[Federal Register Volume 86, Number 231 (Monday, December 6, 2021)]
[Rules and Regulations]
[Pages 68921-68926]
[FR Doc No: 2021-26369]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2020-0424; FRL-9063-01-OCSPP]

Isoprothiolane; Pesticide Tolerances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation establishes tolerances for residues of
isoprothiolane in or on banana; rice, bran; rice, husked; and rice,
polished rice. Nichino America, Inc. requested these tolerances under
the Federal Food, Drug, and Cosmetic Act (FFDCA).

DATES: This regulation is effective December 6, 2021. Objections and
requests for hearings must be received on or before February 4, 2022
and must be filed in accordance with the instructions provided in 40
CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

ADDRESSES: The docket for this action, identified by docket
identification (ID) number EPA-HQ-OPP-2020-0424, is available at
https://www.regulations.gov or at the Office of Pesticide Programs
Regulatory Public Docket (OPP Docket) in the Environmental Protection
Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg.,
Rm. 3334, 1301 Constitution Ave. NW, Washington, DC 20460-0001. The
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>, and the telephone number for the OPP
Docket is<PHONE_NUMBER>.
    Due to the public health concerns related to COVID-19, the EPA
Docket Center (EPA/DC) and Reading Room is closed to visitors with
limited exceptions. The staff continues to provide remote customer
service via email, phone, and webform. For the latest status
information on EPA/DC services and docket access, visit https://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: Marietta Echeverria, Registration

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

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

    You may be potentially affected by this action if you are an
agricultural producer, food manufacturer, or pesticide manufacturer.
The following list of North American Industrial Classification System
(NAICS) codes is not intended to be exhaustive, but rather provides a
guide to help readers determine whether this document applies to them.
Potentially affected entities may include:
     Crop production (NAICS code 111).
     Animal production (NAICS code 112).
     Food manufacturing (NAICS code 311).
     Pesticide manufacturing (NAICS code 32532).

B. How can I get electronic access to other related information?

    You may access a frequently updated electronic version of EPA's
tolerance regulations at 40 CFR part 180 through the Office of the
Federal Register's e-CFR site at https://www.ecfr.gov/current/title-40.

C. How can I file an objection or hearing request?

    Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an
objection to any aspect of this regulation and may also request a
hearing on those objections. You must file your objection or request a
hearing on this regulation in accordance with the instructions provided
in 40 CFR part 178. To ensure proper receipt by EPA, you must identify
docket ID number EPA-HQ-OPP-2020-0424 in the subject line on the first
page of your submission. All objections and requests for a hearing must
be in writing and must be received by the Hearing Clerk on or before
February 4, 2022. Addresses for mail and hand delivery of objections
and hearing requests are provided in 40 CFR 178.25(b).
    In addition to filing an objection or hearing request with the
Hearing Clerk as described in 40 CFR part 178, please submit a copy of
the filing (excluding any Confidential Business Information (CBI)) for
inclusion in the public docket. Information not marked confidential
pursuant to 40 CFR part 2 may be disclosed publicly by EPA without
prior notice. Submit the non-CBI copy of your objection or hearing
request, identified by docket ID number EPA-HQ-OPP-2020-0424, by one of
the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be CBI or other
information whose disclosure is restricted by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please follow the
instructions at https://www.epa.gov/dockets/contacts.html.
    Additional instructions on commenting or visiting the docket, along
with more information about dockets generally, is available at https://www.epa.gov/dockets.

II. Summary of Petitioned-For Tolerance

    In the Federal Register of December 21, 2020 (85 FR 82998) (FRL-
10016-93), EPA issued a document pursuant to FFDCA section 408(d)(3),
21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP
9E8820) by Nichino America, Inc., 4550 Linden Hill Road, Suite 501,
Wilmington, DE 19808. The petition requested that 40 CFR part 180 be
amended by establishing tolerances for residues of the fungicide
isoprothiolane, Diisopropyl 1,3-dithiolan-2-ylidenemalonate, in or on
raw agricultural commodities banana at 1 part per million (ppm); rice,
bran, at 30 ppm; rice, husked, at 6 ppm; and rice, polished at 1.5 ppm.
That document referenced a summary of the petition prepared by Nichino
America, Inc., the registrant, which is available in the docket,
https://www.regulations.gov. One comment was received on the notice of
filing. EPA's response to the comment is discussed in Unit IV.C.
    Based upon review of the data supporting the petition, EPA has
revised one commodity definition and is establishing several tolerances
at different levels than requested by the registrant. The reasons for
these changes are explained in Unit IV.D.

III. Aggregate Risk Assessment and Determination of Safety

    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a
tolerance (the legal limit for a pesticide chemical residue in or on a
food) only if EPA determines that the tolerance is ``safe.'' Section
408(b)(2)(A)(ii) of FFDCA defines ``safe'' to mean that ``there is a
reasonable certainty that no harm will result from aggregate exposure
to the pesticide chemical residue, including all anticipated dietary
exposures and all other exposures for which there is reliable
information.'' This includes exposure through drinking water and in
residential settings but does not include occupational exposure.
Neither of these exposures are relevant to this action, however.
Section 408(b)(2)(C) of FFDCA requires EPA to give special
consideration to exposure of infants and children to the pesticide
chemical residue in establishing a tolerance and to ``ensure that there
is a reasonable certainty that no harm will result to infants and
children from aggregate exposure to the pesticide chemical residue. . .
. ''
    Consistent with FFDCA section 408(b)(2)(D), and the factors
specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available
scientific data and other relevant information in support of this
action. EPA has sufficient data to assess the hazards of and to make a
determination on aggregate exposure for isoprothiolane. EPA's
assessment of exposures and risks associated with isoprothiolane
follows.

A. Toxicological Profile

    EPA has evaluated the available toxicity data and considered its
validity, completeness, and reliability as well as the relationship of
the results of the studies to human risk. EPA has also considered
available information concerning the variability of the sensitivities
of major identifiable subgroups of consumers, including infants and
children.
    The primary target organ for isoprothiolane is the liver in rats
and mice. Consistent decreases in body weight were also observed at the
same or lower doses than the liver effects throughout the database.
Adverse liver effects included increases in liver enzymes, increased
liver weight (absolute and relative), hepatocellular hypertrophy,
eosinophilic foci of cellular alterations, eosinophilic cytoplasmic
inclusions, and spongiosis hepatis in rats. In mice, following chronic
dosing, amyloidosis was observed across several organs at the highest-
tested dose. There is no evidence of increased qualitative or
quantitative susceptibility in the rat and rabbit developmental
toxicity studies or the 2-generation rat reproduction study.
    There was no evidence of immunotoxicity, or neurotoxicity observed
in any species in the submitted toxicity database.

    Isoprothiolane is classified as ``Suggestive Evidence of
Carcinogenic Potential'' based upon increases of skin keratoacanthomas
and keratoacanthomas, papillomas, basal cell epitheliomas and/or
squamous cell carcinomas combined in male rats. Isoprothiolane is not
considered to be genotoxic. The Agency has determined that
quantification of risk using a non-linear approach (i.e., chronic
reference dose (cRfD)) will adequately account for all chronic
toxicity, including any potential carcinogenicity, that could result
from exposure to isoprothiolane.
    Specific information on the studies received and the nature of the
adverse effects caused by isoprothiolane as well as the no-observed-
adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-
level (LOAEL) from the toxicity studies can be found at https://www.regulations.gov in document Isoprothiolane. Human Health Risk
Assessment for Isoprothiolane Tolerances for Banana and Rice without a
U.S. Registration (First Food Use) hereinafter ``Isoprothiolane Human
Health Risk Assessment'' at pages 23-44 in docket ID number EPA-HQ-OPP-
2020-0424.

B. Toxicological Points of Departure/Levels of Concern

    Once a pesticide's toxicological profile is determined, EPA
identifies toxicological points of departure (POD) and levels of
concern to use in evaluating the risk posed by human exposure to the
pesticide. For hazards that have a threshold below which there is no
appreciable risk, the toxicological POD is used as the basis for
derivation of reference values for risk assessment. PODs are developed
based on a careful analysis of the doses in each toxicological study to
determine the dose at which no adverse effects are observed (the NOAEL)
and the lowest dose at which adverse effects of concern are identified
(the LOAEL). Uncertainty/safety factors are used in conjunction with
the POD to calculate a safe exposure level--generally referred to as a
population-adjusted dose (PAD) or a reference dose (RfD)--and a safe
margin of exposure (MOE). For non-threshold risks, the Agency assumes
that any amount of exposure will lead to some degree of risk. Thus, the
Agency estimates risk in terms of the probability of an occurrence of
the adverse effect expected in a lifetime. For information on the
general principles EPA uses in risk characterization and a complete
description of the risk assessment process, see https://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/assessing-human-health-risk-pesticide.
    A summary of the toxicological endpoints for isoprothiolane used
for human risk assessment can be found in the Isoprothiolane Human
Health Risk Assessment.

