[Federal Register: June 27, 2008 (Volume 73, Number 125)]
[Notices]
[Page 36504-36511]
[DOCID:fr27jn08-46]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OPPT-2008-0267; FRL-8371-5]

Formaldehyde Emissions from Composite Wood Products; Disposition
of TSCA Section 21 Petition

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: On March 24, 2008, 25 organizations and approximately 5,000
individuals petitioned EPA under section 21 of the Toxic Substances
Control Act (TSCA) to use section 6 of TSCA to adopt a recently
promulgated California State regulation concerning emissions of
formaldehyde from three types of composite wood products: Hardwood
plywood, particleboard, and medium density fiberboard. They petitioned
EPA to assess and reduce the risks posed by formaldehyde emitted from
these products by exercising its authority under TSCA section 6 to:
Adopt and apply nationally the California formaldehyde emissions
regulation for these composite wood products; and to extend the
regulation to include composite wood products used in manufactured
homes. For the reasons set forth in this notice, EPA has granted in
part and denied in part the petitioners' requests.

FOR FURTHER INFORMATION CONTACT: For general information contact: Colby
Linter, Regulatory Coordinator, Environmental Assistance Division
(7408M), Office of Pollution Prevention and Toxics, Environmental
Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-
0001; telephone number:<PHONE_NUMBER>; e-mail address: TSCA-
<EMAIL_ADDRESS>    For technical information contact: Mary Belefski, Chemical Control
Division (7405M), Office Pollution Prevention and Toxics, Environmental
Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-
0001; telephone number:<PHONE_NUMBER>; e-mail address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this Action Apply to Me?

    This action is directed to the public in general. This action may,
however, be of interest to those persons who manufacture, process,
import, or distribute in commerce composite wood products, including
hardwood plywood, particleboard, or medium density fiberboard and
others who are interested in Agency activities involving formaldehyde.
Since other entities may also be interested, the Agency has not
attempted to describe all the specific entities that may be interested
in this action. If you have any questions regarding the applicability
of this action to a particular entity, consult the technical person
listed under FOR FURTHER INFORMATION CONTACT.

B. How Can I Get Information About This Petition?

    EPA has established a docket for this action under docket
identification (ID) number EPA-HQ-OPPT-2008-0267. All documents in the
docket are listed in the docket's index available at http://
www.regulations.gov. Although listed in the index, some information is
not publicly available, e.g., Confidential Business Information (CBI)
or other information whose disclosure is restricted by statute. Certain
other material, such as copyrighted material, will be publicly
available only in hard copy. Publicly available docket materials are
available electronically at http://www.regulations.gov, or, if only
available in hard copy, at the OPPT Docket. The OPPT Docket is located
in the EPA Docket Center (EPA/DC) at Rm. 3334, EPA West Bldg., 1301
Constitution Ave., NW., Washington, DC. The EPA/DC Public Reading Room
hours of operation are 8:30 a.m. to 4:30 p.m., Monday through Friday,
excluding Federal holidays. The telephone number of the EPA/DC Public
Reading Room is

(202) 566-1744, and the telephone number for the OPPT Docket is (202)
566-0280. Docket visitors are required to show photographic
identification, pass through a metal detector, and sign the EPA visitor
log. All visitor bags are processed through an X-ray machine and
subject to search. Visitors will be provided an EPA/DC badge that must
be visible at all times in the building and returned upon departure.

II. Background

A. What is a TSCA Section 21 Petition?

    Section 21 of TSCA allows any person to petition EPA to initiate a
rulemaking proceeding for the issuance, amendment, or repeal of a rule
under TSCA section 4, 6, or 8 or an order under TSCA section 5(e) or
6(b)(2). A TSCA section 21 petition must set forth the facts that are
claimed to establish the necessity for the action requested. EPA is
required to grant or deny the petition within 90 days of its filing. If
EPA grants the petition, the Agency must promptly commence an
appropriate proceeding. If EPA denies the petition, the Agency must
publish its reasons for the denial in the Federal Register. A
petitioner may commence a civil action in a U.S. district court to
compel initiation of the requested rulemaking proceeding within 60 days
of either a denial or the expiration of the 90-day period.

B. What Criteria Apply to a Decision on a TSCA Section 21 Petition?

    1. Legal standards regarding TSCA section 21 petitions. Section
21(b)(1) of TSCA requires that the petition ``set forth the facts which
it is claimed establish that it is necessary'' to issue the rule or
order requested. 15 U.S.C. 2620(b)(1). Thus, TSCA section 21 implicitly
incorporates the statutory standards that apply to the requested
actions. In addition, TSCA section 21 establishes standards a court
must use to decide whether to order EPA to initiate rulemaking in the
event of a lawsuit filed by the petitioner after denial of a TSCA
section 21 petition. 15 U.S.C. 2620(b)(4)(B). Accordingly, EPA has
relied on the standards in TSCA section 21 and in the provisions under
which actions have been requested to evaluate this petition.
    2. Legal standard regarding TSCA section 6 rules. In order to
promulgate a rule under TSCA section 6(a), the Administrator must find
that ``there is a reasonable basis to conclude that the manufacture,
processing, distribution in commerce, use, or disposal of a chemical
substance or mixture . . . presents or will present an unreasonable
risk.'' 15 U.S.C. 2605(a). This finding cannot be made considering risk
alone. In promulgating any rule under TSCA section 6(a), the statute
requires that the Administrator consider:
     The effects of such substance or mixture on health and the
magnitude of the exposure of human beings to such substance or mixture.
     The effects of such substance or mixture on the
environment and the magnitude of the exposure of the environment to
such substance or mixture.
     The benefits of such substance or mixture for various uses
and the availability of substitutes for such uses.
     The reasonably ascertainable economic consequences of the
rule, after consideration of the effect on the national economy, small
business, technological innovation, the environment, and public health.
15 U.S.C. 2605(c)(1).

    Furthermore, the control measure or measures adopted are to be the
``least burdensome requirements'' that adequately protect against the
unreasonable risk. 15 U.S.C. 2605(a).
    Section 21(b)(4)(B) of TSCA provides the standard for judicial
review should EPA deny a request for rulemaking under TSCA section
6(a): ``If the petitioner demonstrates to the satisfaction of the court
by a preponderance of the evidence that ... there is a reasonable basis
to conclude that the issuance of such a rule ... is necessary to
protect health or the environment against an unreasonable risk of
injury,'' the court shall order the Administrator to initiate the
requested action. 15 U.S.C. 2620(b)(4)(B).

C. What Action is Requested Under this TSCA Section 21 Petition?

    On March 24, 2008, the Sierra Club, National Center for Healthy
Housing, National Coalition to End Childhood Lead Poisoning, Alliance
for Healthy Homes, National Housing Institute, Healthy Building
Network, Gulf Coast Environmental Restoration Task Force of Sierra
Club, Next Generation Choices Foundation, Improving Kids' Environment,
EarthRose Institute, Grassroots Environmental Education, Healthy Homes
of Louisiana, Lower Mississippi Riverkeeper, Women's Community Cancer
Project, Gulf Coast D'Iberville Volunteers Foundation, Advocates for
Environmental Human Rights, Environmental Health Watch, North Gulfport
Community Land Trust, Louisiana Environmental Action Network, Allergy
and Environmental Health Assoc., Aspen River Construction, DeVany
Industrial Consultant, Protect Sacred Sites ``Indigenous People, One
Nation,'' United People of the Cherokee Nation, Clean Air Athens, and
approximately 5,000 individuals petitioned EPA under TSCA section 21.
The petitioners are concerned about risks to human health from exposure
to formaldehyde emitted from composite wood products, including
hardwood plywood, particleboard, and medium density fiberboard. They
petitioned EPA to assess and reduce these risks by exercising its
authority under TSCA section 6 to:
    1. Adopt and apply nationally the formaldehyde emissions regulation
(Airborne Toxics Control Measure (ATCM)) for three types of composite
wood products (hardwood plywood, particleboard, and medium density
fiberboard), recently adopted by the California Air Resources Board
(CARB).
    2. Extend the regulation to include composite wood products used in
manufactured housing.
    Among other requirements, the CARB ATCM specifies cap emission
limits that are not to be exceeded.
    In this notice, unless otherwise specified, ``composite wood
products'' refers to the three types of wood products (hardwood
plywood, particleboard, and medium density fiberboard) referred to in
the California regulation. Composite wood products are a subset of
``pressed wood products.''

D. What Support Do the Petitioners Offer for These Requests?

    To support their request, the petitioners referenced CARB's webpage
containing the documentation supporting the composite wood products
rulemaking. In addition, petitioners cited information available from
Federal agencies including the following:
    1. U.S. Department of Housing and Urban Development (HUD), Office
of Manufactured Housing Programs, and HUD's formaldehyde emission
control regulations at 24 CFR 3280.308.
    2. The U.S. EPA National Emission Standards for Hazardous Air
Pollutants: Plywood and Composite Wood Products at 40 CFR part 63,
subpart DDDD regulation.
    3. The U.S Occupational Safety and Health Administration,
Formaldehyde Standards for Toxic and Hazardous Substances, 29 CFR
1910.1048.
    4. The U. S. Centers for Disease Control and Prevention (CDC)
analyses and findings on formaldehyde in the Federal Emergency
Management Agency's (FEMA) Hurricane Katrina trailers. The petitioners
also

summarized in their submission the findings on exposure levels from the
CDC trailer study.

