[Federal Register Volume 78, Number 12 (Thursday, January 17, 2013)]
[Notices]
[Pages 3952-3958]
[FR Doc No: 2013-00873]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68631; File No. SR-ISE-2013-03]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change To Amend the Schedule of Fees

January 11, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 3, 2013, the International Securities Exchange, LLC
(the ``Exchange'' or the ``ISE'') filed with the Securities and
Exchange Commission the proposed rule change, as described in Items I,
II, and III below, which items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The ISE proposes to amend its Schedule of Fees. The text of the
proposed rule change is available on the Exchange's Web site (http://www.ise.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 self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
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
    The Exchange currently assesses per contract transaction fees and
provides rebates to market participants that add or remove liquidity
from the Exchange (``maker/taker fees and rebates'') in 190 options
classes (the ``Select Symbols'').\3\ The Exchange's maker/taker fees
and rebates are applicable to regular and complex orders executed in
the Select Symbols. The Exchange also currently assesses maker/taker
fees and rebates for complex orders in symbols that are in the Penny
Pilot program but are not a Select Symbol (``Non-Select Penny Pilot
Symbols'') \4\ and in all symbols that are not in the Penny Pilot
Program (``Non-Penny Pilot Symbols'').\5\
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    \3\ Options classes subject to maker/taker fees and rebates are
identified by their ticker symbol on the Exchange's Schedule of
Fees.
    \4\ See Exchange Act Release Nos. 65724 (November 10, 2011), 76
FR 71413 (November 17, 2011) (SR-ISE-2011-72); 66597 (March 14,
2012), 77 FR 16295 (March 20, 2012) (SR-ISE-2012-17); 66961 (May 10,
2012), 77 FR 28914 (May 16, 2012) (SR-ISE-2012-38); 67628 (August 9,
2012), 77 FR 49049 (August 15, 2012) (SR-ISE-2012-71); and 68034
(October 11, 2012), 77 FR 63911 (October 17, 2012) (SR-ISE-2012-85).
    \5\ See Exchange Act Release Nos. 66084 (January 3, 2012), 77 FR
1103 (January 9, 2012) (SR-ISE-2011-84); 66392 (February 14, 2012),
77 FR 10016 (February 21, 2012) (SR-ISE-2012-06); 66962 (May 10,
2012), 77 FR 28917 (May 16, 2012) (SR-ISE-2012-35); 67400 (July 11,
2012), 77 FR 42036 (July 17, 2012) (SR-ISE-2012-63); 67628 (August
9, 2012), 77 FR 49049 (August 15, 2012) (SR-ISE-2012-71); and 68034
(October 11, 2012), 77 FR 63911 (October 17, 2012) (SR-ISE-2012-85).

