EPA Registration Division contact: Barbara Madden,<PHONE_NUMBER>

Interregional Research Project No. 4

PP# 0E6209

227 by establishing a tolerance for combined residues of the herbicide
dicamba (3,6-dichloro- o -anisic acid) and its metabolite
3,6-dichloro-5-hydroxy- o- anisic in or on the raw agricultural
commodities Corn, sweet, kernel plus cob with husks removed at 0.04
ppm; Corn, sweet, forage at 0.50 ppm; and Corn, sweet, stover at 0.50
ppm.  EPA has determined that the petition contains data or information
regarding the elements set forth in section 408(d)(2) of the FFDCA;
however, EPA has not fully evaluated the sufficiency of the submitted
data at this time or whether the data supports granting of the petition.
 Additional data may be needed before EPA rules on the petition.

	.

. The metabolism is adequately understood on the basis of soybean,
asparagus, cotton, sugarcane and published data on grass. In the
majority of registered crops, the major metabolite is the 3,6
dichloro-5-OH-o-anisic acid. Tolerances are expressed as the dicamba
parent plus the respective major metabolite.

. BASF Corp. has provided suitable independently validated analytical
methods for detecting and measuring levels of dicamba and its
metabolites in or on food with a limit of detection that allows
monitoring of food with residues at or above the levels described in
these and the existing tolerances. Adequate methods are available in
PAM-II for enforcement purposes. The analytical method involves
extraction, partition, clean-up and detection of residues by gas
chromatography/electron capture detector (gc/ecd).

. Residue trials have been conducted with dicamba/diflufenzopyr end use
product Distinct on the sweet corn crop for expanded use requested in
the subject petition.  The tolerances listed below are based on the
maximum expected residue from geographically representative field trial
data:

Proposed tolerances for combined residues of the herbicide dicamba
(3,6-dichloro-o-anisic acid) and its metabolite
3,6-dichloro-5-hydroxy-o-anisic acid in or on the raw agricultural
commodities as follows 40 CFR 180.227(a): Corn, sweet, kernel plus cob
with husks removed at 0.04 ppm; Corn, sweet, forage at 0.05 ppm; and
Corn, sweet, stover at 0.05 ppm.

             	 4.  Animal residue.  The amended uses proposed do not
yield secondary residues in meat and milk above the tolerances already
published under 40 CFR 180.227. Data from metabolism and feeding studies
in poultry have established that the maximum expected dietary burden
from crops treated with dicamba will not result in quantifiable residues
above the limits of the analytical method.

.  Dicamba has been evaluated for genotoxicity in numerous in vitro and
in vivo studies.  The results are:  Ames assay (3 studies point
mutation): negative; mammalian cell mutagenicity with L5178Y mouse
lymphoma cells (3 studies; point mutation): negative; in vitro
chromosome aberration test in Chinese Hamster Ovary (CHO) cells (1 test
chromosome aberration): negative; in vivo mouse micronucleus assay (2
studies chromosome aberration): negative.  It is concluded that dicamba
is not genotoxic.

. Administration of dicamba to pregnant rats at dose levels of 0, 64,
160, and 400 mg/kg resulted in maternal toxicity at the highest dose
level as indicated by mortality, clinical signs (e.g. ataxia, decreased
motor activity, stiff body when held), and decreased body weight gain
and food consumption. Based on these findings, the maternal no observed
effect level (NOAEL) was 160 mg/kg in this study. In the absence of any
developmental toxicity, the developmental NOAEL was 400 mg/kg bw/day.

Administration of dicamba at dose levels of 0, 30, 150 and 300 mg/kg to
pregnant rabbits during days 6 to 18 of gestation resulted in maternal
toxicity at dose levels ( 150 mg/kg as indicated by mortality, body
weight loss, reduced food consumption, and an increased incidence of
abortions at 300 mg/kg and clinical observations (ataxia and decreased
motor activity) at ( 150 mg/kg. Irregular ossification of nasal bones of
the skull in fetuses was observed at 300 mg/kg bw/day.  The maternal
NOAEL was determined to be 30 mg/kg bw/day and the developmental NAOEL
was determined to be 150 mg/kg bw/day.

In a two-generation study rat reproduction toxicity study, dietary
administration of dicamba at dose levels of 0, 500, 1500, and 5000 ppm
resulted in slight parental toxicity at 5000 ppm as indicated by
decreased body weight gain of F0 and F1 females during gestation,
clinical signs of F1 females during lactation (increased body tone and
slowed righting reflex), as well as by increased liver weights in F0 and
F1 adults. The increased liver weights were, however, not accompanied by
any histopathological findings. Reproductive performance was not
affected by treatment.  Developmental toxicity was observed as reduced
pup weights in the top dose group of 5000 ppm at birth and reduced body
weight gain at 1500 and 5000 ppm. Secondary to the initially lower F1
pup weights, a slight delay of sexual maturation was observed in F1
males. The parental toxicity NOAEL was 1500 ppm (approximately 122 and
136 mg/kg bw/day for males and females, respectively).  Based on the
effects on pup body weight gain at 1500 ppm the NOAEL for developmental
toxicity was 500 ppm (equivalent to a daily dose of approx. 45 mg/kg
bw/day). There were effects on reproduction up to the highest dose
tested (5000 ppm, approx. 350 mg/kg bw/day).

Subchronic toxicity.  Administration of dicamba to rats at dietary
concentrations of 0, 500, 3000, 6000, and 12000 ppm for three months
resulted in a marked decrease of body weight gain and reduced food
consumption at the highest dose level. The liver was identified as
target organ as indicated by an increased activity of hepatic enzymes,
altered liver associated clinical chemistry parameters, increased
relative liver weights as well as hepatocyte hypertrophy and
pigmentation.. In addition, a number of minor hematological changes were
seen at the high dose. Except for the increased serum phosphate levels
all observed changes were shown to be reversible within 28 days upon
cessation of compound administration. Based on the results of the study,
the NOAEL for subchronic toxicity was determined to be 6000 ppm
(approximately 500 mg/kg bw/day).

Dogs were treated with dicamba at dose levels of 0, 10, 50 and 300
mg/kg/day for 13-weeks. Treatment at a dosage of 300 mg/kg/day resulted
in effects on gait and behavior, decreased food intake and body weight
gain, minor alterations in the red blood cell parameters and
disturbances in the serum lipid levels. Treatment at a dosage of 50
mg/kg/day resulted in slightly decreased serum lipid levels, which were
considered not to be adverse. Therefore, the NOAEL was 50 mg/kg bw/day.

A dermal toxicity study administered dicamba at doses up to 1000 mg/kg
bw/day for 21 days to male and female rabbits.  There was no evidence of
systemic toxicity at any dose.  Therefore, the NOAEL for systemic
toxicity in this study is considered to be 1000 mg/kg/day.

. Dietary administration of dicamba to rats at concentrations of 0, 50,
250 and 2500 ppm for up to 27 months resulted in no adverse effects up
to the highest dose level.  Based on the results of the study, the NOAEL
was 2500 ppm (approximately 107 mg/kg bw/day). There was no evidence of
oncogenic potential in this study.

The top dose of 2500 ppm equivalent to 107 mg/kg bw/day selected for the
chronic rat study can be justified by a pharmacokinetic study. In this
study a saturation of elimination processes was reached at dose levels
of 100 mg/kg bw for females and between 100 and 200 mg/kg bw for males.
Testing above the level of 107 mg/kg bw/day in the rat cancer study
would not be appropriate. Continued treatment at doses in excess of
where saturation of excretion occurs would result in a physiological
condition that is irrelevant for human exposure at doses below the
saturation point and most likely result in excessive kidney and liver
toxicity.

Dicamba was administered to mice via the diet at dose levels of 0, 50,
150, 1000, and 3000 ppm for at 24 months.   A statistically significant
increase in male mortality and a slight body weight gain reduction was
observed in high dose animals. All other parameters of systemic toxicity
were unaffected. Based on these data, the NAOEL in this study was 1000
ppm (approximately 115 mg/kg/day). There was no evidence of oncogenic
potential.

Dietary administration of dicamba to dogs for one year at dietary dose
levels of 0, 100, 500, and 2500 ppm did not result in any systemic
toxicity. The dose of 2500 ppm is near to the limit content of dicamba
in the diet which dogs will consume. Based on the result of this study,
the NOAEL was 2500 ppm (approx. 52 mg/kg bw/day).

