[Federal Register Volume 79, Number 29 (Wednesday, February 12, 2014)]
[Rules and Regulations]
[Pages 8295-8301]
[FR Doc No: 2014-03074]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 180

[EPA-HQ-OPP-2012-0925; FRL-9904-22]

Thiram; Pesticide Tolerances

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This regulation establishes tolerances for residues of thiram
in or on strawberry. Taminco, Inc. requested these tolerances under the
Federal Food, Drug, and Cosmetic Act (FFDCA).

DATES: This regulation is effective February 12, 2014. Objections and
requests for hearings must be received on or before April 14, 2014, 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-2012-0925, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory
Public Docket (OPP Docket) in the Environmental Protection Agency
Docket Center (EPA/DC), EPA West 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 (202)
566-1744, and the telephone number for the OPP Docket is (703) 305-
5805. Please review the visitor instructions and additional information
about the docket available at http://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT: Lois Rossi, Registration Division
(7505P), Office of Pesticide Programs, Environmental Protection Agency,
1200 Pennsylvania Ave. NW., Washington,

DC 20460-0001; telephone number:<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this action apply to me?

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

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

    You may access a frequently updated electronic version of EPA's
tolerance regulations at 40 CFR part 180 through the Government
Printing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl. To access the OCSPP
test guidelines referenced in this document electronically, please go
to http://www.epa.gov/ocspp and select ``Test Methods and Guidelines.''

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-2012-0925 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
April 14, 2014. 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-2012-0925, by one of
the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the online instructions for submitting comments. Do not submit
electronically any information you consider to be CBI or other
information whose disclosure is restricted by statute.
     Mail: OPP Docket, Environmental Protection Agency Docket
Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW., Washington, DC
20460-0001.
     Hand Delivery: To make special arrangements for hand
delivery or delivery of boxed information, please follow the
instructions at http://www.epa.gov/dockets/contacts.htm.
    Additional instructions on commenting or visiting the docket, along
with more information about dockets generally, is available at http://www.epa.gov/dockets.

II. Summary of Petitioned-for Tolerance

    In the Federal Register of January 16, 2013 (78, FR 3379) (FRL-
9375-4), 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
2F8106) by Taminco, Inc., 7540 Windsor Drive, Suite 411, Allentown, PA
18195. The petition requested that 40 CFR 180.132 be amended by
increasing the level of the tolerance for residues of the fungicide
thiram, in or on strawberry to 20 parts per million (ppm). This request
was made to support a change in the preharvest interval (PHI) from 3
days to 1 day for strawberry on the label for Spotrete-F (EPA Reg. No.
45728-26). That document referenced a summary of the petition prepared
by Taminco, Inc., the registrant, which is available in the docket,
http://www.regulations.gov. There were no comments received in response
to the notice of filing.

III. Aggregate Risk Assessment and Determination of Safety

    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a
tolerance (the legal limit for a pesticide chemical residue in or on a
food) only if EPA determines that the tolerance is ``safe.'' Section
408(b)(2)(A)(ii) of FFDCA defines ``safe'' to mean that ``there is a
reasonable certainty that no harm will result from aggregate exposure
to the pesticide chemical residue, including all anticipated dietary
exposures and all other exposures for which there is reliable
information.'' This includes exposure through drinking water and in
residential settings, but does not include occupational exposure.
Section 408(b)(2)(C) of FFDCA requires EPA to give special
consideration to exposure of infants and children to the pesticide
chemical residue in establishing a tolerance and to ``ensure that there
is a reasonable certainty that no harm will result to infants and
children from aggregate exposure to the pesticide chemical residue. . .
.''
    Consistent with FFDCA section 408(b)(2)(D), and the factors
specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available
scientific data and other relevant information in support of this
action. EPA has sufficient data to assess the hazards of and to make a
determination on aggregate exposure for thiram including exposure
resulting from the tolerances established by this action. EPA's
assessment of exposures and risks associated with thiram 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.
    Thiram is a dimethyl dithiocarbamate fungicide. Thiram has been
shown to cause neurotoxicity following acute and subchronic exposures.
In the acute and subchronic neurotoxicity studies submitted,
neurotoxicity is characterized as lethargy, reduced and/or tail pinch
response, changes in the functional-observation battery (FOB)
parameters, increased hyperactivity, changes in motor activity, and
increased occurrences of rearing events. No treatment-related changes
were observed in brain weights or in the histopathology of the nervous
system. In a non-guideline study published in the open literature,
chronic feeding of thiram to rats caused neurotoxicity, with onset of
ataxia in some animals 5-19 months after beginning of treatment.
However, no evidence of neurotoxicity was seen following chronic
exposures in mice or rats in guideline studies submitted to the Agency.
In addition, no adverse effects on the developing fetal nervous system
were seen in a DNT study. The chronic toxicity profile for thiram
indicates that the liver, blood, and urinary system are the target
organs for this chemical in mice, rats, and dogs. There is no evidence
for increased

