change would extend the temporary relief that provides firms with
the option to fulfill their inspection obligations remotely. The
proposed extension would include calendar year 2024 inspection
obligations through the earlier of the effective date of the Remote
Inspections Pilot Program Proposal, if approved, or June 30, 2024
within the scope of the supplementary material without making
substantive changes to the other aspects of the provision. In addition,
the proposed extension would provide firms certainty for the reasons
stated above. FINRA believes that this limited extension in temporary
relief, together with the requirements for using the temporary relief
in Rule 3110.17, would not diminish investor protection.

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

    Written comments were neither solicited nor received.

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

    Because the foregoing 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, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \17\ and Rule 19b-
4(f)(6) thereunder.\18\
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    \17\ 15 U.S.C. 78s(b)(3)(A).
    \18\ 17 CFR 240.19b-4(f)(6).
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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 protected]. Please include
File Number SR-FINRA-2023-012 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-FINRA-2023-012. 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 a.m. and 3
p.m. Copies of such filing also will be available for inspection and
copying at the principal office of FINRA. Do not include personal
identifiable information in submissions; you should submit only
information that you wish to make available publicly. We may redact in
part or withhold entirely from publication submitted material that is
obscene or subject to copyright protection. All submissions should
refer to File Number SR-FINRA-2023-012 and should be submitted on or
before October 24, 2023.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21785 Filed 10-2-23; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 46 (Thursday, March 8, 2012)]
[Rules and Regulations]
[Pages 13967-13968]
[FR Doc No: 2012-5655]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 67

[Docket No. FAA-2012-0245]

Notice of Intent To Discontinue Use of Paper Applications for
Airman Medical Certification

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of intent

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SUMMARY: The Federal Aviation Administration is providing public notice
regarding its intent to discontinue use of the paper version of FAA
Form 8500-8, the application form used to apply for FAA medical
certification. Maintaining FAA Form 8500-8 for applicants to complete
manually is burdensome not only in terms of the cost involved, but also
in terms of the complex logistics and use of Agency resources involved.
This burden becomes all the more compounded when the form must be
revised, reprinted, and redistributed (worldwide). The FAA launched an
on-line FAA Form 8500-8 application known as ``FAA MedXpress''
beginning in 2007. Since 2007, ``FAA MedXpress'' has evolved
considerably, streamlining FAA medical certification into a much more
efficient and seamless process, thereby rendering the paper process
both redundant and obsolete. Discontinuing print of FAA Form 8500-8
will save considerable resources and improve the efficiency of the
airman medical certification process.

DATES: This action goes into effect on October 1, 2012. It should be
noted, however, that ``FAA MedExpress'' already is fully operational
and ready for use.

ADDRESSES: You can obtain an electronic copy of this document by--
    1. Searching the Federal eRulemaking Portal at http://www.regulations.gov;
    2. Accessing the Government Printing Office's Web page at http://www.gpo.gov/fdsys/browse/collection.action?collectionCode=FR; or
    3. Contacting the person identified in the FOR FURTHER INFORMATION
CONTACT section of this document.

FOR FURTHER INFORMATION CONTACT: Judi Citrenbaum, Office of Aerospace
Medicine, Federal Aviation Administration, 800 Independence Avenue SW.,
Washington, DC 20591; telephone<PHONE_NUMBER>; email
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: The FAA receives and reviews annually more
than 400,000 applications for airman medical certification. Until 2007,
the only available means for making application was for applicants to
manually complete an FAA Form 8500-8 provided by an FAA-designated
Aviation Medical Examiner (AME) at the time of medical examination and
for AMEs to record the results of the applicant's medical examination
on the reverse side of application form manually. Since 2007, when the
FAA launched a digital version of FAA Form 8500-8, applicants have been
able to complete the form prior to an appointment with an AME for an
FAA medical examination by accessing it on line using a secure,
password-protected FAA system, known as ``FAA MedXpress.'' At the time
of the medical examination, therefore, an AME merely accesses the
applicant's completed and securely stored FAA Form 8500-8 in ``FAA
MedXpress'' and uses it to complete the medical examination and record
the results. ``FAA MedXpress'' also provides both applicants and AMEs
the capability to print the form for whatever purpose needed.
    FAA Form 8500-8 is considered one of the most complex of paper
forms still in use in the Federal Government. More than 5 years of
experience with ``FAA MedXpress'' has streamlined the FAA medical
certification process into a more seamless and efficient process.
Having digitized data, rather than handwritten copy, reduces the risk
of errors being made by applicants, AME staff, and AMEs in processing
the examination. Using ``FAA MedXpress'' exclusively will allow the FAA
to make and implement any needed or mandated changes to the FAA Form
8500-8 in a more timely manner, resulting in a more dynamic form and
eliminating the considerable cost and logistical challenges involved
with printing and distributing the form both within and outside of the
United States. Whenever the form must be revised, the initial
reprinting and redistribution of approximately 1.5 million revised
forms worldwide is very costly and considerable waste is incurred
disposing of superseded forms.
    Many federal forms, including FAA forms, (such as applications for
pilot certificates and ratings) are now fully