III. Comments Received

    In response to EPA's request for comment on this TSCA section 21
petition (73 FR 22369, April 25, 2008) (FRL-8362-6), EPA received 25
comments. Three were short comments in support of the petition from
concerned citizens and furniture manufacturers; one additional
furniture manufacturer commented on his concern about effective
enforcement against furniture importers. Another comment cautioned that
developing a compliance testing method may be very difficult.
    Eight manufactured housing trade groups and suppliers submitted
similar comments opposed to EPA regulation of manufactured homes. The
commenters stated that the HUD's standards have not been shown to be
inadequate, HUD has the appropriate statutory authority (and EPA should
use TSCA section 9 to refer the matter to HUD), and HUD has already
received recommendations to amend its standards. Five furniture,
window, door, and general manufacturing trade groups indicated their
support for national application of formaldehyde emission standards,
but noted that several challenges to the implementation and enforcement
of California's rule still need to be worked out. Some indicated
support for EPA development of a ``performance-based standard''
designed to reduce human exposure to formaldehyde, regardless of source
(mentioning carpet and paints as other sources of formaldehyde
exposure) and all were concerned about the administrative burdens of
the CARB rule and California's or EPA's ability to manage the
certification and testing requirements.
    Three plywood and composite panel trade groups indicated support
for expanding CARB's emission limits to the rest of the United States,
but commented that a TSCA section 6 rule is neither appropriate nor
justifiable. They suggest that a national standard would be ``developed
in a cooperative effort with industry'' rather than through a TSCA
section 6 rule. The Hardwood Plywood & Veneer Association (HPVA) stated
that it would be willing to join the Manufactured Housing Institute to
petition HUD to adopt the CARB standards, and is considering
incorporating the CARB emission standards into their next revision of
the American National Standards Institute-HPVA standards for hardwood
plywood and engineered hardwood flooring. The American Forest & Paper
Association commented that it ``supports adoption by EPA of the ATCM
emission standards and testing and labeling provisions as a single,
national paradigm for formaldehyde in composite wood panels, but
developed in a cooperative effort with industry rather than through an
(unjustified) Section 6 rule.'' The Composite Panel Association (CPA)
estimated that 80% of their members' medium density fiberboard and
particleboard production will be CARB-compliant, and CPA expects the
CARB rule to become a de facto national standard. However, since
compliance with the Phase 2 standards will be significantly more
expensive, CPA commented that there will be a greater incentive to
differentiate panel emission level by region or customer. CPA also
noted that the industry estimates that the costs of the CARB rule,
nationwide, will be close to $650 million, significantly higher than
the cost to affected parties predicted by California (commenters stated
that CARB's cost estimate was $147 million, but it is actually $127
million). HPVA and CPA also noted concerns about the ability of
California or the EPA to enforce the regulation against importers of
panels and finished products, and suggested that imports may be a main
source of higher emitting panels and finished products.
    Comments were also received from a formaldehyde trade group and
from a resin manufacturer. Hexion, a ``major global supplier of
thermosetting adhesives,'' opposed EPA using section 6 to adopt the
California rule, but ``could support a national, preemptive regulation
limiting formaldehyde emissions from composite wood products . . .''
The Formaldehyde Council, Inc. (FCI) disagreed with the idea that there
is no safe level of exposure to formaldehyde. FCI also commented that
the average level detected in the FEMA trailers does not typically
cause sensory irritation, and cited a study of conventional homes,
finding an average formaldehyde concentration of 0.37 parts per million
(ppm) (370 parts per billion (ppb)), in which the occupants had not
complained of irritation. They also cited studies that show sensory
irritation thresholds of 0.5 ppm (500 ppb), and up to 0.9 ppm (900 ppb)
for unsensitized people, and asserted that the empirical support for
the studies that the International Agency for Research on Cancer (IARC)
relied on to recategorize formaldehyde has been ``steadily eroded.''
    The Sierra Club commented on the TSCA section 6(c) factors and
suggested that EPA consider cost factors associated with remediating
the problems in the FEMA trailers. They suggested that EPA estimate the
effect on the national economy by a simple mathematic extrapolation
from the costs estimated by California and argue that adopting the ATCM
would spur technological innovation and have a positive impact on human
health and the environment.
    HUD commented that it received (prior to EPA's receipt of this
petition) a proposal to lower formaldehyde emissions limits from
certain products used in the construction of manufactured homes from
the Congressionally established Federal Advisory Committee, the
Manufactured Housing Consensus Committee (MHCC). In addition, the MHCC
recently received a new proposal from the public to adopt the CARB
standard. HUD commented that it will work with the MHCC to review the
new proposal regarding CARB levels. A supplemental comment was received
from HUD on June 19, 2008, and is in the docket.
    On June 13, 2008, EPA received an additional comment from CPA,
summarizing new developments since they submitted their first comment.
As also noted in their first comment, CPA is accredited by the American
National Standards Institute (ANSI) as a standards developer. On June
3, 2008, the CPA Board of Directors ``approved the insertion of the
CARB Phase 1 and Phase 2 formaldehyde emission limits'' into the new
versions of the ANSI standards for Particleboard (ANSI A208.1) and for
Medium Density Fiberboard (ANSI A208.2). When the standards are
finalized, ``companies would be able to reference either of those
levels from these voluntary standards in their commercial dealings.'' A
consensus committee must still approve the revised standard. A
supplemental comment was also received from HPVA on June 17, 2008, and
is in the docket.

IV. Disposition of Petition

    For the purpose of making its decision, EPA evaluated the
information presented or referenced in the petition and its authority
and requirements under TSCA sections 6 and 21. EPA also evaluated
comments submitted and relevant information that was otherwise
available to EPA during the 90-day petition review period. On the basis
of the significant differences in the legal standards applicable to the
California Health and Safety Code (H&SC) and TSCA section 6, and the
insufficiency of the information available to EPA for purposes of
conducting the TSCA section 6 analysis, EPA is not granting

the specific request in the petition to commence a proceeding under
TSCA section 6 to impose the CARB formaldehyde ATCM nationwide. Even if
the information available to EPA were sufficient to support an
evaluation of whether formaldehyde in composite wood products presents
or will present an unreasonable risk, petitioners have not provided
sufficient information, and EPA does not otherwise have sufficient
information, to evaluate whether the CARB ATCM would likely be the
least burdensome alternative necessary to protect adequately against
such risk. However, EPA has decided to initiate a proceeding to
investigate whether and what type of regulatory or other action might
be appropriate to protect against risks posed by formaldehyde emitted
from pressed wood products.
    The discussion that follows provides the reasons for EPA's
decisions to grant this petition in part and to deny it in part.

A. EPA is Not Granting the Petitioners' Specific Requests

    1. Differences between California's authority under State law, and
EPA's authority under TSCA. The petition requests that EPA use
authorities under section 6 of TSCA to ``adopt the California rules and
apply them nationally,'' and apply them to composite wood products used
in manufactured housing (Ref. 1). The authority under which the State
of California issued its ATCM is quite distinct from the regulatory
authority granted to EPA under TSCA, however, and EPA has determined
that its authority under section 6 of TSCA does not permit it to simply
adopt the California formaldehyde ATCM and impose these regulatory
controls as a Federal standard without independently determining that
formaldehyde in the relevant materials presents or will present an
``unreasonable risk'' under TSCA section 6(a). Neither the CARB
rulemaking record nor other information available to EPA is adequate to
support an evaluation of whether the use of formaldehyde in composite
wood products presents or will present an unreasonable risk.
    CARB's authority to regulate formaldehyde is discussed on pages 2-3
of CARB's ``Initial Statement of Reasons'' (ISOR), which was used to
support its rulemaking (Ref. 2). According to the statement of
authority in the ISOR, CARB asserted jurisdiction to regulate
formaldehyde in composite wood products under the California H&SC. The
H&SC authorizes CARB to control emissions of criteria pollutants and
precursors from source categories. In addition, CARB is authorized to
regulate toxic air contaminants (TACs) under that portion of the H&SC
known as the Tanner Act. In 1992, CARB identified formaldehyde as a TAC
``based primarily on the determination that it was a human carcinogen
with no known safe level of exposure'' (Ref. 2). According to the ISOR,
CARB's formaldehyde ATCM was issued principally under the Tanner Act on
the basis of formaldehyde being a TAC. Because CARB had identified
formaldehyde as a TAC ``with no identified `safe' threshold exposure
level,'' it was required by the Tanner Act ``to reduce emissions of the
TAC to the lowest level achievable through application of BACT (best
available control technology) or a more effective control method.''
    The TSCA section 6 authority specifically requested by the petition
to be used to adopt and apply nationally the CARB ATCM is significantly
different from CARB's authority under the H&SC. As discussed in Unit
II.B.2., under TSCA section 6(a), EPA must make a finding that there is
a reasonable basis to conclude that the manufacture, processing,
distribution in commerce, use, or disposal of a chemical presents or
will present an unreasonable risk of injury to health or the
environment in order to promulgate a TSCA section 6(a) rule. The CARB
rulemaking record does not analyze the issues in these terms because
CARB does not have to make an unreasonable risk finding under the
California H&SC.
    TSCA section 6(a) identifies the actions that may be taken to
protect against unreasonable risk, but does not prescribe a particular
minimum control measure as California's law prescribes BACT. If EPA
finds that there is a reasonable basis to conclude that one or more
activities presents an unreasonable risk, EPA may:
     Prohibit or limit manufacture, processing, or distribution
in commerce;
     Prohibit or limit the manufacture, processing, or
distribution in commerce of the chemical above a specified
concentration;
     Require adequate warnings and instructions with respect to
use, distribution, or disposal;
     Require recordkeeping;
     Prohibit or regulate any manner of commercial use;
     Prohibit or regulate any manner of disposal; or
     Require manufacturers or processors to give notice of the
unreasonable risk of injury.
    TSCA section 6(a) also states that EPA must determine which one or
more of the risk management options set forth in the statute are the
least burdensome means of adequately protecting against the risk. The
CARB rulemaking record was constructed to support the single option
(BACT or more effective control method) available under the California
H&SC, and not for choosing from the multiple options available under
TSCA. The California H&SC also does not require that CARB choose the
least burdensome means of protecting adequately against the risk.
    2. Information in the petition and otherwise available to EPA is
inadequate to support an unreasonable risk evaluation under TSCA.
Notwithstanding the substantial amount of information submitted by
reference with the petition or otherwise available to the Agency, EPA
has determined that this information is not sufficient to support an
evaluation of whether formaldehyde emitted from composite wood products
presents or will present an unreasonable risk to human health
(including cancer and non-cancer endpoints) under TSCA section 6.
Applying the TSCA section 6(a) and 6(c) requirements to the information
provided by the petitioners reveals significant information gaps that
would need to be filled to support an evaluation of whether use of
formaldehyde in composite wood products presents or will present an
unreasonable risk. EPA briefly summarizes its reasoning in this unit.
    a. Health risks and exposure. With respect to health risks, the
petition refers to the CARB record and to the CDC study on FEMA
trailers, thus looking at both cancer risk and irritation risk. CARB
based their health effects evaluation on cancer risk. In 1992, CARB
identified formaldehyde as a TAC ``based primarily on the determination
that it was a human carcinogen with no known safe level of exposure''
(Ref. 2). CARB also cites for support the higher (hazard)
classification of formaldehyde as ``Group 1, Carcinogenic to humans''
by the International Agency for Research on Cancer (IARC) (Ref. 2, p.
155, see also Ref. 3). CARB's analysis was dependent on its
determination of formaldehyde as a human carcinogen and its assumptions
and analyses that rely on animal data and use two different kinds of
models, the linearized multi-stage model and a model which takes into
account the proliferation of premalignant cells, for quantification of
the cancer risk. In this analysis CARB relied upon the animal data
considered by EPA in its 1991 analysis and applied an additional model
which places the result somewhere between that of EPA's 1991 assessment
and that of the Chemical Industry Institute of