susceptibility following in utero exposures to rats or rabbits and
following pre- and post-natal exposures to rats for two generations.
There is evidence of quantitative susceptibility in the developmental
neurotoxicity (DNT) study. However, there is low concern for the
increased susceptibility seen in the DNT study since the dose response
is well defined with a clear NOAEL and this endpoint is used for
assessing the acute dietary risk for the most sensitive population.
Thiram is classified as ``not likely to be carcinogenic to humans''
based on lack of evidence for carcinogenicity in mice or rats. There
are no mutagenic/genotoxic concerns with thiram. The available
toxicological database for thiram suggests that this chemical has a low
to moderate acute-toxicity profile.
    Specific information on the studies received and the nature of the
adverse effects caused by thiram as well as the no-observed-adverse-
effect-level (NOAEL) and the lowest-observed-adverse-effect-level
(LOAEL) from the toxicity studies can be found at http://www.regulations.gov in document Thiram. Update to the Aggregate Risk
Assessment to Support the Requested PHI Reduction and Increased
Tolerance Request on Strawberry at page 9 in docket ID number EPA-HQ-
OPP-2012-0925.

B. Toxicological Points of Departure/Levels of Concern

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

    Table 1--Summary of Toxicological Doses and Endpoints for Thiram for Use in Human Health Risk Assessment
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                                                                                Study and
       Exposure/ Scenario                 PoD          Uncertainty/FQPA    RfD, PAD, LOC for     toxicological
                                                              SFs           risk assessment         effects
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Acute Dietary (General            BMDL10 = 64.94 mg/  UFA = 10x.........  Acute RfD = 0.6494  Acute
 Population).                      kg.                UFH = 10x.........   mg/kg/day.          Neurotoxicity
                                                      FQPA SF = 1x......  aPAD = 0.6494 mg/    Study--Rat. MRID
                                                                           kg/day.             42912401.
                                                                                LOAEL = 150 mg/kg/
                                                                                day based on FOB
                                                                                effects
                                                                                (lethargy, lower
                                                                                temperature,
                                                                                reduced startle
                                                                                response, no tail-
                                                                                pinch response),
                                                                                reduced motor
                                                                                activity, and
                                                                                reduced brain
                                                                                weights.
Acute Dietary (Females 13-49      NOAEL = 1.4 mg/kg.  UFA = 10x.........  Acute RfD = 0.014   Dev. Neurotoxicity
 years old).                                          UFH = 10x.........   mg/kg/day.          Study--Rat. MRID
                                                      FQPA SF = 1x......  aPAD = 0.014 mg/kg/  46455201.
                                                                           day.               LOAEL = 3.7 mg/kg/
                                                                                day based on
                                                                                increases in
                                                                                motor activity
                                                                                seen in female
                                                                                offspring on PND
                                                                                17.
Chronic Dietary (All              NOAEL = 1.5 mg/kg.  UFA = 10x.........  Chronic RfD =       Co-critical: (1)
 populations).                                        UFH = 10x.........   0.015 mg/kg/day.    Combined Chronic
                                                      FQPA SF = 1x......  cPAD = 0.015 mg/kg/  Toxicity/
                                                                           day.                Carcinogenicity
                                                                                Study--Rat and
                                                                                (2) Chronic Oral
                                                                                Toxicity-Dog.
                                                                                LOAEL = 7.3 mg/kg/
                                                                                day based on
                                                                                changes in
                                                                                hematology,
                                                                                clinical
                                                                                chemistry,
                                                                                incidences of
                                                                                bile duct
                                                                                hyperplasia, and
                                                                                reduction in mean
                                                                                body-weight gain
                                                                                from the chronic
                                                                                toxicity/
                                                                                carcinogenicity
                                                                                rat study in
                                                                                conjunction with
                                                                                elevated
                                                                                cholesterol
                                                                                levels and
                                                                                increased liver
                                                                                weights reported
                                                                                in the Chronic
                                                                                Oral Toxicity
                                                                                Study in Dogs at
                                                                                a LOAEL = 7.23 mg/
                                                                                kg/day.
                                 -------------------------------------------------------------------------------
Short- and Intermediate-Term                         No incidental oral residential exposure.
 Incidental Oral.
                                 -------------------------------------------------------------------------------
Short-Term Dermal (1-30 days)...  NOAEL = 1.4 mg/kg/  UFA = 10x.........  Residential LOC     Dev. Neurotoxicity
                                   day.               UFH = 10x.........   for MOE = 100.      Study--Rat MRID
                                                      FQPA SF = 1x        Occupational LOC     46455201.
                                                       (Dermal-            for MOE = 100.     LOAEL = 3.7 mg/kg/
                                                       absorption factor                       day based on
                                                       = 1%).                                  increases in
                                                                                motor activity
                                                                                seen in female
                                                                                offspring on PND
                                                                                17.
Intermediate-Term Dermal (1 to 6  NOAEL = 1.4 mg/kg/  UFA = 10x.........  Residential LOC     Dev. Neurotoxicity
 months).                          day.               UFH = 10x.........   for MOE = 100.      Study--Rat MRID
                                                      FQPA SF = 1x        Occupational LOC     46455201.
                                                       (Dermal-            for MOE = 100.     LOAEL = 3.7 mg/kg/
                                                       absorption factor                       day based on
                                                       = 1%).                                  increases in
                                                                                motor activity
                                                                                seen in female
                                                                                offspring on PND
                                                                                17.
                                 -------------------------------------------------------------------------------

