[Federal Register Volume 83, Number 148 (Wednesday, August 1, 2018)]
[Notices]
[Pages 37500-37504]
[FR Doc No: 2018-16416]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2017-N-0007]

Outsourcing Facility Fee Rates for Fiscal Year 2019

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing the
fiscal year (FY) 2019 rates for the establishment and re-inspection
fees related to entities that compound human drugs and elect to
register as outsourcing facilities under the Federal Food, Drug, and
Cosmetic Act (the FD&C Act). The FD&C Act authorizes FDA to assess and
collect an annual establishment fee from outsourcing facilities, as
well as a re-inspection fee for each re-inspection of an outsourcing
facility. This document establishes the FY 2019 rates for the small
business establishment fee ($5,461), the non-small business
establishment fee ($18,375), and the re-inspection fee ($16,382) for
outsourcing facilities; provides information on how the fees for FY
2019 were determined; and describes the payment procedures outsourcing
facilities should follow. These fee rates are effective October 1,
2018, and will remain in effect through September 30, 2019.

FOR FURTHER INFORMATION CONTACT: For more information on human drug
compounding and outsourcing facility fees: Visit FDAs website at:
https://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/PharmacyCompounding/default.htm.

    For questions relating to this notice: Melissa Hurley, Office of
Financial Management, Food and Drug Administration, 8455 Colesville
Rd., COLE-14202J, Silver Spring, MD 20993-0002,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

I. Background

    The Drug Quality and Security Act (DQSA) contains important
provisions relating to the oversight of compounding human drugs. Title
I of this law, the Compounding Quality Act, created a new section 503B
in the FD&C Act (21 U.S.C. 353b). Under section 503B of the FD&C Act, a
human drug compounder can become an ``outsourcing facility.''
    Outsourcing facilities, as defined in section 503B(d)(4) of the
FD&C Act, are facilities that meet all of the conditions described in
section 503B(a), including registering with FDA as an outsourcing
facility and paying an annual establishment fee. If the conditions of
section 503B are met, a drug compounded by or under the direct
supervision of a licensed pharmacist in an outsourcing facility is
exempt from three sections of the FD&C Act: (1) Section 502(f)(1) (21
U.S.C. 352(f)(1)) concerning the labeling of drugs with adequate
directions for use; (2) section 505 (21 U.S.C. 355) concerning the
approval of human drug products under new drug applications (NDAs) or
abbreviated new drug applications (ANDAs); and (3) section 582 (21
U.S.C. 360eee-1) concerning drug supply chain security requirements.
Drugs compounded in outsourcing facilities are not exempt from the
requirements of section 501(a)(2)(B) of the FD&C Act (21 U.S.C.
351(a)(2)(B)) concerning current good manufacturing practice
requirements for drugs.
    Section 744K of the FD&C Act (21 U.S.C. 379j-62) authorizes FDA to
assess and collect the following fees associated with outsourcing
facilities: (1) An annual establishment fee from each outsourcing
facility and (2) a re-inspection fee from each outsourcing facility
subject to a re-inspection (see section 744K(a)(1) of the FD&C Act).
Under statutorily defined conditions, a qualified applicant may pay a
reduced small business establishment fee (see section 744K(c)(4) of the
FD&C Act).
    FDA announced in the Federal Register of November 24, 2014 (79 FR
69856), the availability of a final guidance for industry entitled
``Fees for Human Drug Compounding Outsourcing Facilities Under Sections
503B and 744K of the FD&C Act.'' The guidance provides additional
information on the annual fees for outsourcing facilities and
adjustments required by law, re-inspection fees, how to submit payment,
the effect of failure to pay fees, and how to qualify as a small
business to obtain a reduction of the annual establishment fee. This
guidance can be accessed on FDA's website at: https://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM391102.pdf.

II. Fees for FY 2019

A. Methodology for Calculating FY 2019 Adjustment Factors

1. Inflation Adjustment Factor
    Section 744K(c)(2) of the FD&C Act specifies the annual inflation
adjustment for outsourcing facility fees. The inflation adjustment has
two components: One based on FDA's payroll costs and one based on FDA's
non-payroll costs for the first 3 of the 4 previous fiscal years. The
payroll component of the annual inflation adjustment is calculated by
taking the average change in FDA's per-full time equivalent (FTE)
personnel compensation and benefits (PC&B) in the first 3 of the 4
previous fiscal years (see section 744K(c)(2)(A)(ii) of the FD&C Act).
FDA's total annual spending on PC&B is divided by the total number of
FTEs per fiscal year to determine the average PC&B per FTE.
    Table 1 summarizes the actual cost and FTE data for the specified
fiscal years, and provides the percent change from the previous fiscal
year and the average percent change over the first 3 of the 4 fiscal
years preceding FY 2019. The 3-year average is 2.4152 percent.

