[Federal Register Volume 85, Number 239 (Friday, December 11, 2020)]
[Notices]
[Pages 80207-80211]
[FR Doc No: 2020-27202]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90583; File No. SR-CBOE-2020-112]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Adopt Temporary Rules To Extend the Time by Which Trading Permit
Holders must Complete Their Office Inspections for the Calendar Year
2020 and To Provide Temporary Remote Inspection Relief for Their Office
Inspections for Calendar Years 2020 and 2021

December 7, 2020.
    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 November 30, 2020, Cboe Exchange, Inc. (the ``Exchange'' or
``Cboe Options'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by the Exchange. The
Exchange filed the proposal as a ``non-controversial'' proposed rule
change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule
19b-4(f)(6) thereunder.\4\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    Cboe Exchange, Inc. (the ``Exchange'' or ``Cboe Options'') proposes
to adopt temporary Rules to extend the time by which Trading Permit
Holders must complete their office inspections for the calendar year
2020 and to provide temporary remote inspection relief for their office
inspections for calendar years 2020 and 2021. The text of the proposed
rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the
Exchange's website (http://www.cboe.com/AboutCBOE/CBOELegalRegulatoryHome.aspx), at the Exchange's Office of the
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    In light of the operational challenges that Trading Permit Holders
are facing due to the outbreak of the coronavirus disease (COVID-19),
the Exchange proposes to extend the time by which Trading Permit
Holders must complete their calendar year 2020 inspection obligations
under Rule 8.6(f) (Office Inspections) and Rule 9.2(d) (Annual Branch
Inspections) to March 31, 2021,\5\ and to provide Trading Permit
Holders with the option to complete their calendar year 2020 and
calendar year 2021 inspection obligations under Rules 8.16(f) and
9.2(d) remotely, without an on-site visit to the office or location.\6\
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    \5\ The proposed rule change will automatically sunset on March
31, 2021. If the Exchange seeks to provide additional temporary
relief from the rule requirement identified in this proposal beyond
March 31, 2021, it will submit a separate rule filing to further
extend the temporary extension of time.
    \6\ The proposed rule change will automatically sunset on
December 31, 2021. If the Exchange seeks to extend the duration of
the temporary proposed rule beyond December 31, 2021, it will submit
a separate rule filing to further renew the temporary relief. The
Exchange notes that SEC staff has stated in guidance that
inspections must include a physical, on-site review component. See
SEC National Examination Risk Alert, Volume I, Issue 2 (November 30,
2011); SEC Division of Market Regulation, Staff Legal Bulletin No.
17: Remote Office Supervision (March 19, 2004) (stating, in part,
that broker-dealers that conduct business through geographically
dispersed offices have not adequately discharged their supervisory
obligations where there are no on-site routine or ``for cause''
inspections of those offices).
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    The Exchange has observed the impact of the COVID-19 pandemic on
its Trading Permit Holders, investors, and the industry generally and
recognizes that Trading Permit Holders are experiencing operational
challenges with much of their personnel working from home due to stay-
at-home orders, restrictions on businesses and social activity imposed
in various states, and adherence to other social distancing guidelines
consistent with the recommendations of public health officials.\7\ In
response, like many employers across the United States, Trading Permit
Holder organizations

closed their offices to the public, transitioned their employees to
telework arrangements to comply with stay-at-home orders, and
implemented other restrictive measures in an effort to slow the spread
of COVID-19, such as curtailing or eliminating non-essential business
travel and significantly limiting or canceling in-person activities.\8\
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    \7\ See Centers for Disease Control and Prevention (``CDC''),
International Classification of Diseases, Tenth Revision, Clinical
Modification, https://www.cdc.gov/nchs/data/icd/Announcement-New-ICD-code-forcoronavirus-3-18-2020.pdf; WHO Director-General, Opening
Remarks at the Media Briefing on COVID-19 (March 11, 2020), https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarksat-the-media-briefing-on-covid-19-11-march-2020; and Centers
for Disease Control and Prevention, How to Protect Yourself & Others
(last visited November 12, 2020) https://www.cdc.gov/coronavirus/2019-ncov/prevent-gettingsick/prevention.html.
    \8\ See e.g., FINRA Regulatory Notice 20-16 (May 2020) (``Notice
20-16'') (describing practices implemented by small, mid-sized and
large firms to transition to, and supervise in, remote work
environment during the COVID-19 pandemic).
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    Exchange Rules require Trading Permit Holders \9\ to conduct branch
\10\ and non-branch office and location inspections pursuant to certain
annual cycles. Specifically, pursuant to Rule 8.16(f), each Trading
Permit Holder shall inspect every office or location of the Trading
Permit Holder at least once every three calendar years, the cycle of
which is contingent on the nature and complexity of the securities
activities for which the office or location is responsible, the volume
of business done, and the number of associated persons at each office
or location. The examination schedule and an explanation of the factors
considered in determining the frequency of the examinations in the
cycle shall be set forth in the Trading Permit Holder's written
supervisory procedures. Such inspection shall be reasonably designed to
assist in preventing and detecting violations of, and achieving
compliance with, applicable securities laws and regulations, and with
applicable Exchange rules, and each Trading Permit Holder shall retain
a written record of the dates upon which each inspection is conducted,
the participants in the inspection, and the results thereof. Pursuant
to Rule 9.2(d), each branch office that supervises one or more non-
branch locations must be inspected no less often than once each
calendar year, unless it qualifies for certain exemptions.\11\ Every
branch office, without exception, must be inspected at least once every
three calendar-years. Trading Permit Holders must maintain written
reports of such inspections.
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    \9\ The Exchange notes that the term Trading Permit Holder
includes Trading Permit Holder organizations. See Eleventh Amended
and Restated Bylaws of Cboe Exchange, Inc., Section 1.1(f).
    \10\ The Exchange notes that any location that is responsible
for supervising the activities of persons associated with a Trading
Permit Holder or TPH organization at one or more non-branch
locations of such Trading Permit Holder or TPH organization is
considered to be a branch office. See Rule 3.40(c).
    \11\ A Trading Permit Holder may demonstrate to the satisfaction
of the Exchange that because of proximity, special reporting or
supervisory practice, other arrangements may satisfy this Rule's
requirements for a particular branch office, or that, based upon the
written policies and procedures of such Trading Permit Holder
organization providing for a systematic risk-based surveillance
system, the Trading Permit Holder organization submits a proposal to
the Exchange and receives, in writing, an exemption from the
requirement in 9.2(d), pursuant to Rule 9.2(e).
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    As a result of the compelling health and welfare concerns stemming
from the COVID-19 pandemic, Trading Permit Holders are facing
potentially significant disruptions to their normal business operations
that include staff absenteeism, the increased use of remote offices or
telework arrangements, travel or transportation limitations, and
technology interruptions or slowdowns. Pandemic-related operational
changes have made it impracticable for Trading Permit Holders to
conduct the on-site inspections pursuant to Rules 8.16(f) and 9.2(d) at
many or most locations for calendar year 2020 because this compliance
function requires firm employees to travel to geographically dispersed
branch and non-branch office locations. Such travel not only has been
restricted by government orders,\12\ but also puts the health and
safety of employees at great risk of contracting and spreading COVID-
19.\13\ By mid-year, with many restrictive measures still in place, and
in some instances additional quarantine requirements imposed on
interstate travel, on-site inspections of Trading Permit Holder offices
or locations scheduled for calendar year 2020 remain pending. The acute
health and safety concerns related to COVID-19 persist, with the number
of confirmed cases of COVID-19 in the U.S. continuing to rise through
the fall of 2020.\14\ While Trading Permit Holders have continued to
supervise all offices and locations by, among other things,
implementing remote supervisory practices through novel uses of
technology as well as existing methods of supervision (e.g.,
supervisory checklists, surveillance tools, incident trackers, email
review, and trade exception reports),\15\ they are still experiencing
logistical challenges related to conducting the onsite portion of their
inspections due to continuing business and governmental restrictions
and public health concerns.\16\ As a result, the Exchange understands
that Trading Permit Holders have not yet been able to conduct on-site
inspections scheduled for calendar year 2020, and, with no certainty as
to when pandemic-related health concerns will subside and restrictions
recently re-implemented in light of the resurgence of cases during the
fall of 2020,\17\ Trading Permit Holders may have a considerable
backlog of 2020 inspections that may be difficult, if not impossible,
to overcome on or before calendar year 2020 ends. Additionally, the
Exchange recognizes that planning on-site inspections for calendar year
2021 for Trading Permit Holder branch and non-branch offices and
locations in the current environment may be impacted as well. In light
of pandemic-related developments and the approaching end of calendar
year 2020, the Exchange believes it is appropriate to provide tailored
temporary relief for Trading Permit Holders to meet their inspection
obligations under Rule 8.16(f) and Rule 9.2(d) for calendar years 2020
and 2021.
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    \12\ See e.g., City of Chicago, Emergency Travel Order (November
10, 2020) https://www.chicago.gov/city/en/sites/covid-19/home/emergency-travel-order.html (announcing certain travel restrictions
applicable to different states based on the status of the outbreak
in the states and how the data compares to the situation in
Chicago); New York Department of Health, Interim Guidance for
Quarantine Restrictions on Travelers Arriving in New York State
Following Out of State Travel (November 3, 2020).
    \13\ See CDC, Travel During the COVID-19 Pandemic (updated
October 21, 2020) https://www.cdc.gov/coronavirus/2019-ncov/travelers/travel-during-covid19.html (stating, in part, ``[t]ravel
increases your chance of getting and spreading COVID-19. Staying
home is the best way to protect yourself and others from COVID-
19'').
    \14\ See CDC, COVIDView, Key Updates for Week 44, ending October
31, 2020 (November 5, 2020) https://www.cdc.gov/coronavirus/2019-ncov/covid-data/pdf/covidview-11-06-2020.pdf (stating that
surveillance indicators tracking levels of SARS-CoV-2 virus
circulation and associated illnesses have been increasing since
September).
    \15\ See supra note 8.
    \16\ See supra note 12.
    \17\ See supra note 14.
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    Specifically, the Exchange proposes to adopt temporary language in
Rule 8.16(f), and to adopt temporary Rule 9.2(d)(4), to provide that
each Trading Permit Holder obligated to complete an office inspection
pursuant to Rule 8.16(f) and Rule 9.2(d), respectively, in calendar
year 2020 will be deemed to have satisfied such obligation if the
applicable inspection is completed on or before March 31, 2021. The
Exchange believes that this proposed temporary extension of time is
tailored to address the needs and constraints on a Trading Permit
Holder's operations during the COVID-19 pandemic, without significantly
compromising critical investor protection, as potential risks that may
arise from providing firms additional time to comply with their
inspection obligations due in calendar year 2020 are mitigated by their
ongoing supervisory obligations, off-site monitoring, and the temporary
nature of the extension. The proposed extension will provide Trading
Permit Holders with an opportunity to better manage the operational
challenges resulting from the COVID-19 pandemic and the