Short- and Intermediate-Term               Current assessment does not warrant an inhalation assessment.
 Inhalation.
                                 -------------------------------------------------------------------------------
Cancer (oral, dermal,                              ``Not Likely to be Carcinogenic to Humans''.
 inhalation).
----------------------------------------------------------------------------------------------------------------
Point of Departure (PoD) = A data point or an estimated point that is derived from observed dose-response data
  and used to mark the beginning of extrapolation to determine risk associated with lower environmentally
  relevant human exposures. NOAEL = no observed adverse effect level. LOAEL = lowest observed adverse effect
  level. UF = uncertainty factor. UFA = extrapolation from animal to human (intraspecies). UFH = potential
  variation in sensitivity among members of the human population (interspecies). FQPA SF = Food Quality
  Protection Act Safety Factor. PAD = population-adjusted dose (a = acute, c = chronic). RfD = reference dose.
  MOE = margin of exposure. LOC = level of concern.

C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary
exposure to thiram, EPA considered exposure under the petitioned-for
tolerances as well as all existing thiram tolerances in 40 CFR 180.132.
EPA assessed dietary exposures from thiram 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.
    A refined probabilistic acute dietary exposure assessment was
performed using maximum percent crop treated (PCT) values, tolerance,
the highest residue found during field-trials, distribution of field
trial residues, Federal Drug Administration (FDA) monitoring data for
apples, and empirical processing factors. Dietary risk estimates were
determined considering exposures from food and drinking water using
estimated drinking water concentrations (EDWCs) for surface water
sources.
    ii. Chronic exposure. A refined chronic dietary-exposure assessment
was performed using tolerance level residues and average estimated PCT.
    iii. Cancer. Based on the data summarized in Unit III.A., EPA has
classified thiram as ``Not Likely to be Carcinogenic to Humans,''
therefore, a dietary exposure assessment for the purpose of assessing
cancer risk is unnecessary.
    iv. Anticipated residue and PCT information. Section 408(b)(2)(E)
of FFDCA authorizes EPA to use available data and information on the
anticipated residue levels of pesticide residues in food and the actual
levels of pesticide residues that have been measured in food. If EPA
relies on such information, EPA must require pursuant to FFDCA section
408(f)(1) that data be provided 5 years after the tolerance is
established, modified, or left in effect, demonstrating that the levels
in food are not above the levels anticipated. For the present action,
EPA will issue such data call-ins as are required by FFDCA section
408(b)(2)(E) and authorized under FFDCA section 408(f)(1). Data will be
required to be submitted no later than 5 years from the date of
issuance of these tolerances.
    Section 408(b)(2)(F) of FFDCA states that the Agency may use data
on the actual percent of food treated for assessing chronic dietary
risk only if:
     Condition a: The data used are reliable and provide a
valid basis to show what percentage of the food derived from such crop
is likely to contain the pesticide residue.
     Condition b: The exposure estimate does not underestimate
exposure for any significant subpopulation group.
     Condition c: Data are available on pesticide use and food
consumption in a particular area, the exposure estimate does not
understate exposure for the population in such area.
    In addition, the Agency must provide for periodic evaluation of any
estimates used. To provide for the periodic evaluation of the estimate
of PCT as required by FFDCA section 408(b)(2)(F), EPA may require
registrants to submit data on PCT.
    The Agency estimated the PCT in the acute dietary risk assessment
for existing uses as follows apples: 10%; peaches: 2.5%; and
strawberry: 30%. The Agency estimated the PCT in the chronic dietary
risk assessments for existing uses as follows apples: 5%; peaches:
1.0%; and strawberry: 20%.
    In most cases, EPA uses available data from United States
Department of Agriculture/National Agricultural Statistics Service
(USDA/NASS), proprietary market surveys, and the National Pesticide Use
Database for the chemical/crop combination for the most recent 6-7
years. EPA uses an average PCT for chronic dietary risk analysis. The
average PCT figure for each existing use is derived by combining
available public and private market survey data for that use, averaging
across all observations, and rounding to the nearest 5%, except for
those situations in which the average PCT is less than one. In those
cases, 1% is used as the average PCT and 2.5% is used as the maximum
PCT. EPA uses a maximum PCT for acute dietary risk analysis. The
maximum PCT figure is the highest observed maximum value reported
within the recent 6 years of available public and private market survey
data for the existing use and rounded up to the nearest multiple of 5%.
    The Agency believes that the three conditions discussed in Unit
III.C.1.iv. have been met. With respect to Condition a, PCT estimates
are derived from Federal and private market survey data, which are
reliable and have a valid basis. The Agency is reasonably certain that
the percentage of the food treated is not likely to be an
underestimation. As to Conditions b and c, regional consumption
information and consumption information for significant subpopulations
is taken into account through EPA's computer-based model for evaluating
the exposure of significant subpopulations including several regional
groups. Use of this consumption information in EPA's risk assessment
process ensures that EPA's exposure estimate does not understate
exposure for any significant subpopulation group and allows the Agency
to be reasonably certain that no regional population is exposed to
residue levels higher than those estimated by the Agency. Other than
the data available through national food consumption surveys, EPA does
not have available reliable information on the regional consumption of
food to which chemical name may be applied in a particular area.
    2. Dietary exposure from drinking water. The Agency used screening
level water exposure models in the dietary exposure analysis and risk
assessment