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    The purpose of this proposed rule change is to amend the list of
Select Symbols. Specifically, the Exchange proposes to add the
following 39 symbols to the list of Select Symbols: Aetna, Inc.
(``AET''), Amgen, Inc. (``AMGN''), Amarin Corp. PLC (``AMRN''), Celgene
Corporation (``CELG''), CF Industries Holdings, Inc. (``CF''), Comcast
Corporation (``CMCSA''), Costco Wholesale Corporation (``COST''), Cree,
Inc. (``CREE''), Electronic Arts, Inc. (``EA''), Express Scripts, Inc.
(``ESRX''), Facebook, Inc. (``FB''), Fifth Third Bancorp. (``FITB''),
The Gap, Inc. (``GPS''), Groupon, Inc. (``GRPN''), Starwoods Hotels and
Resorts (``HOT''), Interoil Corporation (``IOC''), JDS Uniphase
Corporation (``JDSU''), Juniper Networks, Inc. (``JNPR''), Knight
Capital Group, Inc. (``KCG''), Keycorp. (``KEY''), Lennar Corporation
(``LEN''), Eli Lilly & Company (``LLY''), Cheniere Energy, Inc.
(``LNG''), LinkedIn Corporation (``LNKD''), Macys, Inc. (``M''),
Marathon Oil (``MRO''), Noble Drilling Corporation (``NE''), Annaly
Mortgage Management (``NLY''), Occidental Petroleum Corporation
(``OXY''), MetroPCS Communications, Inc. (``PCS''), Pulte Group, Inc.
(``PHM''), Philip Morris International, Inc. (``PM''), Suntech Power
Holdings (``STP''), Seagate Technology (``STX''), Direxion Small Cap
Bull 3X (``TNA''), Vringo, Inc. (``VRNG''), Consumer Discretionary
Select Sector SPDR Fund (``XLY''), SPDR S&P Metals & Mining ETF
(``XME'') and Xerox Corporation (``XRX'') (``Additional Select
Symbols'').\6\
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    \6\ The following 9 of the Additional Select Symbols were added
to the Penny Pilot Program on January 3, 2013: AMRN, FB, GRPN, KCG,
LNG, LNKD, PCS, TNA and VRNG (``New Penny Pilot Symbols''). The New
Penny Pilot Symbols are a subset of the Additional Select Symbols.
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    With the addition of the Additional Select Symbols to Select
Symbols, the fees currently applicable to regular and complex orders in
the Select Symbols will now be applied to regular and complex orders in
the Additional Select Symbols.
Regular Order Fees and Rebates
    The Exchange currently applies transaction fees to regular orders
in the Additional Select Symbols, as follows:\7\
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    \7\ Additional Select Symbols are currently subject to the
standard transaction fee listed in the table titled Non-Select
Symbols. See Schedule of Fees, Section I, Regular Order Fees and
Rebates.
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    [rtarr8] for Market Maker \8\ orders, a fee of $0.18 per contract
\9\;
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    \8\ The term ``Market Makers'' refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. See ISE Rule
100(a)(25).
    \9\ The Exchange provides a volume-based discount to fees to ISE
Market Maker contracts for regular orders in Non-Select Symbols. See
Schedule of Fees, Section IV, C. ISE Market Maker Discount Tiers.
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    [rtarr8] for Market Maker (for orders sent by Electronic Access
Members), Firm Proprietary/Broker-Dealer and Professional Customer \10\
orders, a fee of $0.20 per contract;
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    \10\ A Professional Customer is a person who is not a broker/
dealer and is not a Priority Customer.
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    [rtarr8] for Non-ISE Market Maker \11\ orders, a fee of $0.45 per
contract;
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    \11\ A Non-ISE Market Maker, or Far Away Market Maker
(``FARMM''), is a market maker as defined in Section 3(a)(38) of the
Securities Exchange Act of 1934 registered in the same options class
on another options exchange.
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    [rtarr8] for Priority Customer \12\ orders, a fee of $0.00 per
contract.
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    \12\ A Priority Customer is defined in ISE Rule 100(a)(37A) as a
person or entity that is not a broker/dealer in securities, and does
not place more than 390 orders in listed options per day on average
during a calendar month for its own beneficial account(s).
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    The Exchange currently charges a fee of $0.20 per contract to all
market participants (except for Market Makers, this fee is currently
$0.18 per contract,\13\ and for Priority Customers, this fee is $0.00
per contract) for regular Crossing Orders in the Non-Select Symbols
(this fee currently applies to the Additional Select Symbols as they
are a subset of Non-Select Symbols). The Exchange also currently
charges a fee of $0.20 per contract to all market participants (except
for Non-ISE Market Makers, this fee is currently $0.45 per contract,
and for Market Makers, this fee is $0.18 per contract \14\) for regular
Responses to Crossing Orders in the Non-Select Symbols (this fee
currently applies to the Additional Select Symbols as they are a subset
of Non-Select Symbols).
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    \13\ The volume-based discount to fees to ISE Market Maker
contracts also applies to regular Crossing Orders. See supra, note
9.
    \14\ The volume-based discount to fees to ISE Market Maker
contracts also applies to regular Responses to Crossing Orders. See
supra, note 9.
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    With this proposed rule change, the Additional Select Symbols will
now be subject to the maker/taker fees and rebates applicable to
Regular orders in the Select Symbols.\15\ The Exchange currently
charges the following maker fees and rebates for Select Symbols: (i)
for Market Maker, Non-ISE Market Maker, Firm Proprietary/Broker-Dealer
and Professional Customer orders, $0.10 per contract; (ii) for Priority
Customer orders, $0.00 per contract; and (iii) for Market Maker Plus
\16\ orders, a rebate of $0.10 per contract. The Exchange also
currently charges the following taker fees for Select Symbols: (i) For
Market Maker and Market Maker Plus orders, $0.32 per contract; (ii) for
Non-ISE Market Maker orders, $0.36 per contract; (iii) for Firm
Proprietary/Broker-Dealer and Professional Customer orders, $0.33 per
contract; and iv) for Priority Customer orders, $0.25 per contract.
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    \15\ See Schedule of Fees, Section I, Regular Order Fees and
Rebates.
    \16\ In order to promote and encourage liquidity in the Select
Symbols, the Exchange currently offers a $0.10 per contract rebate
to Market Makers if the quotes they sent to the Exchange qualify the
Market Maker to become a Market Maker Plus. A Market Maker Plus is a
Market Maker who is on the National Best Bid or National Best Offer
80% of the time for series trading between $0.03 and $5.00 (for
options whose underlying stock's previous trading day's last sale
price was less than or equal to $100) and between $0.10 and $5.00
(for options whose underlying stock's previous trading day's last
sale price was greater than $100) in premium in each of the front
two expiration months and 80% of the time for series trading between
$0.03 and $5.00 (for options whose underlying stock's previous
trading day's last sale price was less than or equal to $100) and
between $0.10 and $5.00 (for options whose underlying stock's
previous trading day's last sale price was greater than $100) in
premium for all expiration months in that symbol during the current
trading month. A Market Maker's single best and single worst overall
quoting days each month, on a per symbol basis, is excluded in
calculating whether a Market Maker qualifies for this rebate, if
doing so will qualify a Market Maker for the rebate.
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    The Exchange currently charges Market Maker, Non-ISE Market Maker,
Firm Proprietary/Broker-Dealer and Professional Customers a fee of
$0.20 per contract ($0.00 per contract for Priority Customers) for
regular Crossing Orders in the Select Symbols, and a fee of $0.40 per
contract to all market participants for regular Responses to Crossing
Orders in the Select Symbols. With this proposed rule change, the fee
for regular Crossing Orders in the Additional Select Symbols will
remain at $0.20 per contract for most market participants. For Priority
Customers, this fee will remain at $0.00 per contract, and for Market
Makers, this fee will increase, from $0.18 per contract \17\ to $0.20
per contract. With this proposed rule change, the fee for regular
Responses to Crossing Orders will increase for most market
participants, from $0.20 per contract to $0.40 per contract, with the
exception of Non-ISE Market Makers who will now pay a lower fee of
$0.40 per contract as opposed to $0.45 per contract.
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    \17\ The volume-based discount to fees to ISE Market Maker
contracts also applies. See supra, note 9.
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    The Exchange also currently provides a rebate of $0.25 per contract
for contracts that are submitted to the Price Improvement Mechanism
that do not trade with their contra order in the Select Symbols, and a
rebate of $0.15