resources needed to fulfill these supervisory obligations during the
pandemic.
    In addition to this, the Exchange proposes to extend temporary
remote inspection relief for calendar year 2020 and 2021. In
particular, the Exchange proposes to adopt temporary Rule 9.2(d)(5),
which provides that each Trading Permit Holder obligated to conduct an
inspection of a branch office or non-branch location in calendar year
2020 and calendar year 2021 pursuant to Rule 8.16(f) \18\ and Rule
9.2(d), as applicable, may, subject to the requirements of this Rule
9.2.(d)(5), satisfy such obligation by conducting the applicable
inspection remotely, without an on-site visit to the office or
location. In accordance with Rules 8.16(f) and 9.2(d)(4), inspections
for calendar year 2020 must be completed on or before March 31, 2021.
Inspections for calendar year 2021 must be completed on or before
December 31, 2021. Notwithstanding proposed Rule 9.2(d)(5), a Trading
Permit Holder remains subject to the other requirements of Rules
8.16(f) and 9.2(d).
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    \18\ The proposed rule change adds language to Rule 8.16(f),
which provides that the temporary remote inspection relief provided
in Rule 9.2(d)(5) will apply to each Trading Permit Holder obligated
to complete an office inspection pursuant to Rule 8.16(f) in
calendar year 2020 or calendar year 2021.
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    The proposed rule change also adopts written supervisory procedures
for remote inspections in proposed Rule 9.2(d)(5)(A), which provides
that, consistent with a Trading Permit Holder's obligations under Rule
8.16(f) and Rule 9.2(d), a Trading Permit Holder that elects to conduct
each of its calendar year 2020 or calendar year 2021 inspections
remotely must amend or supplement its written supervisory procedures to
provide for remote inspections that are reasonably designed to assist
in detecting and preventing violations of and achieving compliance with
applicable securities laws and regulations, and with applicable
Exchange Rules. Reasonably designed procedures for conducting remote
inspections of offices or locations should include, among other things:
(i) A description of the methodology, including technologies permitted
by the Trading Permit Holder, that may be used to conduct remote
inspections; and (ii) the use of other risk-based systems employed
generally by the Trading Permit Holder to identify and prioritize for
review those areas that pose the greatest risk of potential violations
of applicable securities laws and regulations, and of applicable
Exchange Rules. The Exchange believes the proposed rule change is
consistent with a Trading Permit Holder's existing supervisory
obligations to establish and maintain written supervisory procedures
for branch office reviews \19\ and reviews of non-branch offices and
locations.\20\
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    \19\ See Rule 3.40(f).
    \20\ See Rule 8.16(e).
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    Proposed temporary Rule 9.2(d)(5)(B) provides that the requirement
to conduct inspections of offices and locations is one part of a
Trading Permit Holder's overall obligation to have an effective
supervisory system and, therefore, a Trading Permit Holder must
continue with its ongoing review of the activities and functions
occurring at all offices and locations, whether or not the Trading
Permit Holder conducts inspections remotely. A Trading Permit Holder's
use of a remote inspection of an office or location will be held to the
same standards for review as set forth under Rule 8.16(f) and Rule
9.2(d). Where a Trading Permit Holder's remote inspection of an office
or location identifies any indicators of irregularities or misconduct
(i.e., ``red flags''), \21\ the Trading Permit Holder may need to
impose additional supervisory procedures for that office or location or
may need to provide for more frequent monitoring or oversight of that
office or location, or both, including potentially a subsequent
physical, on-site visit on an announced or unannounced basis when the
Trading Permit Holder's operational difficulties associated with COVID-
19 abate, nationally or locally as relevant, and the challenges a
Trading Permit Holder is facing in light of the public health and
safety concerns make such on-site visits feasible using reasonable best
efforts. The temporary relief provided by this Rule 9.2(d)(5) does not
extend to a Trading Permit Holder's inspection requirements beyond
calendar year 2021 and such inspections must be conducted in compliance
with Rule 9.2(d)(1) through (3). The Exchange believes that the
proposed rule is consistent with a Trading Permit Holder's existing
supervisory obligations to maintain policies and procedures, and a
system for applying such procedures, reasonably designed to achieve
compliance with, as well as assist in preventing and detecting
violations of, applicable securities laws and regulations and Exchange
Rules.\22\
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    \21\ Red flags that suggest the increased risk or occurrence of
violations may include, among other events: customer complaints; an
unexplained increase or change in the types of investments or
trading concentration that a representative is recommending or
trading; an unexpected improvement in a representative's production,
lifestyle, or wealth; questionable or frequent transfers of cash or
securities between customer or third party accounts, or to or from
the representative; a representative that serves as a power of
attorney, trustee or in a similar capacity for a customer or has
discretionary control over a customer's account(s); representative
with disciplinary records; customer investments in one or a few
securities or class of securities that is inconsistent with firm
policies related to such investments; churning; trading that is
inconsistent with customer objectives; numerous trade corrections,
extensions, liquidations; or significant switching activity of
mutual funds or variable products held for short time periods. See
generally SEC Division of Market Regulation, Staff Legal Bulletin
17: Remote Office Supervision (March 19, 2004).
    \22\ See generally Rule 8.16; and see Rule 9.2(g)(5)(A).
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    Finally, proposed temporary Rule 9.2(d)(5)(C) provides for a
documentation requirement and specifically provides that a Trading
Permit Holder must maintain and preserve a centralized record for each
of calendar year 2020 and calendar year 2021 that separately
identifies: (i) All offices or locations that had inspections that were
conducted remotely; and (ii) any offices or locations for which the
Trading Permit Holder determined to impose additional supervisory
procedures or more frequent monitoring, as provided in Rule
9.2(d)(5)(B) above. A Trading Permit Holder's documentation of the
results of a remote inspection for an office or location must identify
any additional supervisory procedures or more frequent monitoring for
that office or location that were imposed as a result of the remote
inspection. The Exchange believes that this documentation requirement
would help readily distinguish the offices and locations that underwent
remote inspections and their attendant supervisory procedures, and
their more frequent monitoring, as applicable.
    As noted above, even in the current environment, Trading Permit
Holders have an ongoing obligation to establish and maintain a system
to supervise the activities of their associated persons that is
reasonably designed to achieve compliance with applicable securities
laws and regulations, and with applicable Exchange Rules. The proposed
amendments to Rule 8.16(f) and proposed Rule 9.2(d)(4) and (d)(5) are
not intended to lessen the supervisory obligations prescribed under the
Exchange Rules. The Exchange believes that the proposed temporary rule
changes, which address the needs and constraints on a Trading Permit
Holder's operations during the COVID-19 pandemic by extending the time
to conduct inspections for calendar year 2020 and permitting firms to
remotely inspect, subject to specified requirements described above,
their

offices and locations for calendar years 2020 and 2021, would provide
Trading Permit Holders a way to comply with Rules 8.16(f) and 9.2(d)
that would not materially diminish, and is reasonably designed to
achieve, the investor protection objectives of the inspection
requirements under these unique circumstances. The Exchange notes that
potential risks that may arise from providing Trading Permit Holders
extended time to conduct their 2020 inspections and the option to
conduct their inspections remotely are mitigated by their use of
technology to meet their supervisory obligations on an ongoing basis,
the unique circumstances under which they are operating, and the
temporary nature of the proposed rules, which would expire on March 31,
2021 and December 31, 2021, respectively.\23\
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    \23\ See supra notes 5 and 6.
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    The Exchange notes that the proposed temporary rules are
substantively identical to the temporary inspection extension and
remote relief rules recently filed by the Financial Industry Regulatory
Authority (``FINRA'').\24\ The Exchange notes too that it will continue
to monitor the situation and engage with Trading Permit Holders, other
financial regulators, and governmental authorities to determine whether
further regulatory relief or guidance related to Rules 8.16 and 9.2 may
be appropriate.
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    \24\ See FINRA Rule 3110.16; Securities and Exchange Act Release
No. 89188 (June 30, 2020), 85 FR 40713 (July 7, 2020) (SR-FINRA-
2020-019); and SR-FINRA-2020-040 (filed November 6, 2020) available
at https://www.finra.org/sites/default/files/2020-11/SR-FINRA-2020-040.pdf.
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2. Statutory Basis