                                 Table 1--FDA PC&Bs Each Year and Percent Change
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           Fiscal year                   2015                2016                2017           3-year average
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Total PC&B......................      $2,232,304,000      $2,414,728,159      $2,581,551,000  ..................
Total FTE.......................              15,484              16,381              17,022  ..................
PC&B per FTE....................            $144,168            $147,408            $151,660  ..................
Percent change from previous                 2.1136%             2.2474%             2.8845%             2.4152%
 year...........................
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    Section 744K(c)(2)(A)(ii) of the FD&C Act specifies that this
2.4152 percent should be multiplied by the proportion of PC&B to total
costs of an average FDA FTE for the same 3 fiscal years.

                      Table 2--FDA PC&Bs as a Percent of FDA Total Costs of an Average FTE
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           Fiscal year                   2015                2016                2017           3-year average
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Total PC&B......................      $2,232,304,000      $2,414,728,159      $2,581,551,000  ..................
Total Costs.....................      $4,510,565,000      $4,666,236,000      $5,104,580,000  ..................
PC&B Percent....................            49.4906%            51.7490%            50.5732%            50.6043%
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    The payroll adjustment is 2.4152 percent multiplied by 50.6043
percent, or 1.2222 percent.
    Section 744K(c)(2)(A)(iii) of the FD&C Act specifies that the
portion of the inflation adjustment for non-payroll costs for FY 2019
is equal to the average annual percent change in the Consumer Price
Index (CPI) for urban consumers (U.S. City Average; Not Seasonally
Adjusted; All items; Annual Index) for the first 3 years of the
preceding 4 years of available data, multiplied by the proportion of
all non-PC&B costs to total costs of an average FDA FTE for the same
period.
    Table 2 provides the summary data for the percent change in the
specified CPI for U.S. cities. These data are published by the Bureau
of Labor Statistics and can be found on its website: https://data.bls.gov/cgi-bin/surveymost?cu. The data can be viewed by checking
the box marked ``U.S. All

items, 1982-84 = 100--CUUR0000SA0'' and then selecting ``Retrieve
Data.''

                   Table 3--Annual and 3-Year Average Percent Change in U.S. City Average CPI
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              Year                       2015                2016                2017           3-year average
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Annual CPI......................             237.017             240.007             245.120  ..................
Annual Percent Change...........             0.1187%             1.2615%             2.1304%             1.1702%
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    Section 744K(c)(2)(A)(iii) of the FD&C Act specifies that this
1.1702 percent should be multiplied by the proportion of all non-PC&B
costs to total costs of an average FTE for the same 3 fiscal years. The
proportion of all non-PC&B costs to total costs of an average FDA FTE
for FYs 2015 to 2017 is 49.3957 percent (100 percent - 50.6043 percent
= 49.3957 percent). Therefore, the non-pay adjustment is 1.1702 percent
times 49.3957 percent, or 0.5780 percent.
    The PC&B component (1.2222 percent) is added to the non-PC&B
component (0.5780 percent), for a total inflation adjustment of 1.8002
percent (rounded). Section 744K(c)(2)(A)(i) of the FD&C Act specifies
that one is added to that figure, making the inflation adjustment
1.018002.
    Section 744K(c)(2)(B) of the FD&C Act provides for this inflation
adjustment to be compounded after FY 2015. This factor for FY 2019
(1.8002 percent) is compounded by adding one to it, and then
multiplying it by one plus the inflation adjustment factor for FY 2018
(7.2835 percent), as published in the Federal Register of August 2,
2017 (82 FR 35962 at 35965). The result of this multiplication of the
inflation factors for the 4 years since FY 2015 (1.018002 x 1.072835)
becomes the inflation adjustment for FY 2019. For FY 2019, the
inflation adjustment is 9.2148 percent (rounded). We then add one,
making the FY 2019 inflation adjustment factor 1.092148.
2. Small Business Adjustment Factor
    Section 744K(c)(3) of the FD&C Act specifies that in addition to
the inflation adjustment factor, the establishment fee for non-small
businesses is to be further adjusted for a small business adjustment
factor. Section 744K(c)(3)(B) of the FD&C Act provides that the small
business adjustment factor is the adjustment to the establishment fee
for non-small businesses that is necessary to achieve total fees
equaling the amount that FDA would have collected if no entity
qualified for the small business exception in section 744K(c)(4) of the
FD&C Act. Additionally, section 744K(c)(5)(A) states that in
establishing the small business adjustment factor for a fiscal year,
FDA shall provide for the crediting of fees from the previous year to
the next year if FDA overestimated the amount of the small business
adjustment factor for such previous fiscal year.
    Therefore, to calculate the small business adjustment to the
establishment fee for non-small businesses for FY 2019, FDA must
estimate: (1) The number of outsourcing facilities that will pay the
reduced fee for small businesses for FY 2019 and (2) the total fee
revenue it would have collected if no entity had qualified for the
small business exception (i.e., if each entity that registers as an
outsourcing facility for FY 2019 were to pay the inflation-adjusted fee
amount of $16,382).
    With respect to (1), FDA estimates that 14 entities will qualify
for small business exceptions and will pay the reduced fee for FY 2019.
With respect to (2), to estimate the total number of entities that will
register as outsourcing facilities for FY 2019, FDA used data submitted
by outsourcing facilities through the voluntary registration process,
which began in December 2013. Accordingly, FDA estimates that 82
outsourcing facilities, including 14 small businesses, will be
registered with FDA in FY 2019.
    If the projected 82 outsourcing facilities paid the full inflation-
adjusted fee of $16,382, this would result in total revenue of
$1,343,324 in FY 2019 ($16,382 x 82). However, 14 of the entities that
are expected to register as outsourcing facilities for FY 2019 are
projected to qualify for the small business exception and to pay one-
third of the full fee ($5,461 x 14), totaling $76,454 instead of paying
the full fee ($16,382 x 14), which would total $229,348. This would
leave a potential shortfall of $152,894 ($229,348 - $76,454).
    Additionally, section 744K(c)(5)(A) of the FD&C Act states that in
establishing the small business adjustment factor for a fiscal year,
FDA shall provide for the crediting of fees from the previous year to
the next year if FDA overestimated the amount of the small business
adjustment factor for such previous fiscal year. FDA has determined
that it is appropriate to credit excess fees collected from the last
completed fiscal year, due to the inability to conclusively determine
the amount of excess fees from the fiscal year that is in progress at
the time this calculation is made. This crediting is done by comparing
the small business adjustment factor for the last completed fiscal
year, FY 2017 ($1,137), to what would have been the small business
adjustment factor for FY 2017 ($892) if FDA had estimated perfectly.
    The calculation for what the small business adjustment would have
been if FDA had estimated perfectly begins by determining the total
target collections (15,000 x [inflation adjustment factor] x [number of
registrants]). For the most recent complete fiscal year, FY 2017, this
was $1,219,449 ($15,837 x 77). The actual FY 2017 revenue from the 77
total registrants (i.e., 71 registrants paying FY 2017 non-small
business establishment fee and six small business registrants) paying
establishment fees is $1,156,101. $1,156,101 is calculated as follows:
(FY 2017 Non-Small Business Establishment Fee adjusted for inflation
only) x (total number of registrants in FY 2017 paying Non-Small
Business Establishment Fee) + (FY 2017 Small Business Establishment
Fee) x (total number of small business registrants in FY 2017 paying
Small Business Establishment Fee). $15,837 x 71 + $5,279 x 6 =
$1,156,101. This left a shortfall of $63,348 from the estimated total
target collection amount ($1,219,449 - $1,156,101). $63,348 divided by
the total number of registrants in FY 2017 paying Standard
Establishment Fee (71) equals $892.
    The difference between the small business adjustment factor used in
FY 2017 and the small business adjustment factor that would have been
used had FDA estimated perfectly; is $245 ($1,137 - $892). The $245
(rounded to the nearest dollar) is then multiplied by the number of
actual registrants who paid the standard fee for FY 2017 (71), which
provides us a total excess collection of $17,380 in FY 2017.
    Therefore, to calculate the small business adjustment factor for FY
2019, FDA subtracts $17,380 from the projected shortfall of $152,894
for FY 2019 to arrive at the numerator for the