Toxicology's (CIIT) biologically based dose response (BBDR) approach
used in EPA in 2004 (discussed in this unit). Given the recent
availability of human cancer data which may provide the basis of a more
appropriate quantification of human cancer risk, EPA questions the
adequacy of the CARB approach and for this reason as well as other
reasons discussed in this unit, EPA has determined that it is not able
to rely on CARB's cancer risk assessment.
    EPA has previously assessed formaldehyde's cancer risk. In 1991,
EPA classified formaldehyde as a B1, probable human carcinogen, ``based
on limited evidence in humans, and sufficient evidence in animals''
(Ref. 4). Increased incidences of nasal squamous cell carcinomas were
observed in long-term inhalation studies in rats and mice. Based on the
nasal cavity cancer data in rats and using a linearized multi-stage
procedure (for genotoxic effects), EPA calculated an inhalation cancer
unit risk/potency factor of 1.3 E-5 per microgram/meter cubed ([mu]g/
m\3\) (Ref. 4). As explained in this unit, the assessment and modeling
procedure used to develop EPA's cancer risk assessment is not based on
the most current information, and EPA may determine that the
appropriate unit risk/potency factor is higher or lower than the 1991
value, after considering the currently available scientific
information, including human data.
    CIIT developed a health risk assessment for formaldehyde based upon
animal toxicology data that utilized mechanistic and biological
response information to develop a dose response model for the risk of
squamous cell carcinoma in the respiratory tract (Ref. 5). The
resulting BBDR model was published in the peer reviewed literature
(Refs. 6-8). The cancer estimates obtained with the BBDR model are
generally 2-3 orders of magnitude lower than corresponding estimates
obtained with the linearized multistage procedure. In 2004, EPA's
Office of Air and Radiation (OAR) determined that the CIIT's BBDR model
was the most appropriate tool to assess the potential cancer risk
associated with formaldehyde emissions to the atmosphere (Refs. 9-11).
In the Plywood and Composite Wood Products National Emission Standard
for Hazardous Air Pollutants (NESHAP), which was issued in 2006, OAR
stated ``In the case of formaldehyde, we have determined that the
cancer potency derived using the approach developed by CIIT, which has
been peer reviewed by an external review panel sponsored by EPA and the
Canadian government, represents an appropriate alternative to EPA's
current IRIS URE for formaldehyde. Therefore, this potency represents
the best available peer-reviewed science at this time.'' (Ref. 10, p.
8348).
    In April 2008, the EPA Office of Pesticide Programs (OPP) issued a
preliminary risk assessment of formaldehyde for the reregistration
eligibility decision (RED) as part of Phase 3 of a modified, 4-Phase
public participation process that the Agency uses to involve the public
in developing pesticide reregistration decisions (Ref. 12). Through the
reregistration program, EPA is ensuring that all pesticides meet
current health and safety standards under the Federal Insecticide,
Fungicide, and Rodenticide Act (FIFRA) and the Federal Food, Drug, and
Cosmetic Act (FFDCA). In this preliminary risk assessment, OPP decided
to present the formaldehyde cancer risks as a range using both the 1991
EPA assessment and the CIIT BBDR model (Ref. 15). This approach, which
recently underwent public comment, brackets a range of cancer risk
estimates that span about three orders of magnitude (or a factor of a
thousand), and depending on which value is being considered suggests
potentially significant risk at one end and potentially insignificant
risk at the other. In addition to these assessments, IARC, in their
reevaluation of epidemiologic studies, concluded that there was
``sufficient epidemiological evidence that formaldehyde causes
nasopharyngeal cancer in humans,'' and upgraded formaldehyde to ``Group
1, carcinogenic to humans'' from ``Group 2A, probably carcinogenic to
humans'' (Ref. 3). In addition, IARC concluded that ``there is strong
but not sufficient evidence for a causal association between leukemia
and occupational exposure to formaldehyde'' (Ref. 3). With these new
human data, and considering the other available data, EPA's Office of
Research and Development (ORD) is currently engaged in a re-assessment/
update of the potential cancer and non-cancer risks of formaldehyde
through the ORD Integrated Risk Information System (IRIS) program. An
external peer review draft of this assessment is expected to be
released in 2009. EPA offices which may be considering or are actively
regulating formaldehyde, including the Office of Pollution Prevention
and Toxic Substances (OPPTS), will coordinate and proceed accordingly
once the assessment is finalized.
    As discussed previously, because of the uncertainties in estimating
formaldehyde's cancer risks, and the ongoing development of the science
with respect to cancer characterization and risk estimation based on
the new human data, EPA has determined that it cannot rely on the CARB
cancer assessment and believes it would be premature to render judgment
on this complex issue for TSCA section 6 purposes. Thus, EPA does not
believe that it has information sufficient to support an evaluation of
whether formaldehyde in composite wood products presents or will
present an unreasonable risk.
    In addition, in the chronic exposure analysis for composite wood,
the CARB rulemaking record makes assumptions that are not believed to
be reasonable for use in an EPA risk assessment. For example, CARB
assumed that individuals will live in new houses (and have associated
elevated formaldehyde exposures) for 70 years. Their analysis did not
account for formaldehyde concentration decay over time in new home
environments, and they assumed all time spent indoors is spent at the
same average formaldehyde concentration as at home, and that all time
at home is spent indoors (Ref. 13).
    With respect to irritation risk, the CDC study on FEMA trailers
cited by petitioners provides data on exposure to formaldehyde in
trailers, but does not provide a risk analysis. CARB did not rely on
irritation risks for their decision to regulate formaldehyde emissions
from composite wood products.
    For these reasons, EPA believes that the information available on
health risks (including cancer and non-cancer effects) and exposure is
not adequate to support an unreasonable risk evaluation.
    b. Economics. The economic analysis supporting CARB's ATCM is
inadequate to support an evaluation of whether formaldehyde in
composite wood products presents or will present an unreasonable risk.
In its ISOR, CARB quantified some of the costs and benefits for the
ATCM, but not all of the costs or any non-cancer benefits.
    The ISOR estimated, for example, the cost for industry to comply
with the ATCM using various substitute resin systems and discussed the
characteristics, advantages, and disadvantages of these substitutes, as
well as their effectiveness in reducing formaldehyde emissions from
composite wood products. The ISOR cost estimate was based on the cost
to purchase substitute resins and on the longer processing times
required to manufacture composite wood products when using certain
substitute resins. CARB received public comments on its rulemaking that
companies will incur additional costs to manufacture

compliant panels due to increased costs for resin additives, new
equipment, additional energy usage, or decreased throughput. In
responding to these comments, CARB indicated that these costs would not
necessarily be incurred, and that it expected future innovations in
resin technology would decrease production costs over time. EPA
suspects that the CARB analysis underestimated costs, particularly in
the short term. But EPA was not able to assess the full extent of the
likely costs based on the information available. For example, the ISOR
cost estimate also does not fully reflect other requirements of the
ATCM, such as third party certification and labeling. In addition,
because data were not available on the quantity of composite wood
contained in imported fabricated goods such as cabinets and furniture,
the ISOR cost estimates did not reflect the increase in the cost of
these goods. Thus, the information submitted provides an inadequate
basis for assessing total incremental cost for the ATCM, or for a
national version of the ATCM, including certification, labeling, and
related activities required by the ATCM.
    The trade associations representing composite wood product
manufacturers have indicated that the CARB limits may have a
significant impact on the national markets. For example, CPA estimated
that 80% or more of its members' production nationwide will be
compliant with CARB's requirements. The associations indicated,
however, that they could not estimate how foreign manufacturers and
importers will respond to the ATCM and that off-shore producers are an
issue because they do not participate in the same voluntary compliance
programs that are applicable to domestic producers. Furthermore,
especially in view of the expected growth in imports of composite wood
products and the fabricated goods made from them, the national baseline
following the implementation of the CARB rule, which EPA would use as a
starting basis in assessing whether there is an unreasonable risk, is
uncertain (Ref. 13).
    In addition to cancer benefits, the ATCM may result in benefits
from avoided cases of non-cancer effects. The CARB ISOR does not,
however, present sufficient information to assess benefits from non-
cancer effects. For example, the CARB ISOR mentions a hazard quotient
for non-cancer inhalation impacts, but the hazard quotient was not
evaluated to estimate the number of people exposed to a hazard quotient
above 1, the aggregate length of time that such exposures occur, and
the intensity of the exposure over time. In addition, the ISOR did not
provide information on the size of the population exposed or the
intensity of exposure from composite wood products in remodeled homes,
newly purchased furniture, or non-residential settings. The benefits of
avoiding irritation effects include reductions in medical costs,
individuals' willingness to pay to avoid the pain and suffering
resulting from these effects, and increases in productivity due to a
decline in lost work days and school days. The ISOR and the other
information available to EPA does not provide sufficient information to
estimate the non-cancer benefits.
    Thus, EPA does not have sufficient information to support an
evaluation of the costs and benefits of implementing the ATCM
requirements nationwide.
    3. Information in the petition and otherwise available to EPA is
insufficient to support an evaluation of whether the CARB rule would be
the least burdensome requirement under TSCA. Even if the information
available to EPA were sufficient to support an evaluation of whether
formaldehyde in composite wood products presents or will present an
unreasonable risk, petitioners have not provided sufficient
information, and EPA does not otherwise have sufficient information, to
evaluate whether the CARB ATCM would likely be the least burdensome
alternative necessary to protect adequately against such risk. The
information submitted with the petition does not provide an adequate
basis for EPA to evaluate the likely costs and benefits of less
burdensome alternatives. This is not surprising, since the CARB
rulemaking does not require such an analysis. For example, EPA has no
basis to evaluate whether the specific emission levels adopted by CARB
would be appropriate levels under TSCA section 6, whether CARB's cap
approach or an average emissions approach would be more appropriate, or
whether the additional detailed requirements pertaining to third-party
certification and other issues would be appropriate. Several aspects of
the CARB ATCM are not in place yet, and EPA is not able to evaluate
those aspects. Beyond that, it is entirely possible that some control
measure(s) other than the emission cap approach that CARB selected for
their ATCM would be appropriate. Especially in view of estimates in the
record of nationwide compliance with the ATCM, EPA would want to assess
the risk that was likely to remain following compliance with the rule
and assess whether one or more of the options under TSCA section 6(a)
was more appropriate to address the remaining risk.
    In summary, information in the petition and otherwise available to
EPA, including health effects, exposure, and economic information, is
inadequate to support an evaluation of whether there is an unreasonable
risk under TSCA. Therefore, EPA is not granting the specific request in
the petition to commence a proceeding under TSCA section 6 to impose
the CARB formaldehyde ATCM nationwide.