    The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\25\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \26\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, to
promote just and equitable principles of trade, to foster cooperation
and coordination with persons engaged in regulating, clearing,
settling, processing information with respect to, and facilitating
transactions in securities, to remove impediments to and perfect the
mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \27\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.
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    \25\ 15 U.S.C. 78f(b).
    \26\ 15 U.S.C. 78f(b)(5).
    \27\ Id.
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    In particular, the Exchange believes that, in light of the impact
of COVID-19 on the performance of on-site office and location
inspections pursuant to Rules 8.16(f) and 9.2(d), the proposed
temporary rule changes are intended to provide Trading Permit Holders
additional time to comply with their Rule 8.16(f) and 9.2(d) inspection
obligations due in calendar year 2020 and a temporary regulatory option
to conduct inspections of offices and locations remotely for calendar
years 2020 and 2021. The proposed temporary rule changes do not relieve
firms from meeting their existing regulatory obligations to establish
and maintain a supervisory system that is reasonably designed to
achieve compliance with applicable securities laws and regulations, and
with applicable Exchange Rules, which directly serve investor
protection. In a time when faced with unique challenges resulting from
the COVID-19 pandemic, the Exchange believes that the proposed
temporary rule changes provide appropriately tailored relief that will
afford Trading Permit Holders the ability to observe the
recommendations of public health officials to provide for the health
and safety of their personnel, while continuing to serve and promote
the protection of investors and the public interest.

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

    The Exchange 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. The Exchange does not
believe the proposed temporary rule changes will impose any burden on
intramarket competition that is not necessary or appropriate in
furtherance of the Act, because the extension for inspections and the
remote inspection relief will apply equally to all Trading Permit
Holders required to conduct office and location inspections in calendar
year 2020 and 2021. The Exchange further does not believe that the
proposed temporary rule changes will impose any burden on intermarket
competition because it relates only to the extension of time for 2020
inspections and the manner in which inspections for 2020 and 2021 may
be conducted. Additionally, and as stated above, FINRA has recently
submitted filings to adopt substantively identical temporary inspection
relief rules for its members.

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

    The Exchange neither solicited nor received comments on the
proposed rule change.

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

    Because the foregoing proposed rule change does not:
    A. Significantly affect the protection of investors or the public
interest;
    B. impose any significant burden on competition; and
    C. become operative for 30 days from the date on which it was
filed, or such shorter time as the Commission may designate, it has
become effective pursuant to Section 19(b)(3)(A) of the Act \28\ and
Rule 19b-4(f)(6) \29\ thereunder. At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission will institute proceedings to determine whether the proposed
rule change should be approved or disapproved.
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    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 17 CFR 240.19b-4(f)(6).
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IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CBOE-2020-112 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CBOE-2020-112. This file

number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change; 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-CBOE-2020-112 and should be
submitted on or before January 4, 2021.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-27202 Filed 12-10-20; 8:45 am]
BILLING CODE 8011-01-P


Summary of Late Comments for Methyl Bromide Critical Use Exemption Rule TABLE OF CONTENTS 1. Summary of Comments Relating to CRITICAL NEED ............................................... 3 1. a. Total amount for critical uses can be reduced through use of sulfuryl fluoride 3 1. b. Total amount for critical uses can be reduced through use of other chemicals 3 1. c. No need for exemptions ................................................................................... 5 1. d. Total amount is insufficient to meet critical use demand ................................. 6 1. e. Total amount should include amounts pending before Parties ......................... 8 2. Summary of Comments Relating to AMOUNT FROM STOCKS ................................. 8 2. a. Legal basis to control stocks ........................................................................... 8 2. b. Factors in the algorithm ................................................................................. 9 2. c. Disclosure of data ( CBI) ............................................................................... 10 3. Summary of Comments Relating to ACCESS TO STOCKS ....................................... 13 3. a. Who should get access to stocks .................................................................... 13 3. b. Legal basis ................................................................................................... 15 4. Summary of Comments Relating to CAP ON CRITICAL USE METHYL BROMIDE 15 5. Summary of Comments Relating to CRITICAL USE ALLOWANCE ALLOCATIONS 17 5. a. Baseline for critical use allowance distribution ............................................. 17 5. b. Frequency of critical use allowance distribution ......................................... 177 6. Summary of Comments Relating to CRITICAL STOCK ALLOWANCE ALLOCATIONS ......................................................................................................... 177 7. Summary of Comments Relating to TRADING ALLOWANCES ............................. 177 7. a. Trading within allowance type .................................................................... 177 7. b. Trading between allowances ......................................................................... 18 8. Summary of Comments Relating to ACQUIRING CRITICAL USE METHYL BROMIDE ................................................................................................................ 188 9. Summary of Comments Relating to WHO IS AN APPROVED CRITICAL USER ...... 19 9. a. Uses .............................................................................................................. 19 9. b. Conditions .................................................................................................... 19 9. c. New market entrants ..................................................................................... 20 10. Summary of Comments Relating to REPORTING AND RECORDKEEPING REQUIREMENTS ........................................................................................................ 21 10. a. Reporting .................................................................................................. 21 10. b. Record Keeping ........................................................................................ 21 10. c. Treatment of Unused Critical Use Methyl Bromide ..................................... 211 11. Summary of Comments Relating to ENFORCEMENT PROVISIONS ................... 222 12. Summary of Comments Relating to DISTRIBUTION OF PERMITS TO APPROVED CRITICAL USERS ...................................................................................................... 233 12. a. Allocation of Allowances to Producers/ Importers Versus End Users ....... 233 2 12. b. Historic Baseline Approach .................................................................... 233 12. c. Auctions .................................................................................................. 233 12. d. Redeemable System ................................................................................... 24 13. Summary of Comments Relating to EPA TREATMENT OF BASELINE AND INVENTORY DATA ..................................................................................................... 24 14. Summary of Comments Relating to ECONOMICS AND THE REGULATORY IMPACT STATEMENT ................................................................................................ 24 15. Summary of Comments Relating to BURDEN ASSOCIATED WITH THIS REGULATORY SYSTEM ............................................................................................ 244 16. Summary of Comments Relating to NEED FOR AN EXPORT MECHANISM ...... 244 17. Summary of Comments Relating to the RULEMAKING AND REGULATORY PROCESS ................................................................................................................ 244 3 1. Summary of Comments Relating to CRITICAL NEED 1. a. Total amount for critical uses can be reduced through use of sulfuryl fluoride   No late comments were received in relation to " total amount for critical uses can be reduced through use of sulfuryl fluoride."

1. b. Total amount for critical uses can be reduced through use of other chemicals Commenter Organization Document ID Number David Mueller Fumigation Service & Supply, Inc. 0265 Mass letter/ email campaign Sponsored by Natural Resources Defense Council ( NRDC) 0143 ( x 167)

Mass letter/ email campaign Sponsored by Natural Resources Defense Council ( NRDC) 0164 ( x 9)

  Two sets of late comments assert that the proposed cap on critical use methyl bromide for the U. S. for 2005 of 8,942 metric tons is too high [ 0265, 0268].