.  In oral pharmacokinetic and metabolism studies in rats, dicamba was
rapidly absorbed and then efficiently and rapidly eliminated mainly via
urinary excretion.  Maximum blood concentrations were reached within one
hour and then declined very rapidly with a half-life time of 1.1 to 2.1
hours.  The absorbed radioactivity was rapidly and almost completely
excreted via urine (85-98% of applied dose within 24 hours). A recent
pharmacokinetic study in rats revealed that the renal excretion is
saturated at higher dose levels (( 100 - 200 mg/kg bw). A low percentage
of the dose administered was eliminated in the feces (1 to 2 % of
applied). Total radiocarbon in the body was generally very low. Tissue
levels were low (max. 4.5 ppm after 16 hours) and declined rapidly (max.
0.14 ppm after 96 hours). Kidneys contained the highest residue levels
(which is in accordance with the urinary excretion of dicamba) followed
by blood and liver. No accumulation of dicamba was observed.  The parent
dicamba was metabolized only to a limited degree and represented the
major radiocarbon fraction in urine, feces and examined tissues. In the
urine, 3,6-dichloro-2-hydroxybenzoic acid was found in small quantities.
The glucuronide of dicamba and the metabolite, 5-hydroxy dicamba (5-OH
dicamba) were also found at low levels in rat urine.

Metabolite toxicology. All significant plant metabolites were also found
in the rat metabolism studies. However, 5-OH dicamba,  which represents
a significant metabolite in several plants, was detected in rats at low
amounts only. Therefore, additional studies were conducted to
investigate the toxicological profile with this metabolite. The
metabolite 5-OH dicamba was not acutely toxic. A series of genotoxicity
studies were conducted including an Ames mutagenicity test, mouse
lymphoma mammalian cell mutagenicity test, in vitro chromosome
aberration in CHO cells, mouse micronucleus in vivo chromosome
aberration and an in vivo Unscheduled DNA synthesis (UDS) test in rats.
Most studies were negative.  In an in vitro mammalian cell mutagenicity
assay, a positive response was obtained without metabolic activation.
The increased incidence of mutations occurred only at doses which were
cytotoxic.  A positive was also observed in an in vitro chromosome
aberration study.  However, an in vivo micronucleus assay was negative.
The weight of the evidence is that the 5-OH metabolite of dicamba is not
genotoxic.

.  No specific tests have been conducted with dicamba to determine
whether the chemical has a potential for endocrine disruption.  However,
there were no significant findings in other relevant toxicity studies
(i.e., subchronic and chronic toxicity, teratology and multi-generation
reproductive studies) which would suggest that dicamba produces
endocrine related effects.

However, signs of neurotoxicity (e.g. ataxia, rigid when handled,
impaired righting reflex) were observed in the developmental toxicity
studies. Therefore acute and subchronic neurotoxicity studies in rats
were conducted

The single oral administration of dicamba at dose levels of 0, 300, 600,
and 1200 mg/kg bw to rats resulted in one case of mortality and
decreased mean body weight gain and food consumption in high dose males.
Dose dependent neurobehavioral effects were apparent in all treated
groups at 1.5 ± 1 hours after dosing. The overall effect of treatment
is best described as a stimulus- or stress-induced rigidity. At the day
14 neurobehavioral examination the dicamba-treated animals were
performing similarly to vehicle control animals, indicating that the
neurobehavioral changes were transient. The transient nature of the
neurotoxic effects is also substantiated by the absence of any
treatment-related neurohistopathological findings.  The NOAEL was
determined to be <300 mg/kg bw/day.

Dietary administration of technical dicamba to rats at dietary dose
levels of 0, 3000, 6000, and 12000 ppm for 3 months resulted in a
slightly decreased body weight gain in high dose animals. The main
effect on body weight gain was observed in treatment week one with males
more affected than females. Cumulative food consumption was slightly
decreased in high dose males. The major neurobehavioral
treatment-related effect in the high-dose animals was an increased
frequency of rigid body tone when handled at weeks 4, 8, and 13. Despite
the persistence of these neurobehavioral findings throughout the study,
administration of dicamba did not cause damage to the nervous tissues as
indicated by the histopathology findings.  The NOAEL was determined to
be 401 and 472 mg/kg bw/day (males and females, respectively).

. Exposure assessments were conducted to evaluate the potential risk due
to acute and chronic dietary exposure of the U.S. population to residues
of dicamba.  This herbicide and its metabolite
(3,6-dichloro-5-hydroxy-o-anisic acid; DCSA), in or on raw agricultural
commodities, and metabolites in or on animal fat, liver, meat and meat
byproducts were expressed as the parent compound.  The tolerance values
previously established for various cereals, asparagus, sugarcane,
cotton, and animal products are listed in the U.S. 40 CFR § 180.227.
This analysis included all current tolerances and the proposed tolerance
values for sweet corn (0.04 ppm kernel plus cob with husk removed; 0.05
ppm for stover and forage).

Acute Dietary Exposure Assessment

The acute dietary exposure estimates were based on tolerance values,
default process factors, 100% crop treated values for all commodities
including the currently registered and proposed uses.  The consumption
data was from the USDA Continuing Survey of Food Intake by Individuals
(CSFII 1994 - 1996, 1998) and the EPA Food Commodity Ingredient Database
(FCID) using Exponent's Dietary Exposure Evaluation Module (DEEM-FCID)
software.

The acute population adjusted dose (aPAD) used for all sub-populations
was 1.0 mg/kg bw/day.   Considering the exposure assumptions discussed
above, dicamba acute dietary exposure from food is less than 6 % aPAD
for the U.S. population and all sub-populations.  The results of the
acute dietary assessment are presented in Table 1.

Table 1.	Results for Dicamba Acute Dietary Exposure Analysis Considering
all Current Tolerances and the Proposed Tolerances for Sweet Corn using
DEEM-FCID at the 95th Percentile

Population	Exposure Estimate	%aPAD

Subgroups	(mg/kg b.w./day)*

U.S. Population	0.029757	3.0

All Infants (< 1 year old)	0.051651	5.2

Children (1-2 years old)	0.053779	5.4

Children (3-5 years old)	0.048466	4.8

Children (6-12 years old)	0.035541	3.6

Youth (13-19 years old)	0.023578	2.4

Females (13-49 years old)	0.021483	2.1

Adults (20-49 years old)	0.015067	1.5

Adults (50+ years old)	0.018052	1.8

aPAD = acute population adjusted dose

* Exposure Estimate (95th percentile) was based on tolerance values,
default processing factors, and considering 100% crop treated for all
commodities

Results of the analysis show that for the U.S. population and all
sub-populations, the exposures are below the Agency's level of concern
(< 100% aPAD).  Additional refinements in the dietary risk assessment
(i.e. utilizing anticipated residue values, process factors, percent
crop treated values) would further reduce the estimated exposure values.

Chronic Dietary Exposure Assessment

The chronic dietary exposure estimates were based on tolerance values,
default process factors, and 100% crop treated values for all currently
registered and proposed uses.  The consumption data was from the USDA
Continuing Survey of Food Intake by Individuals (CSFII 1994 - 1996,
1998) and the EPA Food Commodity Ingredient Database (FCID) using
Exponent's Dietary Exposure Evaluation Module (DEEM-FCID) software.  The
tolerance values included the proposed values for sweet corn.

The chronic population adjusted dose (cPAD) used for U.S. population and
all sub-populations is 0.45 mg/kg bw/day. Considering the exposure
assumptions discussed above, dicamba chronic dietary exposure from food
for the U.S. population was < 7% of the cPAD.  The most highly exposed
population sub group was children 1-2 years of age at 6.5% cPAD.   The
results of the chronic dietary assessment are presented in Table 2.