B. Additional Considerations

    Pressed wood products, of which the three composite wood products
regulated by CARB are a subset, are a major source of formaldehyde
concentrations. Other sources of formaldehyde include smoking,
household products, and the use of un-vented, fuel-burning appliances
like gas stoves or kerosene space heaters (Refs. 16 and 17).
Formaldehyde emissions from pressed-wood products are the highest when
these products are new and decline over time. Emissions of formaldehyde
will increase as the temperature, humidity, and pressed wood surface
area increase (Ref. 13).
    Several Federal agencies and other entities have regulated or
produced guidelines on appropriate air concentrations of formaldehyde.
HUD presently limits formaldehyde emissions from plywood and
particleboard used in manufactured home construction to 200-300 ppb,
and is reviewing proposals to revise those emission limits. Among
others, the Agency for Toxic Substances and Disease Registry (ATSDR)
has established a Minimal Risk Level (MRL) chronic value of 0.008 ppm/
8ppb; the National Institute for Occupational Safety and Health (NIOSH)
has established a Recommended Exposure Limit (REL) of 0.016 ppm/16ppb
(8-hour Time Weighted Average), and of 0.1 ppm/100ppb (15 minute
ceiling); and American Conference of Governmental Industrial Hygienists
(ACGIH) has established threshold limit value (TLV)-Ceiling of 0.3 ppm/
300 ppb (Ref. 13).
    In March 2008, several Federal agencies, including the Department
of Health and Human Services (HHS), CDC, U.S. Department of Homeland
Security (DHS), FEMA, and EPA finalized a document entitled:
``Formaldehyde Exposure in Homes: A Reference for State Officials to
Use in Decision-making,'' which summarizes the environmental health
related aspects of formaldehyde exposure in homes and references the
government standards in occupational settings (Ref. 14).

    Foreign governments, including Japan and the European Union, have
also regulated permissible levels of formaldehyde emissions from
composite wood products and other building materials (Ref. 2).
    EPA previously assessed formaldehyde's cancer risk based on the
nasal cavity cancer data in rats and using a linearized multi-staged
procedure (for genotoxic carcinogens) (Ref. 4). EPA is conducting a re-
assessment/update of the potential cancer risks of formaldehyde through
the Integrated Risk Information System (IRIS) process that will
consider current human data and other data.
    Depending on concentration, it is well recognized that formaldehyde
can be an eye, nose, and throat irritant, even when exposure is of
relatively short duration. In the indoor environment, sensory reactions
and various symptoms as a result of mucous membrane irritation are
potential effects, and, while there are large individual differences in
the general population, the differences are even greater when hyper-
reactive and sensitized people are included in an analysis. EPA
acknowledges that there are uncertainties relating to irritation
response levels in humans.
    In light of information about the hazards of formaldehyde, in
combination with the potential for prolonged exposure to potentially
problematic levels of formaldehyde by residents in newly constructed
housing (Ref. 13), EPA believes it is appropriate, in the Agency's
discretion, to initiate a proceeding to better understand the risks
from formaldehyde in pressed wood products (including the three types
of composite wood regulated by CARB) and to assess various alternatives
that EPA might pursue to address such risks. Most of the exposure
information presently available to EPA pertains to formaldehyde
emissions from pressed wood products in newly built homes (Ref. 13).
While emissions from pressed wood products used in new home
construction are themselves significant sources of formaldehyde in
indoor air, EPA is interested in what other pressed wood sources
contribute significantly to formaldehyde concentrations in indoor air.
For example, large renovations projects in existing homes, which
include a large amount of new pressed wood products, and
microenvironments, such as baby cribs built with pressed wood products,
could be important sources of exposure to a large number of children
and adults.
    The available information, guidelines, and regulations span a wide
range of permissible formaldehyde levels. EPA believes that it is
appropriate to examine these various standards, analyze the risk level
for formaldehyde in pressed wood products, and determine the
appropriate course of action to reduce risks to human health.

C. EPA's Decision to Initiate a Proceeding to Investigate Formaldehyde
in Pressed Wood Products

    In sum, the petition does not, as required under TSCA section 21,
set forth facts sufficient to establish that it is necessary to
initiate a proceeding under TSCA section 6(a) to protect human health
against an unreasonable risk of injury by applying the CARB regulation
on a national basis. Further, the additional relevant information that
EPA has identified does not support initiation of the requested
proceeding. However, after considering the facts presented by the
petitioners (including the California administrative record),
information presented by commenters, and other information available to
EPA, EPA has decided to initiate a proceeding to investigate whether
and what type of regulatory or other action might be appropriate to
protect against risks posed by formaldehyde emitted from pressed wood
products.
    In parallel with this effort, EPA's ORD will be developing and
obtaining external peer review for the IRIS assessment of
formaldehyde's cancer and non-cancer risks. OPPTS will coordinate with
ORD and other EPA offices as it evaluates risks and options under TSCA,
and the results of the IRIS effort will be incorporated into this
proceeding if timely available. In addition, the preliminary risk
assessment used in the Pesticide Reregistration Program will be
considered in the effort to evaluate risks and options under TSCA if
timely available, and OPP will also consider the efforts under TSCA, as
well as other efforts.
    In Fall 2008, EPA plans to issue an advance notice of proposed
rulemaking (ANPR) to initiate a proceeding. As part of the ANPR
process, EPA will engage stakeholders to contribute to obtaining a
better understanding of the available control technologies and
approaches, industry practices, and the implementation of CARB's ATCM.
Concurrently, EPA plans to develop and conduct an industry survey and
initiate development of an exposure assessment and an irritation
concern level that could be used for evaluating emissions standards or
other approaches. Subsequently, EPA plans to develop an irritation risk
assessment, which will receive the appropriate external review, and
quantify costs and benefits. At the conclusion of this work, OPPTS
anticipates determining whether it should take action, which may
include action under TSCA section 6(a) or TSCA section 6(b), or via the
development of a voluntary consensus standard or other approaches. As
OPPTS evaluates risks and options under TSCA, OPPTS intends to
coordinate its efforts with other interested EPA offices and agencies,
as well as engage the public and stakeholders.
    With respect to the petitioners' request that EPA use TSCA section
6 to apply the CARB rule to manufactured homes, EPA notes that HUD has
regulations governing formaldehyde emission levels from plywood and
particleboard materials installed in manufactured homes. (See 24 CFR
3280.308.) HUD is in the process of reviewing proposed changes to these
regulations to include medium density fiberboard, among other things.
HUD is also currently reviewing a proposal to amend its manufactured
housing regulations governing formaldehyde to include the standards set
forth in the CARB regulation. Section 9(d) of TSCA provides that the
Administrator of EPA shall consult and cooperate with other Federal
agencies ``for the purpose of achieving the maximum enforcement of
[TSCA] while imposing the least burdens of duplicative requirements.''
15 U.S.C. 2608(d). Consistent with this provision, EPA will consult and
cooperate with HUD as the two agencies work to address formaldehyde
emissions from composite wood products.