  Two sets of late comments argue that the proposed cap is too high on the grounds that that the amount of methyl bromide to be set aside in 2005 for critical uses is larger than the total quantity of methyl bromide used in 2003 [ 0143, 0164]

  A late commenter believes that all flour mills and food processing structures, specifically, should not qualify for methyl bromide critical use exemptions [ 0265].   This commenter asserts that " all flour mills and food processing structures in the United States have technical and economic alternatives to methyl bromide". As an example, it is stated that " our group of fumigators have fumigated over 100 flour mills and food factories with alternatives to methyl bromide," where " about 130 MT was replaced during these alternative fumigations" and " each facility started up the next day insect free and free from ozone depleting substances." Further, it is the opinion of this commenter that to grant critical use exemptions for 2005 to those belonging to this sector is " unfair for those of us that have worked hard to come up with viable technical and economical alternatives to methyl bromide for structures and durables" and " will be a disincentive to others to research and develop alternatives to this serious ozone depleting substance." [ 0265]   This commenter also notes that methyl bromide users, in general, " have had over ten years to prepare for this phase out." [ 0265] 4   Further, each letter/ email criticizes EPA for " allowing big agribusinesses to use more methyl bromide in 2005 than they actually used in 2003." [ 0143 x 167, 0164 x 9]

Response # 111: In the U. S. nomination, the EPA took great pains to describe the specific circumstances that make alternatives, which may be otherwise technically and economically feasible, not feasible for a certain portion of total domestic use. The U. S. addressed the alternatives described by the commenter for four mills and food processing in the U. S. nomination. The commenter did provide additional technical data to indicate that these alternatives could replace the use of methyl bromide over the portions of the use that EPA determined to be critical. Please see response # 2 in the on time comment document for a more detailed explanation of the technical and economic determinations for certain uses. The commenter implicitly argues that exempted critical use should be lower than the amounts of methyl bromide used in 2003. EPA does not agree that critical use must be lower than use in some year prior to the phaseout. There could be technical reasons why use in 2005 or a future year could be higher than use in 2003: for example a pest outbreak, increasing market demand etc. The U. S. made a policy decision not to nominate or exempt methyl bromide to account for growth in a commodity sector. EPA understands that other countries did request methyl bromide quantities to accommodate growth in an industry. Although the U. S. as a policy matter elected to exclude growth in methyl bromide use after the phaseout, we do not agree that the U. S. is required to do so. That being said, in today's rule, EPA is not making more methyl bromide available in 2005 than was used in 2003 according to the best available data. EPA believes that 7,764 ( 31% of baseline) is one estimate of use in 2003 that bounds the lower part of the range of where critical use may lie for the year 2005. Use may actually be higher than 31% of baseline and some estimates of use would indicate that the amounts used are closer to 40% of baseline or higher as described in the following paragraph. The 31% estimate is a " top down" estimate of use looking at the change in known inventories combined with production, import, and export data. This use figure may not capture all use in the U. S. because we did not have complete information on the size and drawdown on inventories in 2003. As stated in the letter to Senator Jeffords, the information we did have on inventories was collected from manufacturing facilities, importers and major distributors. It did not reflect any inventories that might exist on farm or that might be held by pesticide reformulators or distributors. Nor did it reflect any amounts that might be held by individual end users. Other estimates of use employ a " bottom up" approach. EPA consulted a number of pesticide use databases and developed estimates of use that were higher than 31%. Data sources consulted include the National Agricultural Statistical Service ( NASS) of the U. S. Department of Agriculture, the State of California Department of Pesticide Regulation, and proprietary sources available to the EPA. Estimates using these data sources put U. S. use in 2002, the most recent year of data available, between 35 and 50% of the 1991 baseline. Although the 2002 data does not tell us what use was like in 2003, it is the best data available to the Agency that 5 tracks actual fumigations. An important " bottom up" estimate of critical use was developed by the cross Agency team that prepared a detailed, sector by sector analysis of the projected need for methyl bromide in the U. S. in 2005. The results of that team's analysis suggested that in 2005, the U. S. would need to request a CUE for a level equivalent to 39% of the 1991 baseline. As discussed in the preamble, during the international review process this level was adjusted to account for various factors, including double counting for example. Taking into account these adjustments, the 35% critical use level approved by the Parties largely confirmed the result of the cross Agency team's bottom up analysis. EPA anticipates that the use data reported to the Agency under the exemption framework described in today's rule will help the U. S. government develop a more complete picture of actual use in critical categories. To the extent that there are new alternatives available, EPA took them into account in preparing the nomination. EPA did not receive any additional information in response to the request for comments that would warrant further adjustments.

1. c. No need for exemptions Commenter Organization Document ID Number Mass letter/ email campaign Sponsored by Natural Resources Defense Council ( NRDC) 0143 ( x 167)

Mass letter/ email campaign Sponsored by Natural Resources Defense Council ( NRDC) 0164 ( x 9)

Caire Lane N/ A 0278 Will Alexander N/ A 0285 Connie Metcalf N/ A 0286   One hundred and seventy six comments, received as part of two mass letter/ email campaigns, urge EPA to not allow methyl bromide critical use exemptions [ 0143 x 167, 0164 x 9].   Each letter/ email notes that methyl bromide " depletes the ozone layer, exposing millions of Americans to skin cancer and a host of other diseases" and " also causes prostate cancer in workers who apply pesticides and others directly exposed to it." [ 0143 x 167, 0164 x 9]

Response # 112: The CAA allows the Agency to create an exemption for critical uses to the extent consistent with the Protocol. The Protocol authorizes an exemption to the extent decided by the Parties. In Decision Ex. I/ 3, the Parties decided to permit a limited exemption for specified uses nominated by the United States. EPA, in conjunction with other U. S. government entities, spent substantial time reviewing applications for critical use exemptions and preparing a nomination based on the lack of technically and economically feasible alternatives for the nominated uses. As discussed below, EPA does not have new information that would change the basis for the nomination. Although the Act does not require EPA to establish an exemption, EPA believes that the lack of suitable alternatives for the uses listed as 6 approved critical uses in today's rulemaking warrants the establishment of an exemption. The history of the ozone protection programs has been the transition of industries away from production, import, and use of ozone depleting chemicals to alternatives. In some instances a successful transition was possible within the allotted time. In other instances, additional time has been required to allow for the development and market penetration of alternatives. In fact, more than ten years after the phaseout of chlorofluorocarbons ( CFCs), the U. S. government is still exempting the production of CFCs for essential uses in metered dose inhalers. In the instance of critical uses where suitable alternatives are not yet available for all uses, EPA believes it would be inconsistent with the history and the goals of the ozone protection program to not allow for a safety valve in accordance with the provisions of both international and domestic law. EPA anticipates that the use data reported to the Agency under the exemption framework described in today's rule will help the U. S. government develop a more complete picture of actual use in critical categories. To the extent that there are new alternatives available, EPA took them into account in preparing the nomination. EPA did not receive any additional information in response to the request for comments that would warrant further adjustments. EPA appreciates the commenters concern regarding farm worker exposure to methyl bromide. EPA will address farm worker exposure issues through the reregistration of methyl bromide under the Federal Insecticide, Fungicide, and Rodenticide Act where the Agency is specifically charged with examining human health concerns such as by stander and worker exposure to pesticides, not under the Title VI of the Clean Air Act which is designed to address depletion of stratospheric ozone and resulting exposures to UV radiation.

  Three other late commenters are also against EPA granting critical use exemptions, citing reasons similar to those given in the mass letter/ email campaigns [ 0278, 0285, 0286].   One of these commenters is also of the opinion that EPA should destroy existing stocks [ 0278].

Response # 113: Neither the Clean Air Act nor the Montreal Protocol require destruction of stocks of methyl bromide as a condition of the critical use exemption.

1. d. Total amount is insufficient to meet critical use demand Commenter Organization Document ID Number Billy W. Thomas Georgia Vegetable Co., Inc. 0258 Indiana Forest Nursery Grower N/ A 0262 Joseph M. Pantaleo Florida Golf Course Superintendents Association 0263 Wanda Hamilton Tyler Hamilton Growers 0264 Alexander J. Ott California Grape & Tree Fruit League 0271 Anne Giesecke & Bob Garfield Food Industry Environmental 0283 7 Council ( FIEC)

  One late commenter expresses the concern that the proposed reduction of 53,329 kilograms for 2005 represents more than 10 percent of the total quantity of methyl bromide approved for the Mills and Processors sector, and that it will not be technically or economically feasible in 2005 for alternatives, specifically sulfuryl fluoride, to replace 10 percent of the methyl bromide usage [ 0283].

  While not specifically stating that the amount of methyl bromide for critical uses is insufficient, five late commenters express a concern that there is a lack of effective, economically viable alternatives [ 0258, 0262, 0263, 0264, 0271].   One of these commenters, representing the golf industry in Florida, states that the " alternatives do not offer effective control of many of the pests that affect production and planting of certified sod for use on golf courses" and that " this will require us to make substantially more topical applications of insecticides, fungicides, nematicide and herbicides to grow quality turfgrass, thus increasing the chemical load on the environment." [ 0263] Further, this representative asserts that " since cost effective and safe alternatives have not been developed as promised to offset the loss of Methyl Bromide, it is incumbent on the EPA and our legislators to see that U. S. economic and environmental interests are protected and not subject to unfair global competitive tactics." [ 0263]   Three sets of comments state that " nothing has been found to take the place of methyl bromide," [ 0258, 0262, 0264] where two of these commenters continue with the statement that, for fumigation, " the alternatives that have been tried have been inconsistent, have longer waiting periods, are more costly, or have buffer zone problems." [ 0258, 0264] One of these commenters also claims that " our industry has spent millions on research, not USDA or EPA dollars but our dollars, over the past decade." [ 0262]   Finally, the last of these commenters, a trade association that represents growers of table grapes and fresh deciduous tree fruit in California, notes that while the industry continues to develop possible alternatives to methyl bromide, " at this point in time, there seems to be no ` silver bullet' to replace this material." [ 0271]

Response # 114: EPA does not have flexibility to adjust the total amount of exempted methyl bromide above the maximum cap of 30% of baseline for new production and 35% for total use. In today's rule, EPA is making the maximum 30% available for exempted production and 35% for exempted use. Therefore EPA cannot issue additional CUAs, or raise the total number of CUAs plus CSAs issued above 35% of baseline, absent additional authorizations from the Parties. However, EPA is not adopting a sector by sector approach and thus is not imposing a cap on the Mills and Process sector. The circumstances described by the commenters regarding the lack of technically and economically feasible alternatives in certain uses is the reason why EPA is establishing a critical use exemption for 2005. 8 1. e. Total amount should include amounts pending before Parties   No late comments were received in relation to " total amount should include amounts pending before Parties."