small business adjustment amount, which equals $135,514. This number
divided by 68 (the number of expected non-small businesses for FY 2019)
is the small business adjustment amount for FY 2019, which is $1,993
(rounded to the nearest dollar).

B. FY 2019 Rates for Small Business Establishment Fee, Non-Small
Business Establishment Fee, and Re-Inspection Fee

1. Establishment Fee for Qualified Small Businesses \1\
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    \1\ To qualify for a small business reduction of the FY 2019
establishment fee, entities had to submit their exception requests
by April 30, 2018. See section 744K(c)(4)(B) of the FD&C Act. The
time for requesting a small business exception for FY 2019 has now
passed. An entity that wishes to request a small business exception
for FY 2020 should consult section 744K(c)(4) of the FD&C Act and
section III.D of FDA's guidance for industry entitled ``Fees for
Human Drug Compounding Outsourcing Facilities Under Sections 503B
and 744K of the FD&C Act,'' which can be accessed on FDA's website
at https://www.fda.gov/downloads/drugs/
guidancecomplianceregulatoryinformation/guidances/ucm391102.pdf.
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    The amount of the establishment fee for a qualified small business
is equal to $15,000 multiplied by the inflation adjustment factor for
that fiscal year, divided by three (see section 744K(c)(4)(A) and
(c)(1)(A) of the FD&C Act). The inflation adjustment factor for FY 2019
is 1.092148. See section II.A.1 for the methodology used to calculate
the FY 2019 inflation adjustment factor. Therefore, the establishment
fee for a qualified small business for FY 2019 is one third of $16,382,
which equals $5,461 (rounded to the nearest dollar).
2. Establishment Fee for Non-Small Businesses
    Under section 744K(c) of the FD&C Act, the amount of the
establishment fee for a non-small business is equal to $15,000
multiplied by the inflation adjustment factor for that fiscal year,
plus the small business adjustment factor for that fiscal year, and
plus or minus an adjustment factor to account for over- or under-
collections due to the small business adjustment factor in the prior
year. The inflation adjustment factor for FY 2019 is 1.092148. The
small business adjustment amount for FY 2019 is $1,993. See section
II.A.2 for the methodology used to calculate the small business
adjustment factor for FY 2019. Therefore, the establishment fee for a
non-small business for FY 2019 is $15,000 multiplied by 1.092148 plus
$1,993, which equals $18,375 (rounded to the nearest dollar).
3. Re-Inspection Fee
    Section 744K(c)(1)(B) of the FD&C Act provides that the amount of
the FY 2019 re-inspection fee is equal to $15,000, multiplied by the
inflation adjustment factor for that fiscal year. The inflation
adjustment factor for FY 2019 is 1.092148. Therefore, the re-inspection
fee for FY 2019 is $15,000 multiplied by 1.092148, which equals $16,382
(rounded to the nearest dollar). There is no reduction in this fee for
small businesses.