per contract for contracts that are submitted to the Facilitation and
Solicited Order Mechanisms that do not trade with their contra order in
the Select Symbols except when those contracts trade against pre-
existing orders and quotes on the Exchange's orderbook. With this
proposed rule change, market participants trading in the Additional
Select Symbols will now be eligible for rebates that were not
previously available for this group of symbols. Specifically, market
participants will now receive a rebate of $0.25 per contract for
contracts that are submitted to the Price Improvement Mechanism that do
not trade with their contra order in the Additional Select Symbols.
Further, market participants will now also receive a rebate of $0.15
per contract for contracts that are submitted to the Facilitation and
Solicited Order Mechanisms that do not trade with their contra order in
the Additional Select Symbols except when those contracts trade against
pre-existing orders and quotes on the Exchange's orderbook.
    Further, the Exchange currently charges Primary Market Makers
(PMMs) a transaction fee of $0.18 per contract \18\ in the Additional
Select Symbols when they trade report a Priority Customer or
Professional Customer order in accordance with their obligation to
provide away market price protection. PMMs in Select Symbols do not
receive a maker rebate nor pay a taker fee when trade reporting.\19\
With this proposed rule change, PMMs in the Additional Select Symbols
will also not receive a maker rebate nor pay a taker fee when trade
reporting.
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    \18\ The volume-based discount to fees to ISE Market Maker
contracts also applies. See supra, note 9.
    \19\ See Schedule of Fees, Section I, Regular Order Fees and
Rebates, footnote 9.
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    Finally, for the New Penny Pilot Symbols (prior to their inclusion
to the Penny Pilot Program), the Exchange charged a payment for order
flow (PFOF) fee of $0.70 per contract, applicable to Market Makers when
trading against Priority Customer orders, and for the remaining
Additional Select Symbols, the Exchange currently charges a PFOF fee of
$0.25 per contract, applicable to Market Makers when trading against
Priority Customer orders. With this proposed rule change, the Exchange
will no longer charge a PFOF fee for trading in the Additional Select
Symbols.
Complex Order Fees and Rebates
    With this proposed rule change, the maker fee for complex orders in
the Additional Select Symbols will remain unchanged because the
Exchange currently charges the same maker fee for complex orders in the
Select Symbols, in the Penny Pilot Symbols and in the Non-Penny Pilot
Symbols.\20\ Specifically, for Select Symbols, Penny Pilot Symbols and
Non-Penny Pilot Symbols, the Exchange currently charges a complex order
maker fee of: (i) $0.10 per contract for Market Maker, Firm
Proprietary/Broker-Dealer and Professional Customer orders; (ii) $0.20
per contract for Non-ISE Market Maker orders; and (iii) $0.00 per
contract for Priority Customer orders.
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    \20\ The New Penny Pilot Symbols were subject to the fee listed
in the Column titled Maker Fee for Non-Penny Pilot Symbols. The
remaining Additional Select Symbols are currently subject to the fee
listed in the column titled Maker Fee for Select Symbols and Penny
Pilot Symbols. See Schedule of Fees, Section II, Complex Order Fees
and Rebates.
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    With this proposed rule change, the maker fee for complex orders in
the Additional Select Symbols (except for the New Penny Pilot Symbols)
when trading against Priority Customers will remain unchanged because
the Exchange currently charges the same maker fee for complex orders in
the Select Symbols (excluding SPY) when trading against Priority
Customers and in the Non-Select Penny Pilot Symbols when trading
against Priority Customers.\21\ Specifically, for complex orders in the
Select Symbols (excluding SPY) when trading against Priority Customer
and for complex orders in the Non-Select Penny Pilot Symbols when
trading against Priority Customers, the Exchange currently charges a
maker fee of: (i) $0.39 per contract for Market Maker orders; (ii)
$0.40 per contract for Non-ISE Market Maker, Firm Proprietary/Broker-
Dealer and Professional Customer orders; and (iii) $0.00 per contract
for Priority Customer orders. Thus, these fees will remain unchanged.
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    \21\ The New Penny Pilot Symbols were subject to the fee listed
in the Column titled Maker Fee for Non-Penny Pilot Symbols when
trading against Priority Customer. The remaining Additional Select
Symbols are currently subject to the fee listed in the column titled
Maker Fee for Non-Select Penny Pilot Symbols when trading against
Priority Customer. See Schedule of Fees, Section II, Complex Order
Fees and Rebates.
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    Prior to their inclusion to the Penny Pilot Program, the New Penny
Pilot Symbols, which are a subset of the Additional Select Symbols,
were charged a higher maker fee when trading against Priority Customer
complex orders. Specifically, for complex orders in the New Penny Pilot
Symbols when trading against Priority Customer complex orders, the
Exchange charged a maker fee of: (i) $0.82 per contract for Market
Maker orders; (ii) $0.84 per contract for Non-ISE Market Maker, Firm
Proprietary/Broker-Dealer and Professional Customer orders; and (iii)
$0.00 per contract for Priority Customer orders.\22\ With this proposed
rule change, the New Penny Pilot Symbols will now be subject to the
same maker fee as the remaining Additional Select Symbols, as noted
above, which is lower (except for Priority Customer orders which fee
will remain the same) than those the Exchange charged for the New Penny
Pilot Symbols when trading against Priority Customer complex orders.
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    \22\ The per contract fees noted reflect changes proposed by the
Exchange in an earlier filing. See SR-ISE-2013-01.
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    With this proposed rule change, the taker fee for complex orders in
the Additional Select Symbols (except for the New Penny Pilot Symbols)
will remain unchanged because the Exchange currently charges the same
taker fee for complex orders in the Select Symbols (excluding SPY) and
in the Non-Select Penny Pilot Symbols.\23\ Specifically, for complex
orders in the Select Symbols (excluding SPY) and in the Non-Select
Penny Pilot Symbols, the Exchange currently charges a taker fee of: (i)
$0.39 per contract for Market Maker orders; (ii) $0.40 per contract for
Non-ISE Market Maker, Firm Proprietary/Broker-Dealer and Professional
Customer orders; and (iii) $0.00 per contract for Priority Customer
orders. Thus, these fees will remain unchanged.
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    \23\ The New Penny Pilot Symbols were subject to the fee listed
in the Column titled Taker Fee for Non-Penny Pilot Symbols. The
remaining Additional Select Symbols are currently subject to the fee
listed in the column titled Taker Fee for Non-Select Penny Pilot
Symbols. See Schedule of Fees, Section II, Complex Order Fees and
Rebates.
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    Prior to their inclusion to the Penny Pilot Program, the New Penny
Pilot Symbols, which are a subset of the Additional Select Symbols,
were charged a higher taker fee for trading complex orders.
Specifically, for complex orders in the New Penny Pilot Symbols, the
Exchange charged a taker fee of: (i) $0.82 per contract for Market
Maker orders; (ii) $0.84 per contract for Non-ISE Market Maker, Firm
Proprietary/Broker-Dealer and Professional Customer orders; and (iii)
$0.00 per contract for Priority Customer orders.\24\ With this proposed
rule change, the New Penny Pilot Symbols will now be subject to the
same taker fee as the remaining Additional Select Symbols, as noted
above, which is lower (except for Priority Customer orders which fee
will remain the same) than