Table 2. 	Results for Dicamba Chronic Dietary Exposure Analysis
Considering all Current Tolerances and the Proposed Tolerances for Sweet
Corn using DEEM-FCID

Population	Exposure Estimate	%cPAD

Subgroups	(mg/kg b.w./day)

U.S. Population	0.011574	2.6

All Infants (< 1 year old)	0.018928	4.2

Children (1-2 years old)	0.029346	6.5

Children (3-5 years old)	0.026702	5.9

Children (6-12 years old)	0.018314	4.1

Youth (13-19 years old)	0.0112	2.5

Females (13-49 years old)	0.009502	2.1

Adults (20-49 years old)	0.007233	1.6

Adults (50+ years old)	0.008468	1.9

cPAD = chronic  population adjusted dose

* Exposure estimates based on tolerance values, default processing
factor, and 100% crop treated values

Results of the analysis show that for the U.S. population and all
sub-populations, the exposures are below a level of concern (< 100%
cPAD).  Additional refinements in the chronic dietary risk assessment
(i.e. utilizing anticipated residue values, process factors, percent
crop treated values) would further reduce the estimated exposure values.

.  Based on the US Geological Survey National Water Quality Assessment
program (NAWQA) data, the 90th percentile concentration for acute and
chronic surface water is 0.053 ppb.  The drinking water concentrations
were considered the 0.053 ppb surface water value of dicamba from NAWQA
plus the addition of the DCSA residues (i.e. acute drinking water conc =
0.053 ug/L [dicamba] + 10.1 ug/L  [DCSA], chronic drinking water conc. =
0.053 ug/L [dicamba] + 0.75 ug/L [DCSA]; DCSA values from dicamba RED
document, Table 2).

Drinking water contributions were assessed based on the maximum
estimated dicamba water concentrations (dicamba + metabolite DCSA), and
water consumption and body weights reported in CSFII, using DEEM-FCID
software.  The acute and chronic estimated water exposure values are
summarized in Tables 3 and 4, respectively.  Minimal exposure of dicamba
occurs through drinking water with < 0.25% the aPAD and < 0.02 cPAD for
all subpopulations.

Table 3. 	Results for Dicamba Acute Water Exposure Analysis Considering
the Maximum Estimated Acute Drinking Water Concentration using

DEEM-FCID

Population	Water Exposure Estimate	%aPAD

Subgroups	(mg/kg b.w./day)*

U.S. Population	0.00053	0.05

All Infants (< 1 year old)	0.002	0.20

Children (1-2 years old)	0.000832	0.08

Children (3-5 years old)	0.00076	0.08

Children (6-12 years old)	0.000529	0.05

Youth (13-19 years old)	0.00043	0.04

Females (13-49 years old)	0.000491	0.05

Adults (20-49 years old)	0.000444	0.04

Adults (50+ years old)	0.000494	0.05

aPAD = acute  population adjusted dose

*Water exposure estimates using acute surface water value of dicamba
(0.053 ug/L based on NAWQA 90th percentile concentration) + DCSA (10.1
ug/L from Table 2 in dicamba RED document)

Table 4. 	Results for Dicamba Chronic Water Exposure Analysis
Considering the Maximum Estimated Chronic Drinking Water Concentration
using DEEM-FCID

Population	Water Exposure Estimate	%cPAD

Subgroups	(mg/kg b.w./day)

U.S. Population	0.000017	0.00

All Infants (< 1 year old)	0.000055	0.01

Children (1-2 years old)	0.000025	0.01

Children (3-5 years old)	0.000024	0.01

Children (6-12 years old)	0.000016	0.00

Youth (13-19 years old)	0.000012	0.00

Females (13-49 years old)	0.000016	0.00

Adults (20-49 years old)	0.000017	0.00

Adults (50+ years old)	0.000016	0.00

cPAD = chronic  population adjusted dose

*Water exposure estimates using acute surface water value of dicamba
(0.053 ug/L based on NAWQA 90th percentile concentration) + DCSA (0.75
ug/L from Table 2 in dicamba RED document)

Acute Aggregate Exposure and Risk (Food and water)

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

Table 5. 	Estimated Acute Aggregate Exposure and Risk of dicamba

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

U.S. Population	1	0.029757	0.00053	0.030287	3.03

All Infants (< 1 yr old)	1	0.051651	0.00200	0.053651	5.37

Children 1-2 years	1	0.053779	0.000832	0.054611	5.46

Children 3-5 years	1	0.048466	0.00076	0.049226	4.92

Children 6 – 12 years	1	0.035541	0.000529	0.03607	3.61

Youth 13-19 years	1	0.023578	0.00043	0.024008	2.40

Females 13-49 years	1	0.018052	0.000494	0.018546	1.85

Adults 20-49 years	1	0.021483	0.000491	0.021974	2.20

Adults + 50	1	0.015067	0.000444	0.015511	1.55

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

Short-term aggregate risk from dicamba takes into account exposures from
dietary consumption (food and water) and residential exposure from turf
use.  Post application exposure from the turf use is considered
short-term.  The aggregate MOE from food, water, and residential
exposure are 1105 and 1987 for the children 1-2 years old and the US
population, respectively.  These MOE are greater than the target MOE of
100 that indicates there is no safety concern.  The results of the
analysis are shown in Table 6.

Table 6. 	Estimated Short/Intermediate Term Aggregate Exposure and Risk
of Dicamba

Population	NOAEL (mg/kg/day)	Target MOE1	Food Exposure (mg/kg/day)	Water
Exposure (mg/kg/day)	Residential Exposure2 (mg/kg/day)	Total Exposure
(mg/kg/day)	MOE3

US	45	100	0.018928	0.000017	0.0037	0.022645	1987

Child 4	45	100	0.026702	0.000024	0.014	0.040726	1105

1 Target MOE is 100.

2 Residential Exposure = Exposure to adult while playing golf.

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

4 Short-term residential exposure was calculated for children 3-years of
age, dietary exposure for children

  3-5 years of age

 Chronic Aggregate Exposure and Risk (food and water)

The aggregate chronic risk includes residues of dicamba from food and
water (Table 7). Exposures from residential uses are not included in the
chronic aggregate assessment.  The results demonstrate there are no
safety concerns for any subpopulation based on established and new uses,
and that the results clearly meet the FQPA standard of reasonable
certainty of no harm.

  Table 7. 	Estimated Chronic Aggregate Exposure and Risk of dicamba

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

U.S. Population	0.45	0.011574	0.000017	0.011591	2.58

All Infants (< 1 yr old)	0.45	0.018928	0.000055	0.018983	4.22

Children 1-2 years	0.45	0.029346	0.000025	0.029371	6.53

Children 3-5 years	0.45	0.026702	0.000024	0.026726	5.94

Children 6 – 12 years	0.45	0.018314	0.000016	0.01833	4.07

Youth 13-19 years	0.45	0.011200	0.000012	0.011212	2.49

Females 13-49 years	0.45	0.008468	0.000016	0.008484	1.89

Adults 20-49 years	0.45	0.009502	0.000016	0.009518	2.12

Adults + 50	0.45	0.007233	0.000017	0.00725	1.61

.

Dicamba is registered for use on residential and recreational turf.  The
following post-application exposure scenarios were evaluated 1) adults
and toddler post-application dermal exposure 2) toddlers’ incidental
ingestion of pesticide residues on lawns form hand-to-mouth transfer, 3)
toddlers’ object-to-mouth transfer from mouthing pesticide-treated
turfgrass, and 4) toddlers’ incidental ingestion of soil from
pesticide-treated residential areas.  The post-application exposure
assessment was based on generic assumptions specified in the Recommended
Revisions to the Residential Standard Operating Procedures and
recommended approaches by an EPA science advisory council.  A dermal
absorption value of 15% was used in the assessment of dicamba.  The
exposure and risk estimates for the residential exposure scenarios are
assessed for the day of application because adults and toddlers could
contact treated turf immediately after application.  All
short-/intermediate term MOE were greater than 100 which indicates that
exposure from all residential scenarios result in exposures below a
level of concern.

	Section 408(b)(2)(D)(v) requires that, when considering whether to
establish, modify, or revoke a tolerance, the Agency consider
``available information'' concerning the cumulative effects of a
particular pesticide's residues and ``other substances that have a
common mechanism of toxicity.'

		No Maximum residue levels (MRLs) have been established for dicamba by
the Codex Alimentarius Commision (CODEX).

