[Federal Register Volume 79, Number 92 (Tuesday, May 13, 2014)]
[Notices]
[Pages 27315-27316]
[FR Doc No: 2014-10951]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2011-E-0759]

Determination of Regulatory Review Period for Purposes of Patent
Extension; IMPROVEST

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) has determined the
regulatory review period for IMPROVEST and is publishing this notice of
that determination as required by law. FDA has made the determination
because of the submission of an application to the Director of Patents
and Trademarks, Department of Commerce, for the extension of a patent
which claims that animal drug product.

ADDRESSES: Submit electronic comments to http://www.regulations.gov.
Submit written petitions (two copies are required) and written comments
to the Division of Dockets Management (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
Submit petitions electronically to http://www.regulations.gov at Docket
No. FDA-2013-S-0610.

FOR FURTHER INFORMATION CONTACT: Beverly Friedman, Office of
Management, Center for Drug Evaluation and Research, Food and Drug
Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6257, Silver
Spring, MD 20993-0002,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The Drug Price Competition and Patent Term
Restoration Act of 1984 (Pub. L. 98-417) and the Generic Animal Drug
and Patent Term Restoration Act (Pub. L. 100-670) generally provide
that a patent may be extended for a period of up to 5 years so long as
the patented item (human drug product, animal drug product, medical
device, food additive, or color additive) was subject to regulatory
review by FDA before the item was marketed. Under these acts, a
product's regulatory review period forms the basis

for determining the amount of extension an applicant may receive.
    A regulatory review period consists of two periods of time: A
testing phase and an approval phase. For animal drug products, the
testing phase begins on the earlier date when either a major
environmental effects test was initiated for the drug or when an
exemption under section 512(j) of the Federal Food, Drug, and Cosmetic
Act (the FD&C Act) (21 U.S.C. 360b(j)) became effective and runs until
the approval phase begins. The approval phase starts with the initial
submission of an application to market the animal drug product and
continues until FDA grants permission to market the drug product.
Although only a portion of a regulatory review period may count toward
the actual amount of extension that the Director of Patents and
Trademarks may award (for example, half the testing phase must be
subtracted as well as any time that may have occurred before the patent
was issued), FDA's determination of the length of a regulatory review
period for an animal drug product will include all of the testing phase
and approval phase as specified in 35 U.S.C. 156(g)(4)(B).
    FDA has approved for marketing the animal drug product IMPROVEST
(gonadotropin releasing factor analog-diptheria toxoid conjugate).
IMPROVEST is indicated for the temporary immunological castration
(suppression of testicular function) and reduction of boar taint in
intact male pigs intended for slaughter. Subsequent to this approval,
the Patent and Trademark Office received a patent term restoration
application for IMPROVEST (U.S. Patent No. 7,534,441) from Pfizer Inc.,
and the Patent and Trademark Office requested FDA's assistance in
determining this patent's eligibility for patent term restoration. In a
letter dated August 10, 2012, FDA advised the Patent and Trademark
Office that this animal drug product had undergone a regulatory review
period and that the approval of IMPROVEST represented the first
permitted commercial marketing or use of the product. Thereafter, the
Patent and Trademark Office requested that the FDA determine the
product's regulatory review period.
    FDA has determined that the applicable regulatory review period for
IMPROVEST is 2,555 days. Of this time, 2,498 days occurred during the
testing phase of the regulatory review period, while 57 days occurred
during the approval phase. These periods of time were derived from the
following dates:
    1. The date an exemption under section 505(i) of the Federal Food,
Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 355(i)) became
effective: March 25, 2004. The applicant claims July 18, 2005, as the
date the investigational new animal drug application (INAD) became
effective. However, FDA records indicate that the INAD effective date
was March 25, 2004, which was the received date of the first submission
containing a Notice of Claimed Investigational Exemption for a new
animal drug.
    2. The date the application was initially submitted with respect to
the animal drug product under section 512 of the FD&C Act (21 U.S.C.
360b): January 25, 2011. The applicant claims January 24, 2011, as the
date the new animal drug application (NADA) for IMPROVEST (NADA 141-
322) was initially submitted. However, FDA records indicate that
January 24, 2011, was the correspondence date of the cover letter for
NADA 141-322 and the application was received by FDA on January 25,
2011.
    3. The date the application was approved: March 22, 2011. FDA has
verified the applicant's claim that NADA 141-322 was approved on March
22, 2011.
    This determination of the regulatory review period establishes the
maximum potential length of a patent extension. However, the Patent and
Trademark Office applies several statutory limitations in its
calculations of the actual period for patent extension. In its
application for patent extension, this applicant seeks 366 days of
patent term extension.
    Anyone with knowledge that any of the dates as published are
incorrect may submit to the Division of Dockets Management (see
ADDRESSES) either electronic or written comments and ask for a
redetermination by July 14, 2014. Furthermore, any interested person
may petition FDA for a determination regarding whether the applicant
for extension acted with due diligence during the regulatory review
period by November 10, 2014. To meet its burden, the petition must
contain sufficient facts to merit an FDA investigation. (See H. Rept.
857, part 1, 98th Cong., 2d sess., pp. 41-42, 1984.) Petitions should
be in the format specified in 21 CFR 10.30.
    Interested persons may submit to the Division of Dockets Management
(see ADDRESSES) electronic or written comments and written or
electronic petitions. It is only necessary to send one set of comments.
Identify comments with the docket number found in brackets in the
heading of this document. If you submit a written petition, two copies
are required. A petition submitted electronically must be submitted to
http://www.regulations.gov, Docket No. FDA-2013-S-0610. Comments and
petitions that have not been made publicly available on http://www.regulations.gov may be viewed in the Division of Dockets Management
between 9 a.m. and 4 p.m., Monday through Friday.