V. References

    The following is a list of the documents that are specifically
referenced in this notice and placed in the docket that was established
under Docket ID number EPA-HQ-OPPT-2008-0267. For information on
accessing these documents in the docket, refer to Unit I.B. Some
documents may also be accessed directly using the url provided.
    1. Sierra Club, 25 other organizations, and approximately 5,000
individuals. Letter from Tom Neltner, Sierra Club, to Stephen Johnson,
Administrator, Environmental Protection Agency. Re: Citizen Petition to
EPA Regarding Formaldehyde in Wood Products. March 20, 2008.
    2. California Environmental Protection Agency Air Resources Board.
Proposed Airborne Toxic Control Measure to Reduce Formaldehyde
Emissions from Composite Wood Products, Staff Report: Initial Statement
of Reasons for Proposed Rulemaking. March 9, 2007. http://
www.arb.ca.gov/

regact/2007/compwood07/compwood07.htm.
    3. International Agency for Research on Cancer (IARC).
Formaldehyde. IARC Monographs on the Evaluation of Carcinogenic Risks
to Humans. International Agency for Research on Cancer. Lyon, France.
Meeting on June 2-9, 2004, as published by IARC in 2006. Vol. 88.
http://monographs.iarc.fr/ENG/Monographs/vol88/index.php.
    4. EPA, Office of Research and Development. Formaldehyde.
Integrated Risk Information System. 1991. http://www.epa.gov/iris/
links.htm.
    5. Chemical Industry Institute of Toxicology (CIIT). Formaldehyde
hazard characterization and dose-response assessment for
carcinogenicity by the route of inhalation, revised ed. Chemical
Industry Institute of Toxicology, Research Triangle Park, NC. 1999.
    6. Conolly, R.B., Kimbell, J.S., Janszen, D., and Miller, F., J.
Dose-response for formaldehyde-induced cytotoxicity in the human
respiratory tract. Regulatory Toxicology and Pharmacology. 35: 32-43.
2002.
    7. Conolly, R.B., Kimbell, J.S., Janszen, D., Schlosser, P.M.,
Kalisak, D., Preston, J., and Miller, F., J. Biologically-motivated
computational modeling of formaldehyde carcinogenicity in the F344 rat.
Toxicological Sciences. 75:432-447. 2003.
    8. Conolly, R.B., Kimbell, J.S., Janszen, D., Schlosser, P.M.,
Kalisak, D., Preston, J., and Miller, F., J. Human respiratory tract
cancer risks of inhaled formaldehyde: Dose-response predictions derived
from biologically-motivated computational modeling of a combined rodent
and human dataset. Toxicological Sciences. 82: 279-296. 2004.
    9. EPA. National Emission Standards for Hazardous Air Pollutants:
Plywood and Composite Wood Products; Effluent Limitations Guidelines
and Standards for the Timber Products Point Source Category; List of
Hazardous Air Pollutants, Lesser Quantity Designations, Source Category
List; Final Rule. Federal Register (69 FR 45943, July 30, 2004) (FRL-
7634-1). http://www.epa.gov/ttn/atw/plypart/fr30jy04.pdf.
    10. EPA. National Emission Standards for Hazardous Air Pollutants:
Plywood and Composite Wood Products; List of Hazardous Air Pollutants,
Lesser Quantity Designations, Source Category List; Final Rule. Federal
Register (71 FR 8341, February 16, 2006) (FRL-8028-9). http://
www.epa.gov/ttn/atw/plypart/fr16fe06.pdf.
    11. EPA. National Emission Standards for Hazardous Air Pollutants:
Plywood and Composite Wood Products; Final Rule. Federal Register (72
FR 61060, October 29, 2007) (FRL-8482-2). http://www.epa.gov/ttn/atw/
plypart/fr29oc07.pdf.
    12. EPA. Formaldehyde/Paraformaldehyde Risk Assessments; Notice of
Availability and Risk Reduction Options; Notice. Federal Register (73
FR 21944, April 23, 2008) (FRL-8360-3). http://www.epa.gov/fedrgstr/
EPA-PEST/2008/April/Day-23/p8684.htm.
    13. EPA. Background Document of Technical Information Relevant to
the Disposition of the TSCA Section 21 Petition on Formaldehyde. June
2008. Docket ID number EPA-HQ-OPPT-2008-0267.
    14. Department of Health and Human Services, Centers for Disease
Control and Prevention, Department of Homeland Security, Federal
Emergency Management Agency, and EPA. Formaldehyde Exposure in Homes: A
Reference for State Officials to Use in Decision-Making. March 2008.
http://www.cdc.gov/nceh/ehhe/trailerstudy/compendium.htm.
    15. EPA. Formaldehyde: Preliminary Risk Assessment for the
Registration Eligibility Decision (RED). DP Barcode: 348474, April 7,
2008. Docket ID number EPA-HQ-OPP-2008-0121. http://
www.regulations.gov/fdmspublic/component/main?main=DocketDetail&d=EPA-
HQ-OPP-2008-0121.
    16. CPSC. 1997. An Update On Formaldehyde: 1997 Revision. Consumer
Product Safety Commission, Washington, DC, CPSC Doc. 725
http://www.cpsc.gov/cpscpub/pubs/725.html.
    17. EPA. 2007. Indoor Air Quality (IAQ), Pollutants and Sources of
Indoor Air Pollution, Formaldehyde/Pressed Wood Products, Office of
Radiation and Indoor Air (ORIA), Indoor Environments Division,
Washington, DC, Updated November 14, 2007. http://www.epa.gov/iaq/
formalde.html#Levels%20in%20Homes.

List of Subjects

    Environmental protection, Composite wood products, Formaldehyde,
Housing, Toxic Substance Control Act (TSCA).

    Dated: June 21, 2008.
James B. Gulliford,
Assistant Administrator, Office of Prevention, Pesticides and Toxic
Substances.
[FR Doc. E8-14618 Filed 6-26-08; 8:45 am]

BILLING CODE 6560-50-S


[Federal Register Volume 79, Number 33 (Wednesday, February 19, 2014)]
[Notices]
[Pages 9547-9550]
[FR Doc No: 2014-03558]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71527; File No. SR-Topaz-2014-07]

Self-Regulatory Organizations; Topaz Exchange LLC; Notice of
Filing and Immediate Effectiveness of Proposed Rule Change To Amend the
Schedule of Fees

February 12, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 3, 2014, the Topaz Exchange, LLC (d/b/a ISE Gemini)
(the ``Exchange'' or ``Topaz'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

    Topaz is proposing to amend its Schedule of Fees. The text of the
proposed rule change is available on the Exchange's Internet Web site
at http://www.ise.com, at the principal office of the Exchange, and at
the Commission's Public Reference Room.

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

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

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

1. Purpose
    The purpose of the proposed rule change is to amend the Schedule of
Fees to (1) introduce volume-based tiered rebates for Firm Proprietary/
Broker-Dealer and Professional Customer orders, (2) increase Maker
Rebates provided to Priority Customer orders in Non-Penny Symbols, and
(3) increase the Taker Fee and Fee for Responses to Crossing Orders
charged for Market Maker orders in Non-Penny Symbols. The fee changes
discussed apply to both Standard Options and Mini Options traded on
Topaz. The Exchange's Schedule of Fees has separate tables for fees
applicable to Standard Options and Mini Options. The Exchange notes
that while the discussion below relates to fees for Standard Options,
the fees for Mini Options, which are not discussed below, are and shall
continue to be 1/10th of the fees for Standard Options.
    On September 3, 2013 the Exchange filed with the Commission an
immediately effective rule filing that established volume-based tiered
rebates for adding liquidity on the Exchange (``Maker Rebates'').\3\
Specifically, that filing established Maker Rebates applicable to
Market Maker \4\ and Priority Customer \5\ orders based on a Member's
average daily volume (``ADV'') in a given month. Topaz now proposes to
amend its Schedule of Fees to introduce similar tiered Maker Rebates
for Firm Proprietary/Broker-Dealer \6\ and Professional Customer \7\
orders that add liquidity on the Exchange. The proposed tiered Maker
Rebates will replace the current uniform Maker Rebate of $0.25 per
contract that is currently provided to all Firm Proprietary/Broker-
Dealer and Professional Customer orders in all symbols regardless of
the volume executed by a Member.
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 70426 (September 17,
2013), 78 FR 58359 (September 23, 2013) (SR-Topaz-2013-04).
    \4\ The term Market Maker refers to ``Competitive Market
Makers'' and ``Primary Market Makers'' collectively. Market Maker
orders sent to the Exchange by an Electronic Access Member are
assessed fees and rebates at the same level as Market Maker orders.
See footnote 2, Schedule of Fees, Section I and II.
    \5\ A Priority Customer is a person or entity that is not a
broker/dealer in securities, and does not place more than 390 orders
in listed options per day on average during a calendar month for its
own beneficial account(s).
    \6\ A Firm Proprietary order is an order submitted by a Member
for its own proprietary account. A Broker-Dealer order is an order
submitted by a Member for a non-Member broker-dealer account.
    \7\ A Professional Customer is a person who is not a broker/
dealer and is not a Priority Customer.
---------------------------------------------------------------------------

    A Member's tier will be based on its ``maker'' ADV in Firm
Proprietary/Broker-Dealer and Professional Customer orders, which must
be from 0-9,999 contracts for Tier 1, from 10,000-24,999 contracts for
Tier 2, from 25,000-39,999 contracts for Tier 3, and

40,000 or more contracts for Tier 4.\8\ Instead of the uniform Maker
Rebates currently provided, Firm Proprietary/Broker Dealer and
Professional Customer orders will now qualify for tiered Maker Rebates,
which are proposed to be $0.25 per contract in Penny Symbols and $0.35
per contract in Non-Penny Symbols for Tier 1, $0.30 per contract in
Penny Symbols and $0.45 per contract in Non-Penny Symbols for Tier 2,
$0.35 per contract in Penny Symbols and $0.55 per contract in Non-Penny
Symbols for Tier 3, and $0.40 per contract in Penny Symbols and $0.65
per contract in Non-Penny Symbols for Tier 4. The highest tier
threshold attained by a Member will apply retroactively in a given
month to all eligible traded contracts and for all eligible market
participants. These tiers, however, will be completely separate from
the tiers currently in place for Market Maker and Priority Customer
orders. Thus, for example, if a Member executes sufficient volume to
qualify for Tier 2 rebates for its Firm Proprietary/Broker-Dealer and
Professional Customer orders that Member will not thereby qualify for
Tier 2 rebates for its Market Maker or Priority Customer orders, and
vice versa. Market Maker and Priority Customer orders will continue to
be eligible for tiers based exclusively on achieving volume thresholds
in the current table of qualifying tier thresholds, which has been
relabeled ``Table 1.'' Firm Proprietary/Broker-Dealer and Professional
Customer orders will be eligible for higher tiers based exclusively on
achieving volume thresholds in new ``Table 2.'' Members who do not
achieve a higher tier based on the applicable table will receive Tier 1
rates.
---------------------------------------------------------------------------

    \8\ All eligible volume from affiliated Members will be
aggregated in determining applicable tiers, provided there is at
least 75% common ownership between the Members as reflected on each
Member's Form BD, Schedule A. ADV thresholds will be based on
Standard and Mini volume, but their respective rebates/fees will
apply. Any day that the market is not open for the entire trading
day may be excluded from the ADV calculation.
---------------------------------------------------------------------------