C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary
exposure to isoprothiolane, EPA considered exposure under the
petitioned-for tolerances. EPA assessed dietary exposures from
isoprothiolane in food as follows:
    i. Acute exposure. Quantitative acute dietary exposure and risk
assessments are performed for a food-use pesticide, if a toxicological
study has indicated the possibility of an effect of concern occurring
as a result of a 1-day or single exposure. No such effects were
identified in the toxicological studies for isoprothiolane; therefore,
a quantitative acute dietary exposure assessment is unnecessary.
    ii. Chronic exposure. In conducting the chronic dietary exposure
assessment EPA used the 2003-2008 food consumption data from the U.S.
Department of Agriculture's (USDA's) National Health and Nutrition
Examination Survey, What We Eat in America (NHANES/WWEIA). As to
residue levels in food, EPA assumed tolerance-level residues or
tolerance level residues adjusted to account for the residue of concern
for risk assessment; default and empirical processing factors; and 100
percent crop treated (PCT).
    iii. Cancer. EPA determines whether quantitative cancer exposure
and risk assessments are appropriate for a food-use pesticide based on
the weight of the evidence from cancer studies and other relevant data.
Cancer risk is quantified using a linear or nonlinear approach. If
sufficient information on the carcinogenic mode of action is available,
a threshold or nonlinear approach is used and a cancer RfD is
calculated based on an earlier noncancer key event. If carcinogenic
mode of action data are not available, or if the mode of action data
determines a mutagenic mode of action, a default linear cancer slope
factor approach is utilized. Based on its review of available data, EPA
has concluded that a nonlinear RfD approach will adequately account for
all chronic toxicity, including any potential carcinogenicity, that
could result from exposure to isoprothiolane. Cancer risk was assessed
using the same exposure estimates as discussed in Unit III.C.1.ii.,
chronic exposure.
    iv. Percent crop treated (PCT) information. EPA did not use
anticipated residue and/or PCT information in the dietary assessment
for isoprothiolane. Tolerance level residues and/or 100% CT were
assumed for all food commodities.
    2. Dietary exposure from drinking water. Residues are not expected
in drinking water as the products will not be used in the U.S.
    3. From non-dietary exposure. The term ``residential exposure'' is
used in this document to refer to non-occupational, non-dietary
exposure (e.g., for lawn and garden pest control, indoor pest control,
termiticides, and flea and tick control on pets).
    Isoprothiolane is not registered for any use patterns; therefore,
there is no residential exposure.
    4. Cumulative effects from substances with a common mechanism of
toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when
considering whether to establish, modify, or revoke a tolerance, the
Agency consider ``available information'' concerning the cumulative
effects of a particular pesticide's residues and ``other substances
that have a common mechanism of toxicity.''
    Unlike other pesticides for which EPA has followed a cumulative
risk approach based on a common mechanism of toxicity, EPA has not made
a common mechanism of toxicity finding as to isoprothiolane and any
other substances and isoprothiolane does not appear to produce a toxic
metabolite produced by other substances. For the purposes of this
action, therefore, EPA has not assumed that isoprothiolane has a common
mechanism of toxicity with other substances. For information regarding
EPA's efforts to determine which chemicals have a common mechanism of
toxicity and to evaluate the cumulative effects of such chemicals, see
EPA's website at https://www.epa.gov/pesticide-science-and-assessing-pesticide-risks/pesticide-cumulative-risk-assessment-framework.

D. Safety Factor for Infants and Children

    1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA
shall apply an additional tenfold (10X) margin of safety for infants
and children in the case of threshold effects to account for prenatal
and postnatal toxicity and the completeness of the database on toxicity
and exposure unless EPA determines based on reliable data that a
different margin of safety will be safe for infants and children. This
additional margin of safety is commonly referred to as the FQPA Safety
Factor (SF). In applying

this provision, EPA either retains the default value of 10X, or uses a
different additional safety factor when reliable data available to EPA
support the choice of a different factor.
    2. Prenatal and postnatal sensitivity. There is no evidence of
increased qualitative or quantitative susceptibility in the rat and
rabbit developmental toxicity studies or the 2-generation rat
reproduction study. In the rat developmental study, developmental
effects (decrease fetal weights, increased incidence of small fetuses,
and increased incidence of a skeletal variation (un-ossification of
thoracic vertebral body)) were observed in the presence of maternal
toxicity (decreased maternal body weight). In the rabbit developmental
toxicity study, no significant developmental or maternal effects were
seen. In the 2-generation reproductive toxicity study in rats, parental
toxicity was manifested as decreases in body weights and food
consumption in P and F1 parents; increases in liver weights and spleen
weights (P and F1 parents); decreases in thymus weights (P and F1
females); and increased incidences of microscopic findings in the liver
(centrilobular hepatic hypertrophy), thymus (thymic atrophy) of P and
F1 females. Offspring toxicity (decreased body weights and delayed
physical development (delayed eye opening)) and reproductive toxicity
(decreased ovary and uterus weights, atrophy of the endometrium and
myometrium in the uterus, and atrophy of the ovaries) were observed in
the presence of parental toxicity.
    3. Conclusion. EPA has determined that reliable data show the
safety of infants and children would be adequately protected if the
FQPA SF were reduced to 1X. That decision is based on the following
findings:
    i. The toxicity database for isoprothiolane is complete at this
time.
    ii. Although acute (ACN) and subchronic (SCN) neurotoxicity studies
were not available, neurobehavior (functional observation battery (FOB)
and motor activity) was assessed in two 13-week oral studies in rats
and mice on isoprothiolane; no changes in FOB and motor activity were
observed. There was no evidence of neurotoxicity in the isoprothiolane
database including subchronic studies or in the routine clinical
observations of the chronic studies. EPA's Hazard and Science Policy
Council recommended waiving the acute and subchronic neurotoxicity
studies at this time. There is no indication that isoprothiolane is a
neurotoxic chemical and there is no need for a developmental
neurotoxicity study or additional UFs to account for neurotoxicity.
    iii. There is no evidence that isoprothiolane results in increased
susceptibility in in utero rats or rabbits in the prenatal
developmental studies or in young rats in the 2-generation reproduction
study.
    iv. There are no residual uncertainties identified in the exposure
databases. Tolerance-level residues or adjusted tolerance level
residues (adjusted to account for the residue of concern), were used
for the commodities. An assumption of 100% crop treated was also used
for the chronic dietary analysis. There are no residual uncertainties
in the exposure database. The residue database is adequate. The Human
Health Risk Assessment will not underestimate the exposure and risks
posed by isoprothiolane.

E. Aggregate Risks and Determination of Safety

    EPA determines whether acute and chronic dietary pesticide
exposures are safe by comparing aggregate exposure estimates to the
acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA
calculates the lifetime probability of acquiring cancer given the
estimated aggregate exposure. Short-, intermediate-, and chronic-term
risks are evaluated by comparing the estimated aggregate food, water,
and residential exposure to the appropriate PODs to ensure that an
adequate MOE exists.
    1. Acute risk. An acute aggregate risk assessment takes into
account acute exposure estimates from dietary consumption of food and
drinking water. No adverse effect resulting from a single oral exposure
was identified and no acute dietary endpoint was selected. Therefore,
isoprothiolane is not expected to pose an acute risk.
    2. Chronic risk. Using the exposure assumptions described in this
unit for chronic exposure, EPA has concluded that chronic exposure to
isoprothiolane from food and water will utilize 5.8% of the cPAD for
all infants (<1 year old), the population group receiving the greatest
exposure. There are no residential uses for isoprothiolane.
    3. Short- and intermediate-term risk. Short- and intermediate-term
aggregate exposure takes into account short- and intermediate-term
residential exposure plus chronic exposure to food and water
(considered to be a background exposure level). Because isoprothiolane
is not registered in the United States, the only exposures will be
dietary, from residues in or on imported rice commodities or banana;
therefore, no short-term or intermediate-term residential exposure is
expected.
    Because there is no short- or intermediate-term residential
exposure and chronic dietary exposure has already been assessed under
the appropriately protective cPAD (which is at least as protective as
the POD used to assess short-term risk), no further assessment of
short- or intermediate-term risk is necessary, and EPA relies on the
chronic dietary risk assessment for evaluating short or intermediate-
term risk for isoprothiolane.
    4. Aggregate cancer risk for U.S. population. As stated in Unit
III.A., EPA has concluded that the chronic reference dose will
adequately account for all repeated exposure/chronic toxicity,
including carcinogenicity, that could result from exposure to
isoprothiolane. Based on the lack of chronic risk at regulated levels
of exposure, EPA concludes that isoprothiolane will not pose an
aggregate cancer risk.
    5. Determination of safety. Based on these risk assessments, EPA
concludes that there is a reasonable certainty that no harm will result
to the general population, or to infants and children from aggregate
exposure to isoprothiolane residues.

IV. Other Considerations

A. Analytical Enforcement Methodology

    Adequate enforcement methodology 88449-M is available to enforce
the tolerance expression in/on banana. Method No. 88449-M includes
analysis by liquid chromatography with tandem mass spectroscopy (LC/MS/
MS). For rice, the Joint FAO/WHO Meeting on Pesticide Residues (JMPR)
review indicated that the QuEChERS (quick, easy, cheap, effective,
rugged, and safe) method is adequate for the determination of
isoprothiolane.
    The method may be requested from: Chief, Analytical Chemistry
Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD
20755-5350; telephone number:<PHONE_NUMBER>; email address:
[email protected].

B. International Residue Limits

    In making its tolerance decisions, EPA seeks to harmonize U.S.
tolerances with international standards whenever possible, consistent
with U.S. food safety standards and agricultural practices. EPA
considers the international maximum residue limits (MRLs) established
by the Codex Alimentarius Commission (Codex), as required by FFDCA
section 408(b)(4). The Codex Alimentarius is a joint

United Nations Food and Agriculture Organization/World Health
Organization food standards program, and it is recognized as an
international food safety standards-setting organization in trade
agreements to which the United States is a party. EPA may establish a
tolerance that is different from a Codex MRL; however, FFDCA section
408(b)(4) requires that EPA explain the reasons for departing from the
Codex level.
    The Codex has established MRLs for isoprothiolane in or on rice,
husked at 6 ppm and rice, polished at 1.5 ppm. These MRLs are the same
as the tolerances established for isoprothiolane in the United States.
There are currently no Codex MRLs for banana or rice, bran.