    Dated: May 7, 2014.
Leslie Kux,
Assistant Commissioner for Policy.
[FR Doc. 2014-10951 Filed 5-12-14; 8:45 am]
BILLING CODE 4160-01-P


[Federal Register: August 3, 2007 (Volume 72, Number 149)]
[Proposed Rules]
[Page 43488-43496]
[DOCID:fr03au07-29]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240

[Release No. 34-56161; IC-27914; File No. S7-17-07]
RIN 3235-AJ95

Shareholder Proposals Relating to the Election of Directors

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: The Securities and Exchange Commission is publishing this

interpretive and proposing release to clarify the meaning of the
exclusion for shareholder proposals related to the election of
directors that is contained in Rule 14a-8(i)(8) under the Securities
Exchange Act of 1934. Rule 14a-8 is the Commission rule that provides
shareholders with an opportunity to place a proposal in a company's
proxy materials for a vote at an annual or special meeting of
shareholders. The Commission is publishing its interpretation of and
proposing amendments to Rule 14a-8(i)(8) to provide certainty regarding
the meaning of the exclusion in that Rule.

DATES: Comments should be received by October 2, 2007.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml.
);     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number S7-17-07 on the subject line; or
     Use the Federal Rulemaking Portal (http://www.regulations.gov
). Follow the instructions for submitting comments.

Paper Comments

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

All submissions should refer to File Number S7-17-07. This file number
should be included on the subject line if e-mail is used. To help us
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/proposed.shtml). Comments

also are available for public inspection and copying in the
Commission's Public Reference Room, 100 F Street, NE., Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. All comments received will be posted without change; we do not
edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Lillian Brown, Steven Hearne, or
Tamara Brightwell, at<PHONE_NUMBER>, in the Division of Corporation
Finance, U.S. Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-3010.

SUPPLEMENTARY INFORMATION: We are publishing our interpretation of Rule
14a-8(i)(8) \1\ under the Securities Exchange Act of 1934.\2\ We also
are proposing amendments to Rule 14a-8(i)(8).
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    \1\ 17 CFR 240.14a-8(i)(8).
    \2\ 15 U.S.C. 78a et seq.
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I. Overview