automated. Use of on-line applications in the private sector also is
fairly standard--such as applications to academic institutions; for car
loans; for mortage application and refinancing; for employment, and the
like. Fully automating the FAA airman medical certification application
process will improve efficiency, lead to reduced errors with applicant
data, allow for more seamless processing, and save considerable
resources by eliminating the recurrent cycle of printing, distributing,
reprinting, and redistributing paper forms.
    Individuals who may not be familiar with ``FAA MedXpress'' may
access it on the FAA public Web site at https://medxpress.faa.gov.

    Issued in Washington, DC, on March 1, 2012.
Frederick E. Tilton,
Federal Air Surgeon.
[FR Doc. 2012-5655 Filed 3-7-12; 8:45 am]
BILLING CODE 4910-13-P


EPA REGISTRATION DIVISION COMPANY NOTICE OF FILING FOR PESTICIDE PETITIONS PUBLISHED IN THE FEDERAL REGISTER

Docket ID No.: EPA-HQ-OPP-2008-0876

EPA Registration Division contact: Sidney Jackson (phone:<PHONE_NUMBER>)

Interregional Research Project Number 4 (IR-4)

PP 8E7404

EPA has received a pesticide petition (PP 8E7404) from the IR-4 Project Headquarters, 500 College Road East, Suite 201 W, Princeton, NJ 08540 proposing, pursuant to section 408(d) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a(d), to amend 40 CFR part 180.361 by establishing a tolerance for the combined residues of the herbicide pendimethalin, [N-(1-ethylpropyl)-3,4-dimethyl-2,6-dinitrobenzenamine] and its metabolite, 4-[(1-ethylpropyl)amino]-2-methyl-3, 5-dinitrobenzyl alcohol in or on the raw agricultural commodities olive at 0.1 parts per million (ppm).  EPA has determined that the petition contains data or information regarding the elements set forth in section 408 (d)(2) of the FDDCA; however, EPA has not fully evaluated the sufficiency of the submitted data at this time or whether the data supports granting of the petition. Additional data may be needed before EPA rules on the petition.

A. Residue Chemistry

	1. Plant metabolism.  The qualitative nature of the residues of pendimethalin in plants is understood based on adequate studies conducted with 14 C pendimethalin on various crops.  Pendimethalin and its 3,5-dinitrobenzyl alcohol metabolite (CL202347) are the residues of concern.

	2. Analytical method. Section 408 (b)(3) of the amended FDCA requires EPA to determine that there is a practical method for detecting and measuring levels of the pesticide chemical residue in or on food and that the tolerance be set at a level at or above of the limit of detection of the designated method.  In plants the method is aqueous organic solvent extraction, column clean up, and quantitation by GC.  The method has a limit of quantitation (LOQ) of 0.05 ppm for pendimethalin and the alcohol metabolite.

	3. Magnitude of residues. No field trial data were generated in order to determine the magnitude of residues in olive commodities.  EPA has determined that the tolerance on olive may be safely extrapolated from the tolerances established on stone fruit based on similar use pattern and fruit (drupe) physiology.

B. Toxicological Profile

	1. Acute toxicity.  Pendimethalin (BAS 455 H) technical demonstrates low acute toxicity via the oral, dermal and inhalation routes of exposure.  The acute toxicity studies place technical pendimethalin in toxicity category III for the acute oral, category IV for acute dermal, and category IV for acute inhalation.  Technical pendimethalin is category IV for skin irritation and category III for eye irritation. Pendimethalin did not cause skin sensitization in guinea pigs.  Two formulated end use products are registered for use on crops, an Emulsifiable Concentrate (EC) and an Encapsulated Suspension (CS).  The EC has an acute oral category of III, acute dermal category of III, an acute inhalation category of III, eye and skin irritation of III, and is not a dermal sensitizer.  The CS has an acute oral category of IV, an acute dermal category of IV, an acute inhalation category of IV, eye and skin irritation category of IV, and is not a dermal sensitizer.