C. Response to Comments

    EPA received one comment in response to the December 21, 2020
Notice of Filing, which recommended that the use of pesticides on food
should be banned. Although the Agency recognizes that some individuals
believe that pesticides should be banned on agricultural crops, the
existing legal framework provided by section 408 of the FFDCA
authorizes EPA to establish tolerances when it determines that the
tolerance is safe. Upon consideration of the validity, completeness,
and reliability of the available data as well as other factors the
FFDCA requires EPA to consider, EPA has determined that the quizalofop
ethyl tolerances are safe. The commenter has provided no information
indicating that a safety determination cannot be supported.

D. Revisions to Petitioned-For Tolerances

    EPA is establishing two tolerances at different levels than
requested by the petitioner. Specifically, EPA is establishing the
tolerance for banana at 0.9 ppm rather than 1 based on the Organization
for Economic Co-operation and Development (OECD) tolerance calculation
procedure. The proposed ``rice, bran'' tolerance was 30 ppm. EPA is
establishing the ``rice, bran'' tolerance at 15 ppm rather than 30 ppm
based on the field trial and processing data. In addition, EPA revised
the commodity definition from the proposed ``rice, polished'' to
``rice, polished rice'' to conform to current practices.

V. Conclusion

    Therefore, tolerances are established for residues of
isoprothiolane, including its metabolites and degradates, as determined
by measuring only isoprothiolane (bis(1-methylethyl) 2-(1,3-dithiolan-
2-ylidene)propanedioate), in or on banana at 0.9 ppm; rice, bran, at 15
ppm; rice, husked, at 6 ppm; and rice, polished rice at 1.5 ppm.

VI. Statutory and Executive Order Reviews

    This action establishes tolerances under FFDCA section 408(d) in
response to a petition submitted to the Agency. The Office of
Management and Budget (OMB) has exempted these types of actions from
review under Executive Order 12866, entitled ``Regulatory Planning and
Review'' (58 FR 51735, October 4, 1993). Because this action has been
exempted from review under Executive Order 12866, this action is not
subject to Executive Order 13211, entitled ``Actions Concerning
Regulations That Significantly Affect Energy Supply, Distribution, or
Use'' (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled
``Protection of Children from Environmental Health Risks and Safety
Risks'' (62 FR 19885, April 23, 1997). This action does not contain any
information collections subject to OMB approval under the Paperwork
Reduction Act (PRA) (44 U.S.C. 3501 et seq.), nor does it require any
special considerations under Executive Order 12898, entitled ``Federal
Actions to Address Environmental Justice in Minority Populations and
Low-Income Populations'' (59 FR 7629, February 16, 1994).
    Since tolerances and exemptions that are established on the basis
of a petition under FFDCA section 408(d), such as the tolerance in this
final rule, do not require the issuance of a proposed rule, the
requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et
seq.), do not apply.
    This action directly regulates growers, food processors, food
handlers, and food retailers, not States or Tribes, nor does this
action alter the relationships or distribution of power and
responsibilities established by Congress in the preemption provisions
of FFDCA section 408(n)(4). As such, the Agency has determined that
this action will not have a substantial direct effect on States or
Tribal Governments, on the relationship between the National Government
and the States or Tribal Governments, or on the distribution of power
and responsibilities among the various levels of government or between
the Federal Government and Indian Tribes. Thus, the Agency has
determined that Executive Order 13132, entitled ``Federalism'' (64 FR
43255, August 10, 1999) and Executive Order 13175, entitled
``Consultation and Coordination with Indian Tribal Governments'' (65 FR
67249, November 9, 2000) do not apply to this action. In addition, this
action does not impose any enforceable duty or contain any unfunded
mandate as described under Title II of the Unfunded Mandates Reform Act
(UMRA) (2 U.S.C. 1501 et seq.).
    This action does not involve any technical standards that would
require Agency consideration of voluntary consensus standards pursuant
to section 12(d) of the National Technology Transfer and Advancement
Act (NTTAA) (15 U.S.C. 272 note).

VII. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
EPA will submit a report containing this rule and other required
information to the U.S. Senate, the U.S. House of Representatives, and
the Comptroller General of the United States prior to publication of
the rule in the Federal Register. This action is not a ``major rule''
as defined by 5 U.S.C. 804(2).

List of Subjects in 40 CFR Part 180

    Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and
recordkeeping requirements.

    Dated: November 23, 2021.
Edward Messina,
Director, Office of Pesticide Programs.
    Therefore, for the reasons stated in the preamble, EPA is amending
40 CFR chapter I as follows:

PART 180--TOLERANCES AND EXEMPTIONS FOR PESTICIDE CHEMICAL RESIDUES
IN FOOD

0
1. The authority citation for part 180 continues to read as follows:

    Authority: 21 U.S.C. 321(q), 346a and 371.

0
2. Add Sec.  180.721 to subpart C to read as follows:

Sec.  180.721  Isoprothiolane; tolerances for residues.

    (a) General. Tolerances are established for residues of the
fungicide isoprothiolane, including its metabolites and degradates, in
or on the commodities in Table 1 to this paragraph (a). Compliance with
the tolerance levels specified in Table 1 to this paragraph (a) is to
be determined by measuring only residues of isoprothiolane (bis(1-
methylethyl) 2-(1,3-dithiolan-2-ylidene)propanedioate) in or on the
commodities:

                        Table 1 to Paragraph (a)
------------------------------------------------------------------------
                                                               Parts per
                          Commodity                             million
------------------------------------------------------------------------
Banana \1\..................................................         0.9
Rice, bran \1\..............................................          15
Rice, husked \1\............................................           6
Rice, polished rice \1\.....................................         1.5
------------------------------------------------------------------------
\1\ There are no U.S. registrations as of December 6, 2021.

    (b)-(d) [Reserved]

[FR Doc. 2021-26369 Filed 12-3-21; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 82, Number 179 (Monday, September 18, 2017)]
[Notices]
[Pages 43657-43658]
[FR Doc No: 2017-19685]

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DEPARTMENT OF TRANSPORTATION

Federal Railroad Administration

[Docket Number FRA-2017-0082]

Notice of Application for Approval To Discontinue or Modify a
Railroad Signal System

    Under part 235 of Title 49 of the Code of Federal Regulations (CFR)
and 49 U.S.C. 20502(a), this document provides the public notice that
on August 21, 2017, the Denver Regional Transportation District
Commuter Rail (RTDC) petitioned the Federal Railroad Administration
(FRA) seeking approval to discontinue or modify a signal system. FRA
assigned the petition Docket Number FRA-2017-0082.
    Applicant: Regional Transportation District Commuter Rail, Mr.
Allen W. Miller, Senior Manager, Commuter Rail, Contracted Services,
1560 Broadway, Suite 600, Denver, Colorado 80202.
    The Regional Transportation District (RTD) is the owner of the line
segment and BNSF Railway (BNSF) and the National Railroad Passenger
Corporation (Amtrak) are the operators. RTDC seeks to modify the
Automatic Block Signal (ABS) and Traffic Control System (TCS) on the
BNSF and RTDC line segment between the 41D and 43D derails, switch 29,
and the 8S signal, on the East and West Yard Track segments near Denver
Union Station (DUS) Interlocking, between MP 0.00 and MP 0.49.
    The application states that BNSF uses this 500-foot line segment
between the 41D and 43D derails, switch 29, and the 8S signal primarily
for locomotive switching moves and Amtrak operates on this line segment
to move in and out of DUS Tracks #4 and #5 for passenger operations.
    The current signal system design uses the 41D, East yard track, and
43D West yard track, switch indication lights to govern traffic in
advance of the derails on the yard tracks and in approach to the 8S
signal at DUS Interlocking. The 41D and 43D derails and switch 29 are
interlocked with the 8S signal at DUS Interlocking. The violation of
the 8S signal, toward DUS, is safeguarded by the 49D derail.
    Disconnecting the circuitry of the 41D and 43D derail and switch 29
from 8S signal at DUS Interlocking is proposed in order to comply with
provisions of 49 CFR part 236. The application goes on to describe the
work that would be done if approved. All existing home signals will be
retained. The 41D and 43D derails, switch 29, and associated switch
indication lights will remain powered but will be controlled and
monitored independently from the DUS Interlocking. The movement of
switch 29 will be electrically tied to the 41D and 43D derails.
Positioning of switch 29 will be determined by the position of the
corresponding derail, aligning to the derail which is in the non-
derailing position and locked. Although the switch and derails will be
removed from the DUS Interlocking logics, a minimum of two indications
from switch 29--switch position and the locked indication--will be
established in order to provide safe routing through DUS between the
platform and beyond the 41D and 43D derails in both directions. The
design will be fail-safe. Sufficient provision will exist to protect
unauthorized access to DUS Interlocking via the 49D derail to protect
against any train that may violate the 8S signal at DUS Interlocking.
As an additional safety measure a minimum of 100 feet of center gauge
restraining rail will be installed south of the 49D derail, toward DUS,
to protect against incursion into the RTDC tracks.
    The reasons given by RTDC for the proposed changes are improvements
to reliability and safety, expedited train movements, and compliance
with 49

CFR part 236 for present train operations.
    A copy of the petition, as well as any written communications
concerning the petition, is available for review online at
www.regulations.gov and in person at the U.S. Department of
Transportation's Docket Operations Facility, 1200 New Jersey Avenue
SE., W12-140, Washington, DC 20590. The Docket Operations Facility is
open from 9 a.m. to 5 p.m., Monday through Friday, except Federal
Holidays.
    Interested parties are invited to participate in these proceedings
by submitting written views, data, or comments. FRA does not anticipate
scheduling a public hearing in connection with these proceedings since
the facts do not appear to warrant a hearing. If any interested parties
desire an opportunity for oral comment, they should notify FRA, in
writing, before the end of the comment period and specify the basis for
their request.
    All communications concerning these proceedings should identify the
appropriate docket number and may be submitted by any of the following
methods:
     Web site: http://www.regulations.gov. Follow the online
instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: Docket Operations Facility, U.S. Department of
Transportation, 1200 New Jersey Avenue SE., W12-140, Washington, DC
20590.
     Hand Delivery: 1200 New Jersey Avenue SE., Room W12-140,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal Holidays.
    Communications received by November 2, 2017 will be considered by
FRA before final action is taken. Comments received after that date
will be considered if practicable.
    Anyone can search the electronic form of any written communications
and comments received into any of our dockets by the name of the
individual submitting the comment (or signing the document, if
submitted on behalf of an association, business, labor union, etc.).
Under 5 U.S.C. 553(c), DOT solicits comments from the public to better
inform its processes. DOT posts these comments, without edit, including
any personal information the commenter provides, to
www.regulations.gov, as described in the system of records notice (DOT/
ALL-14 FDMS), which can be reviewed at https://www.transportation.gov/privacy. See also https://www.regulations.gov/privacyNotice for the
privacy notice of regulations.gov.