{<P>}

{</P>}

{<HD2>}

{</HD2>}

{<P>}

{<E T=’03'>}

{</E>}

{</P>}

{<P>}

{<E T=’03'>}

{</E>}

{</P>}

{<P>}

{<E T=’03'>}

{</E>}

{</P>}

{<HD2>}

{</HD2>}

{<P>}

{<E T=’03'>}

{</E>}

{</P>}

{<P>}

{<E T=’03'>}

{</E>}

{<P>}

{<E T=’03'>}

{</E>}

{<P>}

{<E T=’03'>}

{<P>}

{<E T=’03'>}

{</E>}

{<P>}

{<E T=’03'>}

{</E>}

{<P>}

{<E T=’03'>}

{</E>}

{<P>}

{<E T=’03'>}

{</E>}

{<HD2>}

{</HD2>}

{<P>}

{<E T=’03'>}

{</E>}

{<P>}

{<E T=’03'>}

{</E>}

{</P>}

{<P>}

{<E T=’03'>}

{</E>}

{<P>}

{<E T=’03'>}

{</E>}

{<HD2>}

{</HD2>}

{<P>}

{</P>}

{<HD2>}

{</HD2>}

{<P>}

{<E T=’03'>}

{</E>}

{</P>}

{<P>}

{<E T=’03'>}

{</E>}

{</P>}

{<HD2>}

{</HD2>}


June 7, 2017
MEMORANDUM
TO:		EPA-HQ-OAR-2017-0358
FROM:	Korbin Smith SPPD, MMG
--------------------------------------------------------------------------------
SUBJECT:	Industry Characterization for Friction Materials Manufacturing Facilities NESHAP

      The purpose of this memorandum is to provide industry characterization for the Friction Materials Manufacturing Facilities source category. The information summarized includes material gathered for the EPA's proposed residual risk and technology review, as well as past documents used in the initial National Emissions Standards for Hazardous Air Pollutants (NESHAP). There are two major sources subject to this rulemaking (Knowlton Technologies and Railroad Friction Products Corporation). Data was provided through a questionnaire sent to both of the major sources subject to the NESHAP. Section 1 describes the type and purpose of products manufactured within the source category. Section 2 provides a summary of the manufacturing process used to create the products of this source category.

1. Friction Materials Manufacturing Facilities Industry

1.1 Product and Manufacturing Overview

      Friction material manufacturing is a broad source category that covers a wide assortment of products. The 2002 NESHAP describes a friction materials manufacturing facility as a facility that manufactures friction materials using a solvent-based process. Friction materials are used in the manufacture of products used to accelerate or decelerate objects. Products that use friction materials include, but are not limited to, disc brake pucks, disc brake pads, brake linings, brake shoes, brake segments, blocks, brake discs, clutch facings, and clutches.
      The two major sources subject to this rulemaking produce very different products. Railroad Friction Products Corporation produces train car brakes. Knowlton Technologies produces friction paper products utilized in several different processes including appliance motors, automotive transmissions, motorcycle transmissions, industrial equipment, power take-off (PTO) clutches, launch clutches, torque converters, transfer cases, limited slip differentials, machine brakes, and sealed wet brakes. For additional information on the two facilities see memorandums (Site Visit Report-Knowlton Technologies, LLC and Site Visit Report-Railroad Friction Products Corporation) available in the docket for this rulemaking (docket ID: EPA-HQ-OAR-2017-0358).

1.2 Characterization of the Friction Materials Manufacturing Facilities Industry

      There are only two major source facilities subject to the friction materials manufacturing facilities NESHAP. Both facilities were visited by EPA staff during development of the rulemaking and the companies provided data used in this rulemaking via a questionnaire attached to the site visit letter. There were four facilities subject to this regulation when the NESHAP was promulgated
      The NESHAP established two subcategories based on the size of the solvent mixer. A small solvent mixer is defined as a mixer with a design capacity less than or equal to 2,000 lbs. A large solvent mixer is defined as having a design capacity of greater than 2,000 pounds. Both remaining facilities have large solvent mixers.

2.0 Friction Materials Manufacturing Facilities Manufacturing Process

2.1 Overview of Process

Due to the large variability in products made within the Friction Materials Manufacturing Facilities source category, the process from one operation to the next can be very different. One commonalty between both major sources is the use of a solvent mixer. As mentioned in section 1.1, a friction materials manufacturing facility is a facility that manufactures friction materials using a solvent-based process.
The solvent mixer is used to blend raw ingredients to form the friction product. The raw materials processed in the solvent mixers include reinforcement materials, property modifiers, fibers, solvents, and other additives. The equipment used in the raw material preparation area accomplishes the mixing of these raw materials in the proportions necessary to produce friction materials with the desired specifications.[2]
Materials are mixed in discreet batches. When solvents are used in preparing the friction materials, the solvents are typically added as a process aid for further process operations. The solvent mixers are typically batch mixers operated at slightly elevated temperatures. Typically, the reinforcement material, property modifiers, fibers, and any other additives are loaded into the mixer, and then the solvent is added. After mixing, the material undergoes further processing before being heated (cured) into the final product.

2.2 Emission Characteristics

      At the time of the NESHAP, the EPA believed that HAP emissions from the manufacturing of friction materials was driven almost entirely by the use of HAP-containing solvents used in the mixing operation.[1] This understanding hasn't changed as data has shown almost all HAP emitted from the source category is released from the solvent used in the mixing operation. Most emissions from the HAP containing solvent occur at the mixing operation, however, residual emissions can be found at various downstream processes as it is further heated and processed.


[Federal Register: December 23, 2008 (Volume 73, Number 247)]
[Notices]
[Page 78774-78775]
[DOCID:fr23de08-64]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings

December 17, 2008.
    Take notice that the Commission has received the following Natural
Gas Pipeline Rate and Refund Report filings:
    Docket Numbers: RP00-157-023.
    Applicants: Kern River Gas Transmission Company.
    Description: Kern River Gas Transmission Company submits the third
refund report for refunds paid December 1, 2008.
    Filed Date: 12/10/2008.
    Accession Number: 20081210-5137.
    Comment Date: 5 p.m. Eastern Time on Monday, December 22, 2008.

    Docket Numbers: RP04-274-013.
    Applicants: Kern River Gas Transmission Company.
    Description: Kern River Gas Transmission Company submits the third
refund report for refunds paid December 1, 2008.
    Filed Date: 12/10/2008.
    Accession Number: 20081210-5137.
    Comment Date: 5 p.m. Eastern Time on Monday, December 22, 2008.

    Docket Numbers: RP04-67-004.
    Applicants: NGO Transmission, Inc.
    Description: NGO Transmission, Inc. submits First Revised Sheet 170
to FERC Gas Tariff, Original Volume 1.
    Filed Date: 12/15/2008.
    Accession Number: 20081216-0020.
    Comment Date: 5 p.m. Eastern Time on Monday, December 29, 2008.

    Docket Numbers: RP08-347-004.
    Applicants: Columbia Gulf Transmission Company.
    Description: Columbia Gas Transmission, LLC submits Forty Seventh
Revised Sheet 18 et al. to FERC Gas Tariff Second Revised Volume 1.
    Filed Date: 12/15/2008.
    Accession Number: 20081216-0018.
    Comment Date: 5 p.m. Eastern Time on Monday, December 29, 2008.

    Docket Numbers: RP09-141-001.
    Applicants: Columbia Gulf Transmission Company.
    Description: Columbia Gas Transmission, LLC submit Substitute First
Revised Sheet 64 to FERC Gas Tariff Second Revised Volume 1.
    Filed Date: 12/15/2008.
    Accession Number: 20081216-0019.
    Comment Date: 5 p.m. Eastern Time on Monday, December 29, 2008.

    Docket Numbers: RP09-142-001.
    Applicants: Columbia Gas Transmission, LLC.
    Description: Columbia Gas Transmission, LLC submits Second Revised
Sheet 506 et al. to FERC Gas Tariff Second Revised Volume 1.
    Filed Date: 12/15/2008.
    Accession Number: 20081216-0017.
    Comment Date: 5 p.m. Eastern Time on Monday, December 29, 2008.

    Docket Numbers: RP09-154-000.
    Applicants: Young Gas Storage Company, Ltd.
    Description: Young Gas Storage Company, Ltd submits Sixteenth
Revised Sheet 4 et al. to FERC Gas Tariff, Original Volume 1, to be
effective 12/1/08.
    Filed Date: 12/12/2008.
    Accession Number: 20081215-0268.
    Comment Date: 5 p.m. Eastern Time on Wednesday, December 24, 2008.