A. Federal Regulation of the Proxy Process

    Regulation of the proxy process is a core function of the
Commission and is one of the original responsibilities that Congress
assigned to the agency in 1934. Section 14(a) of the Exchange Act \3\
stemmed from a Congressional belief that ``fair corporate suffrage is
an important right that should attach to every equity security bought
on a public exchange.'' \4\ The Congressional committees recommending
passage of Section 14(a) proposed that ``the solicitation and issuance
of proxies be left to regulation by the Commission.'' \5\ Congress
intended that Section 14(a) give the Commission the ``power to control
the conditions under which proxies may be solicited'' \6\ and that this
power would be exercised ``as necessary or appropriate in the public
interest or for the protection of investors.'' \7\ Because the
Commission's authority under Section 14(a) encompasses both disclosure
and proxy mechanics,\8\ the proxy rules have long governed not only the
information required to be disclosed to ensure that shareholders
receive full disclosure of all information that is material to the
exercise of their voting rights under state law and the corporation's
charter, but also the procedure for soliciting proxies.\9\
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    \3\ 15 U.S.C. 78n(a).
    \4\ Mills v. Electric Auto-Lite Co., 396 U.S. 375, 381 (1970),
quoting H.R. Rep. No. 1383, 73d Cong., 2d Sess., at 13 (1934). See
also J. I. Case Co. v. Borak, 377 U.S. 426, 431 (1964).
    \5\ S. Rep. No. 792, 73d Cong., 2d Sess., at 12 (1934).
    \6\ H.R. Rep. No. 1383, 73d Cong., 2d Sess., at 14 (1934). The
same report demonstrated a congressional intent to prevent
frustration of the ``free exercise of the voting rights of
stockholders.'' Id.
    \7\ 15 U.S.C. 78n(a).
    \8\ See Business Roundtable v. SEC, 905 F.2d 406, 411 (D.C. Cir.
1990) (``We do not mean to be taken as saying that disclosure is
necessarily the sole subject of Sec.  14''); Roosevelt v. E.I. du
Pont de Nemours & Co., 958 F.2d 416, 421-22 (D.C. Cir. 1992)
(Congress ``did not narrowly train section 14(a) on the interest of
stockholders in receiving information necessary to the intelligent
exercise of their'' state law rights); SEC v. Transamerica Corp.,
163 F.2d 511, 518 (3d Cir. 1947) (in which the Commission's
authority to promulgate Exchange Act Rule 14a-8 was upheld), cert.
denied, 332 U.S. 847 (1948). See also John C. Coffee Jr., Federalism
and the SEC's Proxy Proposals, New York Law Journal 5 (March 18,
2004) (Section 14(a) ``does not focus exclusively on disclosure;
rather, it contemplates SEC rules regulating procedure in order to
grant shareholders a `fair' right of corporate suffrage''); Louis
Loss & Joel Seligman, Securities Regulation 1936-37 (3d ed. 1990)
(The Commission's ``power under Sec.  14(a) is not necessarily
limited to ensuring full disclosure. The statutory language is
considerably more general than it is under the specific disclosure
philosophy of the [Securities Act of 1933].'')
    \9\ E.g., Exchange Act Rule 14a-4 (17 CFR 240.14a-4), Exchange
Act Rule 14a-7 (17 CFR 240.14a-7), and Exchange Act Rule 14a-8 (17
CFR 240.14a-8). Each specifies procedural requirements that
companies must observe in soliciting proxies. Exchange Act Rule 14a-
4(b)(2) requires that the form of proxy furnish the security holder
with the means to withhold approval for the election of a director.
Exchange Act Rule 14a-7 provides a procedure under which a security
holder may be able to obtain a list of security holders. Exchange
Rule 14a-8 provides a procedure under which a qualifying security
holder can obligate the company to include certain types of
proposals, along with statements in support of those proposals, in
the company's proxy statement.
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B. Exchange Act Disclosure Requirements for Contested Elections