Robert C. Lauby,
Associate Administrator for Railroad Safety, Chief Safety Officer.
[FR Doc. 2017-19685 Filed 9-15-17; 8:45 am]
 BILLING CODE 4910-06-P


[Federal Register Volume 81, Number 81 (Wednesday, April 27, 2016)]
[Notices]
[Page 24930]
[FR Doc No: 2016-09773]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

[Summary Notice No. 2016-49]

Petition for Exemption; Summary of Petition Received; VT DRB
Aviation Consultants

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice.

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SUMMARY: This notice contains a summary of a petition seeking relief
from specified requirements of Title 14 of the Code of Federal
Regulations. The purpose of this notice is to improve the public's
awareness of, and participation in, the FAA's exemption process.
Neither publication of this notice nor the inclusion or omission of
information in the summary is intended to affect the legal status of
the petition or its final disposition.

DATES: Comments on this petition must identify the petition docket
number and must be received on or before May 17, 2016.

ADDRESSES: Send comments identified by docket number FAA-2015-8751
using any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and follow the online instructions for sending your
comments electronically.
     Mail: Send comments to Docket Operations, M-30; U.S.
Department of Transportation (DOT), 1200 New Jersey Avenue SE., Room
W12-140, West Building Ground Floor, Washington, DC 20590-0001.
     Hand Delivery or Courier: Take comments to Docket
Operations in Room W12-140 of the West Building Ground Floor at 1200
New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays.
     Fax: Fax comments to Docket Operations at<PHONE_NUMBER>.
    Privacy: In accordance with 5 U.S.C. 553(c), DOT solicits comments
from the public to better inform its rulemaking process. DOT posts
these comments, without edit, including any personal information the
commenter provides, to http://www.regulations.gov, as described in the
system of records notice (DOT/ALL-14 FDMS), which can be reviewed at
http://www.dot.gov/privacy.
    Docket: Background documents or comments received may be read at
http://www.regulations.gov at any time. Follow the online instructions
for accessing the docket or go to the Docket Operations in Room W12-140
of the West Building Ground Floor at 1200 New Jersey Avenue SE.,
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Deana Stedman, ANM-113, Federal
Aviation Administration, 1601 Lind Avenue SW., Renton, WA 98057-3356,
email<EMAIL_ADDRESS>phone<PHONE_NUMBER>.
    This notice is published pursuant to 14 CFR 11.85.

    Issued in Washington, DC, on April 20, 2016.
James M. Crotty,
Acting Director, Office of Rulemaking.

Petition for Exemption

    Docket No.: FAA-2015-8751.
    Petitioner: VT DRB Aviation Consultants.
    Section(s) of 14 CFR Affected: Sec.  25.817.
    Description of Relief Sought: VT DRB Aviation Consultants petitions
the FAA for an exemption from Sec.  25.817 which allows no more than
three seats abreast on each side of the aisle in any one row. Instead,
the petitioner wishes to install four seats abreast on one side of the
aisle with no seats on the opposite side, having less passenger egress
impedance than in standard Boeing Model 777 passenger jet
configurations.

[FR Doc. 2016-09773 Filed 4-26-16; 8:45 am]
 BILLING CODE 4910-13-P


[Federal Register Volume 79, Number 62 (Tuesday, April 1, 2014)]
[Proposed Rules]
[Pages 18243-18245]
[FR Doc No: 2014-07267]

=======================================================================
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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 117

[Docket No. USCG-2013-1021]
RIN 1625-AA09

Drawbridge Operation Regulation; Isle of Wight (Sinepuxtent) Bay,
Ocean City, MD

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Coast Guard proposes to modify the operating schedule that
governs the US 50 Bridge, over Isle of Wight (Sinepuxent) Bay, mile
0.5, at Ocean City, MD. This proposal would revise the current closure
times to accommodate heavy volumes of vehicular traffic following the
annual July 4th fireworks show.

DATES: Comments and related material must reach the Coast Guard on or
before May 16, 2014.

ADDRESSES: You may submit comments identified by docket number USCG-
2013-1021 using any one of the following methods:
    (1) Federal eRulemaking Portal: http://www.regulations.gov.
    (2) Fax:<PHONE_NUMBER>.
    (3) Mail or Delivery: Docket Management Facility (M-30), U.S.
Department of Transportation, West Building Ground Floor, Room W12-140,
1200 New Jersey Avenue SE., Washington, DC 20590-0001. Deliveries
accepted between 9 a.m. and 5 p.m., Monday through Friday, except
federal holidays. The telephone number is<PHONE_NUMBER>.
    See the ``Public Participation and Request for Comments'' portion
of the SUPPLEMENTARY INFORMATION section below for instructions on
submitting comments. To avoid duplication, please use only one of these
four methods.

FOR FURTHER INFORMATION CONTACT: If you have questions on this proposed
rule, call or email Mrs. Traci Whitfield, Fifth Coast Guard District
Bridge Administration Division, Coast Guard; telephone<PHONE_NUMBER>,
email<EMAIL_ADDRESS>If you have questions on viewing or
submitting material to the docket, call Cheryl Collins, Program
Manager, Docket Operations, telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Table of Acronyms

CFR Code of Federal Regulations
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of Proposed Rulemaking
Sec.  Section Symbol
U.S.C. United States Code

A. Public Participation and Request for Comments

    We encourage you to participate in this proposed rulemaking by
submitting comments and related materials. All comments received will
be posted, without change to http://www.regulations.gov and will
include any personal information you have provided.

1. Submitting Comments

    If you submit a comment, please include the docket number for this
proposed rulemaking (USCG-2013-1021), indicate the specific section of
this document to which each comment applies, and provide a reason for
each suggestion or recommendation. You may submit your comments and
material online (http://www.regulations.gov), or by fax, mail or hand
delivery, but please use only one of these means. If you submit a
comment online via http://www.regulations.gov, it will be considered
received by the Coast Guard when you successfully transmit the comment.
If you fax, hand deliver, or mail your comment, it will be considered
as having been received by the Coast Guard when it is received at the
Docket Management Facility. We recommend that you include your name and
a mailing address, an email address, or a phone number in the body of
your document so that we can contact you if we have questions regarding
your submission.
    To submit your comment online, go to http://www.regulations.gov,
type the docket number [USCG-2013-1021] in the ``SEARCH'' box and click
``SEARCH.'' Click on ``Submit a Comment'' on the line associated with
this rulemaking. If you submit your comments by mail or hand delivery,
submit them in an unbound format, no larger than 8\1/2\ by 11 inches,
suitable for copying and electronic filing. If you submit them by mail
and would like to know that they reached the Facility, please enclose a
stamped, self-addressed postcard or envelope. We will consider all
comments and material received during the comment period and may change
the rule based on your comments.

2. Viewing Comments and Documents

    To view comments, as well as documents mentioned in this preamble
as being available in the docket, go to http://www.regulations.gov,
type the docket number (USCG-2013-1021) in the ``SEARCH'' box and click
``SEARCH.'' Click on Open Docket Folder on the line associated with
this rulemaking. You may also visit the Docket Management Facility in
Room W12-140 on the ground floor of the Department of Transportation
West Building, 1200 New Jersey Avenue SE., Washington, DC, 20590,
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays.

3. Privacy Act

    Anyone can search the electronic form of comments received into any
of our dockets by the name of the individual submitting the comment (or
signing the comment, if submitted on behalf of an association,
business, labor

union, etc.). You may review a Privacy Act notice regarding our public
dockets in the January 17, 2008, issue of the Federal Register (73 FR
3316).

4. Public Meeting

    We do not now plan to hold a public meeting. But you may submit a
request for one using one of the four methods specified under
ADDRESSES. Please explain why one would be beneficial. If we determine
that one would aid this rulemaking, we will hold one at a time and
place announced by a later notice in the Federal Register.

B. Regulatory History and Information

    On November 14, 2011 we published a Final rule entitled Drawbridge
Operation Regulations; Isle of Wight (Sinepuxent) Bay, Ocean City, MD
in the Federal Register (76 FR 70346). This rule initially added dates
and times that the bridge was allowed to remain in the closed position
to accommodate heavy volumes of vehicular traffic due to the annual
fireworks show on July 4th or July 5th should inclement weather
prevents the event from taking place as planned.