	2. Genotoxicty. Extensive mutagenicity studies conducted to investigate point and gene mutations, DNA damage and chromosomal aberration, both using in vitro and in vivo test systems demonstrate pendimethalin to be non-genotoxic.

Pendimethalin has been classified as a Group C "possible human carcinogen," based on a statistically significantly increased incidence of benign follicular cell adenomas of the thyroid gland in male and female rats at 5000 ppm (250 mg/kg b.w./day) (highest concentration tested).  For risk assessment, OPP recommends using the RfD (non-linear) approach for quantification of human risk.  The Agency Committee has determined that the hypothesis, that benign thyroid tumors associated with pendimethalin are due to a thyroid-pituitary imbalance, can be supported.  Finally, pendimethalin's mechanism of threshold oncogenic activity only occurs at high doses in rats, a mammalian species that is expected to be much more sensitive than humans to the induction of thyroid tumors via conditions which result in hypothyroidism.

	3. Reproductive and developmental toxicity.  Pendimethalin (BAS 455 H) is not a selective developmental toxicant.  There is no indication of increased susceptibility following prenatal/postnatal exposure to pendimethalin.

In a developmental (teratology) toxicity study in the rat, the results demonstrated that the NOAELs for both maternal toxicity and fetal (prenatal)/developmental toxicity were 500 mg/kg b.w./day (highest dose tested) (HDT).  In addition, there were no indications of any teratogenic effects in the rat fetuses at 500 mg/kg b.w./day (HDT).  Therefore, pendimethalin is considered to be neither a developmental toxicant nor a teratogenic agent in the rat.

In a developmental (teratology) toxicity study in the rabbit, the results demonstrated the NOAEL for maternal toxicity was 30 mg/kg b.w./day, based on increased clinical signs of toxicity and decreased body weight gain during the treatment period at 60 mg/kg b.w./day (HDT).  The NOAEL for fetal (prenatal)/developmental toxicity was 60 mg/kg b.w./day (HDT).  In addition, there were no indications of any teratogenic effects in the rabbit fetuses at 60 mg/kg b.w./day.  Therefore, pendimethalin is considered to be neither a developmental toxicant nor a teratogenic agent in the rabbit.

A two-generation reproductive toxicity study in the rat demonstrated an absence of increased sensitivity for the developing offspring to pendimethalin.  The NOAEL for parental toxicity was 500 ppm (approximately 38.5 mg/kg b.w./day), based on reduced food consumption and decreased body weight/weight gain at 2500 ppm (mid-dietary concentration).  The NOAEL for pup/offspring toxicity was also 500 ppm, based on decreased pup body weight gain at 2500 ppm.  Lastly, the NOAEL for reproductive toxicity was 2500 ppm (approximately 194 mg/kg b.w./day), based on reduced mean live litter size at 5000 ppm (highest concentration tested) (HCT).  These reductions in mean live litter size and pup body weight gain were only observed at dietary concentrations that were parentally toxic.  As such, there is no evidence that prenatal or postnatal exposure to pendimethalin results in an increased sensitivity to developing offspring.

	4. Sub-chronic toxicity. Sub-chronic (90-day) feeding studies were conducted in rats and dogs.  For the rat, the NOAEL for systemic toxicity was 500 ppm (41 mg/kg b.w./day), based on slightly decreased body weight, increased absolute and relative liver weights, and liver histopathology (hepatocellular hypertrophy) in males and females at 5000 ppm (HCT).  For the dog, the NOAEL for systemic toxicity was 2500 ppm (62.5 mg/kg b.w./day), based on decreased body weight at 10000 ppm (250 mg/kg b.w./day).

	5. Chronic toxicity. The chronic Reference Dose (RfD) was established based on the results of sub-chronic special studies demonstrating the thyroid hormone related endpoint in rats.  The NOAEL of 10 mg/kg b.w./day was established from the collective results of the sub-chronic oral 92-day thyroid function study, the sub-chronic oral 56-day thyroid function study, and the 14-day intrathyroidal metabolism study.  A LOAEL of 31 mg/kg b.w./day was based on hormonal and histopathological changes in the thyroid gland.  The chronic RfD was calculated to be 0.03 mg/kg b.w./day using an Uncertainty Factor (UF) of 30X (3X for interspecies extrapolation and 10X for intraspecies variability) and a 10X database uncertainty factor (UFDB) retained pending receipt of a developmental thyroid toxicity study.  EPA/HED currently recommends a FQPA Safety Factor of 1X.  Therefore, the chronic Population Adjusted Dose (PAD) is 0.03 mg/kg b.w./day.