    In connection with the new tiered Maker Rebates described above,
the Exchange is also proposing to make non-substantive edits to the
text of its Schedule of Fees to clarify which items are included in the
various ADV categories. In particular, the Exchange proposes to adopt
amended text that states that: (1) The Total Affiliated Member ADV
category includes all volume in all symbols and order types, including
both maker and taker volume and volume executed in the PIM,
Facilitation, Solicitation, and QCC mechanisms; \9\ and (2) the
Priority Customer Maker ADV category includes all Priority Customer
volume that adds liquidity in all symbols. This amended language will
supplement new text indicating, as explained above, that the Firm
Proprietary/Broker-Dealer and Professional Customer Maker ADV category
includes all Firm Proprietary/Broker-Dealer and Professional Customer
volume that adds liquidity in all symbols.
---------------------------------------------------------------------------

    \9\ Only the Total Affiliated Member ADV category includes
volume executed in the PIM, Facilitation, Solicitation, and QCC
mechanisms as orders executed in the Exchange's crossing mechanisms
are not considered ``maker'' volume.
---------------------------------------------------------------------------

    The Exchange is also proposing to increase the Maker Rebates
applicable to Priority Customer orders in Non-Penny Symbols. Currently,
Priority Customer orders in Non-Penny Symbols receive a Maker Rebate of
$0.70 per contract for Tier 1, $0.75 per contract for Tier 2, $0.80 per
contract for Tier 3, and $0.82 per contract for Tier 4. The Exchange
proposes to increase the Maker Rebate for Priority Customer orders in
Non-Penny Symbols to be $0.75 per contract for Tier 1, $0.80 per
contract for Tier 2, $0.82 per contract for Tier 3, and $0.85 per
contract for Tier 4.
    Finally, the Exchange is proposing to increase the Taker Fee and
Fee for Responses to Crossing Orders applicable to Market Maker orders
in Non-Penny Symbols. Currently, Market Maker orders in Non-Penny
Symbols that remove liquidity or respond to a Crossing Order pay a fee
of $0.84 per contract. The Exchange is proposing to increase both of
these fees to $0.86 per contract.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\10\ in general, and
Section 6(b)(4) of the Act,\11\ in particular, in that it is designed
to provide for the equitable allocation of reasonable dues, fees, and
other charges among its members and other persons using its facilities.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------

    The Exchange believes the proposed tiered Maker Rebates are
reasonable, equitable, and not unfairly discriminatory because Topaz
has already established volume-based pricing for Market Maker and
Priority Customer orders, and is merely proposing to adopt a similar
pricing model for Firm Proprietary/Broker-Dealer and Professional
Customer orders in order to incentivize Members to send this order flow
to the Exchange. The new Maker Rebate tiers will allow Members to
receive increased rebates for their Firm Proprietary/Broker-Dealer and
Professional Customer orders. In Penny Symbols, Members that bring this
order flow to the Exchange will receive the same $0.25 per contract
Maker Rebate that they receive today at the lowest tier, and an
additional $0.15 per contract above the current rebate at the highest
tier. In Non-Penny Symbols, Members will receive an additional $0.10
per contract above the current rebate at the lowest tier, and an
additional $0.40 per contract above the current rebate at the highest
tier. As noted above, Market Maker and Priority Customer orders
currently benefit from tiered rebates, and the Exchange believes that
these rebates have been successful in attracting that order flow to
Topaz. This proposal is designed to attract additional order flow from
certain market participants that are not incentivized by the current
tiers for Market Maker and Priority Customer orders. The Exchange
believes that providing higher rebates for Firm Proprietary/Broker-
Dealer and Professional Customer orders executed by Members that have
achieved specified volume thresholds will attract that order flow to
Topaz, and thereby create additional liquidity to the benefit of all
market participants who trade on the Exchange. While non-Topaz Market
Makers will not be eligible for the proposed tiers, the Exchange does
not believe that this is unfairly discriminatory as the proposal is not
intended to incentivize additional flow from non-Members who will
continue to receive Maker Rebates at the current rate. In addition, the
Exchange believes that it is appropriate, in connection with this
change, to make non-substantive amendments to the text of the Schedule
of Fees in order to make the current and proposed rebate programs more
transparent to Members and investors.
    The Exchange also believes that it is reasonable, equitable, and
not unfairly discriminatory to increase Maker Rebates provided to
Priority Customer orders in Non-Penny Symbols. As with the new Maker
Rebates discussed above for Firm Proprietary/Broker-Dealer and
Professional Customer orders, the Exchange believes that providing
higher rebates for Priority Customer orders attracts that order flow to
Topaz and thereby creates liquidity to the benefit of all market
participants who trade on the Exchange. While the proposed rule change
increases Maker Rebates for both Priority and Professional Customer
orders the Exchange notes that Priority Customer orders will remain
entitled to higher rebates than Professional

Customer orders. The Exchange believes that it is equitable and not
unfairly discriminatory to provide higher rebates to Priority Customer
orders than to Professional Customer orders. A Priority Customer is by
definition not a broker or dealer in securities, and does not place
more than 390 orders in listed options per day on average during a
calendar month for its own beneficial account(s). This limitation does
not apply to participants on the Exchange whose behavior is
substantially similar to that of market professionals, including
Professional Customers, who will generally submit a higher number of
orders (many of which do not result in executions) than Priority
Customers.
    Finally, the Exchange believes that it is reasonable, equitable,
and not unfairly discriminatory to increase the Taker Fee and Fee for
Responses to Crossing Orders charged for Market Maker orders in Non-
Penny Symbols as these fees are still within the range of fees
currently charged on other options exchanges. For example, the NASDAQ
Options Market currently charges a fee for removing liquidity of $0.89
per contract for Market Maker orders in Non-Penny Symbols, which is
higher than the $0.86 per contract fee proposed here.\12\ The Exchange
notes that it is increasing response fees in tandem with its Taker Fees
as an execution resulting from a Response to a Crossing Order is akin
to taking liquidity.
---------------------------------------------------------------------------

    \12\ See NASDAQ Options Rules, Chapter XV Options Pricing,
Section 2, NASDAQ Options Market--Fees and Rebates.
---------------------------------------------------------------------------

    The Exchange notes that it has determined to charge fees and
provide rebates in Mini Options at a rate that is 1/10th the rate of
fees and rebates the Exchange provides for trading in Standard Options.
The Exchange believes it is reasonable and equitable and not unfairly
discriminatory to assess lower fees and rebates to provide market
participants an incentive to trade Mini Options on the Exchange. The
Exchange believes the proposed fees and rebates are reasonable and
equitable in light of the fact that Mini Options have a smaller
exercise and assignment value, specifically 1/10th that of a standard
option contract, and, as such, is providing fees and rebates for Mini
Options that are 1/10th of those applicable to Standard Options.

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

    In accordance with Section 6(b)(8) of the Act,\13\ the Exchange
does not believe that the proposed rule change will impose any burden
on inter-market or intramarket competition that is not necessary or
appropriate in furtherance of the purposes of the Act. To the contrary,
the Exchange believes that the proposed changes will promote
competition as they are designed to allow Topaz to better compete for
order flow by offering higher rebates to market participants that add
liquidity on the Exchange. While the Exchange proposes to increase
taker and response fees for a subset of orders, the Exchange believes
that this will not impose a burden on competition because the new fees
are consistent with those charged by other options exchanges.\14\
Furthermore, the Exchange believes that the clarifying text being added
to the Schedule of Fees is non-substantive, and therefore does not
impact the competition analysis. The Exchange operates in a highly
competitive market in which market participants can readily direct
their order flow to competing venues. In such an environment, the
Exchange must continually review, and consider adjusting, its fees and
rebates to remain competitive with other exchanges. For the reasons
described above, the Exchange believes that the proposed fee changes
reflect this competitive environment.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b)(8).
    \14\ See supra note 12.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.

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

    The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act,\15\ and subparagraph (f)(2) of Rule 19b-4
thereunder,\16\ because it establishes a due, fee, or other charge
imposed by Topaz.
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    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \16\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File No. SR-Topaz-2014-07 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Topaz-2014-07. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method.
    The Commission will post all comments on the Commission's Internet
Web site (http://www.sec.gov/rules/sro.shtml). Copies of the
submission, all subsequent amendments, all written statements with
respect to the proposed rule change that are filed with the Commission,
and all written communications relating to the proposed rule change
between the Commission and any person, other than those that may be
withheld from the public in accordance with the provisions of 5 U.S.C.
552, will be available for Web site viewing and printing in the
Commission's Public Reference Room, 100 F Street NE., Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal offices of the Exchange. All comments
received will be posted without change; the Commission does not edit
personal identifying information from submissions. You should submit
only information that you wish to make available publicly.
    All submissions should refer to File Number SR-Topaz-2014-07, and
should be submitted on or before March 12, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-03558 Filed 2-18-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: August 31, 2010 (Volume 75, Number 168)]
[Notices]
[Page 53355-53357]
[DOCID:fr31au10-120]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29399; File No. 812-13763]

The Integrity Funds, et al.; Notice of Application

August 25, 2010.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (the ``Act'') for an exemption from section 15(a)
of the Act and rule 18f-2 under the Act.

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SUMMARY: Summary of Application: The requested order would permit
certain registered open-end management investment companies to enter
into and materially amend subadvisory agreements without shareholder
approval.

Applicants: The Integrity Funds (``Integrity Funds''), Integrity
Managed Portfolios (``Managed Portfolios''), Integrity Fund of Funds,
Inc. (``Fund of Funds''), Viking Mutual Funds (``Viking Funds'') (each,
a ``Mutual Fund'' and collectively, the ``Mutual Funds''), and Viking
Fund Management, LLC (the ``Adviser'').

DATES: Filing Dates: The application was filed on March 30, 2010, and
amended on August 10, 2010.

Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on September 20, 2010 and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reasons for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090. Applicants, Viking Fund
Management, LLC, 1 Main Street North, Minot, North Dakota 58703.

FOR FURTHER INFORMATION CONTACT: Keith A. Gregory, Senior Counsel at
(202) 551-6815, or Mary Kay Frech, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Office of Investment Company
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling<PHONE_NUMBER>.