2. Summary of Comments Relating to AMOUNT FROM STOCKS 2. a. Legal basis to control stocks Commenter Organization Document ID Number W. Caffey Norman Patton Boggs LLP 0267 Alexander J. Ott California Grape & Tree Fruit League 0271   One late commenter argues that EPA is legally required to take into account existing stocks in regulating critical methyl bromide use [ 0267].   This commenter expresses the concern that " the allocation regulations adopted by EPA be fully consistent with the requirements of the Clean Air Act and the Protocol, including decisions of the Parties to the Protocol." [ 0267] It is then noted by the commenter that " in particular, Decision IX/ 6( b) provides that EPA may allow production and consumption of methyl bromide for critical uses only if `[ m] ethyl bromide is not available in sufficient quantity and quality from existing stocks of banked or recycled methyl bromide also bearing in the mind the developing countries' need for methyl bromide.'" In the opinion of the commenter, " this decision indicates that EPA may not authorize production of methyl bromide for critical uses to the extent that EPA is able to determine that methyl bromide is available from existing stocks." [ 0267]   This commenter also urges EPA to reject that the option of simply determining the amount of methyl bromide available from existing stocks in 2005 as the difference between the limit on methyl bromide authorized for critical uses ( 8,842 metric tons) and that authorized for new production and import ( 7,659 metric tons) on the basis that " this alternative approach is facially inconsistent with the Protocol and relevant decisions thereunder." [ 0267]

Response # 115: EPA's interpretation of its obligations with respect to the Decisions of the Parties is set forth in the preamble to the Notice of Proposed Rulemaking and in sections two and three of this document. EPA concludes that the appropriate level of stocks utilization is set forth in Decision Ex. I/ 3( 1), which establishes a critical use level of 35% but permits production and consumption of only 30%. Paragraph ( 1) of Decision Ex. I/ 3, read in conjunction with paragraph ( 2) of the same Decision, specifies the amount of the critical use level for 2005 that should be met from stocks. Paragraph ( 1) establishes a critical use level of 35% of baseline but permits production and consumption of only 30%. Paragraph ( 2) explains that the 9 difference is to be made up by using available stocks. In other words, the amount of the United States' 2005 critical use level that should be met from stocks is 1,283,214 kilograms, i. e., an amount equivalent to 5% of baseline.

  One late commenter asserts that it would be wrong of EPA to restrict the sale and use of stocks that were produced or imported in accordance with the methyl bromide phase out guidelines of the Montreal Protocol [ 0271].

Response # 116: In today's final rule, EPA is imposing narrowly tailored use restrictions as a condition of obtaining new production and import. EPA believes that section 604( d)( 6) mandates this result. In section 604( d)( 6), Congress provided EPA authority to exempt production and import of methyl bromide for critical uses, but only " to the extent consistent with the Protocol." The use restrictions in today's final rule are necessary to ensure that total usage for critical uses does not exceed the limit agreed to by the Parties in implementing the critical use provision in Article 2H of the Protocol. The relationship between sections 604( d)( 6) and 614( b) of the CAA and the Protocol and its Decisions is discussed in detail in the NPRM and in the background section of the preamble.

2. b. Factors in the algorithm Commenter Organization Document ID Number W. Caffey Norman Patton Boggs LLP 0267   Specific comments on a number of the algorithm factors are also made [ 0267].   The commenter believes that the B, E1 and E2 factors are appropriate [ 0267].   This commenter does not agree with the inclusion of a C ( catastrophic reserve) factor on the grounds that it seems unrealistic that a three month supply for a catastrophic reserve is needed and that Decision IX/ 6 makes no provision for such a catastrophic reserve [ 0267].   This commenter also questions the inclusion of an N ( stocks to be set aside for non critical uses) factor. It is also noted by this commenter that " the Protocol and decisions thereunder make no provision for amounts for transition management in non critical use categories in 2005." At the same time, however, the commenter notes that " this variable seems appropriate if there is a legal basis for its inclusion." [ 0267]   Finally, the commenter makes the observation that " if D is to be included in the equation for an estimated drawdown of stocks in 2004, it should only be done on the basis of year end stocks information that EPA requires to be submitted." [ 0267]

Response # 117: EPA is not implementing the available stockpile methodology in today's final rule and therefore is not responding to comments on the details of the 10 methodology described in the proposal. Should EPA utilize this methodology in future, EPA will consider these comments at that time.

2. c. Disclosure of data ( CBI)

Commenter Organization Document ID Number Mass letter/ email campaign Sponsored by Natural Resources Defense Council ( NRDC) 0143 ( x 167)

Mass letter/ email campaign Sponsored by Natural Resources Defense Council ( NRDC) 0164 ( x 9)

W. Caffey Norman Patton Boggs LLP 0267 Connie Metcalf N/ A 0286   One hundred and seventy six comments, received as part of two mass letter/ email campaigns, question why EPA is " helping the big chemical companies keep their methyl bromide stockpiles secret?" [ 0143 x 167, 0164 x 9], while one other late commenter also expresses concern about " the secret storage places that big chemical companies are allowed." [ 0286]

  One late commenter asserts that " no production should be authorized until EPA obtains and makes available public information showing that methyl bromide is not available in sufficient quantity and quality from existing stocks." [ 0267]   This commenter does note however that " the proposal makes a good first step in this direction by requiring that ` an entity that does not submit information to EPA regarding stocks of methyl bromide they hold for sale or transfer to another entity as of August 25, 2004 will not receive critical stock allowances ( CSAs) in the allocation made in the final rule." The commenter suggests that this requirement be expanded so that submission of year end stocks information is also required. [ 0267]

  On a similar note, this late commenter states that " individual company stocks information should not be considered confidential business information ( CBI) and CSAs should not be confidential." [ 0267]   This commenter believes that it is important for EPA to realize that " maintaining the confidentiality of stockpile information impedes both the public's ability to understand what EPA proposed to do and the transparency of EPA's final determination." Further, the commenter makes the case that EPA's concern, which is that publishing the aggregate stockpile amount could allow the small number of producers, importers and distributors to calculate the amounts claimed as CBI by their competitors, will not apply once EPA receives information on stockpiles from a larger number of respondents. [ 0267]