    Several Commission rules, including Exchange Act Rule 14a-12,\10\
regulate contested proxy solicitations to assure that investors receive
adequate disclosure to enable them to make informed voting decisions in
elections. The requirements to provide these disclosures to
shareholders from whom proxy authority is sought are grounded in Rule
14a-3,\11\ which requires that any party conducting a proxy
solicitation file with the Commission, and furnish to each person
solicited, a proxy statement containing the information in Schedule
14A.\12\ Items 4(b) and 5(b) of Schedule 14A require numerous specified
disclosures if the solicitation is subject to Rule 14a-12(c). A
solicitation is subject to Rule 14a-12(c) if it is made ``for the
purpose of opposing'' a solicitation by any other person ``with respect
to the election or removal of directors. * * * '' \13\ Thus, the result
of Schedule 14A's cross-referencing of Rule 14a-12(c) is to trigger,
when a solicitation with respect to the election of directors is
conducted in opposition to another solicitation, a number of
disclosures relevant in proxy contests, including disclosure of: \14\
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    \10\ 17 CFR 240.14a-12.
    \11\ 17 CFR 240.14a-3.
    \12\ Rule 14a-3 provides, in pertinent part, that ``[n]o
solicitation subject to this regulation shall be made unless each
person solicited is concurrently furnished or has previously been
furnished with a publicly-filed preliminary or definitive written
proxy statement containing the information specified in Schedule
14A. * * *''
    \13\ Because numerous protections of the federal proxy rules are
triggered only by the presence of a solicitation made in opposition
to another solicitation, the requirements regarding disclosures and
procedures in contested elections do not contemplate the presence of
nominees from different vying factions in the same proxy materials.
    \14\ See 17 CFR 240.14a-101, Items 4(b) and 5(b).

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     By whom the solicitation is made;
     The methods to be employed to solicit;
     Total expenditures to date and anticipated in connection
with the solicitation;
     By whom the cost of the solicitation will be borne;
     Any substantial interest of each participant in the
solicitation;
     The name, address, and principal occupation or principal
business of each participant;
     Whether any participant has been convicted in a criminal
proceeding within the past 10 years;
     The amount of each class of securities of the company
owned by the participant and the participant's associates;
     Information concerning purchases and sales of the
company's securities by each participant within the past two years;
     Whether any part of the purchase price or market value of
such securities is represented by funds borrowed;
     Whether a participant is a party to any contract,
arrangements or understandings with any person with respect to
securities of the company;
     Certain related party transactions between the participant
or its associates and the company;
     Whether the participant or any of its associates have any
arrangement or understanding with any person with respect to any future
employment with the company or its affiliates, or with respect to any
future transactions to which the company or its affiliates will or may
be a party; and
     With respect to any person who is a party to an
arrangement or understanding pursuant to which a nominee is proposed to
be elected, any substantial interest that such person has in any matter
to be acted upon at the meeting.\15\
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    \15\ For purposes of Items 4 and 5, a ``participant'' in the
solicitation includes: (i) Any person who solicits proxies; (ii) any
director nominee for whose election proxies are being solicited; and
(iii) any committee or group, any member of a committee or group,
and other persons involved in specified ways in the financing of the
solicitation. See Item 4, Instruction 3. Thus, for each of the
numerous disclosures required as to a ``participant,'' the
information must be disclosed as to all of such persons.

In addition, Item 7 of Schedule 14A requires the furnishing of
additional information as to nominees for director, including nominees
of ``persons other than the [company]'' (e.g., shareholders),
including: \16\
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    \16\ See 17 CFR 240.14a-101, Item 7. See also 17 CFR 240.14a-
101, Item 22(b).
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     Any arrangement or understanding between the nominee and
any other person(s) (naming such person(s)) pursuant to which the
nominee was or is selected as a nominee; \17\
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    \17\ See Item 401(a) of Regulation S-K [17 CFR 229.401(a)],
which is referenced in Item 7 of Schedule 14A.
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     Business experience of the nominee; \18\
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    \18\ See Item 401(e)(1) of Regulation S-K [17 CFR
229.401(e)(1)], which is referenced in Item 7 of Schedule 14A.
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     Any other directorships held by the nominee in an Exchange
Act reporting company; \19\
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    \19\ See Item 401(e)(2) of Regulation S-K [17 CFR
229.401(e)(2)], which is referenced in Item 7 of Schedule 14A.
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     The nominee's involvement in certain legal proceedings;
\20\
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    \20\ See Items 103 and 401(f) of Regulation S-K [17 CFR 229.103
and 17 CFR 229.401(f)], which are referenced in Item 7 of Schedule
14A.
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     Certain transactions between the nominee and the company;
\21\ and
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    \21\ See Item 404 of Regulation S-K [17 CFR 229.404], which is
referenced in Item 7 of Schedule 14A.
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     Whether the nominee complies with independence
requirements.\22\
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    \22\ See Item 407(a) of Regulation S-K [17 CFR 229.407(a)],
which is referenced in Item 7 of Schedule 14A.