C. Summary of FY 2019 Fee Rates

                   Table 4--Outsourcing Facility Fees
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Qualified Small Business Establishment Fee.....................   $5,461
Non-Small Business Establishment Fee...........................   18,375
Re-inspection Fee..............................................   16,382
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III. Fee Payment Options and Procedures

A. Establishment Fee

    Once an entity submits registration information and FDA has
determined that the information is complete, the entity will incur the
annual establishment fee. FDA will send an invoice to the entity, via
email to the email address indicated in the registration file, or via
regular mail if email is not an option. The invoice will contain
information regarding the obligation incurred, the amount owed, and
payment procedures. A facility will not be registered as an outsourcing
facility until it has paid the annual establishment fee under section
744K of the FD&C Act. Accordingly, it is important that facilities
seeking to operate as outsourcing facilities pay all fees immediately
upon receiving an invoice. If an entity does not pay the full invoiced
amount within 15 calendar days after FDA issues the invoice, FDA will
consider the submission of registration information to have been
withdrawn and adjust the invoice to reflect that no fee is due.
    Outsourcing facilities that registered in FY 2018 and wish to
maintain their status as an outsourcing facility in FY 2019 must
register during the annual registration period that lasts from October
1, 2018, to December 31, 2018. Failure to register and complete payment
by December 31, 2018, will result in a loss of status as an outsourcing
facility on January 1, 2019. Entities should submit their registration
information no later than December 10, 2018, to allow enough time for
review of the registration information, invoicing, and payment of fees
before the end of the registration period.

B. Re-Inspection Fee

    FDA will issue invoices for each re-inspection after the conclusion
of the re-inspection, via email to the email address indicated in the
registration file or via regular mail if email is not an option.
Invoices must be paid within 30 days.

C. Fee Payment Procedures

    1. The preferred payment method is online using electronic check
(Automated Clearing House (ACH) also known as eCheck) or credit card
(Discover, VISA, MasterCard, American Express). Secure electronic
payments can be submitted using the User Fees Payment Portal at https://userfees.fda.gov/pay. (Note: only full payments are accepted. No
partial payments can be made online.) Once you search for your invoice,
click ``Pay Now'' to be redirected to Pay.gov. Electronic payment
options are based on the balance due. Payment by credit card is
available for balances less than $25,000. If the balance exceeds this
amount, only the ACH option is available. Payments must be made using
U.S bank accounts as well as U.S. credit cards.
    2. If paying with a paper check: Checks must be in U.S. currency
from a U.S. bank and made payable to the Food and Drug Administration.
Payments can be mailed to: Food and Drug Administration, P.O. Box
979033, St. Louis, MO 63197-9000. If a check is sent by a courier that
requests a street address, the courier can deliver the check to: U.S.
Bank, Attn: Government Lockbox 979033, 1005 Convention Plaza, St.
Louis, MO 63101. (Note: This U.S. Bank address is for courier delivery
only. If you have any questions concerning courier delivery, contact
the U.S. Bank at<PHONE_NUMBER>).
    3. When paying by wire transfer, the invoice number must be
included. Without the invoice number the payment may not be applied.
Regarding re-inspection fees, if the payment amount is not applied, the
invoice amount will be referred to collections. The originating
financial institution may charge a wire transfer fee. If the financial
institution charges a wire transfer fee, it is required that the
outsourcing facility add that amount to the payment to ensure that the
invoice is paid in full. Use the following account information when
sending a wire transfer: New York Federal Reserve Bank, U.S. Dept of
Treasury, TREAS NYC, 33 Liberty St., New York, NY 10045, Acct. No.
75060099, Routing No. 021030004, SWIFT: FRNYUS33. If

needed, FDA's tax identification number is 53-0196965.