those the Exchange charged for the New Penny Pilot Symbols.
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    \24\ The per contract fees noted reflect changes proposed by the
Exchange in an earlier filing. See SR-ISE-2013-01.
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    With this proposed rule change, the Fee for Crossing Orders when
trading complex orders in the Additional Select Symbols will remain
unchanged because the Exchange currently charges $0.20 per contract
(for largest leg only) for complex Crossing Orders in all symbols,
except for Priority Customers who are currently charged $0.00 per
contract.
    With this proposed rule change, the Fee for Responses to Crossing
Orders when trading complex orders in the Additional Select Symbols
will remain unchanged (except for the New Penny Pilot Symbols) because
the Exchange currently charges $0.40 per contract for Responses to
Crossing Orders when trading complex orders in the Select Symbols and
in the Penny Pilot Symbols. The Fee for Responses to Crossing Orders
when trading complex orders in the New Penny Pilot Symbols will,
however, decrease because the Exchange currently charges $0.82 per
contract for Market Maker orders and $0.84 per contract for Non-ISE
Market Maker, Firm Proprietary/Broker-Dealer and Professional Customer
orders.\25\ The New Penny Pilot Symbols, which are a subset of the
Additional Select Symbols, will now be charged $0.40 per contract for
Market Maker, Non-ISE Market Maker, Firm Proprietary/Broker-Dealer and
Professional Customer orders.\26\
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    \25\ Id.
    \26\ The New Penny Pilot Symbols were subject to the fee listed
in the Column titled Fee for Responses to Crossing Orders for non-
Penny Pilot Symbols. The remaining Additional Select Symbols are
currently subject to the fee listed in the column titled Fee for
Responses to Crossing Orders for Select Symbols and Penny Pilot
Symbols. See Schedule of Fees, Section II, Complex Order Fees and
Rebates.
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    With this proposed rule change, the rebate levels payable for
Priority Customer complex orders in the Additional Select Symbols
(except for the New Penny Pilot Symbols) will increase because the
rebate levels payable for Priority Customer complex orders in the
Select Symbols are higher than the rebate levels currently payable for
Priority Customer complex orders in Non-Select Penny Pilot Symbols, as
described below.
    For the Additional Select Symbols (except for the New Penny Pilot
Symbols), the Exchange currently provides a base rebate of $0.33 per
contract, per leg, for Priority Customer complex orders when these
orders trade with non-Priority Customer complex orders in the complex
order book.\27\ Additionally, Members who achieve a certain level of
average daily volume (ADV) of executed Priority Customer complex order
contracts across all symbols during a calendar month are provided a
rebate of $0.35 per contract, per leg, in these symbols, if a Member
achieves an ADV of 40,000 Priority Customer complex order contracts;
$0.37 per contract, per leg, in these symbols, if a Member achieves an
ADV of 75,000 Priority Customer complex order contracts; $0.38 per
contract, per leg, in these symbols, if a Member achieves an ADV of
125,000 Priority Customer complex order contracts; and $0.39 per
contract, per leg, in these symbols, if a Member achieves an ADV of
225,000 Priority Customer complex order contracts.\28\ The highest
rebate amount achieved by the Member for the current calendar month
applies retroactively to all Priority Customer complex order contracts
that trade with non-Priority Customer complex orders in the complex
order book executed by the Member during such calendar month.
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    \27\ Additional Select Symbols (except for the New Penny Pilot
Symbols) are currently subject to the rebate listed in the column
titled Rebate for non-Select Penny Pilot Symbols. See Schedule of
Fees, Section II, Complex Order Fees and Rebates.
    \28\ The per contract rebates noted reflect changes proposed by
the Exchange in an earlier filing. See SR-ISE-2013-01.
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    For Select Symbols (excluding SPY), the Exchange currently provides
a base rebate of $0.34 per contract, per leg, for Priority Customer
complex orders when these orders trade with non-Priority Customer
complex orders in the complex order book. Additionally, Members who
achieve a certain level of average daily volume (ADV) of executed
Priority Customer complex order contracts across all symbols during a
calendar month are provided a rebate of $0.37 per contract, per leg, in
these symbols, if a Member achieves an ADV of 40,000 Priority Customer
complex order contracts; $0.38 per contract, per leg, in these symbols,
if a Member achieves an ADV of 75,000 Priority Customer complex order
contracts; $0.39 per contract, per leg, in these symbols, if a Member
achieves an ADV of 125,000 Priority Customer complex order contracts;
and $0.40 per contract, per leg, in these symbols, if a Member achieves
an ADV of 225,000 Priority Customer complex order contracts.\29\ The
highest rebate amount achieved by the Member for the current calendar
month applies retroactively to all Priority Customer complex order
contracts that trade with non-Priority Customer complex orders in the
complex order book executed by the Member during such calendar month.
With this proposed rule change, the increased rebate levels currently
payable for Priority Customer complex orders in Select Symbols will now
apply to Priority Customer complex orders in the Additional Select
Symbols.
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    \29\ Id.
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    With this proposed rule change, the rebate levels payable for
Priority Customer complex orders in the New Penny Pilot Symbols will,
however, decrease because the these symbols will now be subject to much
lower maker and taker fees and thus receive lower rebates, as described
below.
    For the New Penny Pilot Symbols (prior to their inclusion to the
Penny Pilot Program), the Exchange provided a base rebate of $0.66 per
contract, per leg, for Priority Customer complex orders when these
orders traded with non-Priority Customer complex orders in the complex
order book.\30\ Additionally, Members who achieve a certain level of
average daily volume (ADV) of executed Priority Customer complex order
contracts across all symbols during a calendar month are provided a
rebate of $0.72 per contract, per leg, in these symbols, if a Member
achieves an ADV of 40,000 Priority Customer complex order contracts;
$0.75 per contract, per leg, in these symbols, if a Member achieves an
ADV of 75,000 Priority Customer complex order contracts; $0.77 per
contract, per leg, in these symbols, if a Member achieves an ADV of
125,000 Priority Customer complex order contracts; and $0.78 per
contract, per leg, in these symbols, if a Member achieves an ADV of
225,000 Priority Customer complex order contracts.\31\ The highest
rebate amount achieved by the Member for the current calendar month
applies retroactively to all Priority Customer complex order contracts
that trade with non-Priority Customer complex orders in the complex
order book executed by the Member during such calendar month.
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    \30\ The New Penny Pilot Symbols were subject to the rebate
listed in the column titled Rebate for non-Select non-Penny Pilot
Symbols. See Schedule of Fees, Section II, Complex Order Fees and
Rebates.
    \31\ The per contract rebates noted reflect changes proposed by
the Exchange in an earlier filing. See SR-ISE-2013-01.
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    For Select Symbols (excluding SPY), the Exchange currently provides
a base rebate of $0.34 per contract, per leg, for Priority Customer
complex orders when these orders trade with non-Priority Customer
complex orders in the complex order book. Additionally, Members who
achieve a certain level of average daily volume (ADV) of executed
Priority Customer complex order contracts across all symbols during a