C. Basis and Purpose

    The Ocean City Police Department, on behalf of the Maryland
Department of Transportation, has requested to change the operating
regulation for the US 50 Bridge across Isle of Wight (Sinepuxent) Bay,
mile 0.5, at Ocean City, MD. To accommodate the annual Ocean City July
4th fireworks show and the heavy volumes of vehicular traffic that
transit across the drawbridge after the show, the Ocean City Police
Department requested that the times be changed to remain in the closed
position from 9:30 p.m. until 10:30 p.m., to 10:00 p.m. until 11:00
p.m. Since the firework show runs between 9:30 p.m. and 10:00 p.m.,
there is very little traffic crossing the bridge. However, there
remains a high volume of traffic between 10:30 p.m. and 11:00 p.m. This
change will better reflect the actual time when the traffic is at its
heaviest crossing the bridge. The exact date of the closure will be
published locally in the Local Notice to Mariners and Broadcast Notice
to Mariners.
    The vertical clearance of the bascule bridge is 13 feet above mean
high water in the closed position and unlimited in the open position.

D. Discussion of Proposed Rule

    The Coast Guard proposes to change Sec.  117.559(c) from the bridge
needing not to open from 9:30 p.m. to 10:30 p.m. to needing not to open
from 10:00 p.m. to 11:00 p.m. This proposed change in the rule will
allow for a more orderly process of transiting heavy volumes of
vehicular traffic following the annual July 4th fireworks show.

E. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes
and executive orders related to rulemaking. Below we summarize our
analyses based on these statutes or executive orders.

1. Regulatory Planning and Review

    This proposed rule is not a ``significant regulatory action'' under
section 3(f) of Executive Order 12866, Regulatory Planning and Review,
as supplemented by Executive Order 13563, Improving Regulation and
Regulatory Review, and does not require an assessment of potential
costs and benefits under section 6(a)(3) of Order 12866 or under
section 1 of Executive Order 13563. The Office of Management and Budget
has not reviewed it under those Orders.
    The changes are expected to have minimal impact on maritime traffic
transiting the bridge. Mariners can plan their trips in accordance with
the revised scheduled to minimize delays. Additionally, as mariners are
familiar with this event because for the past 12 years the Coast Guard
has allowed the bridge to remain in the closed position for it, a
bridge closure should not be unexpected.

2. Impact on Small Entities

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as
amended, requires federal agencies to consider the potential impact of
regulations on small entities during rulemaking. The term ``small
entities'' comprises small businesses, not-for-profit organizations
that are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations of less than
50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this
proposed rule would not have a significant economic impact on a
substantial number of small entities.
    This proposed rule would affect the following entities, some of
which might be small entities: The owners or operators of vessels
needing to transit through the bridge from 10:00 p.m. until 11:00 p.m.,
on July 4th or July 5th of every year. This action will not have a
significant economic impact on a substantial number of small entities
because the rule adds minimal restrictions to the movement of
navigation and mariners who plan their transits in accordance with the
scheduled bridge closure can minimize delay. A bridge closure has
occurred every year for the past 12 years for this event; therefore,
mariners should be familiar with planning their transits accordingly.
Vessels that can safely transit under the bridge may do so at any time.

3. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding this proposed rule. If the rule would affect
your small business, organization, or governmental jurisdiction and you
have questions concerning its provisions or options for compliance,
please contact the person listed in the FOR FURTHER INFORMATION
CONTACT, above. The Coast Guard will not retaliate against small
entities that question or complain about this proposed rule or any
policy or action of the Coast Guard.

4. Collection of Information

    This proposed rule would call for no new collection of information
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

5. Federalism

    A rule has implications for federalism under Executive Order 13132,
Federalism, if it has a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. We have analyzed this proposed rule under that Order and
have determined that it does not have implications for federalism.

6. Protest Activities

    The Coast Guard respects the First Amendment rights of protesters.
Protesters are asked to contact the person listed in the FOR FURTHER
INFORMATION CONTACT section to coordinate protest activities so that
your message can be received without jeopardizing the safety or
security of people, places or vessels.

7. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Though this proposed rule will not
result in such an

expenditure, we do discuss the effects of this rule elsewhere in this
preamble.

8. Taking of Private Property

    This proposed rule would not cause a taking of private property or
otherwise have taking implications under Executive Order 12630,
Governmental Actions and Interference with Constitutionally Protected
Property Rights.

9. Civil Justice Reform

    This proposed rule meets applicable standards in sections 3(a) and
3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden.

10. Protection of Children

    We have analyzed this proposed rule under Executive Order 13045,
Protection of Children from Environmental Health Risks and Safety
Risks. This rule is not an economically significant rule and would not
create an environmental risk to health or risk to safety that might
disproportionately affect children.

11. Indian Tribal Governments

    This proposed rule does not have tribal implications under
Executive Order 13175, Consultation and Coordination with Indian Tribal
Governments, because it would not have a substantial direct effect on
one or more Indian tribes, on the relationship between the Federal
Government and Indian tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes.

12. Energy Effects

    This proposed rule is not a ``significant energy action'' under
Executive Order 13211, Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use.

13. Technical Standards

    This proposed rule does not use technical standards. Therefore, we
did not consider the use of voluntary consensus standards.

14. Environment

    We have analyzed this rule under Department of Homeland Security
Management Directive 023-01 and Commandant Instruction M16475.lD, which
guides the Coast Guard in complying with the National Environmental
Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a
preliminary determination that this action is one of a category of
actions which do not individually or cumulatively have a significant
effect on the human environment. This proposed rule simply promulgates
the operating regulations or procedures for drawbridges. This rule is
categorically excluded, under figure 2-1, paragraph (32)(e), of the
Instruction.
    Under figure 2-1, paragraph (32)(e), of the Instruction, an
environmental analysis checklist and a categorical exclusion
determination are not required for this rule. We seek any comments or
information that may lead to the discovery of a significant
environmental impact from this proposed rule.

List of Subjects in 33 CFR Part 117

    Bridges.

    For the reasons discussed in the preamble, the Coast Guard proposes
to amend 33 CFR part 117 as follows:

PART 117--DRAWBRIDGE OPERATION REGULATIONS

0
1. The authority citation for part 117 continues to read as follows:

    Authority: 33 U.S.C. 499; 33 CFR 1.05-1; Department of Homeland
Security Delegation No. 0170.1.

0
2. Revise Sec.  117.559(c) to read as follows:

Sec.  117.559  Isle of Wight (Sinepuxent) Bay.

* * * * *
    (c) On July 4, the draw need not open from 10:00 p.m. until 11:00
p.m. to accommodate the annual July 4th fireworks show. Should
inclement weather prevent the fireworks event from taking place as
planned, the draw need not open from 10:00 p.m. until 11:00 p.m. on
July 5th to accommodate the annual July 4th fireworks show.

    Dated: March 20, 2014.
Steven H. Ratti,
Rear Admiral, U.S. Coast Guard Commander, Fifth Coast Guard District.
[FR Doc. 2014-07267 Filed 3-31-14; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register: September 29, 2008 (Volume 73, Number 189)]
[Notices]
[Page 56628]
[DOCID:fr29se08-126]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

Reports, Forms, and Recordkeeping Requirements: Agency
Information Collection Activity Under OMB Review

AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.

ACTION: Notice.

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SUMMARY: In compliance with the Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.), this notice announces that the Information
Collection Request (ICR) abstracted below has been forwarded to the
Office of Management and Budget (OMB) for review and comment. The ICR
describes the nature of the information collections and their expected
burden. The Federal Register Notice with a 60-day comment period was
published on Friday, May 2, 2008 [U.S. DOT Docket No. NHTSA-2008-0091,
Federal Register Vol. 73, Pages 24349-24350].

DATES: The public may comment on NHTSA's request to OMB. Comments to
OMB must be received on or before October 31, 2008.

FOR FURTHER INFORMATION CONTACT: Jonathan Walker, PhD, Contracting
Officer's Technical Representative, Office of Regulatory Analysis and
Evaluation, National Highway Traffic Safety Administration, 1200 New
Jersey Ave., SE., Room W53-463, Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

National Highway Traffic Safety Administration

    Title: 2008 National Survey on Reported and Unreported Motor
Vehicle Crashes.
    OMB Number: 2127--new.
    Type of Request: Request for public comment on proposed collection
of information.
    Abstract: The data will provide supplementary information on the
cost of motor vehicle crashes and injuries. Specifically, it will allow
NHTSA to add estimates of costs due to unreported crashes to the
estimates currently reported through official police crash reports. The
new cost estimates will allow more valid estimates of the costs and
benefits of NHTSA's programs.
    Affected Public: Individuals.
    Estimated Total Annual Burden: 1400 hours.

ADDRESSES: Send comments, within 30 days, to the Office of Information
and Regulatory Affairs, Office of Management and Budget, 725 17th
Street, NW., Washington, DC 20503, Attention NHTSA Desk Officer.
    Comments are invited on: Whether the proposed collection of
information is necessary for the proper performance of the functions of
the Department, including whether the information will have practical
utility; the accuracy of the Department's estimate of the burden of the
proposed information collection; ways to enhance the quality, utility
and clarity of the information to be collected; and ways to minimize
the burden of the collection of information on respondents, including
the use of automated collection techniques or other forms of
information technology.
    A comment to OMB is most effective if OMB receives it within 30
days of publication.

    Authority: 44 U.S.C. 3506(c)(2)(A).

James Simons,
Director, Office of Regulatory Analysis and Evaluation.
[FR Doc. E8-22742 Filed 9-26-08; 8:45 am]

BILLING CODE 4910-59-P


[Federal Register Volume 87, Number 92 (Thursday, May 12, 2022)]
[Notices]
[Pages 29193-29197]
[FR Doc No: 2022-10152]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94866; File No. SR-MEMX-2021-10]

Self-Regulatory Organizations; MEMX LLC; Order Disapproving a
Proposed Rule Change, as Modified by Amendment No. 1, To Establish a
Retail Midpoint Liquidity Program

May 6, 2022.