    Dated: July 26, 2018.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2018-16416 Filed 7-31-18; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register: July 9, 2008 (Volume 73, Number 132)]
[Notices]
[Page 39363-39365]
[DOCID:fr09jy08-113]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58068; File No. SR-NYSE-2008-20]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Granting Approval of a Proposed Rule Change and Amendments No. 1 and 2
Thereto Relating to Exchange Rule 36 (Communications Between Exchange
and Member's Offices) To Make Permanent an Existing Portable Phone
Pilot

June 30, 2008.
    On March 17, 2008, the New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to make permanent an existing portable phone
pilot. On March 27, 2008, and April 2, 2008, the Exchange submitted
Amendments No. 1 and 2, respectively, to the proposed rule change. The
proposed rule change was published for comment in the Federal Register
on April 9, 2008.\3\ The Commission received no comments regarding the
proposal. This order approves the proposed rule change, as modified by
Amendments No. 1 and 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 57611 (April 3,
2008), 73 FR 19274.
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I. Description of the Proposal

    The Exchange proposes to make permanent NYSE Rule 36
(Communications Between Exchange Member's Offices), which permits Floor
brokers and Registered Competitive Market-Makers (``RCMMs'') \4\ to use
on a pilot basis an Exchange authorized and issued portable phone
(``Exchange Phone'') on the Exchange Floor (``Pilot''). The Commission
originally approved the Pilot to be implemented for a six-month period
\5\ in 2003.\6\ Since the inception of the Original Pilot, the Exchange
extended the Pilot ten times, with the current Pilot set to expire on
June 30, 2008.\7\ In 2006, the Exchange incorporated RCMMs into the
Pilot \8\ and subsequently amended the Pilot to allow RCMMs to use
Exchange Phones to call to and receive calls from their booths.\9\
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    \4\ See NYSE Rule 107A, which defines and governs the
registration and dealings of RCMMs.
    \5\ See Securities Exchange Act Release No. 47671 (April 11,
2003), 68 FR 19048 (April 17, 2003) (SR-NYSE-2002-11) (``Original
Pilot''). The Original Pilot permitted Exchange Phones to be used
only by Floor brokers. See note 8 and 9 infra and accompanying text.
    \6\ See Securities Exchange Act Release No. 47992 (June 5,
2003), 68 FR 35047 (June 11, 2003) (SR-NYSE-2003-19) (delaying the
implementation date for Exchange Phones from on or about May 1,
2003, to no later than June 23, 2003).
    \7\ See Securities Exchange Act Release Nos. 48919 (December 12,
2003), 68 FR 70853 (December 19, 2003) (SR-NYSE-2003-38) (extending
the Pilot for an additional six months ending on June 16, 2004);
49954 (July 1, 2004), 69 FR 41323 (July 8, 2004) (SR-NYSE-2004-30)
(extending the Pilot for an additional five months ending on
November 30, 2004); 50777 (December 1, 2004), 69 FR 71090 (December
8, 2004) (SR-NYSE-2004-67) (extending the Pilot for an additional
four months ending March 31, 2005); 51464 (March 31, 2005), 70 FR
17746 (April 7, 2005) (SR-NYSE-2005-20) (extending the Pilot for
additional four months ending July 31, 2005); 52188 (August 1,
2005), 70 FR 46252 (August 9, 2005) (SR-NYSE-2005-53) (extending the
Pilot for an additional six months ending January 31, 2006); 53277
(February 13, 2006), 71 FR 8877 (February 21, 2006) (SR-NYSE-2006-
03) (extending the Pilot for an additional six months ending July
31, 2006); 54276 (August 4, 2006), 71 FR 45885 (August 10, 2006)
(SR-NYSE-2006-55) (extending the Pilot for an additional six months
ending January 31, 2007); 55218 (January 31, 2007), 72 FR 6025
(February 8, 2007) (SR-NYSE-2007-05) (extending the Pilot for an
additional twelve months ending January 31, 2008); 57249 (January
31, 2008), 73 FR 7024 (February 6, 2008) (SR-NYSE-2008-10)
(extending the Pilot for an additional three months ending April 30,
2008); and 57746 (April 30, 2008), 73 FR 25816 (May 7, 2008) (SR-
NYSE-2008-34) (extending the Pilot to no later than the approval of
SR-NYSE-2008-20 or June 30, 2008, the earlier thereof).
    \8\ See Securities Exchange Act Release No. 53213 (February 2,
2006), 71 FR 7103 (February 10, 2006) (SR-NYSE-2005-80).
    \9\ See Securities Exchange Act Release No. 54215 (July 26,
2006), 71 FR 43551 (August 1, 2006) (SR-NYSE-2006-51).
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    NYSE Rule 36 governs the establishment of telephonic or electronic
communications between the Exchange Floor and any other location. Prior
to the Pilot, NYSE Rule 36 prohibited the use of portable phone
communications between the Exchange Floor and any off-Floor location.
Floor brokers could communicate from the Exchange Floor to off-Floor
location only by means of a telephone located at a broker's booth. Such
communication often involved a customer calling a broker at the booth
for ``market look'' information. A broker could not use a portable
phone in a trading crowd at the point of sale to speak with a person
located off the Exchange Floor.
    Currently, on a pilot basis, NYSE Rule 36 outlines the conditions
under which Floor brokers and RCMMs may use Exchange Phones.\10\ Only
Exchange Phones are permitted to be used under the Pilot and any other
type of portable phones are prohibited pursuant to NYSE Rule 36. A
Floor broker may, with the Exchange's approval, engage in direct voice
communication from the point of sale to an off-Floor location, such as
a member firm's trading desk or the office of one of the broker's
customers. The Pilot permits both incoming and outgoing calls, provided
all requirements of NYSE Rule 36 and other Exchange rules have been
met.
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    \10\ See also Member Education Bulletins 2005-20 (November 28,
2005) and 2005-23 (December 2, 2005) (``MEBs''). MEBs describe the
conditions for the use of a portable phone by Floor brokers and
RCMMs, the acknowledgement procedure, and the rule text. These MEBs
were previously filed as exhibits with the Commission in connection
with the operation of the Pilot. See Securities Exchange Act Release
No. 53213 (February 2, 2006), 71 FR 7103 (February 10, 2006) (SR-
NYSE-2005-80). The Exchange represents that revised MEBs would be
sent to all Floor brokers and RCMMs utilizing portable phones
pursuant to NYSE Rule 36. The Commission notes that MEBs and
acknowledgment forms attached thereto are part of this rule
proposal.
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    During the permitted communication as provided in NYSE Rule 36, a
broker may accept orders, provide status and oral execution reports as
to orders previously received, and provide market look observations as
historically have been routinely transmitted from a broker's booth
location. A Floor broker, however, may not represent and execute any
order received as a result of such communication unless the order is
first properly recorded by the member and entered into the Exchange's
Front End Systemic Capture (``FESC'') electronic database.\11\ In
addition, Exchange rules require that Floor brokers receiving orders
from the public over Exchange Phones must be properly qualified to
engage in such direct access business under NYSE Rules 342 and 345,
among others.
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    \11\ See NYSE Rule 123(e). See also Securities Exchange Act
Release Nos. 43689 (December 7, 2000), 65 FR 79145 (December 18,
2000) (SR-NYSE-98-25) and 44943 (October 16, 2001), 66 FR 53820
(October 24, 2001) (SR-NYSE-2001-39) (discussing certain exceptions
to FESC, such as orders to offset an error or a bona fide arbitrage,
which may be entered within 60 seconds after a trade is executed).
---------------------------------------------------------------------------