calendar month are provided a rebate of $0.37 per contract, per leg, in
these symbols, if a Member achieves an ADV of 40,000 Priority Customer
complex order contracts; $0.38 per contract, per leg, in these symbols,
if a Member achieves an ADV of 75,000 Priority Customer complex order
contracts; $0.39 per contract, per leg, in these symbols, if a Member
achieves an ADV of 125,000 Priority Customer complex order contracts;
and $0.40 per contract, per leg, in these symbols, if a Member achieves
an ADV of 225,000 Priority Customer complex order contracts.\32\ The
highest rebate amount achieved by the Member for the current calendar
month applies retroactively to all Priority Customer complex order
contracts that trade with non-Priority Customer complex orders in the
complex order book executed by the Member during such calendar month.
With this proposed rule change, the lower rebate levels currently
payable for Priority Customer complex orders in the Select Symbols will
now apply to Priority Customer complex orders in the New Penny Pilot
Symbols.
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    \32\ Id.
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    Further, the Exchange currently provides a base rebate of $0.06 per
contract, per leg, for Priority Customer complex orders in all symbols
traded on the Exchange (excluding SPY) when these orders trade against
quotes or orders in the regular orderbook. Additionally, Members who
achieve a certain level of average daily volume (ADV) of executed
Priority Customer complex order contracts across all symbols during a
calendar month are provided a rebate of $0.08 per contract, per leg, in
these symbols, if a Member achieves an ADV of 40,000 Priority Customer
complex order contracts; $0.09 per contract, per leg, in these symbols,
if a Member achieves an ADV of 75,000 Priority Customer complex order
contracts; $0.10 per contract, per leg, in these symbols, if a Member
achieves an ADV of 125,000 Priority Customer complex order contracts;
and $0.11 per contract, per leg, in these symbols, if a Member achieves
an ADV of 225,000 Priority Customer complex order contracts.\33\ The
highest rebate amount achieved by the Member for the current calendar
month applies retroactively to all Priority Customer complex order
contracts that trade with non-Priority Customer complex orders in the
complex order book executed by the Member during such calendar month.
This rebate is currently applicable to the Additional Select Symbols
and with this proposed rule change, will continue to apply at the
current rates.
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    \33\ Id.
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    Additionally, the Exchange currently provides Market Makers with a
discount when trading against Priority Customer orders that are
preferenced to them.\34\ This discount is applicable when Market Makers
add or remove liquidity in, among other symbols, Select Symbols, Non-
Select Penny Pilot Symbols and Non-Penny Pilot Symbols. The Additional
Select Symbols are currently a part of the Non-Select Penny Pilot
Symbols and Non-Penny Pilot Symbols and therefore the discount which
currently applies to these symbols will continue to apply to these
symbols when they become Select Symbols.
---------------------------------------------------------------------------

    \34\ The Exchange has submitted a separate filing to increase
the discount from $0.02 per contract to $0.05 per contract. See SR-
ISE-2013-02.
---------------------------------------------------------------------------

    Further, the Exchange currently provides a $0.20 per contract fee
credit to PMMs for execution of Priority Customer orders in the Non-
Select Symbols--for classes in which it serves as a PMM--that send an
Intermarket Sweep Order to other exchanges. This credit is applied
regardless of the transaction fee charged by a destination market. For
PMMs in the Select Symbols, this credit is equal to the fee charged by
the destination market. With this proposed rule change, PMMs in the
Additional Select Symbols will now be provided with a credit that that
is equal to the fee charged by the destination market.
    The Exchange also currently provides a $0.20 per contract credit
for responses to flash orders in the Non-Select Symbols when trading
against Professional Customers. For Select Symbols, the per contract
fee credit for responses to flash orders is (i) $0.10 per contract when
trading against Priority Customers; (ii) $0.12 per contract when
trading against Preferenced Priority Customers; and (iii) $0.10 per
contract when trading against Professional Customers. Market
participants trading in the Additional Select Symbols will now be
provided the rebate at levels that are currently in place for Select
Symbols, as described above.
    With this proposed rule change, the Exchange expects to attract
additional order flow of regular and complex orders in the Additional
Select Symbols. The Exchange's maker/taker fees and rebates have been
effective in attracting order flow of regular and complex orders in the
Select Symbols and increasing its market share in these symbols. The
Exchange believes that applying its maker/taker fees and rebates to the
Additional Select Symbols will result in the Exchange increasing its
market share for regular and complex orders in these symbols.
    With this proposed rule change, the maker and taker fees and the
Fee for Responses to Crossing Orders for the New Penny Pilot Symbols
will decrease because these symbols will now be charged the fees
currently in place for Select Symbols, which are considerably lower.
While the fees for the New Penny Pilot Symbols will decrease, the
rebates payable for Priority Customer complex orders in these symbols
will also correspondingly decrease. Further, Market Makers will now be
eligible for the Market Maker Plus rebate, which was previously not
applicable to the Additional Select Symbols. This proposed rule change
does not propose any change to the maker and taker fees for complex
orders in the Additional Select Symbols (except the New Penny Pilot
Symbols, as noted above) as those fees remain unchanged. The rebate
levels payable for Priority Customer complex orders in the Additional
Select Symbols will increase compared to the current rebate levels for
this group of symbols, except as noted above, for the New Penny Pilot
Symbols, whose rebate levels will decrease.
    Since the rate changes to the Schedule of Fees pursuant to this
proposal will be effective upon filing, for the transactions occurring
in January 2013 prior to the effective date of this filing, members
will be assessed the rates in effect immediately prior to those
proposed by this filing. For transactions occurring in January 2013 on
and after the effective date of this filing, members will be assessed
the rates proposed by this filing.
2. Basis
    The Exchange believes that its proposal to amend its Schedule of
Fees is consistent with Section 6(b) of the Act \35\ in general, and
furthers the objectives of Section 6(b)(4) of the Act \36\ in
particular, in that it is an equitable allocation of reasonable fees
and other charges among Exchange members and other persons using its
facilities.
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78f(b).
    \36\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable to add the Additional
Select Symbols to the current list of Select Symbols. The Exchange
believes that applying the fees and rebates applicable to Select
Symbols to the Additional Select Symbols will attract additional order
flow to the Exchange. Select Symbol pricing has proven beneficial for
the Exchange and its participants and the Exchange believes that moving