for thiram in drinking water. These simulation models take into account
data on the physical, chemical, and fate/transport characteristics of
thiram. Further information regarding EPA drinking water models used in
pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm.
    Based on the Pesticide Root Zone Model/Exposure Analysis Modeling
System (PRZM/EXAMS) and Screening Concentration in Ground Water (SCI-
GROW) models, the estimated drinking water concentrations (EDWCs) of
thiram for acute exposures are 0.0478 parts per billion (ppb) and
0.0025 ppb for chronic exposures (for non-cancer assessments) for
surface water. Ground water sources were not included (for acute or
chronic exposures), as the EDWCs for ground water are minimal in
comparison to those for surface water. Surface water EDWCs were
incorporated in DEEM-FCID into the food categories ``water, direct, all
sources'' and ``water, indirect, all sources'' for the dietary
assessments.
    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).
    Thiram is not available for sale or use by homeowner applicators;
therefore, there are no residential handler exposure scenarios
applicable to thiram. However, there is potential for residential post-
application dermal exposure from treated golf course greens and tees.
Residential exposures resulting from dermal contact with thiram-treated
turf were assessed for children 6 to <11 years old, children 11 to <16
years old, and adults. When use is restricted to greens and tees, the
duration of exposure is 1 hour to reflect the anticipated time a player
would be spending in contact with those areas. Inhalation post-
application exposures for golf courses were not assessed since
inhalation exposures are thought to be negligible in outdoor post-
application scenarios.
    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 the N-methyl carbamate pesticides, EPA has not found thiram
(a dithiocarbamate) to share a common mechanism of toxicity with any
other substances, and thiram does not appear to produce a toxic
metabolite produced by other substances. For the purposes of this
tolerance action, therefore, EPA has assumed that thiram does not have
a common mechanism of toxicity with other substances. For information
regarding EPA's efforts to determine which chemicals have a common
mechanism of toxicity and to evaluate the cumulative effects of such
chemicals, see EPA's Web site at http://www.epa.gov/pesticides/cumulative.

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 was no evidence of
increased susceptibility following in utero exposure to rats or rabbits
or following pre- and post natal exposures to rats. There is evidence
of quantitative susceptibility in the DNT study. Offspring effects
(increased locomotor activity in females on PND 17) occurred at a lower
dose than maternal effects (increased number of rearing events and
elevated incidences of hyperactivity in females at weeks 8 and 13).
There is low concern for the enhanced susceptibility seen in the DNT
study because: (1) Clear NOAELs/LOAELs were established for the
offspring effects; (2) the dose-response is well defined; (3) the
behavioral effect of concern were observed only in females on one
evaluation time period; and (4) the dose/endpoint is used for acute
dietary risk for the most sensitive population subgroup (females 13-49
years old). Consequently, there are no residual uncertainties for pre-
and post-natal 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 thiram is complete with acceptable
neurotoxicity, developmental, and reproductive toxicity studies.
    ii. Thiram has been shown to cause neurotoxicity following acute
and subchronic exposures only. There was no evidence of increased
susceptibility following in utero exposure to rats or rabbits or
following pre- and post-natal exposures to rats. Evidence of
quantitative susceptibility was demonstrated in the DNT study; however,
there is low concern for the susceptibility seen in the DNT study
because clear NOAELs/LOAELs were established for the offspring effects,
the dose-response is well defined, and the dose/endpoint is used for
acute dietary risk for the most sensitive population (females 13-49
years old) and therefore is protective. Consequently, there are no
residual uncertainties for pre- and post-natal toxicity.
    iii. There is no other evidence that thiram 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, only in the DNT.
    iv. There are no residual uncertainties identified in the exposure
databases. EPA made conservative (protective) assumptions in the ground
and surface water modeling used to assess exposure to thiram in
drinking water. In addition, the acute dietary exposure analysis used
FDA apple monitoring data and field trial data along with the maximum
percent crop treated. The chronic dietary exposure analysis used
tolerance level residues except for apple along with the average
percent crop treated. In addition, washing studies were incorporated
into the dietary analyses since thiram is not a systemic pesticide and
will wash off during normal washing procedures. These assessments will
not underestimate the exposure and risks posed by thiram.