    Docket Numbers: RP09-155-000.
    Applicants: Canyon Creek Compression Company.
    Description: Canyon Creek Compression Company submits Fourth
Revised Sheet 1 to provide for the cancellation of FERC Gas Tariff,
Third Revised Volume 1, to be effective 1/12/09.
    Filed Date: 12/12/2008.
    Accession Number: 20081215-0267.
    Comment Date: 5 p.m. Eastern Time on Wednesday, December 24, 2008.

    Docket Numbers: RP09-156-000.

    Applicants: Transwestern Pipeline Company, LLC.
    Description: Transwestern Pipeline Company, LLC submits Second
Revised Sheet 169 et al. to FERC Gas Tariff, Third Revised Volume 1, to
be effective 1/10/09.
    Filed Date: 12/12/2008.
    Accession Number: 20081215-0266.
    Comment Date: 5 p.m. Eastern Time on Wednesday, December 24, 2008.

    Docket Numbers: RP09-157-000.
    Applicants: Barclays Bank PLC, Barclays Capital Energy Inc., UBS
AG.
    Description: Barclays Bank PLC, et al. submits Notice of Change of
Ownership, Request for Temporary Waiver, Request for Expedited Action,
and Request for Shortened Notice Period.
    Filed Date: 12/15/2008.
    Accession Number: 20081215-5099.
    Comment Date: 5 p.m. Eastern Time on Wednesday, December 24, 2008.

    Docket Numbers: RP09-158-000.
    Applicants: Transcontinental Gas Pipe Line Company.
    Description: Transcontinental Gas Pipe Line Corp submits Original
Sheet 1 et al. to FERC Gas Tariff, Fourth Revised Volume 1 and First
Revised Volume 2, to be effective 12/31/08.
    Filed Date: 12/15/2008.
    Accession Number: 20081217-0043.
    Comment Date: 5 p.m. Eastern Time on Monday, December 29, 2008.

    Any person desiring to intervene or to protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Rules of Practice and Procedure (18 CFR 385.211 and
385.214) on or before 5 p.m. Eastern time on the specified comment
date. It is not necessary to separately intervene again in a subdocket
related to a compliance filing if you have previously intervened in the
same docket. Protests will be considered by the Commission in
determining the appropriate action to be taken, but will not serve to
make protestants parties to the proceeding. Anyone filing a motion to
intervene or protest must serve a copy of that document on the
Applicant. In reference to filings initiating a new proceeding,
interventions or protests submitted on or before the comment deadline
need not be served on persons other than the Applicant.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper, using the FERC Online links at http://
www.ferc.gov. To facilitate electronic service, persons with Internet
access who will eFile a document and/or be listed as a contact for an
intervenor must create and validate an eRegistration account using the
eRegistration link. Select the eFiling link to log on and submit the
intervention or protests.
    Persons unable to file electronically should submit an original and
14 copies of the intervention or protest to the Federal Energy
Regulatory Commission, 888 First St., NE., Washington, DC 20426.
    The filings in the above proceedings are accessible in the
Commission's eLibrary system by clicking on the appropriate link in the
above list. They are also available for review in the Commission's
Public Reference Room in Washington, DC. There is an eSubscription link
on the Web site that enables subscribers to receive email notification
when a document is added to a subscribed docket(s). For assistance with
any FERC Online service, please email<EMAIL_ADDRESS>or
call<PHONE_NUMBER> (toll free). For TTY, call<PHONE_NUMBER>.

Nathaniel J. Davis, Sr.,
Deputy Secretary.
 [FR Doc. E8-30508 Filed 12-22-08; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register: October 2, 2008 (Volume 73, Number 192)]
[Notices]
[Page 57350-57351]
[DOCID:fr02oc08-57]

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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. RP07-139-000, RP08-479-000, RP08-487-000 (not
consolidated)]

Algonquin Gas Transmission, LLC, Saltville Gas Storage Company,
LLC, East Tennessee Natural Gas, LLC; Notice of Technical Conference

September 26, 2008.
    On January 19, 2007, Algonquin Gas Transmission, LLC (Algonquin)
filed proposed changes to its tariff sheets concerning, among other
things, a net present value (NPV) allocation methodology for available
capacity that considered probability of default as one of its factors.
On February 16, 2007, the Commission accepted and suspended the
proposed tariff changes, subject to refund and conditions.\1\ On July
19, 2007, the Commission accepted Algonquin's compliance filing subject
to certain modifications.\2\ On September 19, 2007, the Commission
granted a request for rehearing for further consideration.
---------------------------------------------------------------------------

    \1\ Algonquin Gas Transmission, LLC, 118 FERC ]61,123.
    \2\ Id., 120 FERC ]61,072.
---------------------------------------------------------------------------

    On August 1, 2008, in Docket No. RP08-479-000, Saltville Gas
Storage Company, LLC (Saltville) and, in Docket No. RP08-487-000, East
Tennessee Natural Gas, LLC (East Tennessee) filed proposed changes to
their respective tariffs concerning, among other things, a NPV
allocation methodology for available capacity that considered
probability of default as one of its factors. On August 29, 2008, the
Commission accepted and suspended the proposed tariff changes of both
Saltville\3\ and East Tennessee,\4\ subject to refund and conditions,
and the outcome of a technical conference. In both orders, the
Commission directed its Staff to convene a technical conference to
address the proposed services and terms and conditions, and to report
the results of the technical conference to the Commission within 120
days.
---------------------------------------------------------------------------

    \3\ Saltville Gas Storage Company LLC, 124 FERC ]61,209.
    \4\ East Tennessee Natural Gas, LLC, 124 FERC ]61,210.
---------------------------------------------------------------------------

    On September 24, 2008 the Commission staff sent data requests to
Algonquin, Saltville, and East Tennessee requesting information about
the companies' credit practices, default history, and proposed use of a
probability of default factor in determining NPV of bids for available
capacity. Responses to the data requests are due on October 6, 2008.
    Take notice that a technical conference to discuss issues raised by
the filings of Algonquin, Saltville, and East Tennessee will be held on
Wednesday, October 22, 2008 at 9:30 am (EST), in a room to be
designated at the offices of the Federal Energy Regulatory Commission,
888 First Street, NE., Washington, DC 20426.
    The parties to all three proceedings should be prepared to discuss
the issues raised by the filings, in particular issues concerning the
probability of default factor. Parties should also be prepared to
discuss companies' responses to the data requests including their
current methodologies for allocating capacity, what, if any
deficiencies may exist with these methodologies, and how the proposed
probability of default factor addresses the deficiencies. The parties
should also be prepared to discuss the need for a probability of
default factor for both creditworthy and non-creditworthy customers,
whether the proposed use of a probability of default factor
unreasonably limits the pool of qualified potential bidders for
available capacity, and the merits of not separating the probability of
default assessment from the NPV bid.
    The Commission's conferences are accessible under section 508 of
the Rehabilitation Act of 1973. For accessibility accommodations please
send an e-mail to<EMAIL_ADDRESS>or call toll free 1-866-208-
3372 (voice) or<PHONE_NUMBER> (TTY), or send a FAX to<PHONE_NUMBER> with
the required accommodations.
    All parties and staff are permitted to attend. For further
information please

contact Vince Mareino at<PHONE_NUMBER> or<EMAIL_ADDRESS>
Kimberly D. Bose,
Secretary.
[FR Doc. E8-23210 Filed 10-1-08; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register: December 20, 2005 (Volume 70, Number 243)]
[Notices]
[Page 75519-75523]
[DOCID:fr20de05-96]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52954; File No. SR-NYSE-2005-87]

Self-Regulatory Organizations; New York Stock Exchange, Inc.;
Notice of Filing and Order Granting Accelerated Approval of a Proposed
Rule Change and Amendment No. 1 Thereto Relating to the Pilot to Put
Into Operation Phase 1 of the NYSE HYBRID MARKET \SM\

December 14, 2005.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 9, 2005, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. On December
13, 2005, the Exchange filed Amendment No. 1 to the proposed rule
change.\3\ The Commission is publishing this notice and order to
solicit comments on the proposed rule change, as amended, from
interested persons and to approve the proposed rule change, as amended,
on an accelerated basis.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Partial Amendment dated December 13, 2005 (``Amendment
No. 1''). In Amendment No. 1, the Exchange submitted Exhibit 3 to
the proposed rule change, which identified the securities that would
be included in the Pilot, and corrected a typographical error.
---------------------------------------------------------------------------