the Additional Select Symbols to Select Symbols pricing would enhance
liquidity and participation in those symbols.
    The Exchange believes that it is equitable and not unfairly
discriminatory to amend its list of Select Symbols to add the
Additional Select Symbols because the fees and rebates for Select
Symbols would apply uniformly to all categories of participants in the
same manner. All market participants who trade options in the Select
Symbols would be uniformly subject to the fees and rebates applicable
to those symbols.
    The Exchange believes the proposed rule change is reasonable and
equitable because it generally lowers the maker fees applicable to
market participants (and considerably lowers the maker fees for the New
Penny Pilot Symbols) and believes that the lower maker fees will
attract additional maker liquidity and size to the Exchange in the
Additional Select Symbols. Additionally, while this proposed rule
change proposes to increase the taker fees applicable to market
participants (except for the New Penny Pilot Symbols, whose taker fees
will become considerably lower), the Exchange believes the benefits of
better market quality will outweigh the taker fee increases based on
the Exchange's experience with trading in the Select Symbols. Further,
the Exchange believes this proposed rule change is reasonable and
equitable because it will result in market participants receiving
higher rebates for Priority Customer complex orders when these orders
trade with non-Priority Customer complex orders in the complex order
book as the current rebate payable for these orders in Select Symbols
is higher than the current rebate payable for these orders in
Additional Select Symbols. The Exchange notes, however, that the
rebates payable to the New Penny Pilot Symbols will be decreased to
correspond with the lower maker and taker fees these symbols will now
be subject to.
    The Exchange believes that it is reasonable and equitable to
provide rebates for Priority Customer complex orders when these orders
trade with Non-Priority Customer complex orders in the complex order
book because paying a rebate would continue to attract additional order
flow to the Exchange and create liquidity in the symbols that are
subject to the rebate, which the Exchange believes ultimately will
benefit all market participants who trade on ISE. The Exchange already
provides these rebates, and is now merely proposing to adjust the
rebate amounts applicable to the Additional Select Symbols. With this
proposed rule change, Market Makers will also now be eligible to
receive the Market Maker Plus rebate which was not previously
applicable to the Additional Select Symbols. The Exchange believes that
the proposed rebates are competitive with rebates provided by other
exchanges and are therefore reasonable and equitably allocated to those
members that direct orders to the Exchange rather than to a competing
exchange.
    The Exchange believes that it is reasonable and equitable to
provide a discount to Market Makers on preferenced orders as an
incentive for them to quote in the complex order book. ISE notes that
with this proposed rule change, the Exchange will continue to maintain
the differential that was previously in place for the Additional Select
Symbols.
    The Exchange believes that the proposed changes are non-
discriminatory because the proposal simply moves the Additional Select
Symbols from one category of fees into another category thereby
applying fees currently in effect. Further, the Exchange believes that
it is equitable and not unfairly discriminatory to amend its list of
Select Symbols to add the Additional Select Symbols to the Select
Symbols because the fees applicable to the Select Symbols would apply
uniformly to all categories of participants in the same manner. All
market participants who trade the Select Symbols would be uniformly
subject to the fees and rebates applicable to those symbols.

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

    ISE does not believe that the proposed rule change will impose any
burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. This rule change, which
proposes to move a group of symbols to an existing category of symbols,
does not impose any burden on competition. With this proposed rule
change, the Additional Select Symbols will be subject to fees that are
already in place on the Exchange and therefore, do not impose any
additional burden on competition that is not necessary or appropriate
in furthering the purposes of the Act. The Exchange believes that the
proposed changes promote competition, as they are designed to allow the
Exchange to better compete for order flow and improve the Exchange's
competitive position.

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

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act \37\ and subparagraph (f)(2) of Rule 19b-4
thereunder,\38\ because it establishes a due, fee, or other charge
imposed by ISE.
---------------------------------------------------------------------------

    \37\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \38\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form http://www.sec.gov/rules/sro.shtml); or
     Send an Email to<EMAIL_ADDRESS>Please include
File No. SR-ISE-2013-03 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-ISE-2013-03. 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 Commissions Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent
amendments, all written statements with respect to the proposed rule
change that are filed with the Commission, and all written
communications relating to the proposed rule change between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for Web site viewing and printing in the Commission's Public
Reference Room. Copies of such filing also will be available for
inspection and copying at the principal office of the ISE. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly. All
submissions should refer to File Number SR-ISE-2013-03 and should be
submitted by February 7, 2013.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\39\
---------------------------------------------------------------------------

    \39\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-00873 Filed 1-16-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 67 (Monday, April 8, 2019)]
[Rules and Regulations]
[Pages 13805-13809]
[FR Doc No: 2019-06690]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2018-0273; FRL-9990-52]

Flonicamid; Pesticide Tolerances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation establishes a crop group tolerance for
residues of flonicamid in or on the commodities in sunflower subgroup
20B. Interregional Research Project Number 4 (IR-4) requested these
tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).

DATES: This regulation is effective April 8, 2019. Objections and
requests for hearings must be received on or before June 7, 2019, 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: The docket for this action, identified by docket
identification (ID) number EPA-HQ-OPP-2018-0273, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory
Public Docket (OPP Docket) in the Environmental Protection Agency
Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334,
1301 Constitution Ave. NW, Washington, DC 20460-0001. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>, and the telephone number for the OPP
Docket is<PHONE_NUMBER>. Please review the visitor instructions and
additional information about the docket available at http://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: Michael L. Goodis, Registration
Division (7505P), Office of Pesticide Programs, Environmental
Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-
0001; main telephone number:<PHONE_NUMBER>; email address:
[email protected].

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.
The following list of North American Industrial Classification System
(NAICS) codes is not intended to be exhaustive, but rather provides a
guide to help readers determine whether this document applies to them.
Potentially affected entities may include:
     Crop production (NAICS code 111).
     Animal production (NAICS code 112).
     Food manufacturing (NAICS code 311).
     Pesticide manufacturing (NAICS code 32532).