I. Introduction

    On August 18, 2021, MEMX LLC (``MEMX'' or ``Exchange'') filed with
the Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'' or
``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule
change to establish a Retail Midpoint Liquidity Program (``Program'').
The proposed rule change was published for comment in the Federal
Register on September 8, 2021.\3\ On October 19, 2021, the Commission
designated a longer period within which to approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to disapprove the proposed rule change.\4\ On
December 7, 2021, the Commission instituted proceedings under Section
19(b)(2)(B) of the Act \5\ to determine whether to approve or
disapprove the proposed rule change.\6\ On January 27, 2022, the
Exchange filed Amendment No. 1 to the proposed rule change, which
supersedes the original filing in its entirety, and on February 14,
2022, the Commission published for comment Amendment No. 1 and
designated a longer period for Commission action on the proposed rule
change.\7\ The Commission received comments on the proposed rule
change,\8\ and the Exchange submitted a response to comments at the
time it filed Amendment No. 1.\9\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 92844 (September 1,
2021), 86 FR 50411 (September 8, 2021).
    \4\ See Securities Exchange Act Release No. 93383 (October 19,
2021), 86 FR 58964 (October 25, 2021).
    \5\ 15 U.S.C. 78s(b)(2)(B).
    \6\ See Securities Exchange Act Release No. 93727 (December 7,
2021), 86 FR 70874 (December 13, 2021) (``Order Instituting
Proceedings'').
    \7\ See Securities Exchange Act Release No. 94189 (February 8,
2022), 87 FR 8305 (February 14, 2022).
    \8\ All comments received by the Commission on the proposed rule
change are available on the Commission's website at: https://www.sec.gov/comments/sr-memx-2021-10/srmemx202110.htm.
    \9\ See Letter from Adrian Griffiths, Head of Market Structure,
MEMX, dated January 27, 2022 (``MEMX Letter'').
---------------------------------------------------------------------------

    This order disapproves the proposed rule change, as modified by
Amendment No. 1, because, as discussed below, the Exchange has not met
its burden under the Act and the Commission's Rules of Practice to
demonstrate that its proposal is consistent with the requirements of
the Act, including, in particular, the requirements in Section 6(b)(5)
of the Act that the rules of a national securities exchange be designed
to promote just and equitable principles of trade and to protect
investors and the public interest, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers \10\ and
the objectives in Section 11A of the Exchange Act, including the
maintenance of fair and orderly markets.\11\
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(5).
    \11\ 15 U.S.C. 78k-1(a)(1)(C).
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to establish a Retail Midpoint Liquidity
Program to provide retail investors with price improvement
opportunities at or better than the midpoint of the national best bid
and offer (``Midpoint Price''). Specifically, the Exchange proposes to
allow Retail Member Organizations (``RMOs'') \12\ to submit a new type
of order on behalf of retail investors that is designed to execute at
the Midpoint Price or better (a ``Retail Midpoint Order'').\13\ Contra-
side liquidity would be provided by (i) a new non-displayed Midpoint
Peg order that would be restricted to interacting only with incoming
Retail Midpoint Orders through the proposed Program (``Retail Midpoint
Liquidity Order'' or ``RML Order'') \14\ as well as (ii) resting
liquidity on the Exchange's order book that would offer greater price
improvement than the Midpoint Price,\15\ and (iii) regular non-
restricted Midpoint Peg orders that users designate as also eligible to
interact with Retail Midpoint Orders (``Eligible Midpoint Peg
Orders'').\16\
---------------------------------------------------------------------------

    \12\ See MEMX Rule 11.21(a)(1).
    \13\ A Retail Midpoint Order would have a Midpoint Peg
instruction (i.e., to re-price to the Midpoint Price in response to
changes in the national best bid and offer). As proposed, a Retail
Midpoint Order must have a time-in-force instruction of Immediate-
or-Cancel. See MEMX Rule 11.6(o)(1) (defining Immediate-or-Cancel).
See also MEMX Rules 11.6(h)(2) (defining Midpoint Peg) and 11.21(a)
(defining Retail Order).
    \14\ See proposed MEMX Rule 11.22(a)(2).
    \15\ See infra note 24.
    \16\ The Exchange proposes to revise MEMX Rule 11.6(h)(2)'s
definition of Midpoint Peg to provide that a Midpoint Peg order
(other than a RML Order) would generally not be eligible to execute
against a Retail Midpoint Order, provided, however, that a user
submitting a Midpoint Peg order would be able to include an
instruction that such order is eligible to execute against a Retail
Midpoint Order through the execution process described in proposed
MEMX Rule 11.22(c).
---------------------------------------------------------------------------

    MEMX would disseminate a Retail Liquidity Identifier through its
proprietary market data feeds, MEMOIR Depth \17\ and MEMOIR Top,\18\
and the appropriate securities information processor (``SIP'') when RML
Order interest aggregates to form at least one round lot for a
particular security, provided that such interest is resting at the
Midpoint Price \19\ and is priced at

least $0.001 better than the national best bid (``NBB'') or national
best offer (``NBO'').\20\ The Retail Liquidity Identifier would reflect
the symbol and the side (buy and/or sell) of the RML Order interest but
would not include the price or size of that interest.\21\
---------------------------------------------------------------------------

    \17\ See MEMX Rule 13.8(a).
    \18\ See MEMX Rule 13.8(b).
    \19\ The Exchange explains that a RML Order could have a limit
price that is less aggressive than the Midpoint Price, in which case
it would not be eligible to trade with an incoming Retail Midpoint
Order and therefore would not be included for purposes of Retail
Liquidity Identifier dissemination since it would not reflect
interest available to trade with Retail Midpoint Orders. See
Amendment No. 1, supra note 7, at 8308.
    \20\ The Exchange explains that because RML Orders are proposed
to be only Midpoint Peg orders, they would always represent at least
$0.001 price improvement over the NBB or NBO, with two exceptions:
(1) In a locked or crossed market; and (2) a sub-dollar security
when the security's spread is less than $0.002. See id. The Exchange
would only disseminate the Retail Liquidity Identifier for sub-
dollar securities if the spread in the security is greater than or
equal to $0.002, meaning the Midpoint Price represents at least
$0.001 price improvement over the NBB or NBO. See id.
    \21\ The Exchange would remove the Retail Liquidity Identifier
when remaining RML Order interest no longer aggregates to form at
least one round lot, or in situations where there is no actionable
RML Order interest (such as when the market is locked or crossed).
See id. at 8308-09. A limited exception for some exchange retail
liquidity programs from the Quote Rule has been granted to allow
those exchanges to disseminate identifiers including symbol and
side, but not price or size, to attract retail interest and provide
them with price improvement over displayed prices. See, e.g.,
Securities Exchange Act Release No. 93217 (September 30, 2021)
(Order Granting Application of Investors Exchange LLC for a Limited
Exemption from Rule 602 of Regulation NMS for its Retail Price
Improvement Program).
---------------------------------------------------------------------------

Priority and Order Execution

    Proposed MEMX Rule 11.22(c) sets forth the execution priority rules
for the Program. First, an incoming Retail Midpoint Order would execute
against resting liquidity priced more aggressively than the Midpoint
Price. Specifically, proposed MEMX Rule 11.22(c)(2) provides that if
there is: (1) A Limit Order \22\ of Odd Lot \23\ size that is displayed
by the MEMX system (``Displayed Odd Lot Order'') and that is priced
more aggressively than the Midpoint Price and/or (2) an order that is
not displayed by the MEMX system (``Non-Displayed Order'') and that is
priced more aggressively than the Midpoint Price, resting on the MEMX
Book,\24\ an incoming Retail Midpoint Order would first execute against
any such orders pursuant to the Exchange's standard price/time priority
in accordance with MEMX Rules 11.9 and 11.10 before executing against
resting RML Orders.\25\
---------------------------------------------------------------------------

    \22\ See MEMX Rule 11.8(b).
    \23\ See MEMX Rule 11.6(q)(2).
    \24\ The Exchange states that Displayed Odd Lot Orders and Non-
Displayed Orders are the only types of orders that could rest on the
MEMX Book at a price that is more aggressive than the Midpoint
Price, as any displayed buy (sell) order that is at least one round
lot in size would be eligible to form the NBB (NBO). See Amendment
No. 1, supra note 7, at 8309 n.41.
    \25\ MEMX initially proposed that execution of a Retail Midpoint
Order against such Displayed Odd Lot Orders and Non-Displayed Orders
would have executed at the Midpoint Price irrespective of the prices
at which such orders were ranked. Thus, any additional price
improvement over the Midpoint Price would not have accrued to the
retail investor's Retail Midpoint Order, but rather would have
accrued to the Displayed Odd Lot Order or Non-Displayed Order. The
Exchange subsequently revised its proposal to accrue any price
improvement to the incoming Retail Midpoint Order. See also MEMX
Letter at 4.
---------------------------------------------------------------------------

    Second, after executing against resting liquidity priced more
aggressively than the Midpoint Price, proposed MEMX Rule 11.22(c)(3)
states that any unfilled portion of a Retail Midpoint Order would next
execute against RML Orders at the Midpoint Price in time priority.
    Third, proposed MEMX Rule 11.22(c)(4) states that after executing
against all liquidity that is priced more aggressively than the
Midpoint Price and all RML Orders, Retail Midpoint Orders would execute
against Eligible Midpoint Peg Orders at the Midpoint Price in time
priority.\26\
---------------------------------------------------------------------------