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.
Using DEEM-FCIDTM, acute dietary exposure at the 99.9th
exposure percentile is estimated at 0.020104 mg/kg bw/day for the
general U.S. population (3.1% of the aPAD) and 0.010887 mg/kg bw/day
(78% of the aPAD) for females 13-49 years old, the population subgroup
with the highest estimated acute dietary exposure to thiram.
    2. Chronic risk. The chronic aggregate risk assessment takes into
account exposure estimates from dietary consumption of thiram (food and
drinking water). Dietary risk estimates were determined considering
exposures from food and drinking water using EDWCs for surface water
sources. Using DEEM-FCIDTM, dietary exposure is estimated at
0.001384 mg/kg bw/day for the general U.S. population (9.2% of the
cPAD) and 0.008369 mg/kg bw/day (56% of the cPAD) for children 1-2
years old, the population subgroup with the highest estimated chronic
dietary exposure to thiram.
    3. Short-term and Intermediate-term risk. Short-term aggregate
exposure takes into account short-term residential exposure plus
chronic exposure to food and water (considered to be a background
exposure level). Intermediate-term aggregate exposure takes into
account intermediate-term residential exposure plus chronic exposure to
food and water (considered to be a background exposure level).
    In aggregating short- and intermediate-term risk, the Agency
routinely combines background chronic dietary exposure (food + water)
with short/intermediate-term residential exposure (dermal only). The
combined exposure may then be used to calculate an MOE for aggregate
risk. Using the golfer scenario for adult males, adult females, and
children >6 years old, combined with the applicable subpopulation with
the greatest dietary exposure, the total short/intermediate-term food
and residential aggregate MOEs are 600, 600, and 370, respectively. As
these MOEs are greater than 100, the short- and intermediate-term
aggregate risks do not exceed the Agency's LOC. For children <6 years
old, there is no residential exposure, therefore, a short/intermediate
term aggregate risk assessment is not required for this population.
    4. Aggregate cancer risk for U.S. population. Thiram is classified
as ``Not Likely to be Carcinogenic to Humans'' based on lack of
evidence for carcinogenicity in mice or rats; therefore, thiram is not
expected to pose a 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 thiram residues.

IV. Other Considerations

A. Analytical Enforcement Methodology

    Adequate enforcement methodology (colorimetric analytical method)
is available to enforce the tolerance expression. 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_ADDRESS>
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 ``total dithiocarbamates,
determined and expressed as mg carbon disulfide per kg'' in or on
strawberry at 5 ppm. This MRL differs from the tolerance amendment for
thiram on strawberry that was requested by the petitioner. As U.S.
tolerances are currently established on the individual
dithiocarbamates, compatibility is not possible with the proposed
tolerances. EPA is considering modifying all tolerances for
dithiocarbamates, including thiram, to express them in terms of carbon
disulfide. At that time, the tolerance expression will be compatible
with CODEX; however, the U.S. tolerance level for strawberry cannot be
harmonized with the CODEX MRL level because of differences in
agricultural practices between the U.S. and foreign countries where
strawberries are grown. Actual residues seen in the U.S. field trials
submitted to support the proposed strawberry tolerance amendment
exceeded the CODEX MRL.

C. Revisions to Petitioned-for Tolerances

    The Agency has revised the tolerance expression to clarify:
    1. That, as provided in FFDCA section 408(a)(3), the tolerance
covers metabolites and degradates of thiram not specifically mentioned.
    2. That compliance with the specified tolerance levels is to be
determined by measuring only the specific compounds mentioned in the
tolerance expression.

V. Conclusion

    Therefore, the tolerance for residues of thiram, in or on
strawberry, is amended to increase the level of the tolerance to 20
ppm.

VI. Statutory and Executive Order Reviews

    This final rule 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 final rule has
been exempted from review under Executive Order 12866, this final rule
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 final rule 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 final rule 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
final rule. In addition, this final rule does not impose any
enforceable duty or contain any unfunded mandate as described under
Title II of the Unfunded Mandates Reform Act of 1995 (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 of 1995 (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: January 27, 2014.
Lois Rossi,
Director, Registration Division, Office of Pesticide Programs.
    Therefore, 40 CFR chapter I is amended as follows:

PART 180--[AMENDED]

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

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

0
2. In Sec.  180.132, revise the introductory text of paragraph (a) and
revise the entry for ``Strawberry'' in the table in paragraph (a) to
read as follows:

Sec.  180.132  Thiram; tolerances for residues.

    (a) General. Tolerances for residues of the fungicide thiram
(tetramethyl thiuram disulfide), including its metabolites and
degradates, in or on the commodities in the table below. Compliance
with the tolerance levels specified is to be determined by measuring
only thiram.

------------------------------------------------------------------------
                                       Parts per        Expiration/
             Commodity                  million       revocation  date
------------------------------------------------------------------------

                                * * * * *
Strawberry.........................            20  None.
------------------------------------------------------------------------

* * * * *
[FR Doc. 2014-03074 Filed 2-11-14; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register: September 29, 2005 (Volume 70, Number 188)]
[Notices]
[Page 56944-56947]
[DOCID:fr29se05-79]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52496, File No. SR-MSRB-2005-12]

Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Order Approving Proposed Rule Change Concerning Solicitation and
Coordination of Payments to Political Parties and Question and Answer
Guidance on Supervisory Procedures Related to Rule G-37(d) on Indirect
Violations