Response # 118: EPA is following its own regulations regarding responses to requests for disclosure of information under the Freedom of Information Act and 11 the treatment of information claimed as confidential. These regulations appear at 40 CFR § § 2.100 2.311. EPA received two Freedom of Information Act ( FOIA) requests from one of the commenters. One requests concerned data on use of methyl bromide (" use" FOIA request) and the other concerned data on individual company and aggregate holdings of pre phaseout inventories of methyl bromide (" stocks" FOIA request). In addition, EPA received an additional FOIA request from an entity that did not provide comment on the rulemaking on EPA estimates of use of methyl bromide and the individual and aggregate holdings of stocks (" EIA" FOIA). EPA initially denied the " stocks" FOIA request pending a confidentiality determination. EPA determined that the individual stocks information was confidential but the aggregate was not. Under EPA regulations, EPA was to disclose the information determined not to be confidential unless the companies that had submitted the information initiated an action in federal court to obtain judicial review of the determination. Two of the companies in question availed themselves of this opportunity. Therefore, EPA did not immediately release the aggregate stocks information. Whether EPA ultimately releases that information will depend on the outcome of those actions. Because today's final rule does not rely on the available stocks methodology described in the proposal for purposes of calculating the amount of CUE methyl bromide to come from stocks and the amount to come from new production, clearly EPA is not required to make public any additional information regarding the basis for such an analysis. EPA is not addressing at this time the hypothetical question of whether, if EPA were to rely on an analysis of available stocks for those purposes, EPA would need to allow comment on the individual or aggregate stocks data. EPA is relying on the individual and aggregate stocks data for only one aspect of today's final rule, namely the pro rata distribution of CSAs. The rule states the total amount of CSAs for 2005 and the companies to which EPA is allocating CSAs but not the amount allocated to each company. This is because EPA has determined that the individual holdings of stocks of methyl bromide are confidential business information. The amount of CSAs allocated to each company could be used to calculate the individual stock holdings if information on aggregate stock holdings were released. As discussed above, EPA has determined that the aggregate stock information is not confidential business information but is currently withholding that information due to the filing of complaints seeking to enjoin the Agency from its release. Because release could occur depending on the outcome of that litigation, EPA is not listing the number of CSAs distributed to each entity. Concurrent with today's rule, EPA is sending letters to each entity to inform them of the number of critical stock allowances EPA has issued them. In addition, EPA is placing a document listing the allocations and distribution basis of critical stock allowances for each entity in the confidential portion of the docket. EPA does not believe that commenters needed to know each company's absolute or relative share of total inventory in order to file meaningful comments on the CSA aspects of this rule, such as the total amount of CSAs to be allocated or the basis by which the CSAs would be distributed. The NPRM discussed distribution of CSAs on the basis of pro rata share of total inventory and stated that a possible approach was to 12 conclude that the amount of CUE material available from stocks was equal to the difference between the use cap and the production cap. 69 FR 52375, 52377. Therefore, there was adequate notice and opportunity to comment on these points. Section 114( c) of the CAA states that emission data may not be kept confidential. ( 42 U. S. C. § 7414( c)). EPA regulations define emission data as: ( A) Information necessary to determine the identity, amount, frequency, concentration, or other characteristics ... of any emission which has been emitted by the source; ( B) Information necessary to determine the identity, amount, frequency, concentration, or other characteristics ... of the emissions, which under an applicable standard or limitation, the source was authorized to emit. . . and ( C) A general description of the location and/ or nature of the source to the extent necessary to identify the source and distinguish it from other sources .... ( 40 C. F. R. § 2.301( a)( 2)( I).) EPA regulations further state as follows: " Emission data, standards or limitations, and any other information provided under section 114 or 208 of the Act which is determined under this subpart not to be entitled to confidential treatment, shall be available to the public notwithstanding any other provision of this part." ( 40 C. F. R. § 2.301( f)) EPA does not consider either the individual or the aggregate stocks data to be emission data under Section 114( c) of the Clean Air Act. The five companies that submitted the data to EPA are producers, importers, or distributors of methyl bromide. They do not release methyl bromide into the atmosphere and thus are not themselves the " sources" of any past or future emissions. Thus, the stocks data says nothing about what those companies " emitted" or were " authorized to emit." Any future emissions will come from the end users and not from the five companies. Furthermore, the amount in stockpile does not indicate the amount that will be drawn down from the stockpile for use during a control period. Therefore, it is impossible to determine from this information the amount of methyl bromide that will be emitted during any specified period. EPA issued initial responses to the " use" FOIA request on June 18, 2004 and to the " EIA" FOIA request on September 29,2004. In those responses, EPA noted that it had withheld documents " determined to be exempt from mandatory disclosure by virtue of 5 U. S. C. ( b) ( 4) ( confidential business information)." Such documents included " All proprietary use data and/ or databases." EPA believes that the U. S. nomination and responses to MBTOC contained sufficient information to allow interested members of the public to file comments on the basis for the nomination and today's action. EPA notes that the analysis of critical need does not rely exclusively on proprietary data and that the analysis itself is public. EPA relied on the proprietary data sets, among others, to verify the estimated use data provided to the Agency by applicants. EPA conducted an analysis of the " critical need" for methyl bromide that examined factors such as the percentage of total production that exhibits a certain critical condition or the dosage rates used in fumigations. This information is contained in the numerical analysis ( referred to as the " 5 Way Analysis") and/ or the Bromide Usage Numerical Index 13 ( BUNI), available on the docket as part of the nomination of critical uses and the responses to MBTOC. In instances where EPA relied on a commercial database or other such source of data, a citation is typically provided. In instances where EPA relied upon expert judgment, no citation is provided. EIA has filed an administrative appeal of EPA's partial denial of its FOIA request. That appeal is currently pending. EPA is committed to following the process set forth in its regulations for addressing the EIA request and pending appeal. At this time, EPA has not determined whether the data in question is " emission data" for purposes of CAA section 114. As stated above, EPA believes that sufficient information was available to the public on the date of proposal to allow for meaningful comment. Section 114( c) of the CAA allows EPA to disclose information otherwise entitled to confidential treatment " when relevant in any proceeding" under the CAA. However, such action is discretionary, as evidenced by the use of the word " may" in section 114( c) and in the implementing regulations at 40 CFR 2.301( g)( 1 2). Any disclosure of information under this authority would be governed by the process described at 40 CFR 2.301( g)( 1 2), which includes notification to the affected business, a determination of relevancy and a determination that the disclosure would be in the public interest. EPA does not believe there is sufficient cause to set that process in motion at this time. In regards to reporting stocks data, EPA is requiring entities to report on the amounts of unused critical use methyl bromide. The preamble to the final rule states " on an annual basis, producers, importers, distributors, and third party applicators are required to report to EPA  the amount of critical use methyl bromide that has not been sold to an approved critical user as of the end of the control period that the reporting entity owns [ and] the amount of critical use methyl bromide that has not been sold to an approved critical user that the reporting entity is holding on behalf of another entity along with the name of the entity who owns the material."

3. Summary of Comments Relating to ACCESS TO STOCKS 3. a. Who should get access to stocks Commenter Organization Document ID Number Billy W. Thomas Georgia Vegetable Co., Inc. 0258 Indiana Forest Nursery Grower N/ A 0262 Wanda Hamilton Tyler Hamilton Growers 0264 Alexander J. Ott California Grape & Tree Fruit League 0271 Anne Giesecke & Bob Garfield Food Industry Environmental Council ( FIEC) 0283   Five late commenters make specific remarks regarding who should get access to existing stocks of methyl bromide [ 0258, 0262, 0264, 0271, 0283]. 14   Four of these commenters believe that existing stocks should be made freely available to both critical and non critical users [ 0258, 0262, 0264, 0283].   One of these commenters is only supportive of critical users being granted access to existing stocks [ 0271].

  Four of these late commenters support access to existing stocks, whether this be by both critical and non critical users or only critical users, for one or more of the reasons given below [ 0258, 0262, 0264, 0271].   All four of these commenters argue that access to existing stocks is needed if users are to be able to smoothly and successfully reduce their use of methyl bromide and/ or switch to alternatives [ 0258, 0262, 0264, 0271].   Three sets of comments assert that access to existing stocks is needed to protect against higher prices for methyl bromide [ 0258, 0262, 0264].   Three of these commenters are against restricting access to existing stocks on the basis that it penalizes the many users who, believing that there would be full and unrestricted use of stockpiles, took steps to reduce methyl bromide use [ 0258, 0262, 0264]. These commenters state " it is unfair to restrict the use of these stocks that were banked through our good stewardship." [ 0258, 0262, 0264]

Response # 119: Those entities that put in time and money to apply for an exemption and qualify as approved critical users have access to new production of methyl bromide not available for any other uses. Thus, approved critical users are rewarded for their efforts. The reasons for restricting the amount of stocks that can be sold for critical uses are discussed further under " legal basis" in the on time comment document. Those who chose not to participate in the CUE process do not obtain new production and thus are not " rewarded" for their inaction. Decision Ex I/ 3( 3) does not require that individual Parties prohibit use of stocks by users whose uses fall outside the categories of agreed critical uses. One, low volume users or users in the midst of a transition may have been relying on the availability of stocks as they ease into alternatives and therefore decided not to apply for an exemption. Two, as a matter of policy use of stocks will cushion near term transition and as stocks are drawn down will allow a slow but steady price increase thus facilitating movement away from the ozone depleting chemicals, an environmentally positive outcome. EPA appreciates that there may be users who are against restricting access to existing stocks on the basis that it penalizes those users who minimized their use of methyl bromide during the phasedown believing that there would be full and unrestricted use of stockpiles in the future. EPA would point out however that Decision IX/ 6 requires, as a condition for an exemption, that users minimize use and emissions of methyl bromide. In addition, today's final rule restricts access to stocks for critical uses. Approved critical users may obtain newly produced methyl bromide for such uses. As a matter of policy use of stocks will cushion near term transition and as stocks are drawn down will allow a slow but steady price increase 15 thus facilitating movement away from the ozone depleting chemicals, an environmentally positive outcome.

3. b. Legal basis   No late comments were received in relation to " legal basis."