Chronic toxicity studies were conducted in rats, mice, and dogs.  For the 2-year rat feeding study, the NOAEL for systemic toxicity was 500 ppm (25 mg/kg b.w./day), based on decreased body weight gain (approximately 20-30%), increased clinical signs of toxicity, increased relative liver weights, and slight but statistical increase in the incidence of benign follicular cell adenomas of the thyroid gland in males and females at 5000 ppm (250 mg/kg b.w./day) (HCT).  For the 18-month mouse feeding study, the NOAEL for systemic toxicity was 500 ppm (75 mg/kg b.w./day), based on slightly decreased mean body weights and reduced survival at 5000 ppm (750 mg/kg b.w./day) (HCT).  There were no oncogenic effects up to 5000 ppm (750 mg/kg b.w./day) (HCT).  Lastly, for the 1-year oral (via gelatin capsules) chronic dog study, the NOAEL for systemic toxicity was 200 mg/kg b.w./day, the highest dose tested.

	6. Animal metabolism. Adequate goat and poultry metabolism studies are available for pendimethalin. The Agency has determined that there is no reasonable expectation of finite pendimethalin residues of concern in animal commodities as a result of use on multiple crops.  However, tolerances for pendimethalin residues of concern in livestock commodities were proposed in a previous petition.

In the rat, pendimethalin is metabolized mainly through oxidation of the 4-methyl group attached to the benzene ring as well as oxidation of the alkyl side chain of the N-substituted dinitroaniline compound.  When C14-pendimethalin is administered to rates, about 70% of the radioactivity is excreted in feces and 20% is in the urine within 24 hours.  Within 96 hours, the radioactivity found in the tissues was 0.3 ppm or less, except fat which is 0.9 ppm.  The major portion of the radioactivity that was excreted in the feces was identified as the parent compound.

	7. Metabolite toxicology. The main pendimethalin plant metabolite, CL 202347, has been tested for toxicity.  The acute oral toxicity in mice was determined to be 2140 mg/kg bw.  An Ames assay showed the metabolite to be non-mutagenic.

	8. Endocrine disruption. It is known that pendimethalin affects the hypothalamus-pituitary-thyroid axis.  However, as the chronic RfD (0.03 mg/kg b.w./day) is based on the thyroid hormone related endpoint in rats, as noted in the sub-chronic special studies in Section 5 above, which additionally demonstrated reversibility of the thyroid effects in the oral 56-day thyroid function study, these effects are already taken into consideration in the characterization of potential risks to humans.

C. Aggregate Exposure

	1. Dietary exposure. Pendimethalin is a pre-emergent herbicide used to control broadleaf and grass weeds in food and non-food crops, as well as non-agricultural use sites including residential lawns. In examining aggregate exposure, FQPA directs EPA to consider available information concerning exposures from the pesticide residue in food (dietary) and all other non-occupational exposures. The primary non-food sources of exposure are through pesticide use in gardens, lawns, or buildings (residential and other indoor uses). The potential for aggregate exposure from all registered and proposed uses is discussed below.

	i. Food. An assessment was conducted to evaluate the potential risk due to chronic dietary exposure of the U.S. population to residues of pendimethalin (BAS 455 H).  The current tolerance values are listed in the U.S. 40 CFR § 180.361.

This analysis included all the crops with established tolerance values as of July 2008, the proposed (pending at EPA) new tolerances forage grasses, crop group 17, livestock commodities of 0.15ppm in meat and 0.03ppm in milk, and the proposed new tolerances for olives at 0.1 ppm.  No tolerances are proposed for poultry or eggs because grass forage is not a feed item for poultry.

Acute Dietary Exposure Assessment

An acute assessment was not needed since the U.S. EPA Toxicological Endpoint Selection (TES) Committee had previously evaluated the pendimethalin toxicity data and determined there was no relevant toxicological endpoints for acute dietary exposure and that a risk assessment was not required.

Chronic Dietary Exposure Assessment

The chronic dietary exposure estimates were based on established and proposed tolerance values, and 100% CT values. Default process factors were used with consumption data from the USDA Continuing Survey of Food Intake by Individuals (CSFII 1994 - 1996, 1998).  The EPA Food Commodity Ingredient Database (FCID) was also used in Exponent's Dietary Exposure Evaluation Module (DEEM-FCID) software.  Secondary residues in meat and milk were included.  Secondary residues for eggs and poultry were not included since it has been determined that there is no likelihood of residues in these animal commodities and therefore, a tolerance will not be required by the EPA.