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://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

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-2018-0273 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
June 7, 2019. 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 (excluding any Confidential Business Information (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 the non-CBI copy of your objection or hearing
request, identified by docket ID number EPA-HQ-OPP-2018-0273, by one of
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be CBI or other
information whose disclosure is restricted by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please follow the
instructions at http://www.epa.gov/dockets/contacts.html.

Additional instructions on commenting or visiting the docket, along
with more information about dockets generally, is available at http://www.epa.gov/dockets.

II. Summary of Petitioned-For Tolerance

    In the Federal Register of July 24, 2018 (83 FR 34968) (FRL-9980-
31), EPA issued a document pursuant to FFDCA section 408(d)(3), 21
U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP
8E8667) by Interregional Research Project Number 4 (IR-4), Rutgers, The
State University of New Jersey, 500 College Road East, Suite 201W,
Princeton, NJ 08540. The petition requests to establish a tolerance in
40 CFR part 180 for residues of the insecticide flonicamid, including
its metabolites and degradates, determined by measuring only the sum of
flonicamid, N-(cyanomethyl)-4-(trifluoromethyl)-3-pyridinecarboxamide,
and its metabolites, TFNA (4-trifluoromethylnicotinic acid), TFNA-AM
(4-trifluoromethylnicotinamide), and TFNG N-(4-
trifluoromethylnicotinoyl)glycine, calculated as the stoichiometric
equivalent of flonicamid, in or on the commodities in sunflower
subgroup 20B at 0.70 parts per million (ppm). That document referenced
a summary of the petition prepared by ISK Bioscience 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.

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 FFDCA section 408(b)(2)(D), and the factors
specified in FFDCA section 408(b)(2)(D), 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 flonicamid including exposure
resulting from the tolerances established by this action. EPA's
assessment of exposures and risks associated with flonicamid follows.

A. Toxicological Profile

    EPA has evaluated the available toxicity database 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.
    Flonicamid and its metabolites of concern demonstrated low toxicity
in acute oral toxicity studies. Flonicamid showed no systemic toxicity
in a 28-day dermal study at the limit dose. Feeding studies in rats and
dogs show the kidney and liver are the target organs for flonicamid
toxicity. In repeat-dose subchronic and chronic oral toxicity studies,
the consistently observed adverse effect in rats and mice were kidney
toxicity (i.e., hyaline deposition and nephritis); in dogs, vomiting
and increased percentage of reticulocytes (an indicator for potential
anemia).
    Further detail of the toxicological profile for flonicamid is
discussed in Unit III.A. of the final rule published in the Federal
Register of July 23, 2018 (83 FR 34775) (FRL-9977-82).
    Specific information on the studies received and the nature of the
adverse effects caused by flonicamid as well as the no-observed-
adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-
level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in document, ``SUBJECT: Flonicamid. Human Health
Risk Assessment for the Establishment of Permanent Tolerances in or on
Sunflower Subgroup 20B'' at pages 18-19 in docket ID number EPA-HQ-OPP-
2018-0273.

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 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
population-adjusted dose (PAD) or a reference dose (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://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/assessing-human-health-risk-pesticides.
    A summary of the toxicological endpoints for flonicamid used for
human risk assessment is discussed in Unit III.B. of the final rule
published in the Federal Register of July 23, 2018 (83 FR 34775) (FRL-
9977-82).

C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary
exposure to flonicamid, EPA considered exposure under the petitioned-
for tolerances as well as all existing flonicamid tolerances in 40 CFR
180.613. EPA assessed dietary exposures from flonicamid 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. No such effects were
identified in the toxicological studies for flonicamid; therefore, a
quantitative acute dietary exposure assessment is unnecessary.
    ii. Chronic exposure. In conducting the chronic dietary exposure
assessment, EPA used the food consumption data from the United States
Department of Agriculture (USDA) 2003-2008 National Health and
Nutrition Examination Survey, What We Eat in America (NHANES/WWEIA).
The chronic dietary (food and drinking water) exposure assessment was
conducted using the Dietary Exposure Evaluation Model software with the
Food Commodity Intake Database (DEEM-FCID), Version 3.16. As to residue
levels in food, an unrefined chronic dietary exposure assessment was
conducted for all proposed and established food uses of flonicamid.
Tolerance-level residues were combined with 100 percent crop treated
(PCT) estimates. Separate tolerances established for potato granules/
flakes, tomato paste, and tomato puree were based on processing studies
(processing factor set to 1.0 for these commodities) and DEEM default
processing factors were used for the other processed commodities.
    iii. Cancer. Flonicamid has been determined to have suggestive
evidence of carcinogenicity, but not sufficient to assess human
carcinogenic potential. The Agency has determined that quantification
of risk using a non-linear approach (i.e., using a chronic reference
dose) adequately accounts for all chronic toxicity, including
carcinogenicity that could result from exposure to flonicamid.
Therefore, the chronic reference dose is considered protective for
carcinogenic effects.
    iv. Anticipated residue and percent crop treated (PCT) information.
EPA did not use anticipated residue and/or PCT information in the
dietary assessment for flonicamid. Tolerance-level residues and/or 100
PCT were assumed for all food commodities.
    2. Dietary exposure from drinking water. The Agency used screening-
level water exposure models in the dietary exposure analysis and risk
assessment for flonicamid in drinking water. These simulation models
take into account data on the physical, chemical, and fate/transport
characteristics of flonicamid. Further information regarding EPA
drinking water models used in pesticide exposure assessment can be
found at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/about-water-exposure-models-used-pesticide.
    The drinking water assessment was conducted using a total toxic
residue approach, which considers the parent compound and its major
degradates of concern.
    Based on the Pesticide Root Zone Model Ground Water (PRZM GW),
version 1.0, the estimated drinking water concentration (EDWC) of

flonicamid for chronic exposure for non-cancer assessment is estimated
to be 9.92 parts per billion (ppb) for ground water. The EDWC for
surface water chronic exposure, derived using the Pesticide in Water
Calculator (PWC version 1.52), is 0.94 ppb.
    Modeled estimates of drinking water concentrations were directly
entered into the dietary exposure model. For chronic dietary risk
assessment, the water concentration of value 9.92 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).
    Flonicamid is not registered for any specific use patterns that
would result in residential exposure. Further information regarding EPA
standard assumptions and generic inputs for residential exposures may
be found at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/standard-operating-procedures-residential-pesticide.
    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 flonicamid to share a common mechanism of
toxicity with any other substances, and flonicamid does not appear to
produce a toxic metabolite produced by other substances. For the
purposes of this tolerance action, therefore, EPA has assumed that
flonicamid 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 website at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/cumulative-assessment-risk-pesticides.