Applicants' Representations

    1. Each Mutual Fund is registered under the Act as an open-end
management investment company. Integrity Funds is organized as a
Delaware statutory trust and currently offers three series (each, a
``Fund'' and collectively, the ``Funds''), each with its own distinct
investment objectives, policies and restrictions. Managed Portfolios is
organized as a Massachusetts business trust and

currently offers six Funds, each with its own distinct investment
objectives, policies and restrictions. Fund of Funds is organized as a
North Dakota corporation and currently does not operate as a series
company (included in the term ``Funds''). Viking Funds is organized as
a Delaware statutory trust and currently offers four Funds, each with
its own distinct investment objectives, policies and restrictions.\1\
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    \1\ Applicants also request relief with respect to future Funds
and any other existing or future registered open-end management
investment company or series thereof that: (a) Is advised by the
Adviser or any entity controlling, controlled by, or under common
control with the Adviser (included in the term ``Adviser''); (b)
uses the manager of managers structure described in the application;
and (c) complies with the terms and conditions of the application
(included in the term ``Funds''). The only existing registered open-
end management investment companies that currently intend to rely on
the requested order are named as applicants. If the name of any Fund
contains the name of a Subadviser (as defined below), the name of
the Adviser will precede the name of the Subadviser.
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    2. The Adviser, a North Dakota limited liability company, is
registered as an investment adviser under the Investment Advisers Act
of 1940 (``Advisers Act''). The Adviser is a wholly-owned subsidiary of
Corridor Investors, LLC. The Adviser serves as investment adviser to
each Fund under an investment advisory agreement (each, an ``Advisory
Agreement'') that has been approved by the shareholders of each Fund
and by the board of directors or trustees of the Mutual Funds
(``Board''), including a majority of the directors or trustees who are
not ``interested persons,'' as defined in section 2(a)(19) of the Act,
of a Mutual Fund, the Adviser, or the Subadvisers (``Independent Board
Members'').\2\
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    \2\ Under a prior order, the Commission granted relief to The
Integrity Funds and Integrity Money Management, Inc., a wholly owned
subsidiary of Integrity Mutual Funds, Inc. (``Integrity Mutual
Funds'') from the provisions of section 15(a) of the Act and rule
18f-2 under the Act similar to that requested in the Application.
The Integrity Funds, et al., Investment Company Act Release Nos.
27144 (Nov. 10, 2005)(notice) and 27180 (Dec. 6, 2005)(order). On
July 31, 2009, Integrity Mutual Funds generally sold its mutual fund
services business to Corridor and the Adviser. In 2009, the existing
shareholders of the Funds approved the Advisory Agreements, the
existing Subadvisory Agreements and the manager of managers
structure.
---------------------------------------------------------------------------

    3. Under the terms of each Fund's Advisory Agreement, the Adviser
provides a continuous investment program for the Fund consistent with
the investment objectives, policies and limitations of the Fund. For
its services, the Adviser receives a fee from each Fund specified in
the relevant Advisory Agreement. Under each Advisory Agreement, the
Adviser may enter into investment subadvisory agreements with one or
more subadvisers (``Subadvisers'') who have discretionary authority to
invest all or a portion of the Fund's assets pursuant to a separate
subadvisory agreement (``Subadvisory Agreement''). The Adviser will
evaluate, allocate assets to, and oversee Subadvisers, and recommend to
the Board their hiring, termination and replacement. Each Subadviser is
or will be an investment adviser registered under the Advisers Act. For
its services to a Fund, the Adviser pays each Subadviser a monthly fee
out of the fee paid to the Adviser by the Fund.
    4. Applicants request an order to permit the Adviser, subject to
Board approval, to enter into and materially amend Subadvisory
Agreements without obtaining shareholder approval. The requested relief
will not extend to any Subadviser who is an affiliated person, as
defined in section 2(a)(3) of the Act, of a Fund or the Adviser (other
than by reason of serving as a Subadviser to one or more of the Funds)
(``Affiliated Subadviser'').

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is
unlawful for any person to act as an investment adviser to a registered
investment company except pursuant to a written contract that has been
approved by the vote of a majority of the company's outstanding voting
securities. Rule 18f-2 under the Act provides that each series or class
of stock in a series company affected by a matter must approve such
matter if the Act requires shareholder approval.
    2. Section 6(c) of the Act provides that the Commission may exempt
any person, security, or transaction or any class or classes of
persons, securities, or transactions from any provision of the Act, or
from any rule thereunder, if and to the extent that such exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the Act. Applicants believe that the requested relief
meets this standard for the reasons discussed below.
    3. Applicants state that the shareholders rely on the Adviser's
experience to select one or more Subadvisers best suited to achieve the
Fund's investment objectives. Applicants assert that, from the
perspective of the investor, the role of the Subadvisers is
substantially equivalent to that of the individual portfolio managers
employed by traditional investment company advisory firms. Applicants
contend that requiring shareholder approval of Subadvisory Agreements
would impose costs and unnecessary delays on the Funds and may preclude
the Adviser and the Board from acting promptly when a change in
Subadvisers would benefit a Fund. Applicants note that each Advisory
Agreement and any Subadvisory Agreement with an Affiliated Subadviser
will remain subject to the shareholder approval requirements of section
15(a) and rule 18f-2 under the Act.

Applicants' Conditions

    Applicants agree that any order granting the requested relief shall
be subject to the following conditions:
    1. Before a Fund may rely on the order requested in the
application, the operation of the Fund in the manner described in the
application will be approved by a majority of the Fund's outstanding
voting securities, as defined in the Act, or in the case of a Fund
whose public shareholders purchase shares on the basis of a prospectus
containing the disclosure contemplated by condition 2 below, by the
initial shareholder(s) before offering shares of that Fund to the
public.
    2. Each Fund that relies on the requested order will disclose in
its prospectus the existence, substance, and effect of any order
granted pursuant to the application. In addition, each Fund will hold
itself out to the public as employing the manager of managers structure
described in the application. The prospectus will prominently disclose
that the Adviser has the ultimate responsibility (subject to oversight
by the Board) to oversee the Subadvisers and to recommend their hiring,
termination and replacement.
    3. At all times, at least a majority of the Board will be
Independent Board Members, and the nomination of new or additional
Independent Board Members will be placed within the discretion of the
then-existing Independent Board Members.
    4. The Adviser will not enter into a Subadvisory Agreement with any
Affiliated Subadviser without that agreement, including the
compensation to be paid thereunder, being approved by the shareholders
of the applicable Fund.
    5. When a Subadviser change is proposed for a Fund with an
Affiliated Subadviser, the Board, including a majority of the
Independent Board Members, will make a separate finding, reflected in
the Board minutes, that the change is in the best interests of the Fund
and its shareholders and does not involve a conflict of interest from
which the Adviser or the Affiliated Subadviser derives an inappropriate
advantage.

    6. Within 90 days of the hiring of any new Subadviser, shareholders
of the affected Fund will be furnished all information about the new
Subadviser that would be included in a proxy statement. To meet this
condition, each affected Fund will provide shareholders with an
information statement meeting the requirements of Regulation 14C,
Schedule 14C and Item 22 of Schedule 14A under the 1934 Act.
    7. The Adviser will provide general management services to each
Fund, including overall supervisory responsibility for the general
management and investment of each Fund's assets, and, subject to the
review and approval by the Board, will: (i) Set each Fund's overall
investment strategies; (ii) evaluate, select and recommend Subadvisers
to manage all or part of each Fund's assets; (iii) when appropriate,
allocate and reallocate each applicable Fund's assets among multiple
Subadvisers; (iv) monitor and evaluate the performance of Subadvisers;
and (v) implement procedures reasonably designed to ensure that the
Subadvisers comply with each Fund's investment objective, policies and
restrictions.
    8. No Board Member or officer of a Mutual Fund, or director or
officer of the Adviser will own directly or indirectly (other than
through a pooled investment vehicle that is not controlled by such
person), any interest in a Subadviser except for: (i) Ownership of
interests in the Adviser or any entity that controls, is controlled by,
or under common control with the Adviser; or (ii) ownership of less
than 1% of the outstanding securities of any class of equity or debt of
a publicly-traded company that is either a Subadviser or an entity that
controls, is controlled by, or is under common control with a
Subadviser.
    9. In the event that the Commission adopts a rule under the Act
providing substantially similar relief to that in the order requested
in the application, the requested order will expire on the effective
date of that rule.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-21625 Filed 8-30-10; 8:45 am]
BILLING CODE 8010-01-P


UNITED STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON, D. C. 20460 OFFICE OF PREVENTION, PESTICIDES AND TOXIC SUBSTANCES May 31, 2002 CERTIFIED MAIL Ronald Landis, Ph. D. Landis International 3185 Madison Highway PO Box 5126 Valdosta, GA 31603 5126 Dear Mr. Landis:

This is the Environmental Protection Agency's (hereafter referred to as EPA or the Agency) "Report of the Food Quality Protection Act (FQPA) Tolerance Reassessment Progress and Risk Management Decision (TRED) for Linuron", which was approved on May 31, 2002. A Notice of Availability of this tolerance reassessment decision will be published in the Federal Register (FR) shortly.

The Federal Food, Drug and Cosmetic Act (FFDCA), as amended by FQPA, requires EPA to reassess all the tolerances for registered chemicals in effect on or before the date of the enactment of the FQPA, which was in August of 1996. In reassessing these tolerances, the Agency must consider, among other things, aggregate risks from non occupational sources of pesticide exposure, whether there is increased susceptibility to infants and children, and the cumulative effects of pesticides with a common mechanism of toxicity. Once a safety finding has been made that aggregate risks are not of concern, the tolerances are considered reassessed. A Reregistration Eligibility Decision (RED) for linuron was completed in March, 1995, prior to FQPA enactment. Therefore, the tolerances need to be reassessed to meet the FQPA standard.