Dietary exposure estimates were compared against the worst-case pendimethalin chronic Population Adjusted Dose (cPAD) of 0.03 mg/kg b.w./day for all populations subgroups.  Results of the chronic dietary assessments are listed in the table below.  The estimated chronic dietary exposure from crops (both established and proposed tolerances) was less than 20% of the cPAD for all subpopulations.  Additional refinements such as the use of anticipated residues and percent crop treated values for the established crop uses would further reduce the estimated chronic dietary exposure.  The results in Table 1 below demonstrate there are no safety concerns for any subpopulation based on established and new uses, and that the results clearly meet the FQPA standard of reasonable certainty of no harm.

Table 1.	Summary of chronic dietary exposure assessment considering crops with established and proposed tolerances for pendimethalin.

Population

Subgroups	Exposure Estimate

(mg/kg b.w./day)	%cPAD

US Population	0.00207725	6.23

All infants (< 1 year)	0.00396	11.88

Children 1-2	0.0064085	19.23

Children 3-5	0.00508625	15.26

Children 6-12	0.00312325	9.37

Youth 13-19	0.00188925	5.67

Adults 20-49	0.0015675	4.70

Adults 50+ yrs	0.00142875	4.29

Females 13 - 49 yrs	0.0015355	4.61

%cPAD = percent of chronic population adjusted dose

Exposure estimates based on tolerance values and 100 % CT values

	ii. Drinking Water. There are no established maximum contaminant levels or health advisory levels for residues of pendimethalin (BAS 455 H) in drinking water.  The drinking water exposure values used in this assessment were obtained from the most recent pendimethalin assessment conducted by EPA published on August 2, 2007.  The pendimethalin water values were calculated using PRZM-EXAMS and SCI-GROW2.  The modeled chronic surface water concentrations were 6.0 ug/L,  The modeled groundwater concentration was 0.024 ug/L.

Drinking water contributions were assessed based on the a pendimethalin water concentration of 6.0 ug/L for chronic exposure and water consumption and body weights reported in CSFII, using DEEM-FCID software.  The chronic estimated water exposure values are summarized in Table 2.

Table 2.  	Summary of chronic dietary exposure assessment for drinking water considering direct and indirect sources.

Population

Subgroups	Exposure Estimate

(mg/kg b.w./day)	%cPAD

U.S. Population	0.000126	0.4

All Infants (< 1 year)	0.000415	1.2

Children 1-2 years	0.000188	0.6

Children 3-5 years	0.000176	0.5

Children 6-12 years	0.000121	0.4

Youth 13-19 years	0.000091	0.3

Adults 20-49 years	0.000118	0.4

Adults 50+ years	0.000124	0.4

Females 13 – 49 years	0.000118	0.4

%cPAD = percent of chronic population adjusted dose

Exposure based on the maximum estimated water concentration of 6.0 ug/L

Acute Aggregate Exposure and Risk (Food and water)

An acute assessment was not needed since the U.S. EPA Toxicological Endpoint Selection (TES) Committee had previously evaluated the pendimethalin toxicity data and determined there was no relevant toxicological endpoints for acute dietary exposure and that a risk assessment was not required.

Short- and Intermediate-Term Aggregate Exposure and Risk (food, water, and residential)

Short-term aggregate risk from pendimethalin takes into account exposures from dietary consumption (food and water) and residential exposure from turf use.  Post application exposure from the turf use is considered short-term.  The aggregate MOE from food, water, and residential exposure are 1132 (children 1-2 years) and 3577 (US population) for the EC formulation and 678 (children 1-2 years) and 2358 (US population) for the CS formulation, respectively.  These MOEs are greater than the target MOE of 300, which indicates there is no safety concern from the aggregate exposure from pendimethalin.  The results of the analysis are shown in Tables 3 and 4.

Table 3. 	Estimated short/intermediate term aggregate exposure and risk of pendimethalin for the EC formulation.