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. The prenatal and postnatal
toxicity database for flonicamid includes prenatal developmental
toxicity studies in rats and rabbits and a multigeneration reproduction
toxicity study in rats. There is no evidence that flonicamid results in
increased susceptibility (qualitative or quantitative) in utero in rats
or rabbits in the prenatal developmental studies or in young rats in
the multi-generation reproduction study. No developmental effects were
seen in rabbits. In the multi-generation reproduction study,
developmental delays in the offspring (decreased body weights, delayed
sexual maturation) were seen only in the presence of parental toxicity
(kidney and blood effects). Also, there are clear NOAELs and LOAELs for
all effects. The degree of concern for prenatal and/or post-natal
susceptibility is, therefore, low due to the lack of evidence of
qualitative and quantitative susceptibility.
    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, except where assessing risks from
inhalation exposure as discussed below. Those decisions are based on
the following findings:
    i. The toxicity database for flonicamid is essentially complete,
except for an outstanding subchronic 28-day inhalation study. In the
absence of a subchronic inhalation study, EPA has retained a 10X FQPA
SF to assess risks from inhalation exposure, although at present,
residential inhalation exposure is not expected from existing or
pending uses of flonicamid.
    ii. There is no indication that flonicamid is a neurotoxic
chemical. As discussed in Unit III.A. of the final rule published in
the Federal Register of July 23, 2018 (83 FR 34775) (FRL-9977-82), EPA
has concluded that the clinical signs observed from available acute and
subchronic neurotoxicity studies were not the result of a neurotoxic
mechanism. Therefore, there is no need for a developmental
neurotoxicity study or additional UFs to account for neurotoxicity.
    iii. There is no evidence that flonicamid results in increased
susceptibility in in utero rats or rabbits in the prenatal
developmental studies or in young rats in the 2-generation reproduction
study.
    iv. There are no residual uncertainties identified in the exposure
databases. The chronic dietary food exposure assessment was based on
100 PCT, tolerance-level residues and where applicable, default
processing factors. EPA made conservative (protective) assumptions in
the ground and surface water modeling used to assess exposure to
flonicamid in drinking water. These assessments will not underestimate
the exposure and risks posed by flonicamid.

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
acute PAD (aPAD) and chronic PAD (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. An acute aggregate risk assessment takes into
account acute exposure estimates from dietary consumption of food and
drinking water. No adverse effect resulting from a single oral exposure
was identified and no acute dietary endpoint was selected. Therefore,
flonicamid is not expected to pose an acute risk.
    2. Chronic risk. Using the exposure assumptions described in this
unit for chronic exposure, EPA has concluded that chronic exposure to
flonicamid from food and water will utilize 64% of the cPAD for
children 1-2 years old, the population group receiving the greatest
exposure. There are no residential uses for flonicamid.
    3. Short- and Intermediate-term risks. Short- and intermediate-term
aggregate exposures take into account short- and intermediate-term
residential exposures plus chronic exposure to food and water
(considered to be a background exposure level). Flonicamid is not
registered for any use patterns that would result in short- and
intermediate-term residential exposures.
    4. Aggregate cancer risk for U.S. population. Based on the
information referenced in Unit III.A., EPA has concluded that the cPAD
is protective of possible cancer effects from flonicamid, and as
evidenced in Unit III.E.2,

aggregate exposure to flonicamid is below the cPAD. As a result, EPA
concludes that there is not an aggregate cancer risk from exposures to
flonicamid.
    5. 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 flonicamid residues.

IV. Other Considerations

A. Analytical Enforcement Methodology

    Adequate enforcement methodology is available to enforce the
tolerance expression. FMC Method No. P-3561M, a liquid chromatography-
tandem mass spectrometry (LC/MS/MS) method, is an acceptable
enforcement method for flonicamid and its metabolites in plant
commodities. The method determines residues of flonicamid and its
metabolites TFNA-AM, TFNA, and TFNG. The method has been sufficiently
validated in five diverse crops. The limit of quantitation (LOQ) is
0.01 ppm. The limit of detection (LOD) can be estimated as one-third
the LOQ.
    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 protected].

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 United Nations
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.
    There are no Codex maximum residue limits (MRLs) for flonicamid and
its metabolites in/on sunflower subgroup 20B.

V. Conclusion

    Therefore, tolerances are established for residues of flonicamid,
N-(cyanomethyl)-4-(trifluoromethyl)-3-pyridinecarboxamide, and its
metabolites, TFNA (4-trifluoromethylnicotinic acid), TFNA-AM (4-
trifluoromethylnicotinamide), and TFNG, N-(4-
trifluoromethylnicotinoyl)glycine, calculated as the stoichiometric
equivalent of flonicamid, in or on sunflower subgroup 20B at 0.70 ppm.

VI. Statutory and Executive Order Reviews

    This action establishes tolerances under FFDCA section 408(d) 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 action has been
exempted from review under Executive Order 12866, this action 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),), nor is it considered a
regulatory action under Executive Order 13771, entitled ``Reducing
Regulations and Controlling Regulatory Costs'' (82 FR 9339, February 3,
2017). This action 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 FFDCA section 408(d), 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 action 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 FFDCA section 408(n)(4). 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 action. In addition, this
action does not impose any enforceable duty or contain any unfunded
mandate as described under Title II of the Unfunded Mandates Reform Act
(UMRA) (2 U.S.C. 1501 et seq.).
    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 (NTTAA) (15 U.S.C. 272 note).

VII. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
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
the rule in the Federal Register. This action 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: March 26, 2019.
Michael Goodis,
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. In Sec.  180.613, add alphabetically the entry ``Sunflower subgroup
20B'' to the table in paragraph (a)(1) to read as follows:

Sec.  180.613  Flonicamid; tolerances for residues.

    (a) * * *
    (1) * * *

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

                                * * * * *
Sunflower subgroup 20B..................................            0.70

                                * * * * *
------------------------------------------------------------------------

* * * * *
[FR Doc. 2019-06690 Filed 4-5-19; 8:45 am]
BILLING CODE 6560-50-P