September 22, 2005.
    On June 27, 2005, the Municipal Securities Rulemaking Board
(``MSRB'' or ``Board''), filed with the Securities and Exchange
Commission (``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4
thereunder,\2\ a proposed rule change consisting of an amendment to
Rule G-37(c), concerning solicitation and coordination of payments to
political parties, and Q&A guidance on supervisory procedures related
to Rule G-37(d), on indirect violations. The proposed rule change was
published for comment in the Federal Register on August 16, 2005.\3\
The Commission received four comment letters regarding the proposal.\4\
On September 16, 2005,

the MSRB filed a response to the comment letters from UBS, BMA and
DSCC.\5\ On September 21, 2005, the MSRB filed a response to the
comment letter from Griffin, Kubik.\6\ This order approves the proposed
rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 52235 (August 10,
2005) 70 FR 48214 (August 16, 2005) (the ``Commission's Notice'').
    \4\ See letter to Jonathan G. Katz, Secretary, Commission, from
Terry L. Atkinson, Managing Director, UBS Financial Services Inc.
(``UBS''), dated September 1, 2005 (``UBS' Letter''); letter to
Jonathan G. Katz, Secretary, Commission, from Leslie M. Norwood,
Vice President and Assistant General Counsel, The Bond Market
Association (``BMA''), dated September 2, 2005 (``BMA's Letter'');
letter to Jonathan G. Katz, Secretary, Commission, from Marc E.
Elias and Rebecca H. Gordon, Perkins Coie, Counsel to the Democratic
Senatorial Campaign Committee (``DSCC''), dated September 6, 2005
(``DSCC's Letter''); and letter to Jonathan G. Katz, Secretary,
Commission, from David M. Thompson, President, and Robert J.
Stracks, Counsel, Griffin, Kubik, Stephens & Thompson, Inc.
(``Griffin, Kubik''), dated August 29, 2005 (``Griffin, Kubik's
Letter'').
    \5\ See letter from Carolyn Walsh, Senior Associate General
Counsel, MSRB, to Martha M. Haines, Chief, Office of Municipal
Securities, Commission, dated September 16, 2005 (``MSRB's First
Response Letter'').
    \6\ See letter from Carolyn Walsh, Senior Associate General
Counsel, MSRB, to Martha M. Haines, Chief, Office of Municipal
Securities, Commission, dated September 21, 2005 (``MSRB's Second
Response Letter''). Griffin, Kubik's Letter was provided to the MSRB
after it had sent its First Response Letter.
---------------------------------------------------------------------------

    The proposed rule change would prohibit a dealer and certain
municipal finance professionals (``MFPs'') from soliciting any person
or PAC to make or coordinate a payment to a political party of a state
or locality where the dealer is engaging or is seeking to engage in
municipal securities business. In addition, the proposed Qs&As seek to
provide dealers with more guidance as they develop procedures to ensure
compliance with both the language and the spirit of Rule G-37. A full
description of the proposal is contained in the Commission's Notice.
    UBS, BMA and Griffin, Kubik stated in their comment letters that
they fully support the elimination of pay-to-play practices in the
municipal securities industry, but raised concerns about implementation
of the proposal. DSCC expressed concern that the guidance presented in
the MSRB's proposed Questions and Answers may unnecessarily chill
contributions to national party committees from MFPs and dealer-
controlled PACs.

Vagueness and First Amendment Concerns

    Both UBS and BMA stated that the proposed Qs&As are vague and do
not provide clear, uniform standards as to when a contribution to a PAC
or party committee results in an indirect violation. UBS and BMA also
stated that the Qs&As represent an expansion of Rule G-37 because the
Qs&As require that a broker-dealer have procedures in place to
reasonably ensure that contributions to PACs and party committees do
not result in indirect contributions to issuer officials, but provide
no discernable standard as to when such indirect contribution would
occur. BMA stated that the MSRB had previously established a safe
harbor where a broker-dealer gets assurances from a party committee or
PAC that the broker-dealer's contribution will not be used for issuer
officials (e.g., for housekeeping or conference accounts), and that
this safe harbor conflicted with the proposal. Both UBS and BMA stated
that the vagueness of the proposal will allow different firms to
develop different supervisory procedures depending on their tolerance
for risk. UBS and BMA further stated that creating a vague standard for
contributing to PACs and party committees is unconstitutional, and that
the due diligence suggested by the proposed Qs&As is troublesome under
the First Amendment. Griffin, Kubik stated that they believe that Rule
G-37 is unconstitutional.
    The MSRB noted in its Response Letters that the commentators raised
these concerns to the MSRB during its comment period on the proposed
guidance, that the MSRB responded to these comments in its filing and
that the Commission's Notice addresses these issues at some length. The
MSRB stated that the proposed Qs&As do not extend the reach of Rule G-
37 or create a vague standard of regulation. The MSRB stated that the
proposed guidance does not change the standard regarding when a payment
to a political party or PAC could result in either a rule violation or
a ban on doing business with a municipal issuer. The MSRB further
stated that a violation of Rule G-37(d) still will only occur when the
payment is made to other entities ``as a means to circumvent the
rule,'' and that the standard enunciated in Rule G-37(d), which
prohibits anyone from ``directly or indirectly, through or by any other
person or means'' doing what sections (b) and (c) prohibit, is not
unconstitutionally vague.
    The MSRB further stated that contrary to statements made in the
commentators' letters, this precise issue raised before the United
States Court of Appeals in Blount v. SEC,\7\ and that the Court of
Appeals in Blount directly rejected the challenge that Rule G-37(d) was
too broad and could not regulate payments to parties and PACs when they
are intended as end-runs around the direct contribution limits. In
Blount, the Court stated: ``Although the language of section (d) itself
is very broad, the SEC has interpreted it as requiring a showing of
culpable intent, that is, a demonstration that the conduct was
undertaken `as a means to circumvent' the requirements of (b) and (c) *
* * The SEC states its `means to circumvent' qualification in general
terms. The qualification appears, therefore, to apply not only to such
items as contributions made by the broker's or dealer's family members
or employees, but also gifts by a broker to a state or national party
committee, made with the knowledge that some part of the gift is likely
to be transmitted to an official excluded by Rule G-37. In short,
according to the SEC, the rule restricts such gifts and contributions
only when they are intended as end-runs around the direct contribution
limitations.'' \8\
---------------------------------------------------------------------------