    The Pilot also allows RCMMs to use an Exchange Phone, solely to
call and receive calls from their booths on the Exchange Floor, to
communicate with their or their member organizations' off-Floor office,
and to communicate with the off-Floor office of their clearing member
organization to enter off-Floor orders and to discuss matters related
to the clearance and settlement of transactions, provided the off-Floor
office uses a wired phone line for these discussions. RCMMs and their
or their member organization's off-Floor offices may not use Exchange
Phones to transmit to the Exchange Floor orders for the purchase or
sale of securities by public customers or any other agency business.
    Under the Pilot, Floor brokers may not use call-forwarding or
conference calling. Likewise, RCMMs, their booth

personnel, their member organization's off-Floor office, and their
clearing member organization's off-Floor office may not use call-
forwarding or conference calling. Accordingly, Exchange Phones used by
Floor brokers and RCMMs do not have call-forwarding or conference
calling capabilities. The Exchange also prohibits booth phones used to
make calls to and receive calls from RCMMs from having call-forwarding
or conference calling features enabled. Further, Floor brokers and
their member organizations must have procedures designed to deter
anyone calling their Exchange Phone from using caller ID block or
attempting to conceal the phone number from which the call is being
made. Similarly, RCMMs and their member organizations must implement
procedures designed to deter their or their member organization's off-
Floor office and the off-Floor office of their clearing member
organization from doing the same.
    Use of the Exchange Phone by Floor brokers and RCMMs must comply
with all other rules, policies, and procedures of both the federal
securities laws and the Exchange, including the record retention
requirements, as set forth in NYSE Rule 440 and Rules 17a-3 and 17a-4
under the Act. Further, every Floor broker and RCMM must sign a written
agreement consenting to specified terms of usage in connection with the
operation of the Pilot and their use of the Exchange authorized and
provided portable phones.\12\ For surveillance purposes, the Exchange
receives records of all incoming and outgoing calls on Exchange Phones.
The Exchange represents that it will continue to receive such records
on a monthly basis.
---------------------------------------------------------------------------

    \12\ Floor brokers and RCMMs agree to comply with NYSE Rule 36,
all other rules, policies, and procedures of both federal securities
laws and the Exchange, including the record retention requirements
of NYSE Rule 440 and Rules 17a-3 and 17a-4 under the Act, and
acknowledge that the Exchange has the right to request from their
Exchange Phone service provider any records relating to incoming and
outgoing calls that NYSE Regulation, Inc. deems necessary. Floor
brokers additionally agree that, to the extent they are aware that a
customer or any other incoming caller is using a caller ID block,
the Floor broker would request in writing that the customer/caller
disable such block when calling the Floor broker. Such written
request must be documented and a copy of the same retained. RCMMs
acknowledge that they may only call and receive calls from the
locations provided in NYSE Rule 36.22. RCMMs additionally agree to
disable the functionality that allows call-forwarding, conference
calling, caller ID block, or any other means to conceal the phone
number from which the call is being made.
---------------------------------------------------------------------------