    \26\ MEMX initially proposed to execute Retail Midpoint Orders
only against RML Orders, to the exclusion of any other available
Midpoint Peg order. Two commenters objected to that treatment and
were critical of those aspects of the proposal that would have
limited the ability of retail orders to access all available
midpoint interest and the extent to which that could have harmed
retail investors. See Letter from Joseph Saluzzi and Sal Arnuk,
Themis Trading LLC, dated December 20, 2021, and Letter from Sean
Paylor, Acadian Asset Management LLC, dated January 10, 2022. MEMX
subsequently submitted Amendment No. 1 to its proposal to allow
Eligible Midpoint Peg Orders to participate in the Program. Another
commenter expressed concern about a lack of transparency in the
rebate and fee tiering structure behind the proposed Program. See
Letter from Reginald Neumann Maximillian Smythers, dated April 1,
2022. The Exchange has not yet filed an accompanying filing to
propose a fee schedule in connection with this proposal.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    Under Section 19(b)(2)(C) of the Act,\27\ the Commission shall
approve a proposed rule change of a self-regulatory organization
(``SRO'') if it finds that such proposed rule change is consistent with
the requirements of the Act and the rules and regulations thereunder
that are applicable to such organization.\28\ The Commission shall
disapprove a proposed rule change if it does not make such a
finding.\29\ The Commission's Rules of Practice, under Rule 700(b)(3),
state that the ``burden to demonstrate that a proposed rule change is
consistent with the [Exchange] Act and the rules and regulations issued
thereunder . . . is on the self-regulatory organization that proposed
the rule change'' and that a ``mere assertion that the proposed rule
change is consistent with those requirements . . . is not sufficient.''
\30\
---------------------------------------------------------------------------

    \27\ See 15 U.S.C. 78s(b)(2)(C).
    \28\ See 15 U.S.C. 78s(b)(2)(C)(i).
    \29\ See 15 U.S.C. 78s(b)(2)(C)(ii); see also 17 CFR
201.700(b)(3).
    \30\ See 17 CFR 201.700(b)(3).
---------------------------------------------------------------------------

    The description of a proposed rule change, its purpose and
operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding,\31\ and any failure of an
SRO to provide this information may result in the Commission not having
a sufficient basis to make an affirmative finding that a proposed rule
change is consistent with the Act and the applicable rules and
regulations.\32\ Moreover, ``unquestioning reliance'' on an SRO's
representations in a proposed rule change is not sufficient to justify
Commission approval of a proposed rule change.\33\
---------------------------------------------------------------------------

    \31\ See id.
    \32\ See id.
    \33\ Susquehanna Int'l Group, LLP v. Securities and Exchange
Commission, 866 F.3d 442, 447 (D.C. Cir. 2017).
---------------------------------------------------------------------------

    For the reasons discussed below, the Commission is disapproving the
proposed rule change, as modified by Amendment No. 1, because the
information before the Commission is insufficient to support a finding
that the proposed rule change, as modified by Amendment No. 1, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.
    In summary, MEMX has an existing Midpoint Peg order type and is
proposing a new Midpoint Peg order type (i.e., RML Orders) as part of
the proposed Program. From the perspective of an incoming Retail
Midpoint Order, the current and proposed Midpoint-priced order types
are indistinguishable because, under the proposed Program, both would
result in a midpoint execution for the Retail Midpoint Order. From the
perspective of market participants posting each order type, however,
MEMX proposes to treat them differently by providing RML Orders with
execution priority over Eligible Midpoint Peg Orders. This proposed
disparate treatment raises concerns about whether the proposed Program
is consistent with the Act.
    As part of its filing, MEMX bears the burden to provide a
sufficient legal analysis to demonstrate how its proposed rules are
consistent with the Act, which requires, among other

things, that MEMX's rules be designed to promote just and equitable
principles of trade and to protect investors and the public interest,
and not permit unfair discrimination between customers, issuers,
brokers, or dealers.\34\
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    To demonstrate how providing RML Orders with execution priority
over Eligible Midpoint Peg Orders is consistent with the Act, MEMX
asserts the following: (1) Because RML Orders will contribute to the
Retail Liquidity Identifier, which is designed to attract retail orders
to the Exchange, RML Orders deserve the same priority advantage that
MEMX provides to displayed orders to reward displayed orders for
contributing to price discovery; (2) because the Retail Liquidity
Identifier would signal the presence of a buyer or seller at the
Midpoint Price, awarding higher priority to RML Orders would balance
the risks and incentives associated with entering RML Orders; and (3)
market participants that post Midpoint Peg orders can avoid losing
priority to RML Orders when trading with Retail Midpoint Orders by
switching to RML Orders.
    The Commission is disapproving this proposed rule change, as
modified by Amendment No. 1, because, as discussed in detail below,
MEMX has not met its burden under the Act and the Commission's Rules of
Practice to demonstrate how its proposal to provide RML Orders with
execution priority over Eligible Midpoint Peg Orders is consistent with
the requirements of the Act, including, in particular, the requirements
in Section 6(b)(5) of the Act that a national securities exchange's
rules be designed to promote just and equitable principles of trade and
to protect investors and the public interest, and not be designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers, and the objectives in Section 11A of the Exchange Act,
including the maintenance of fair and orderly markets.

1. Price-Time Priority

    The rules of a national securities exchange specify the priority of
orders for execution in its matching engine. When exchange rules award
higher execution priority to one type of order over another, they must
do so in a manner that is consistent with the Act. One reason to
provide execution priority to one liquidity-providing order type over
another may be that the favored order is more aggressive and takes more
risk in a way that provides benefits to the market and liquidity
seekers. An exchange may seek to attract those types of orders because
they directly improve the exchange's market quality and increase
trading volume. Offering a priority advantage to the more aggressive
order is an incentive to attract those types of orders to the exchange
and may be justified as promoting just and equitable principles of
trade, avoiding unfair discrimination between broker-dealers and
between their customers, and contributing to the maintenance of fair
and orderly markets to the extent the priority advantage rewards those
liquidity providers for the risks they take and benefits they provide
to the market when they are the first to provide the most aggressive
widely-available best prices to the broadest population of liquidity
seekers.
    MEMX Rule 11.9 establishes the priority of orders and describes how
MEMX uses ``price-time'' priority to rank orders for execution
priority. Under its price-time priority rule, MEMX affords priority to
the highest-priced order to buy (or lowest-priced order to sell) over
orders with less aggressive prices.\35\ For equally priced orders,
MEMX's rules specify that it will rank them in time priority (i.e.,
with the first order entered into the MEMX system having priority over
later-arriving orders) \36\ and it also generally awards priority to
displayed orders over non-displayed orders.\37\
---------------------------------------------------------------------------

    \35\ See MEMX Rule 11.9(a)(1).
    \36\ See MEMX Rule 11.9(a)(2)(A) (``Where orders to buy (sell)
are entered into the System at the same price, the order clearly
established as the first entered into the System at such particular
price shall have precedence at that price, up to the number of
shares of stock specified in the order.'').
    \37\ See, e.g., MEMX Rule 11.9(a)(2)(A)(i) and (ii).
---------------------------------------------------------------------------

    However, for its proposed Program, MEMX would deviate from its
price-time priority rule by always awarding priority to the RML Orders
(i.e., Midpoint Peg orders that can only trade against Retail Midpoint
Orders) over Eligible Midpoint Peg Orders (i.e., Midpoint Peg orders
that will trade with any counterparty, including Retail Midpoint
Orders), even though both orders are equally priced at the Midpoint
Price and would otherwise execute in time priority outside the proposed
Program.\38\ For the reasons further explained below, the Commission
finds that MEMX has not met its burden to support a finding that
providing RML Orders with execution priority over Eligible Midpoint Peg
Orders under the circumstances MEMX proposes is consistent with the
Act.
---------------------------------------------------------------------------

    \38\ See MEMX Rule 11.9(a)(2)(A)(iv). As proposed, if MEMX has a
90 share Eligible Midpoint Peg Order resting on its order book and
later receives a 90 share RML Order, it would execute an incoming 20
share Retail Midpoint Order against the later-arriving RML Order
even though the Eligible Midpoint Peg Order arrived first in time
(and even though the 90 share RML Order was not of sufficient size
to trigger the Retail Liquidity Identifier).
---------------------------------------------------------------------------

a. Analogizing Non-Displayed Orders to Displayed Orders
    MEMX analogizes RML Orders to fully displayed orders (e.g., a limit
order whose price and size is published by the Exchange) because they
would contribute to the Retail Liquidity Identifier. Specifically, MEMX
states that ``it is appropriate to execute RML Orders, which contribute
to the dissemination of the Retail Liquidity Identifier, ahead of
Eligible Midpoint Peg Orders, which do not contribute to the
dissemination of the Retail Liquidity Identifier and are not displayed
on the MEMX Book.'' \39\ MEMX asserts that such treatment is
``consistent with general principles of order priority on the Exchange
. . . [where] orders that contribute to price discovery receive
priority ahead of non-displayed orders that do not contribute to market
transparency.'' \40\ ``As such,'' the Exchange continues, it ``does not
believe that the proposed order priority under the RML Program raises
any novel issues for the Commission to consider.'' \41\
---------------------------------------------------------------------------

    \39\ See Amendment No. 1, supra note 7, at 8309.
    \40\ See id. at 8310.
    \41\ See id.
---------------------------------------------------------------------------