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

    The Exchange is proposing a pilot to put into operation Phase 1 of
the NYSE HYBRID MARKET \SM\ (``Hybrid Market'') initiative, as proposed
in SR-NYSE-2004-05 and amendments thereto (``Hybrid Market filings'')
with respect to a group of securities trading on the Exchange
(``Pilot'').\4\ In addition, the Pilot will implement certain system
changes discussed in SR-NYSE-2005-57.\5\ This filing sets forth amended
rules (previously described in the Hybrid Market filings) which would
be operational during the Phase 1 pilot as well as certain new
proposals, discussed herein. The text of the proposed rule change is
available on NYSE's Web site (http://www.nyse.co), at the principal

office of the Exchange, and at the Commission's Public Reference Room.
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 50173 (August 10,
2004), 69 FR 50407 (August 16, 2004) (Amendment No. 1 to SR-NYSE-
2004-05); Securities Exchange Act Release No. 50667 (November 15,
2004), 69 FR 67980 (November 22, 2004) (Amendment Nos. 2 and 3 to
SR-NYSE-2004-05) (The Exchange withdrew Amendment No. 4 and replaced
it with Amendment No. 5); Securities Exchange Act Release No. 51906
(June 22, 2005), 70 FR 37463 (June 29, 2005) (Amendment No. 5 to SR-
NYSE-2004-05). See also Amendment No. 6 to SR-NYSE-2004-05
(September 16, 2005) and Amendment No. 7 to SR-NYSE-2004-05 (October
10, 2005).
    \5\ See Securities Exchange Act Release No. 52362 (August 30,
2005), 70 FR 53701 (September 9, 2005) (SR-NYSE-2005-57). While
submitted as effective upon filing, the Exchange intended to
implement these changes upon approval of the Hybrid Market filings
by the Commission, if such approval is granted.
---------------------------------------------------------------------------

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 III 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
    The Exchange proposes a Pilot to put into operation Phase 1 of the
Hybrid Market initiative with respect to a group of securities, known
as Phase 1 \6\ Pilot securities (``Pilot securities''). The Pilot would
commence following Commission approval of the Pilot, during the week of
December 12, 2005 and would terminate the earlier of: (1) 90 calendar
days from the date of Commission approval, if granted, or (2)
Commission approval of the Exchange's Hybrid Market proposal, if
granted.
---------------------------------------------------------------------------

    \6\ See Securities Exchange Act Release No. 51906 (June 22,
2005), 70 FR 37463 (June 29, 2005) (Amendment No. 5 to SR-NYSE-2004-
05).
---------------------------------------------------------------------------

    Approximately 200 securities out of the 3,600 securities listed on
the Exchange (approximately 5%) have been identified as Pilot
securities and are listed on Exhibit 3 of the filing.\7\ In addition,
the list of Pilot securities will be posted on the Exchange's Web site.
---------------------------------------------------------------------------

    \7\ The NYSE selected the Pilot securities based on the
following criteria: (1) Trading location so as to include in the
Pilot securities from each room and post on the floor; (2) crowd
participation so as to include securities that generally have crowd
participation; (3) trading characteristics so as to include
securities whose trading characteristics are typically less volatile
to minimize the likelihood of disruptions during the systems
testing; and (4) specialist firm so as to include each of the equity
specialist firms on the floor. The Pilot securities represent
approximately 10% of the average daily NYSE trading volume.
Telephone call between Nancy Reich Jenkins, NYSE and Kelly Riley,
SEC on December 14, 2005.
---------------------------------------------------------------------------

    The Pilot will allow the Exchange to conduct real-time system and
user testing of certain features of the Hybrid Market filings in order
to be in a position to comply with the implementation of Regulation
NMS.\8\
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37496 (June 29, 2005).
---------------------------------------------------------------------------

    The Exchange believes the Pilot will prove beneficial from both a
technology and a training perspective. It will give the Exchange the
opportunity to identify and address any system problems and to identify
and incorporate beneficial system changes that become apparent as a
result of usage in real time and under real market conditions. The
ability to have such real time user interface will be invaluable, as it
is impossible to accurately anticipate behavioral changes in a
development or mock-trading

environment. In addition, the Pilot will allow users to gain essential
practical experience with the new systems and processes in a well-
modulated way.
    The Exchange anticipates that the Pilot will operate with minimal
problems given the amount and degree of testing and training that has
occurred to date. In addition, the Exchange plans to phase-in the
Pilot, if approved, to allow for a controlled and moderated roll out of
the new systems and capabilities.\9\
---------------------------------------------------------------------------

    \9\ The NYSE intends to phase in the Pilot gradually, beginning
with a single security on the first day of the Pilot and expanding
gradually over the course of four weeks. The timing of the phase-in
will be adjusted depending on the extent and significance of any
technical or user interface problems that might arise. Telephone
call between Nancy Reich Jenkins, NYSE and Kelly Riley, SEC on
December 14, 2005.
---------------------------------------------------------------------------

    There has been extensive testing of the approximately 15 Exchange
systems impacted by the Pilot, individually and collectively, both in
development and production environments. This testing occurred at all
levels, including development testing, automation testing, SIAC
testing, NYSE testing, integrated system testing and code reviews,
production environment testing, fall-back and recovery testing, and
regression and new functionality testing.
    In addition, there has been comprehensive training for both Floor
brokers and specialists, individually and together in a mock trading
environment. Training was conducted by the Exchange and was
supplemented in most cases by firm-specific training conducted by
member organizations for their employees. In addition, the Exchange
training environment was made available to proprietary system vendors
for their training sessions.
    Moreover, the Exchange intends to have available at all times
during the Pilot two versions of the operating software--the new
version that would be operational and the original, pre-Pilot version.
If a problem develops during the Pilot, the Exchange will be able to
revert to the pre-Pilot software within an average time of two minutes
or less.
    Accordingly, the Exchange believes that the extensiveness of the
testing and training, the phase-in approach and the fall-back
capabilities provide significant assurances that the Pilot will operate
as expected. However, in the event systems or other problems arise with
the Pilot that adversely impact investors or impede the Exchange's
ability to maintain a fair and orderly market, the Exchange will
immediately terminate the Pilot in whole or in part, as appropriate,
and return trading to current operations under current NYSE rules.

Phase 1 Pilot

    During the Pilot, the following rules and provisions of the Hybrid
Market initiative as outlined in the Hybrid Market filings will be
operational. To eliminate possible confusion as to what rule provisions
apply to Pilot securities, the Exchange has identified those new or
amended rules which will be operational during the Pilot with a ``P.''
Where part of a provision of a proposed Hybrid Market rule will be
operational during the Pilot, but another part of the proposed rule
will not, the Exchange has noted this in the attached rule text with
the designation that the section is ``intentionally omitted.'' In
addition, during the Pilot, all other Exchange rules apply to Pilot
securities as they do today.

NYSE Direct+[reg] (Exchange Rules 1000-1005)

    During the Pilot, NYSE Direct+[supreg] (``Direct+'') will continue
to operate as it does today under current Exchange Rules 1000-1005 and
subject to the same availability, restrictions and conditions, as
outlined in those rules.