    Specialists are subject to separate restrictions in NYSE Rule 36 on
their ability to engage in communications from the specialist post to
an off-Floor location.\13\ The Exchange's proposal would not apply to
specialists, who would continue to be prohibited from communicating
from the post to upstairs trading desks or customers.\14\
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    \13\ See Securities Exchange Act Release No. 46560 (September
26, 2002), 67 FR 62088 (October 3, 2002) (SR-NYSE-00-31) (discussing
restrictions on specialists' communications from the post).
    \14\ NYSE Rule 36.30 provides that, with the approval of the
Exchange, a specialist unit may maintain a telephone line at its
stock trading post location to the off-Floor offices of the
specialist unit or the unit's clearing firm. Such telephone
connection may not be used for the purpose of transmitting to the
Exchange Floor orders for the purchase or sale of securities but may
be used to enter options or futures hedging orders through the
unit's off-Floor office or the unit's clearing firm or through a
member (on the Exchange Floor) of an options or futures exchange.
---------------------------------------------------------------------------

    The Exchange is proposing to adopt the Pilot on a permanent basis
under the same rules and conditions that currently exist.

II. Discussion

    The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\15\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\16\ which requires that the
rules of the an exchange be designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national securities system, and, in
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \15\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange adopted the prohibition on the use of portable
telephones on the Exchange Floor in 1988.\17\ In approving the
prohibition, the Commission noted that, by being able to communicate
directly with a broker in the trading crowd, a customer (invariably, a
large or institutional one) could have a significant time and place
advantage. The Commission further noted that certain concerns could
result from such advantage. The Commission, however, also observed that
the approval of the prohibition did not foreclose an exchange from
devising a program to permit the use of portable phones on the floor
and that such prohibition was not the only approach consistent with the
Act.
---------------------------------------------------------------------------

    \17\ See Securities Exchange Act Release No. 25842 (June 23,
1998), 53 FR 24539 (June 29, 2008) (SR-NYSE-87-18). The proposal
resulting in the adoption of the prohibition was in response to a
Commission order setting aside actions by the Exchange denying two
of its members permission to install telephone connections to
communicate from the Exchange Floor with non-member customers
located off-Floor. See Securities Exchange Act Release No. 24429
(May 6, 1987). The Exchange's proposal ultimately approved by the
Commission permitted access to non-member customers at the Floor
booth but prohibited such access through portable phones in the
trading crowd.
---------------------------------------------------------------------------

    The Exchange subsequently proposed to permit on a pilot basis the
use of Exchange Phones on the Exchange Floor. In approving the Original
Pilot,\18\ the Commission noted that Exchange Phones could provide more
direct access to the Exchange's trading crowds and increase speed in
the transmittal and execution of orders. The Commission, however,
continued to express an ongoing concern and requested that, if the
Exchange decides to request permanent approval, it submit information
documenting the usage of the Exchange Phones, any problems that has
occurred, and any advantages or disadvantages of such usage. The
Commission noted that such information would help ensure that the
Exchange Phones provide for fair access, with adequate monitoring of
orders being taken and information being disseminated.
---------------------------------------------------------------------------

    \18\ See note 5 supra.
---------------------------------------------------------------------------

    The Exchange has duly provided such information with each extension
of the Pilot and in its proposal to permanently adopt the Pilot. Since
the inception of the Original Pilot, the Commission also notes that the
Exchange did not identify significant regulatory issues and also
represented that that no administrative or technical problems, other
than routine telephone maintenance issues, have occurred. Further, in
its proposal to permanently adopt the Pilot, the Exchange states that
there has been a reasonable degree of usage of the Exchange Phones. In
addition, the Commission notes that there does not appear to be any
complaints concerning fair access to the NYSE's trading floor as a
result of the Pilot.\19\ Rather, the Exchange states in its proposal
that the Pilot demonstrates that the Exchange Phones facilitate
communication without any corresponding drawbacks.
---------------------------------------------------------------------------

    \19\ The Commission notes that since the inception of the
Original Pilot, the Commission received only one comment letter. The
comment letter pertains to the Original Pilot and was supportive of
it. See note 5 supra.
---------------------------------------------------------------------------

    The Commission also notes that, as proposed to be permanently
adopted, NYSE Rule 36 requires Floor brokers and RCMMs to comply with
all rules, policies, and procedures of the Exchange and the federal
securities law, including the record retention requirements.
Additionally, a Floor broker would not be permitted to

represent and execute an order unless first inputted in FESC. Floor
brokers and RCMMs, moreover, are not permitted to use call-forwarding
or conference calling and must implement procedures designed to deter
anyone calling the Exchange Phones from concealing the phone number
from which a call is being made. Further, the Exchange has the right to
request from the Exchange Phone service provider any records relating
to incoming and outgoing calls.\20\ The Exchange represents that it has
received, and will continue to receive, records of such calls on a
monthly basis. With respect to Exchange Phones, these requirements and
records should help the Exchange detect and deter any violations of the
Exchange rules and the Act.
---------------------------------------------------------------------------