Population	NOAEL (mg/kg/day)	Target MOE1	Food Exposure (mg/kg/d

ay)	Water Exposure (mg/kg/day)	Residential Exposure (mg/kg/day)	Total Exposure (mg/kg/day)	MOE2

US	10	300	0.00207725	0.00012625	0.000592	0.0027955	3577

Child

1-2 yr old	10	300	0.0064085	0.0001875	0.002235	0.008831	1132

1 Target MOE is 300.

2 Aggregate MOE = (NOAEL / (Food + Water + Residential Exposure)

Table 4. 	Estimated short/intermediate term aggregate exposure and risk of pendimethalin for the CS formulation.

Population	NOAEL (mg/kg/day)	Target MOE1	Food Exposure (mg/kg/day)	Water Exposure (mg/kg/day)	Residential Exposure (mg/kg/day)	Total Exposure (mg/kg/day)	MOE2

US	10	300	0.00207725	0.00012625	0.002038	0.0042415	2358

Child

1-2 yr old	10	300	0.0064085	0.0001875	0.008148	0.014744	678

1 Target MOE is 300.

2 Aggregate MOE = (NOAEL / (Food + Water + Residential Exposure)

Chronic Aggregate Exposure and Risk (food and water)

The aggregate chronic risk includes residues of pendimethalin from food and water (Table 5). Exposures from residential uses are not included in the chronic aggregate assessment.  The results demonstrate there are no safety concerns for any subpopulation based on established and new uses, and that the results clearly meet the FQPA standard of reasonable certainty of no harm.

Table 5. 	Estimated chronic aggregate exposure and risk of pendimethalin

Population Subgroup	cPAD (mg/kg/day)	Food Exposure (mg/kg/day)	Water Exposure (mg/kg/day)	Total Exposure (mg/kg/day)	% cPAD

U.S. Population	0.03	0.00207725	0.00012625	0.0022035	6.6

All Infants (< 1 yr old)	0.03	0.00396	0.000415	0.004375	13.1

Children 1-2 years	0.03	0.0064085	0.0001875	0.006596	19.8

Children 3-5 years	0.03	0.00508625	0.00017625	0.0052625	15.8

Children 6 – 12 years	0.03	0.00312325	0.00012125	0.0032445	9.7

Youth 13-19 years	0.03	0.00188925	0.00009125	0.0019805	5.9

Females 13-49 years	0.03	0.0015355	0.0001175	0.001653	5.0

Adults 20-49 years	0.03	0.0015675	0.0001175	0.001685	5.1

Adults + 50	0.03	0.00142875	0.00012375	0.0015525	4.7

]

 Pendulum® 3.3 EC herbicide and Pendulum® AquaCap™ herbicide are presented below.

The following table provides the route specific and aggregate exposure assessment results for each population subgroup, along with the percentage of the cPAD (0.03 mg kg BW/day) utilized, and MOE (NOAEL/Aggregate systemic Exposure).

Table 6.	Summary of residential exposure to pendimethalin following the use of the Pendulum® 3.3 EC herbicide formulation including the route specific and aggregate exposure assessment results for the population subgroups.

Population subgroup	Route of Exposure	Route Specific

Systemic Exposure

(mg/kg BW/day) 1	Aggregate

Systemic Exposure

(mg/kg BW/day)	%cPAD	MOE

Adult

(20-49)	Post-application dermal	0.000592	0.000592	1.8	16892

Child

(1-6)	Post-application dermal	0.000990	0.002235	6.7	4474

	Post-application

(Hand to Mouth ingestion)	0.001245

	1 Based 3% dermal absorption

Table 7.	Summary of residential exposure to pendimethalin following the use of the Pendulum® AquaCap™ herbicide formulation including the route specific and aggregate exposure assessment results for the population subgroups.

Population subgroup	Route of Exposure	Route Specific

Systemic Exposure

(mg/kg BW/day) 1	Aggregate

Systemic Exposure

(mg/kg BW/day)	%cPAD	MOE

Adult

(20-49)	Post-application dermal	0.002038	0.002038	6.1	4907

Child

(1-6)	Post-application dermal	0.003411	0.008148	24.4	1227

	Post-application

(Hand to Mouth ingestion)	0.004737

	1 Based 3% dermal absorption

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E. Safety Determination

	1. U.S. population. Based on these risk assessments, there is a reasonable certainty that no harm will result to the general population or any subpopulation from aggregate exposure to pendimethalin residues.

	2. Infants and children. Based on these risk assessments, there is a reasonable certainty that no harm will result to infants or children, or any subpopulation from aggregate exposure to pendimethalin residues.

F. International Tolerances

	There are no CODEX, Canadian or Mexican International Maximum Residue Levels (MRL's) established for residues of pendimethalin in these crops at this time.