    MEMX's proposal does present a novel issue because MEMX seeks to
award execution priority to a new type of Midpoint Peg order (i.e., RML
Orders) over an existing type of Midpoint Peg order (i.e., Eligible
Midpoint Peg Orders). First, both Eligible Midpoint Peg Orders and RML
Orders would be classified as pegged orders under MEMX rules and MEMX's
rules specifically provide that pegged orders cannot be displayed.\42\
Second, RML Orders would not contribute to market transparency or price
discovery in the same way that displayed orders do because RML Orders
are pegged to the Midpoint Price that solely is derived from displayed
quotes and does not impact or contribute to those displayed quotes. The
information conveyed by the Retail Liquidity Identifier (i.e., the
existence of one round lot of RML Order interest at the Midpoint Price)
is different than the information on price and size that displayed
orders provide to inform price discovery. Displayed orders help
establish the best available

prices in the market, which broadly benefits investors, serves the
public interest, and facilitates fair and orderly markets by informing
not only trading decisions but also security and portfolio valuation,
prices of derivative securities like listed options, and the
calculation of market indices. MEMX's comparison of the broad benefits
that displayed orders contribute to the market to the narrow benefit
that the Retail Liquidity Identifier would provide to RMOs to justify
endowing RML Orders with the same exception to its price-time execution
priority rule that MEMX provides to displayed orders, without more,
does not sufficiently address how the proposal would promote just and
equitable principles of trade, be consistent with the maintenance of
fair and orderly markets, and not permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \42\ See MEMX Rule 11.8(c)(3). Because they are pegged to a
reference price (the Midpoint Price), RML Orders would be classified
as Pegged Orders under MEMX rules and MEMX's Pegged Order rule
specifically provides that ``Pegged Orders are not eligible to
include a Displayed instruction.'' Id.
---------------------------------------------------------------------------

    Third, Midpoint Peg orders are not eligible to be displayed for a
number of reasons, including, among others, prohibitions on the display
of quotes in subpenny increments,\43\ requirements to avoid locking the
market,\44\ and the impact that a displayed Midpoint Peg order would
have on the Midpoint Price. Thus, MEMX proposes to reward RML Orders
for doing something (i.e., contributing to the Retail Liquidity
Identifier) that Eligible Midpoint Peg Orders simply are not permitted
to do. Without more, MEMX has not sufficiently explained how providing
a priority advantage to one type of Midpoint Peg order (RML Orders)
over another (Eligible Midpoint Peg Orders), based on something that
Eligible Midpoint Peg Orders are not permitted to do, promotes just and
equitable principles of trade, is consistent with the maintenance of
fair and orderly markets, and does not permit unfair discrimination
between customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \43\ See 17 CFR 242.612.
    \44\ See 17 CFR 242.610(d).
---------------------------------------------------------------------------

b. Balancing the Risks and Incentives Associated With Entering RML
Orders
    MEMX also states that ``entering RML Orders involves some
additional risk for those market participants as the Retail Liquidity
Identifier will signal that there is a buyer or seller that is willing
to trade with retail investors at the Midpoint Price.'' \45\ ``Thus,''
the Exchange states, ``the RML Program seeks to balance the risks and
incentives associated with entering RML Orders. . . .'' \46\
Consequently, MEMX proposes to reward RML Orders with execution
priority over Eligible Midpoint Peg Orders to the same extent that it
rewards displayed orders with priority over non-displayed orders.
---------------------------------------------------------------------------

    \45\ See Amendment No. 1, supra note 7, at 8313.
    \46\ See id.
---------------------------------------------------------------------------

    In general, some market participants may be hesitant to display
regular limit orders on an exchange's order book because of the
potential for adverse selection when trading against counterparties
more associated with price movements and the inability to avoid
interacting with those counterparties. To encourage display of trading
interest on its order book in light of those risks, an exchange might
offer displayed orders enhanced execution priority over non-displayed
orders. Rewarding displayed orders with priority over non-displayed
orders compensates them for the risks they take in displaying prices
that are available for any liquidity taker and for the chance of
adverse selection when trading with certain counterparties.
    However, market participants posting RML Orders would face little
risk (if any) from the Retail Liquidity Identifier because RML Orders
are uniquely counterparty-restricted whereas displayed orders are not
so restricted. In other words, RML Orders would experience
significantly different risk compared to displayed orders on MEMX's
order book because MEMX would restrict the counterparties with which an
RML Order could trade to only permit executions against retail orders
to the exclusion of all other types of orders and counterparties.
Market participants placing RML Orders would be specifically seeking to
interact exclusively with retail customers because they likely regard
retail customers to be attractive counterparties that submit smaller-
sized orders that typically are less predictive of very short-term
price movements.\47\
---------------------------------------------------------------------------

    \47\ See, e.g., Amendment No. 1, supra note 7, at 8306 (``[T]he
Exchange believes that market makers and other sophisticated market
participants generally value interacting with retail orders because
they are smaller and not likely to be part of a larger parent order
that can move a stock price, causing a loss to the market maker.'').
---------------------------------------------------------------------------

    Despite this significant difference, MEMX proposes to confer the
same execution priority benefit to restricted RML Orders that it grants
to unrestricted displayed limit orders. However, MEMX's proposal is
designed to effectively eliminate the risk of adverse selection when
trading with non-retail counterparties more associated with price
movements and RML Orders would not be exposed to a level of execution
risk in the Program that is comparable to what displayed orders face on
MEMX's order book. The Retail Liquidity Identifier and counter-party
restriction would be a benefit to RMOs that permit an otherwise non-
displayed order to advertise its presence to the very counterparty with
which the poster seeks to trade (and is only permitted to trade with by
the terms of the RML Order). Compounding advantages does not appear to
balance the risks and incentives of entering RML Orders that MEMX said
it seeks to balance.
    Accordingly, the Exchange's assertion that the Program ``seeks to
balance the risks and incentives'' is misplaced because the Retail
Liquidity Identifier should not generate additional risks to RMOs
commensurate with the risks experienced by market participants posting
regular displayed orders on MEMX's order book. Moreover, as stated
above, market participants placing RML Orders would instead benefit
from the Retail Liquidity Identifier because it is intended to attract
the desirable retail counterparties with whom they specifically seek to
trade and with whom, aside from the proposed Program, they may have
fewer opportunities to interact.
    Consequently, MEMX is proposing to reward counterparty-restricted
RML Orders for contributing to a Retail Liquidity Identifier that
benefits them and MEMX has not sufficiently explained why those
compounded benefits are consistent with the Act. Further, MEMX has not
sufficiently explained why that different treatment proposed between
brokers, dealers, or customers when such brokers, dealers, or customers
post each different order type is not unfairly discriminatory. Without
more, MEMX has not carried its burden to sufficiently analyze how its
proposed disparate treatment in execution priority between two types of
Midpoint Peg orders promotes just and equitable principles of trade,
protects investors and the public interest, contributes to the
maintenance of fair and orderly markets, and is not designed to permit
unfair discrimination.

2. Choosing Between Two Types of Midpoint Pegs

    MEMX states that its users are free to select which Midpoint Peg
order type they wish to submit if they want to interact with Retail
Midpoint Orders, and would do so knowing their advantages and
disadvantages, thus making its proposal to award RML Orders with
execution priority over Eligible Midpoint Peg Orders not unfairly
discriminatory.\48\ As discussed above, MEMX is proposing disparate
treatment between two Midpoint Peg

order types by proposing to reward RML Orders with execution priority
over Eligible Midpoint Peg Orders when interacting with Retail Midpoint
Orders. MEMX cannot resolve potential unfair discrimination in favor of
RML Orders over Eligible Midpoint Peg Orders by relying on the fact
that users can instead use RML Orders; doing so does not convert unfair
discrimination into fair discrimination. When MEMX chooses to offer two
Midpoint Peg order types but treats them differently, each order type
must independently be consistent with the Act and any discriminatory
treatment must also be consistent with the Act. The consistency of one
order type with the requirements of the Act is independent of, and
cannot be contingent on, the existence of a substitute.
---------------------------------------------------------------------------

    \48\ See Amendment No. 1, supra note 7, at 8313.
---------------------------------------------------------------------------

3. MEMX Has Failed To Meet Its Burden

    When assessing this proposed rule change, as modified by Amendment
No. 1, the Commission must consider its consistency with the Act and
the applicable rules and regulations issued thereunder. As stated
above, under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the Exchange
Act and the rules and regulations issued thereunder . . . is on the
self-regulatory organization that proposed the rule change.'' \49\ For
the foregoing reasons, the Exchange has not met its burden to
demonstrate that it would be consistent with the Act for the Exchange
to provide a priority advantage to one type of midpoint peg (RML
Orders) over another type of midpoint peg (Eligible Midpoint Peg
Orders). As a result, the Commission does not have sufficient
information to find that the Exchange's proposal would promote just and
equitable principles of trade and protect investors and the public
interest, not permit unfair discrimination between customers, issuers,
brokers, or dealers, and promote the maintenance of fair and orderly
markets. Accordingly, the Commission must disapprove the proposal
because the Exchange has not met its burden to demonstrate that the
proposal is consistent with the Act, including Section 6(b)(5) and
Section 11A of the Act.\50\
---------------------------------------------------------------------------

    \49\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR
201.700(b)(3).
    \50\ In disapproving this proposed rule change, the Commission
has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

IV. Conclusion

    For the reasons set forth above, the Commission does not find,
pursuant to Section 19(b)(2) of the Act, that the proposed rule change,
as modified by Amendment No. 1, is consistent with the requirements of
the Act and the rules and regulations thereunder applicable to a
national securities exchange, and in particular, with Section 6(b)(5)
of the Act.\51\
---------------------------------------------------------------------------

    \51\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\52\ that the proposed rule change (SR-MEMX-2021-10), as modified
by Amendment No. 1, is disapproved.
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\53\
---------------------------------------------------------------------------

    \53\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-10152 Filed 5-11-22; 8:45 am]
BILLING CODE 8011-01-P