    \7\ Blount v. SEC, 61 F.3d 938 (D.C. Cir 1995), rehearing and
suggestion for rehearing en banc denied (1995), certiorari denied by
517 U.S. 1119, 116 S.Ct. 1351, 134 L.Ed.2d 520 (1996).
    \8\ Id., at 948.
---------------------------------------------------------------------------

    The MSRB further stated that the cases cited by BMA related to
different issues and did not discredit the Blount Court's ruling on
this precise issue. In addition, the MSRB stated that the cases relied
upon by BMA were decided prior to Blount as well as the Supreme Court's
decision in McConnell.\9\ Griffin, Kubik stated that the MSRB's
citations to Blount and McConnell were weak arguments, but did not cite
any authority for their belief that Rule G-37 is unconstitutional.
---------------------------------------------------------------------------

    \9\ McConnell v. Federal Election Commission, 540 U.S. 93, 124
S.Ct. 619 (Dec. 10, 2003).
---------------------------------------------------------------------------

    The MSRB stated in its filing that it was issuing the proposed
guidance to remind dealers of the need to have adequate supervisory
procedures. The MSRB guidance makes suggestions concerning such
procedures but does not require particular procedures. The MSRB stated
that it is up to individual dealers to create procedures that are
appropriate to their particular circumstances, and that broker-dealers
generally do not have uniform supervisory procedures.
    The MSRB stated that it never intended for dealers to treat
payments to administrative party accounts as a safe harbor and that
payments to administrative-type accounts have always fallen within the
rule's regulatory ambit. The MSRB further stated that the SEC's
approval order of certain early amendments to Rule G-37 clearly
demonstrates that the MSRB never intended for dealers to treat payments
to administrative party accounts as a safe harbor.\10\
---------------------------------------------------------------------------

    \10\ See Securities Exchange Act Release No. 35446 (SEC Order
Approving Proposed Rule Change by the Municipal Securities
Rulemaking Board Relating to Rule G-37 on Political Contributions
and Prohibitions on Municipal Securities Business, and Rule G-8, on
Recordkeeping) (March 6, 1995), 60 FR 13496 (``1995 SEC Approval
Order'').
---------------------------------------------------------------------------

    In 1995, the MSRB filed and the SEC approved amendments to Rule G-
37's disclosure requirements to require dealers to record and report
all payments to parties by dealers, PACs,

MFPs and executive officers regardless of whether those payments
constitute contributions. In the 1995 SEC Approval Order, the SEC
reiterated that the party payment disclosure requirements are intended
to help ensure that dealers do not circumvent the prohibition on
business in the rule by indirect contributions to issuer officials
through payments to political parties. The SEC explained that the need
for the language amendment was motivated by attempts by dealer and/or
political parties to assert that contributions to administrative-type
accounts did not fall within the rule's regulatory ambit. In the 1995
SEC Approval Order, the SEC states: ``Certain dealers and other
industry participants have notified the MSRB that certain political
parties currently are engaging in fundraising practices which,
according to these political parties, do not invoke the application of
rule G-37. For example, some of these entities currently are urging
dealers to make payments to political parties earmarked for expenses
other than political contributions (such as administrative expenses or
voter registration drives). Since these payments would not constitute
`contributions' under the rule, the recordkeeping and reporting
provisions would not apply. The MSRB is concerned, based upon this
information, that the same pay-to-play pressures that motivated the
MSRB to adopt rule G-37 may be emerging in connection with the
fundraising practices of certain political parties described
above.''\11\
---------------------------------------------------------------------------

    \11\ Id. at 13498.
---------------------------------------------------------------------------

    In addition, in August 2003, when the MSRB published a notice on
indirect rule violations of Rule G-37, the MSRB referenced the 1995 SEC
Approval Order and specifically stated that, ``The party payment
disclosure requirements were intended to assist in severing any
connection between payments to political parties (even if earmarked for
expenses other than political contributions) and the awarding of
municipal securities business.'' \12\
---------------------------------------------------------------------------

    \12\ MSRB Notice 2003-32 (August 6, 2003) at pp. 1-2 (emphasis
added).
---------------------------------------------------------------------------

    The MSRB further stated that the commentators continued incorrect
assertions about a ``housekeeping'' safe harbor only serve to
illustrate the potential for real (or imagined) safe harbors to become
dangerous loopholes as parties or PACs tailor their solicitations for
contributions to the safe harbor's parameters, and that, as noted in
the MSRB's proposed guidance, the need for dealers to adopt adequate
written supervisory procedures to prevent indirect violations via
``housekeeping'' type political party accounts is especially important
in light of media and other reports that issuer agents have informed
dealers and MFPs that, if they are prohibited from contributing
directly to an issuer official's campaign, they should contribute to an
affiliate party's ``housekeeping'' account.