4. Summary of Comments Relating to CAP ON CRITICAL USE METHYL BROMIDE Commenter Organization Document ID Number Billy W. Thomas Georgia Vegetable Co., Inc. 0258 Indiana Forest Nursery Grower N/ A 0262 Joseph M. Pantaleo Florida Golf Course Superintendents Association 0263 Wanda Hamilton Tyler Hamilton Growers 0264 David Mueller Fumigation Service & Supply, Inc. 0265 Alexander J. Ott California Grape & Tree Fruit League 0271 Anne Giesecke & Bob Garfield Food Industry Environmental Council ( FIEC) 0283   Six sets of late comments make reference to the type of allocation system that should be utilized [ 0258, 0262, 0263, 0264, 0265, 0283].   Four commenters express a preference for the " lump sum" or " universal" allocation method [ 0258, 0262, 0263, 0264].   The " sector specific" approach is the allocation method preferred by one late commenter [ 0265].   In one set of comments, the preferred allocation method is dependent on the availability of existing stocks. This commenter states that if existing stocks are fully available to whomever needs them, including CUE holders, " without reference to a cap other than the production cap, a national or lump sum allocation system would be appropriate." On the other hand, " if the restrictions on access to existing stocks are applied to CUE holders, then the Agency should allocate CUE amounts on a sector by sector basis." [ 0283]   One commenter does not specify a preferred allocation method but rather requests that EPA adopts an allocation system that is " simple and straightforward allowing growers to obtain the necessary material for their critical need." [ 0271] This commenter also notes that " with the phase out of methyl bromide less than three months away, growers need a system that is flexible; especially since the CUE program is a new process for the grower." [ 0271] In addition to this, one other commenter notes that the allocation system needs to be " fair, grounded in science and defensible." [ 0283] 16   The supporting arguments of the late commenter in favor of the " sector specific" allocation method are given below.   This commenter states that " the issue is that the Montreal Protocol is designed to phase out all ozone depleting substances. We believe that the CUNs were made for specific companies at specific locations and those CUNs are not poker chips to pass around the table to use by anyone. We support the use of the CUNs on the specific sites in the appropriate sectors." [ 0271]   Further this commenter adds that " if strawberry growers phase out earlier than flour millers it is not right to move those allocations to another sector. There is no incentive to phase out if this is done." [ 0271]

Response # 120: Noting that Decision Ex I/ 3 ( 4) states that Parties " should endeavor" to allocate " as listed in annex II A," EPA examined our ability to implement a sector specific system. However, there are several practical impediments to implementing such a system. EPA does not have precise data on use of methyl bromide because the current regulations on methyl bromide require reporting of production, imports, and exports of methyl bromide, not use. The more specific the categories for which EPA is estimating use, the less precise the estimate becomes. Therefore, EPA is reluctant to create sector or applicant specific limits because of the inherent uncertainty of the data at that detailed level. With the establishment of the critical use exemption, EPA will begin to track sector level use data and therefore the concern about data viability should diminish over time. Another limitation to the sector or applicant specific approach is the upstream allowance allocation system itself where EPA issues allowances to producers and importers and not end users. Using an upstream allowance allocation system as proposed, EPA would be unable to adjust amounts of methyl bromide from one sector to another after the allowance was expended. This artifact of the allocation framework would deny the marketplace any flexibility to meet unforeseen demand in a particular use. For example, under a sector specific system, if a pest outbreak were to occur in the peppers sector no additional material could be made available to peppers even if there were an unanticipated surplus in a different sector. For these reasons, EPA believes it is not practicable to implement a sector specific system at this time. By virtue of this rulemaking process, EPA has made the endeavor to allocate quantities of methyl bromide in a manner consistent with Annex IIA of the Report to the First Extraordinary Meeting of the Parties. Because of the practical and administrative difficulties described above, however, EPA has arrived at an allocation system that relies at least partly on the market to allocate quantities on a sectoral basis. EPA anticipates, based on historical use patterns and the research undertaken pursuant to submitting the U. S. nomination, that usage patterns will generally reflect the sectoral quantities found in Annex IIA. The Agency believes, and has received comment to that effect, that the preplant and post harvest markets operate as separate markets under the phaseout, as evidenced by the different prices for methyl bromide in the two markets, for several 17 reasons. The timing and cycles of fumigations for the two sectors are different as well. Pre plant fumigations typically occur once a year about a month before planting the first crop whereas fumigations for post harvest uses occur routinely throughout the year to control ongoing insect pressures. The standard product formulations for pre plant and post harvest uses substantially differ. In the preplant uses the formulations of methyl bromide contain substantially more chloropicrin, as much as 50%. Lastly, the post harvest sector has more purchasing power than the pre plant sector and is therefore willing to pay more for methyl bromide. Post harvest uses rely on nearly pure methyl bromide. For all of these reasons, EPA believes that these two use categories already function as separate markets and therefore the hybrid option would not result in substantial regulatory burden but would achieve a careful balance between flexibility and greater assurance. In today's rulemaking, EPA is establishing two caps on new critical production/ import: one cap for pre plant soil uses and a second cap for post harvest and structural uses. The portion of the critical use methyl bromide supplies obtained from available stocks however will have a universal cap as proposed. EPA did not receive any adverse comment on the proposal to make the quantities from stocks available in a universal fashion.

5. Summary of Comments Relating to CRITICAL USE ALLOWANCE ALLOCATIONS 5. a. Baseline for critical use allowance distribution   No late comments were received in relation to " baseline for critical use allowance distribution."

5. b. Frequency of critical use allowance distribution   No late comments were received in relation to " frequency of critical use allowance distribution."

6. Summary of Comments Relating to CRITICAL STOCK ALLOWANCE ALLOCATIONS   No late comments were received in relation to " critical stock allowance allocations."

7. Summary of Comments Relating to TRADING ALLOWANCES 7. a. Trading within allowance type 18 Commenter Organization Document ID Number W. Caffey Norman Patton Boggs LLP 0267   One of the late commenters supports EPA's proposal to " allow CUAs to be traded or otherwise transferred subject to an offset" and " allow trades of CSAs without requiring an offset." [ 0267]

Response # 121: EPA concurs that a trading system has merits and is consistent with the CAA . Section 607 paragraph ( c) of the Clean Air Act Amendments of 1990 ( CAAA), allows EPA to create trading mechanisms so long as there is a benefit to the environment. In accordance with paragraph ( c) of Section 607 of the CAAA, EPA is establishing an offset of one tenth of one percent of the amount of the CUAs transferred consistent with the proposed rule.

7. b. Trading between allowances Commenter Organization Document ID Number W. Caffey Norman Patton Boggs LLP 0267   One late commenter supports EPA's proposal to allow CUAs to be exchanged for CSAs [ 0267].   The commenter supports a person holding CUAs being able to exchange them for CSAs without the offset being applied [ 0267].

Response # 122: EPA believes that there is an environmental benefit to forgo new production and instead augment use of available stocks, where possible. Therefore, EPA is amending its proposal to allow for a more efficient transaction process in the exchange of CUAs for CSAs without requiring an additional offset.

8. Summary of Comments Relating to ACQUIRING CRITICAL USE METHYL BROMIDE Commenter Organization Document ID Number Billy W. Thomas Georgia Vegetable Co., Inc. 0258 Roger Loftus California Strawberry Nurserymen's Association 0261 Indiana Forest Nursery Grower N/ A 0262 Joseph M. Pantaleo Florida Golf Course Superintendents Association 0263 Wanda Hamilton Tyler Hamilton Growers 0264 Alexander J. Ott California Grape & Tree Fruit League 0271 19   Three late commenters support EPA's proposal that approved critical users acquire methyl bromide through a QPS like process that requires self certification [ 0261, 0263, 0271].   One commenter requests that the self certification system be as simple as possible and be consistent with the system currently used for QPS exempted methyl bromide [ 0261].   One set of comments notes that " a QPS like system would be a very workable and practical way of administering the CUE program." [ 0263]   One commenter believes that a QPS like process that requires selfcertification " will reduce the bureaucratic paperwork for the farmer while continuing to enforce the necessary reporting requirements." [ 0271]   Three commenters are of the view that the certification for CUE should be by the grower or nursery manager, since that person is the only one capable of making the decision that a limiting factor exists in a particular field. This is because fumigation is done in advance of planting the crop and future soil pest pressure can only be determined on past history. [ 0258, 0262, 0264]

Response # 123: EPA concurs that the self certification provisions are the least burdensome way to implement the exemption program and that this approach has worked well under the quarantine and preshipment exemption. EPA concurs that the grower should certify that they have a critical use and EPA is implementing a framework where the end user must certify that the use is an approved critical use.

9. Summary of Comments Relating to WHO IS AN APPROVED CRITICAL USER 9. a. Uses Commenter Organization Document ID Number Roger Loftus California Strawberry Nurserymen's Association 0261   One late commenter simply states that " we support the agency's proposed definition of approved critical users." [ 0261]

Response # 124: In this final rule, EPA is implementing the definition of " approved critical user" set forth in the proposed rule, with minor changes.

9. b. Conditions Commenter Organization Document ID Number Roger Loftus California Strawberry Nurserymen's Association 0261 20   One late commenter is of the opinion that " specific conditions delineated in the rule go beyond the scope of the EPA nomination and the Montreal Protocol exemption." [ 0261]

Response # 125: In the Nomination, EPA explained the feasibility of chemical inkind alternatives by describing what pest complexes were effectively controlled with alternatives, and which pest complexes required methyl bromide for treatment. EPA nominated amounts of methyl bromide based on these and other conditions and therefore including these conditions in this rule is not beyond the scope of the nomination or the Montreal Protocol exemption.