NYSE Floor Broker Agency Interest Files [reg] (Exchange Rule
70.20(a)-(l)(P))

    During the Pilot, the Exchange is proposing to activate the Floor
broker agency file to permit brokers to enter their interest at or
outside the best bid and offer in Pilot securities (also referred to as
``e-Quoting''). The following sections of proposed Exchange Rule 70.20,
described in the Hybrid Market filings, would apply during the Pilot:
     70.20(a)(i)(ii)
     70.20(b)
     70.20(c)(i)-(iv): Floor brokers will be able to populate
the reserve file but it will be visible to the specialist in this phase
     70.20(e)
     70.20(f)
     70.20(i)-(l)
     70.30
    During the Pilot, the following sections of proposed Rule 70.20
would not apply:
     Rule 70.20(d)(i)-(ii): Sweep functionality
     Rule 70.20(g)-(h): Feature permitting brokers to exclude
their interest from the aggregate information available to the
specialist
    The above sections that are not applicable during the Pilot are
intentionally omitted from the proposed rule text.
    In the event that a proprietary vendor system has not been
activated or vender systems or Exchange systems that have been
activated otherwise become unavailable, a Floor broker who is unable to
enter his or her own Floor broker agency interest has the following
options:
    (i) Request a specialist to enter the agency interest on behalf of
the Floor broker who is unable to enter it for himself or herself;
    (ii) Send an order through SuperDot; [reg] \10\
---------------------------------------------------------------------------

    \10\ SuperDot [reg] is an electronic order-routing
system used by NYSE member firms to send market and limit orders to
the NYSE.
---------------------------------------------------------------------------

    (iii) Send a CAP-DI order \11\ to the specialist;
---------------------------------------------------------------------------

    \11\ See Exchange Rule 123A.30. The CAP-DI order guides the
specialist to represent the order to ensure that the elected or
converted portion goes along with the market, by not initiating a
significant price change or lagging behind the market. CAP-DI orders
are subject to a number of restrictions intended to minimize the
specialist's discretion in handling such orders. Elected and
converted CAP-DI orders that are not executed revert to CAP-DI
status.
---------------------------------------------------------------------------

    (iv) Trade manually in the Crowd, as is done today;
    (v) Ask another Floor broker to represent the order through his or
her agency interest file; or
    (vi) Send an order for Direct+ execution.

Rule 70.20(f)(P)

    The Hybrid Market filings described proposed rule 70.20(f) which
requires cancellation of agency interest files when the broker leaves
the Crowd. In connection with the Pilot, the Exchange proposes to amend
this provision to clarify that a Floor broker may leave the Crowd
without canceling his or her agency interest files in order to recharge
his or her handheld device. See proposed Exchange Rule 70.20(f)(P).

NYSE Specialist Interest Files \SM\ (Exchange Rule 104(c)(P))

    During the Pilot, specialists will be able to manually layer their
interest at and outside the best bid and offer, which will give
specialists' bids and offers persistent standing (also referred to as
s-Quotes). See Exchange Rule 104(c)(P). This means that if the
specialist bids/offers at a price that is not the best bid/offer, but
layers its interest below/above such best bid/offer, the specialist's
interest will remain in the specialist interest file and be available
to be displayed as the best bid/offer should better bids/offers be
exhausted. The Hybrid Market filings discuss the specialists' ability
to do this systemically via algorithmically generated messages sent via
the NYSE Specialist API \SM\ (``API''). During the Pilot, however,
specialists will not be

able to use systems employing algorithms to generate messages to bid,
offer, or trade via the API. Accordingly, for the purposes of the
Pilot, the Exchange is proposing a new rule to provide specialists with
the ability to manually layer interest at and outside the Exchange best
bid and offer. See proposed Exchange Rule 104(c)(P).
    During the Pilot, specialists will not be able to disseminate NYSE
Specialist Files \SM\ via NYSE OPENBOOK [reg] or other
Exchange data distribution channels.
    During the Pilot, specialists will not be able to have systems
using algorithms to send messages via the API to layer their interest
or to otherwise trade or quote, nor will the specialist's reserve
capability be operational. Therefore, proposed Exchange Rules 104(b)-
(h) will not be in effect.

Priority, Parity, and Yielding: Exchange Rules 70.20(b)(P), 72(c)-
(g)(P), 104.10(6)(i)(C)P, 108(a)(P)

    During the Pilot, the systemic programming of priority, parity and
yielding, as proposed by the Hybrid Market filings, other than the
yielding requirements for additional specialist interest, will be
operational. As a result, the following rules will apply during the
Pilot: 70.20(b)(P), 72(c)-(g)(P), 104.10(6)(i)(C)(P), and 108(a)(P).
    The most substantive change that will apply to trading in Pilot
securities will be that Floor brokers will lose their current ability
to object to the specialist trading on parity with their orders unless
the specialist is manually trading with them in the Crowd. However, a
Floor broker's use of an e-Quote implicitly suggests his or her
agreement that the specialist can be on parity with his or her orders.
A Floor broker who does not want to permit the specialist to trade on
parity with his or her orders may send the order through
SuperDot,[reg] enter a Direct+ order, or hit a bid/take an
offer.
    A Floor broker who is manually bidding or offering (i.e., not
through his or her agency interest file) will not be able to
participate in an execution involving e-Quotes and/or s-Quotes or, as
today, in Direct+ executions.

Other Exchange Rules

    During the Pilot, the following rules, as amended in the Hybrid
Market filings would apply to Pilot securities: Exchange Rules
60(e)(P), 117P, 122P, 123(e)P, and 132B(a)(D)(P).

Pilot Trading Example

    The Exchange quotation is 20.05 bid, offered at 20.07, 3,000 x 300.
The bid consists of: 1,000 shares of book interest, which arrived first
and has priority; 1,000 shares of broker agency interest comprised of
two brokers' bids for 500 shares each at 20.07, and 1,000 shares of
specialist interest. A market order to sell 3,000 shares arrives and
trades with the 20.05 bid, as follows: 3,000 shares trade and this is
reported by the specialist via the Smart Report Template and the system
assigns the contra-parties as follows: 1,000 shares of book interest
trade first (priority), and the remaining 2,000 shares are split
equally (1,000 shares each) between the floor broker agency interest
files and specialist interest file, as they are on parity.

Automatic Execution of CAP-DI Orders and Stop Orders

    Currently, when a trade occurs, the Exchange's system notifies the
specialist if any CAP-DI or stop orders have been elected by such
trade. The specialist has to then determine if there is any liquidity
against which the elected orders (or portions thereof) can trade. If
so, the specialist manually executes and reports trades involving the
elected volume.
    The Commission recently published an Exchange filing that provides
that elected stop and CAP-DI volume will be automatically executed \12\
to the extent that contra-side interest is available to trade with the
elected orders.\13\ These executions will be automatically reported,
including the relevant information regarding participants to the
execution (See Exchange Rule 123A.30, discussed below). Elected CAP-DI
volume unable to trade will automatically revert to CAP-DI status, and
elected stop limit orders unable to trade will become a limit order on
the Display Book. Elected stop orders will be executed in the same
manner as any market order. The rules regarding the election and
execution of CAP-DI and stop orders remain the same. The implementation
of this process will commence with the Pilot.
---------------------------------------------------------------------------

    \12\ This automatic execution will not be done through NYSE
Direct+, but rather a different system. Therefore, such execution is
not subject to the volume limitations of the Direct+ rules.
    \13\ See supra note 5.
---------------------------------------------------------------------------

    In connection with the Pilot, the Exchange is proposing changes to
Rule 76 to clarify that elected stop and stop limit orders are exempt
from the requirement that a member expose the order for possible price
improvement before crossing it.
    In addition, the Exchange is proposing amendments to Rule 13 with
respect to stop and stop limit orders. Certain of these changes were
proposed in the Hybrid Market filings. With respect to the Pilot, the
Exchange is proposing additional changes to Rule 13 to add language
that provides for the possibility of manual representation of stop and
stop limit orders in the Crowd.

Converted CAP-DI Orders and Direct+

    In addition, commencing with the Pilot, converted CAP-DI orders
will be systemically represented to enable them to participate in NYSE
Direct+[reg] executions under current Rules 1000-1005.\14\
---------------------------------------------------------------------------

    \14\ See id.
---------------------------------------------------------------------------

Automation of Parity Between Specialist and Elected CAP-DI Orders

    Exchange Rule 123A.30 provides that a Floor broker may permit a
specialist to trade on parity with CAP-DI orders. The rule currently
provides that if a specialist is on parity with one or more CAP-DI
orders, at no time may the specialist participate for its own account
in an amount in excess of that which each CAP-DI order would receive,
except that the specialist may participate for its own account to an
extent greater than any particular CAP-DI order where the size
specified on such order has been satisfied. A specialist trading on
parity with a CAP-DI order remains subject to the limitations in
Exchange Rule 104.10 as to transactions for his or her own account
effected on destabilizing ticks.
    Commencing with the Pilot, the Exchange will systemically ensure
that the specialist's participation when trading along with CAP-DI
orders is in accordance with the parity requirements of Rule 123A.30.
The system will assign the proper number of shares to the specialist
and CAP-DI orders. The Exchange filed \15\ this change for immediate
effectiveness pursuant to Section 19(b)(3)(A) of the Act \16\ and Rule
19b-4(f)(5) \17\ thereunder.
---------------------------------------------------------------------------