    \20\ See note 10 supra.
---------------------------------------------------------------------------

    The Commission, therefore, finds that the proposal is consistent
with the Act.\21\ The conditions stated above should continue to aid
the Exchange in surveilling for compliance with Exchange rules and the
Act and address concerns identified in the adoption of the original
prohibition.\22\ The Commission also believes that the operation of the
Pilot without incident since its inception helps to address the
Commission's initial concerns. Accordingly, as noted by the Commission
when it approved the Original Pilot, the Commission continues to
believe that the Pilot helps to expedite orders and make the flow of
information more direct.
---------------------------------------------------------------------------

    \21\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
    \22\ In this regard, the Commission notes that proper
surveillance is an essential component of any telephone access
policy to an Exchange Floor.
---------------------------------------------------------------------------

III. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\23\ that the proposed rule change (SR-NYSE-2008-20), as modified
by Amendments No. 1 and 2 be, and it hereby is, approved.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78s(b)(2).

    For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\24\
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-15485 Filed 7-8-08; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register: September 19, 2006 (Volume 71, Number 181)]
[Proposed Rules]
[Page 54793-54794]
[DOCID:fr19se06-12]

=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 300

[FRL-8220-3]

 National Oil and Hazardous Substance Pollution Contingency Plan;
National Priorities List

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of intent to delete the Waverly Groundwater
Contamination Site (Site) from the National Priorities List (NPL).

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SUMMARY: The EPA, Region 7, is issuing a notice of intent to delete the
Site located near Waverly, Nebraska, from the NPL and requests public
comments on this notice of intent. The NPL, promulgated pursuant to
Section 105 of the Comprehensive Environmental Response, Compensation,
and Liability Act (CERCLA) of 1980, as amended, is found in Appendix B
of 40 CFR part 300 of the National Oil and Hazardous Substances
Pollution Contingency Plan (NCP). The EPA and the State of Nebraska
through the Nebraska Department of Environmental Quality (NDEQ) have
determined that all appropriate response actions under CERCLA have been
completed. However, this deletion does not preclude future actions
under Superfund.

DATES: Comments concerning this site must be received by October 19,
2006.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
SFUND-1986-0005, by one of the following methods:
     http://www.regulations.gov_Follow the on-line instruction

for submitting comments.
     E-mail<EMAIL_ADDRESS>     Fax:<PHONE_NUMBER>
     Mail: Mr. Fritz Hirter, Community Involvement Coordinator,
U.S. EPA,

Region 7, 901 N 5th Street, Kansas City, Kansas 66101.
     Hand Delivery: 901 N 5th Street, Kansas City, Kansas.
    Such deliveries are only accepted during the Docket's normal hours
of operation, and special arrangements should be made for deliveries of
boxed information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-SFUND-
1986-0005. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information

provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information disclosure
of which is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through http://www.regulations.gov or e-mail. The http://www.regulations.gov Web site

is an ``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through http://www.regulations.gov, your e-mail address will be

automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses.
    Docket: All documents in the docket are listed in the http://www.regulations.gov
 index. Although listed in the index, some

information is not publicly available, e.g., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in http://www.regulations.gov or in hard copy at the EPA's Region 7

Superfund Records Center, 901 N 5th Street, Kansas City, Kansas 66101,
and the Waverly City Hall, Lancashire Street, Waverly, Nebraska 68462-
1131. Region 7's Docket Facility is open from 8 a.m. to 4 p.m. by
appointment, Monday through Friday, excluding legal holidays. The EPA
Docket telephone number is<PHONE_NUMBER>. The Waverly City Hall is open
from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays,
or by appointment. The Waverly City Hall telephone number is 402-786-
2312.

FOR FURTHER INFORMATION CONTACT: Mr. Fritz Hirter, Community
Involvement Coordinator (CIC), U.S. Environmental Protection Agency,
Region 7, 901 N 5th Street, Kansas City, Kansas 66101, telephone
number: 1-800-223-0425 or<PHONE_NUMBER>; fax number:<PHONE_NUMBER>; e-
mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: In the ``Rules and Regulations'' Section of
today's Federal Register, EPA is publishing a direct final notice of
deletion of the Site without prior notice of intent to delete because
EPA views this as a noncontroversial revision and anticipates no
adverse comment. The EPA has explained our reasons for this deletion in
the preamble to the direct final deletion. If the EPA receives no
adverse comment(s) on the direct final notice of deletion, the EPA will
take no further action on this notice of intent to delete. If EPA
receives adverse comment(s), EPA will withdraw the direct final notice
of deletion and it will not take effect. The EPA will, as appropriate,
address all public comments in a subsequent final deletion notice based
on this notice of intent to delete. The EPA will not institute a second
comment period on this action. Any parties interested in commenting
must do so at this time. For additional information, see the direct
final notice of deletion which is located in the Rules section of this
Federal Register.

    Dated: September 7, 2006.
William W. Rice,
Acting Regional Administrator, Region 7.
 [FR Doc. E6-15337 Filed 9-18-06; 8:45 am]

BILLING CODE 6560-50-P