  One late set of comments asserts that new methyl bromide production should be available to approved critical users without their having to justify the use [ 0283].

Response # 126: EPA is not permitted to make exempted material available to nonexempt uses. EPA is requiring users who wish to acquire exempted material to document in the form of a self certification that they are in fact approved critical users and that they will use the quantity of methyl bromide for an approved critical use. EPA believes this is a streamlined and simple approach to ensure that exempted material only goes to exempted uses.

9. c. New market entrants Commenter Organization Document ID Number Roger Loftus California Strawberry Nurserymen's Association 0261 Anne Giesecke & Bob Garfield Food Industry Environmental Council ( FIEC) 0283   One late commenter asserts that the members of consortia, where these consortia submitted nominations for critical use exemptions that were approved by the Parties to the Montreal Protocol, should have access to the approved amount of methyl bromide without competition from growers who did not apply for an exemption or who did not qualify for an exemption [ 0261].

  This same late commenter does however agree with EPA that " growers who join a qualified consortium, and who meet the qualifying conditions, should also have the same access to exempted methyl bromide". [ 0261]

  Another late commenter is of the opinion that " new MB production should available only to parties who invested the time and effort to submit a Critical Use Exemption ( CUE) application." [ 0283]

Response # 127: The Agency wishes to accommodate the ever shifting marketplace to allow growers to increase or move production as needed provided that critical use methyl bromide only goes to those uses and locations listed in Appendix L of 40 21 CFR 82. EPA is finalizing a framework in today's rule that allows a new market entrant who is a member of a consortium that applied for an exemption to be an approved critical user so long as the use is for a use listed in column A and a location listed in column B of Appendix L to 40 CFR 82. Therefore, an approved critical user includes those users who are members of a consortium that applied for an exemption, even if the user was not a member of the consortium at the time the application was filed.

10. Summary of Comments Relating to REPORTING AND RECORDKEEPING REQUIREMENTS 10. a. Reporting   No late comments were received in relation to " reporting."

10. b. Record Keeping Commenter Organization Document ID No David Mueller Fumigation Service & Supply, Inc. 0265 W. Caffey Norman Patton Boggs LLP 0267   One late set of comments states that " a recordkeeping system like those in QPS for official phytosanitary certificates should be installed for CUEs and CUNs", where " this record could then help track all fumigant to which locations in which amounts and when it is used by whom." [ 0265]

Response # 128: EPA is requiring recordkeeping similar to the requirements under the existing quarantine and preshipment exemption.

  One late commenter supports EPA's proposal that " producers, importers, distributors, and applicators allocated CSAs file quarterly reports to EPA on the number of expended and unexpended CSAs based on the amount of methyl bromide stocks sold during the quarter to an approved critical user." [ 0267]

Response # 129: EPA is implementing a framework for reporting that requires producers and importers to file reports to EPA on the number of CSA's expended on a quarterly basis and requires reporting from distributors and applicators on an annual basis. This is the same framework that EPA proposed. The commenter's characterization of the proposal is not entirely correct.

10. c. Treatment of Unused Critical Use Methyl Bromide Commenter Organization Document ID No W. Caffey Norman Patton Boggs LLP 0267 22   One late commenter supports EPA's proposed treatment of unused critical use methyl bromide on the basis that " this approach is consistent with the Montreal Protocol and the Clean Air Act." [ 0267]   Specifically, this commenter supports EPA's proposal " to include inventories of methyl bromide produced or imported with CUAs remaining at the end of a control period in the calculation of available stocks for determining total CUAs to be allocated for the subsequent year." Further, this commenter agrees with EPA that " if CUAs are allocated on a sectorspecific basis, unused methyl bromide could be used only for the approved critical uses in the subsequent control period." [ 0267]

Response # 130: EPA is implementing provisions on the treatment of unused exempted material that are nearly identical to those described in the proposed rule. The one exception is that EPA will reduce the number of CUAs issued to take into account unused methyl bromide in the year after the year in which the data was reported. In the proposal, EPA indicated that it would reduce the number of CUAs for the year immediately after the control period in question. However, EPA recognizes that it would not have the all of the data reports in time to make the adjustment for the immediately following year and is therefore making the adjustment instead in the year immediately following the final data report.

11. Summary of Comments Relating to ENFORCEMENT PROVISIONS Commenter Organization Document ID No Roger Loftus California Strawberry Nurserymen's Association 0261 Anne Giesecke & Bob Garfield Food Industry Environmental Council ( FIEC) 0283   Two late commenters urge EPA to impose penalties for misuse that are consistent with the severity of the infractions, where this means that the Federal Insecticide, Fungicide and Rodenticide Act ( FIFRA) penalty guidelines, not Clean Air Act ( CAA) guidelines, be used to enforce pesticide compliance [ 0261, 0283].

Response # 131: Under the Stratospheric Ozone Program regulations, EPA has historically defined each kilogram of unauthorized production or importation of controlled substances to be a separate violation of its regulations. Likewise, for the restricted distribution under exemption programs of controlled substances, the Stratospheric Ozone Program has also considered each kilogram of inappropriate sale for a use other than the designated specific exempted purpose to be a separate violation. To ensure U. S. compliance under the Montreal Protocol, EPA believes this approach remains justified for enforcement against producers, importers, and distributors of methyl bromide because these are larger companies that have an ability to pay higher penalties and should face a substantial deterrent against producing, importing, and selling quantities of controlled substances in excess of 23 allowances. Thus, EPA will continue to define violations involving the unauthorized production, import, or sale of critical use methyl bromide on a per kilogram basis. However, EPA recognizes that defining violations on a per kilogram basis for end users of methyl bromide could result in total per incident penalties that would not be commensurate with the misuse or the users' ability to pay and would not be necessary to provide an effective deterrent. Therefore, EPA is defining violations differently for methyl bromide end users to reduce the maximum potential penalty per incidence of misuse. EPA is defining each violation associated with the improper use of critical use methyl bromide in increments of 200 kilograms. The maximum per violation penalty is currently $ 32,500 per kilogram. EPA emphasizes that this penalty is the maximum amount that would be assessed per 200 kilograms of misuse. EPA has broad discretion in assessing and assigning penalties; actual penalties could be lower than the specified maximum penalties. Section 113( e) of the CAA provides that criteria to be considered in assessing a penalty include the size of the business, the economic impact of the penalty on the business, the violator's full compliance history and good faith efforts to comply, the duration of the violation, payment of penalties previously assessed, the economic benefit of noncompliance, and the seriousness of the violation. FIFRA and the CAA are independent of one another. FIFRA penalties will still apply for the misuse of methyl bromide under FIFRA and its implementing regulations. However, in assessing penalties for violations of the CAA and this regulation, EPA must apply the CAA's penalty provisions.

12. Summary of Comments Relating to DISTRIBUTION OF PERMITS TO APPROVED CRITICAL USERS 12. a. Allocation of Allowances to Producers/ Importers Versus End Users Commenter Organization Document ID No Anne Giesecke & Bob Garfield Food Industry Environmental Council ( FIEC) 0283   One late commenter asserts that " attempting to control MB usage at the user level would be cumbersome" and further that " control should be focused on the MB manufacturer or importer." [ 0283]

Response # 132: EPA concurs that controlling methyl bromide usage at the user level would be cumbersome and is instead implementing a regulatory framework that focuses on the chemical supply and distribution chain.

12. b. Historic Baseline Approach   No late comments were received in relation to " historic baseline approach."

12. c. Auctions 24   No late comments were received in relation to " auctions."

12. d. Redeemable System   No late comments were received in relation to " redeemable system."

13. Summary of Comments Relating to EPA TREATMENT OF BASELINE AND INVENTORY DATA   No late comments were received in relation to " EPA treatment of baseline and inventory data."

14. Summary of Comments Relating to ECONOMICS AND THE REGULATORY IMPACT STATEMENT   No late comments were received in relation to " economics and the regulatory impact statement."

15. Summary of Comments Relating to BURDEN ASSOCIATED WITH THIS REGULATORY SYSTEM   No late comments were received in relation to " burden associated with this regulatory system."

16. Summary of Comments Relating to NEED FOR AN EXPORT MECHANISM   No late comments were received in relation to " need for an export mechanism."

17. Summary of Comments Relating to the RULEMAKING AND REGULATORY PROCESS Commenter Organization Document ID No Anne Giesecke & Bob Garfield Food Industry Environmental Council ( FIEC) 0283   One late commenter states that " the Montreal Protocol ( MP) permits CUEs, and EPA and the MP Parties approved the CUE process" and that given this, " it would 25 be indefensible if the Agency delayed issuing the rule that completes that process." [ 0283]   This commenter suggests that " the Agency should take as simple and straight forward an approach as possible and move forward with the process that will allow continued and proven responsible use of methyl bromide for the food and agricultural sectors." [ 0283]

Response # 133: EPA is implementing the critical use exemption as expeditiously as possible. EPA is also implementing mechanisms that are streamlined and simple while ensuring compliance with Montreal Protocol obligations.