    \15\ See id.
    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(5).
---------------------------------------------------------------------------

Automatic Conversions of CAP-DI Orders

    Current Exchange Rule 123A.30 also provides that specialists have
the ability, subject to certain restrictions noted in the rule, to
convert CAP-DI orders to participate in transactions or to bid or
offer, without an electing trade.
    Proposed Exchange Rule 123A.30(a)(P) \18\ provides in part that the
elected or converted portion of a ``percentage order that is
convertible on a destabilizing tick and designated

immediate execution or cancel election'' (``CAP-DI order'') may be
automatically executed. An elected or converted CAP-DI order on the
same side of the market as an automatically executed electing order may
participate in a transaction at the bid (offer) price if there is
volume associated with the bid (offer) remaining after the electing
order is filled in its entirety. An elected or converted CAP-DI order
on the contra-side of the market as an automatically executed electing
order may participate in a transaction at the bid (offer) price if
there is volume remaining in the electing order.
---------------------------------------------------------------------------

    \18\ This rule is parallel to amendments made to Rule 123A.30.
See Securities Exchange Act Release No. 51906 (June 22, 2005), 70 FR
37463 (June 29, 2005) (Amendment No. 5 to SR-NYSE-2004-05).
---------------------------------------------------------------------------

    In addition, the Exchange is proposing to add new section (iv)(P)
to proposed Exchange Rule 123A.30(a)(P) to provide that when a
specialist is bidding or offering and an automatic execution occurs
with such bid/offer, marketable CAP-DI orders on the Display
Book[supreg] on the same side as the specialist's interest will be
automatically actively converted to participate in this execution, with
the system assigning the proper number of shares to the specialist and
CAP-DI orders, as discussed above. This will allow CAP-DI orders to
better participate in executions.
    However, in certain instances, an automatic conversion of
marketable CAP-DI orders will not occur even though the specialist is
trading for its own account. This will occur where the execution that
included automatically converted CAP-DI orders elects a contra-side
stop or stop limit order. In this situation, pursuant to current
Exchange Rule 123A.40, the specialist, as party to the election of the
stop order, owes such elected stop order an execution at the same price
as the specialist traded. The execution of such stop orders, in which
the specialist is the contra-party, may be manual \19\ or
automatic,\20\ depending upon whether any specialist interest remains
at the execution price. In either situation, marketable CAP-DI interest
at that price will not be automatically converted to participate along
with the specialist. However, the specialist will be alerted to the
fact there are CAP-DI orders on the Display Book[supreg] capable of
trading so that he or she can take appropriate action.
---------------------------------------------------------------------------

    \19\ If there is no specialist interest remaining in the bid/
offer, and the specialist must guarantee an execution to the stop
order at the electing price pursuant to Rule 123A.40, the specialist
must do a manual transaction to guarantee that the stop order
receives the same price as the specialist.
    \20\ If there is specialist interest remaining in the bid/offer
and the specialist must guarantee an execution to the stop order at
the electing price pursuant to Rule 123A.40, the Display Book system
will automatically execute the remaining specialist interest against
the elected stop order at the same price the specialist traded.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change, as amended, is
consistent with Section 6(b)(5) of the Act \21\ in that it is designed
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.
The Exchange believes that the proposed rule change, as amended, is
also designed to support the principles of Section 11A(a)(1) of the Act
\22\ in that it seeks to assure economically efficient execution of
securities transactions, make it practicable for brokers to execute
investors' orders in the best market and provide an opportunity for
investors' orders to be executed without the participation of a dealer.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f(b)(5).
    \22\ 15 U.S.C. 78k-1(a)(1).
---------------------------------------------------------------------------

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

    The Exchange does not believe that the proposed rule change, as
amended, will impose any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.

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

    See the SEC's Web site (http://www.sec.gov) for the comment letters

received on the Hybrid Market initiative and a copy of the Exchange's
response to the letters.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NYSE-2005-87 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NYSE-2005-87. This
file number should be included on the subject line if e-mail 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 Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments,

all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the 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-NYSE-2005-87 and should be submitted on or before
January 10, 2006.

IV. Commission's Finding and Order Granting Accelerated Approval of the
Proposed Rule Change

    The Commission finds that the proposed rule change, as amended, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities
exchange.\23\ Specifically, the Commission finds that approval of the
proposed rule change is consistent with Section 6(b)(5) of the Act
because the proposal is designed to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market and a national market system, and, in
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \23\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    With this proposed rule change, the Exchange has requested
temporary

approval by the Commission of certain features of its Hybrid Market, so
that it may begin live systems testing in a limited group of stocks.
According to the Exchange, this Pilot is necessary so that the Exchange
can maintain its planned implementation schedule for the Hybrid Market
and meet the Regulation NMS compliance dates.\24\ The Commission
recognizes that certain of the processes that NYSE has proposed to
begin testing have generated comment in the Hybrid Market filings. The
Commission wishes to emphasize that it continues to review the larger
Hybrid Market filings, including the processes included in this
Pilot.\25\ The Commission is considering all of the comments submitted
in response to the Hybrid Market filings and has not reached a decision
on whether they should be approved or disapproved. The Commission,
however, believes that due to the limited nature of the Pilot and its
short duration, that it is consistent with the Act to allow NYSE to
begin testing its new systems with this Pilot.
---------------------------------------------------------------------------

    \24\ NYSE has represented that it has proposed the Hybrid Market
with the intent that it will entitle NYSE quotations to protection
under Rule 611 as well as to comply with its obligations under this
rule. The compliance date for certain rules adopted under Regulation
NMS is June 29, 2006. 17 CFR 242.611.
    \25\ The Commission notes that the scope of the Pilot is
extremely limited. This Pilot is intended to enable NYSE to
technologically test certain features of its Hybrid Market proposal.
Other significant features of the Hybrid Market proposal, such as
the expansion of Direct+ and the ability of specialists to
electronically interact with the Display Book, are not included in
this Pilot. The NYSE represented that it expects to be able to use
the results of the systems testing in evaluating and addressing any
technology issues related to its Hybrid Market proposal that become
apparent.
---------------------------------------------------------------------------

    The NYSE explained in its filing that it has tested these functions
extensively but that it needs to test them in an actual trading
environment to ensure that they operate as intended. Accordingly, NYSE
represented that it does not anticipate any significant problems
arising from the Pilot. However, NYSE will immediately terminate the
Pilot, in whole or in part, as appropriate, should any systems or other
problems arise that adversely impact the protection of investors or
impede its ability to maintain a fair and orderly market, and return
trading to its current operations under current NYSE rules.\26\
---------------------------------------------------------------------------

    \26\ The Exchange stated that it would be able to revert back to
pre-Pilot operations within an average of two minutes or less. The
Exchange will notify the public via its Web site if the Pilot is
terminated in whole or in part. In addition, the Exchange will
notify floor members at the post if the Pilot is terminated in whole
or in part.
---------------------------------------------------------------------------

    The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\27\ for approving the proposed rule change prior to the
thirtieth day after the date of publication of the notice in the
Federal Register. The Pilot, which as discussed above is limited in
scope and duration, will allow the NYSE to conduct real-time system and
user testing of certain features of the proposed Hybrid Market.
According to NYSE, such testing should be beneficial from both a
technology and a training perspective. Although preliminary steps have
been taken--the NYSE has provided training for both Floor brokers and
specialists, many member organizations also provided firm-specific
training for their employees, and proprietary system vendors were able
to utilize the NYSE trading environment for their training sessions--
the Pilot should give the Exchange the opportunity, in advance of the
compliance date of Regulation NMS, to identify and address any system
problems with these particular rules under the proposed Hybrid Market.
Further, the Pilot should allow users to gain essential practical
experience with the new systems and processes. Therefore, the
Commission finds that immediate implementation of the Pilot, which is
limited in both scope and duration, should permit NYSE to remain on
schedule to implement the Hybrid Market filings, if approved by the
Commission so that it may meet the Regulation NMS compliance dates.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (SR-NYSE-2005-87), as amended, is hereby
approved on an accelerated basis until March 14, 2006 or the Commission
otherwise acts on the Hybrid Market filings.

    By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 05-24251 Filed 12-19-05; 8:45 am]

BILLING CODE 8010-01-P