The Agency has evaluated the dietary risk associated with linuron and has determined that there is a reasonable certainty that no harm to any population subgroup will result from aggregate exposure to linuron when considering dietary exposure and all other non occupational sources of pesticide exposure for which there is reliable information. However, for chronic drinking water risk from surface water, potential (average) Estimated Environmental Concentrations (EECs) of linuron (18 ppb) exceeds the chronic Drinking Water Level of Comparison (DWLOC) (6 ppb) for infants and children, the most sensitive population subgroups. The chronic EECs were estimated using modeling and exceed the DWLOC slightly. The EEC estimate is based on upper end input parameters such as an assumption that 87% of a watershed would be treated with linuron. EECs predicted from this model are likely higher than would be found in drinking water from surface reservoirs because it is unlikely that 87% of a watershed would be treated with linuron. Nonetheless, additional data are being required that will further refine the chronic drinking water risk assessment. A leaching/ adsorption/ desorption study will provide data on the mobility of linuron and a terrestrial field dissipation study will provide information on what happens 2 to linuron under field conditions.

FQPA requires that EPA consider "available information" concerning the cumulative effects of a particular pesticide's residues and "other substances that have a common mechanism of toxicity." The reason for considering other substances is because of the possibility that low level exposures to multiple chemical substances that cause a common toxic effect by a common mechanism could lead to the same adverse health effect, as would a higher level of exposure to any of the other substances individually. EPA did not perform a cumulative risk assessment as part of this review of linuron, because the Agency has not determined that there are any other chemical substances that have a mechanism of toxicity common with that of linuron. If EPA identifies other substances that share a common mechanism of toxicity with linuron, then a cumulative risk assessment will be conducted that includes linuron once the final framework EPA will use for conducting cumulative risk assessments is available. Further, EPA is in the process of developing criteria for characterizing and testing endocrine disrupting chemicals and plans to implement an Endocrine Disruptor Screening Program. Linuron will be reevaluated at that time and additional studies may be requested.

The Agency's human health findings for the pesticide linuron, were discussed in a closure conference call, and are summarized in the enclosed Linuron Overview and Linuron Summary of the risk assessments. The risk assessments and other documents pertaining to the linuron tolerance reassessment decision are available on the Internet at http:// www. epa. gov/ pesticides/ reregistration/ status. htm and are in the public docket for viewing.

The Agency has reassessed all 40 tolerances for linuron and can make a FQPA safety determination. In addition, three new tolerances are proposed for use on cotton gin by products (9.0 ppm), celeriac (1.0 ppm), and rhubarb (0.5 ppm). The Agency has sufficient residue data for reassessing the tolerances for linuron and is requiring additional confirmatory data for celery, corn, sorghum, and wheat. Anticipated residues for all commodities were calculated from field trial data and subsequently utilized to estimate the dietary exposure to linuron. For commodities that require additional residue data, the Current Tolerance value was used in the acute and chronic dietary risk assessments and this is the value that will continue to be used for enforcement purposes until the additional confirmatory data are reviewed. Acute and chronic dietary risks from exposure do not exceed the Agency's level of concern. Final tolerances are being proposed as part of this Tolerance Reassessment Decision. Tolerances may be revised once the confirmatory field trial data have been submitted to and reviewed by the Agency.

Table 1. Tolerance Reassessment Summary for Linuron.

Commodity Current Tolerance (ppm) 1 Reassessed Tolerance Level (ppm) Comment/ Correct Commodity Definition Tolerances listed under 40 CFR §180.184( a):

Asparagus 7.0 7.0 Carrots 1.0 1.0 [Carrot]

Cattle, fat 1.0 0.2 Commodity Current Tolerance (ppm) 1 Reassessed Tolerance Level (ppm) Comment/ Correct Commodity Definition 3 Cattle, mbyp 1.0 0.1 [Cattle, meat byproducts, except kidney and liver]

Cattle, meat 1.0 0.1 Celery 0.5 0.5 / (TBD 4) The available data support use east of the Rocky Mountains; additional data are required to support use on celery west of the Rocky Mountains.

Corn, field, fodder 1.0 6.0 [Corn, field, stover]

Corn, field, forage 1.0 1.0 Corn, fresh (inc. sweet K+ CWHR) 0.25 0.25 / (TBD 4) Additional crop field trial data are required. [Corn, sweet (K+ CWHR)]

Corn, grain (inc. popcorn) 0.25 0.1 Popcorn grain tolerance should be deleted since there are no registered uses. [Corn, field, grain]

Corn, sweet, fodder 1.0 1.0 / (TBD 4) Additional crop field trial data are required. [Corn, sweet, stover]

Corn, sweet, forage 1.0 1.0 / (TBD 4 ) Additional crop field trial data are required.

Cottonseed 0.25 Reassign This tolerance should be reclassified under 180.184( c) because use of linuron on cotton is restricted to east of the Rocky Mountains.

Goats, fat 1.0 0.2 [Goat, fat]

Goats, mbyp 1.0 0.1 [Goat, meat byproducts, except kidney and liver]

Goats, meat 1.0 0.1 [Goat, meat]

Hogs, fat 1.0 0.05 [Hog, fat]

Hogs, mbyp 1.0 0.1 [Hog, meat byproducts]

Hogs, meat 1.0 0.05 [Hog, meat]

Horses, fat 1.0 0.2 [Horse, fat] Commodity Current Tolerance (ppm) 1 Reassessed Tolerance Level (ppm) Comment/ Correct Commodity Definition 4 Horses, mbyp 1.0 0.1 [Horse, meat byproducts, except kidney and liver]

Horses, meat 1.0 0.1 [Horse, meat]

Parsnips (with tops) 0.5 0.05 [Parsnip, root]

Parsnips (without tops) 0.5 0.05 [Parsnip, root]

Potatoes 1.0 Reassign This tolerance should be reclassified under 180.184( c) as use of linuron on potatoes is restricted to east of the Rocky Mountains.

Sheep, fat 1.0 0.2 Sheep, mbyp 1.0 0.1 [Sheep, meat byproducts, except kidney and liver]

Sheep, meat 1.0 0.1 Sorghum, fodder 1.0 1.0 / (TBD 4) Additional crop field trial data are required. [Sorghum, stover]

Sorghum, forage 1.0 1.0 / (TBD 4) Additional crop field trial data are required.

Sorghum, grain (milo) 0.25 0.25 [Sorghum, grain]

Soybeans (dry) 1.0 1.0 [Soybean, seed]

Soybeans (succulent) 1.0 1.0 [Soybean, seed]

Soybean, forage 1.0 Revoke These tolerances should be revoked, provided all pertinent labels are amended to include the following feeding restriction on the product labels: "The feeding of treated forage or hay to livestock is prohibited.

Soybean, hay 1.0 Revoke Commodity Current Tolerance (ppm) 1 Reassessed Tolerance Level (ppm) Comment/ Correct Commodity Definition 5 Wheat, forage 0.5 Reassign These tolerances should be reclassified under 180.184( c), as use of linuron on wheat is restricted to ID, OR, and WA. Wheat, grain 0.25 Reassign Wheat, hay 0.5 Reassign Wheat, straw 0.5 Reassign Tolerances listed under 40 CFR §180.184( c):

Parsley 0.25 0.25 Tolerances established under 40 CFR §180.184( a):

Cattle, kidney Not applicable 2.0 Cattle, liver Not applicable 2.0 Celeraic Not applicable 1.0 Goat, kidney Not applicable 2.0 Goat, liver Not applicable 2.0 Horse, kidney Not applicable 2.0 Horse, liver Not applicable 2.0 Milk Not applicable 0.05 Rhubarb Not applicable 0.5 Sheep, kidney Not applicable 2.0 Sheep, liver Not applicable 2.0 Tolerances established under 40 CFR §180.184( c):

Cotton, gin byproducts Not applicable 9.0 Additional field trial data and/ or information is required.

Cottonseed 0.25 0.05 This tolerance should be reclassified under 180.184( c) because use of linuron on cotton is restricted to east of the Rocky Mountains. [Cotton, undelinted seed]

Potatoes 1.0 0.2 This tolerance should be reclassified under 180.184( c) because use of linuron on potatoes is restricted to east of the Rocky Mountains. [Potato] Commodity Current Tolerance (ppm) 1 Reassessed Tolerance Level (ppm) Comment/ Correct Commodity Definition 6 Wheat, forage 0.5 0.5 / (TBD 4) Crop field trial data are required. This tolerance should be reclassified under 180.184( c), because use of linuron on wheat is restricted to ID, OR, and WA.

Wheat, grain 0.25 0.05 This tolerance should be reclassified under 180.184( c), because use of linuron on wheat is restricted to ID, OR, and WA.

Wheat, hay 0.5 0.5 / (TBD 4) Crop field trial data are required. This tolerance should be reclassified under 180.184( c), because use of linuron on wheat is restricted to ID, OR, and WA.

Wheat, straw 0.5 2.0 The registrants may wish to generate additional crop field trial data at 1x instead of proposing an increased tolerance. This tolerance should be reclassified under 180.184( c), because use of linuron on wheat is restricted to ID, OR, and WA.

1 Expressed in terms of linuron per se. 2 Refer to sections on Magnitude of the Residue in Crop Plants, Magnitude of the Residue in Processed Food/ Feed, and Magnitude of the Residue in Meat, Milk, Poultry, and Eggs for detailed discussion of residues in plant and animal commodities. 3 Expected residues at a 1x feeding level. 4 These commodities were included in the dietary risk assessment using the Current Tolerance level. Additional confirmatory field trial residue data are required; therefore, the final tolerance may be revised.

No maximum residue limits (MRLs) for linuron have been established by Codex for any agricultural commodity. In addition, no Canadian nor Mexican MRLs have been established for linuron. Therefore, no compatibility questions exist with respect to U. S. tolerances.

Note that you will be sent a Section 3( c)( 2)( B) Data Call In (DCI) letter under the Federal Insecticide, Fungicide, Rodenticide Act (FIFRA) in a separate mailing. If you have questions on this document, please contact the Chemical Review Manager, Dirk V. Helder, at (703) 305 4610.

Sincerely,

Lois A. Rossi, Director Special Review and Reregistration Division 7 Enclosures: "Linuron Overview" and "Linuron Summary"