National Party Committees and Federal Leadership PACs

    UBS and BMA requested that the MSRB expressly state that
contributions made to a national party committee or federal leadership
PAC be permitted under the proposed Qs&As as long as (1) the
contribution was not solicited by an issuer official, and (2) the party
committee or leadership PAC is not controlled by an issuer official.
The DSCC stated that it is concerned that the guidance presented in the
MSRB's draft Questions and Answers may unnecessarily chill
contributions to national party committees from MFPs and dealer-
controlled PACs, and that contributions to national party committees do
not present the ``pay-to-play'' concerns Rule G-37 was intended to
address. These commentators are asking the MSRB to create a safe harbor
for certain national party committees and federal leadership PACs.
    The MSRB responded that there is no evidence that the lack of a
safe harbor for national party committees and federal leadership PACs
has inhibited MFPs or dealers from contributing to such parties or
PACs. The MSRB does not believe it is useful to provide ``safe
harbors'' concerning parties or PACs such that a dealer or MFP could
make payments to certain parties or PACs without investigating whether
the payment is actually being made as a means to circumvent the
requirements of Rule G-37. The MSRB stated that the Court of Appeals in
Blount \13\ expressly recognized that Rule G-37(d) was originally
intended to prevent payments to both national and state parties used as
a ``means to circumvent'' Rule G-37. UBS and BMA stated that when a
contribution is not solicited by an issuer official and the party
leadership PAC is not controlled by an issuer official the national
party committees and federal leadership PACs cannot be used as a means
to circumvent Rule G-37; the MSRB stated that such a position is
inconsistent with public perception. The MSRB also stated that the
Supreme Court's recent decision in McConnell \14\ emphasized the
potential for payments to a political party to have undue influence on
the actions of the elected officeholders belonging to the same party,
and that McConnell upheld new federal statutory restrictions on soft
money donations that were neither solicited by candidates nor used by
the party to aid specific candidates. Given public perception and the
Supreme Court's pronouncements, the MSRB believes it is reasonable to
require dealers to be responsible for having adequate supervisory
procedures that obligate the dealer to exercise its judgment concerning
whether contributions to any party or PAC are being made as a means to
circumvent the provisions of Rule G-37.
---------------------------------------------------------------------------

    \13\ See supra note 7.
    \14\ See supra note 9.
---------------------------------------------------------------------------

The Prohibition on Soliciting Contributions to State and Local Party
Committees Should be Symmetrical to the Contributions Ban

    UBS stated that the Rule G-37(c) amendment should be symmetrical to
the contributions ban because it is illogical to impose a greater
prohibition on soliciting contributions than on making contributions.
The MSRB responded that the proposed rule amendment is more limited
than as portrayed by UBS. UBS stated that the amendment would
completely prohibit MFPs from soliciting contributions to any state and
local party committees when, in fact, it only prohibits solicitations
by the dealer or certain MFPs for contributions to a political party of
a state of locality where the dealer is engaging or is seeking to
engage in municipal securities business. Thus, the MSRB believes that
the proposed amendment is narrowly tailored to regulate only a dealer's
or certain MFP's solicitation of other persons' payments to political
parties when there can be a perception that MFPs and dealers are
soliciting others to make payments to parties or PACs as a means to
circumvent the rule and the rule's disclosure requirements.
    The MSRB determined that allowing dealers or certain MFPs to
solicit other persons to make political party or PAC payments in states
and localities where they are engaging or seeking to engage in
municipal securities business creates at least the appearance of
attempting to influence the awarding of municipal securities business
through such payments. Moreover, without the proposed prohibition, it
would be very difficult for enforcement agencies to detect such
potential indirect violations because the parties solicited do not have
to disclose the payments. Additionally, the MSRB believes that the
arguably stricter prohibition can be justified because a violation of
Rule G-37(c) does

not result in an automatic ban on business.
    The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to the MSRB \15\ and, in particular, the
requirements of Section 15B(b)(2)(C) of the Act and the rules and
regulations thereunder.\16\ Section 15B(b)(2)(C) of the Act requires,
among other things, that the MSRB's rules be designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in municipal
securities, to remove impediments to and perfect the mechanism of a
free and open market in municipal securities, and, in general, to
protect investors and the public interest.\17\ In particular, the
Commission finds that the proposed rule change is consistent with the
Act because it will help inhibit practices that attempt, or create the
appearance of attempting, to influence the awarding of municipal
securities business through an indirect violation of Rule G-37. The
Commission also finds that the Q&A guidance will facilitate dealer
compliance with Rule G-27, on supervision, and Rule G-37(d)'s
prohibitions on indirect rule violations.
---------------------------------------------------------------------------

    \15\ In approving this rule the Commission notes that it has
considered the proposed rule's impact on efficiency, competition and
capital formation. 15 U.S.C. 78c(f).
    \16\ 15 U.S.C. 78o-4(b)(2)(C).
    \17\ Id.
---------------------------------------------------------------------------

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\18\ that the proposed rule change (SR-MSRB-2005-12) be, and hereby
is, approved.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-19497 Filed 9-28-05; 8:45 am]

BILLING CODE 8010-01-P