Finally, and of critical importance, all of these disclosures are
covered by the prohibition on the making of a solicitation containing
false or misleading statements or omissions that is found in Rule 14a-
9.\23\
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    \23\ See 17 CFR 240.14a-9.
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C. The Shareholder Proposal Process

    Rule 14a-8 creates a procedure under which shareholders, subject to
certain requirements, may present in the company's proxy materials a
broad range of binding and non-binding proposals. The rule permits a
shareholder owning a relatively small amount of the company's shares
\24\ to submit his or her proposal to the company, and requires the
company to include the proposal alongside management's proposals in the
company's proxy materials. In all cases, the proposal may be excluded
by the company if it fails to satisfy the rule's procedural
requirements or falls within one of the rule's thirteen substantive
categories of proposals that may be excluded.\25\
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    \24\ Exchange Act Rule 14a-8(b)(1) (17 CFR 240.14a-8(b)(1))
provides that a holder of at least $2,000 in market value, or 1% of
the company's securities entitled to be voted, may submit a
shareholder proposal subject to other procedural requirements and
substantive bases for exclusion under the rule.
    \25\ With respect to subjects and procedures for shareholder
votes that are specified by the corporation's governing documents,
most state corporation laws provide that a corporation's charter or
bylaws can specify the types of proposals that are permitted to be
brought before the shareholders for a vote at an annual or special
meeting. Rule 14a-8(i)(1) supports these determinations by providing
that a proposal that is violative of the corporation's governing
documents may be excluded from the corporation's proxy materials.
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    Rule 14a-8 specifies that companies must notify the Commission when
they intend to exclude a shareholder's proposal from their proxy
materials. This notice goes to the staff of the Division of Corporation
Finance or the Division of Investment Management. In the notice, the
company provides the staff with a discussion of the basis or bases upon
which the company intends to exclude the proposal and requests that the
staff not recommend enforcement action if the company excludes the
proposal. A shareholder proponent may respond to the company's notice,
but is not required to do so. Generally, the staff responds to each
notice with a ``no-action'' letter to the company, a copy of which is
provided to the shareholder, in which the staff either concurs or
declines to concur with the company's view that there is a basis for
excluding the proposal.\26\
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    \26\ The staff's response is an informal expression of its
views, and does not necessarily reflect the view of the Commission.
Either the shareholder proponent or the company may obtain a
decision on the excludability of a challenged proposal from a
federal court.
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II. The Election Exclusion in Rule 14a-8(i)(8)

A. Introduction

    Rule 14a-8(i)(8) sets forth one of several substantive bases upon
which a company may exclude a shareholder proposal from its proxy
materials. Specifically, it provides that a company need not include a
proposal that ``relates to an election for membership on the company's
board of directors or analogous governing body.'' The purpose of this
provision is to prevent the circumvention of other proxy rules that are
carefully crafted to ensure that investors receive adequate disclosure
and an opportunity to make informed voting decisions in election
contests.
    In administering Rule 14a-8(i)(8), the staff has applied the
following explanation of the election exclusion that the Commission
gave in 1976 when it proposed the exclusion:

    [T]he principal purpose of [Rule 14a-8(i)(8)] is to make clear,
with respect to corporate elections, that Rule 14a-8 is not the
proper means for conducting campaigns or effecting reforms in
elections of that nature, since other proxy rules, including Rule
14a-11, are applicable thereto.\27\
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    \27\ Exchange Act Release No. 34-12598 (July 7, 1976) [41 FR
29982].

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    In its application of the Commission's explanation, the staff
has permitted companies to exclude any shareholder proposal that may
result in a contested election. For purposes of Rule 14a-8, the
staff has expressed the position that a proposal may result in a
contested election if it is a means either to campaign for or
against a director nominee or to require a company to include
shareholder-nominated candidates in the company's proxy materials.
The staff's position is consistent with the explanation that the
Commission gave in 1976, and with the Commission's interpretation of
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the election exclusion.

    A recent decision by the U.S. Court of Appeals for the Second
Circuit in American Federation of State, County & Municipal Employees,
Employees Pension Plan v. American International Group, Inc.,\28\
addressed the application of the election exclusion. In that decision,
the Second Circuit held that AIG could not rely on Rule 14a-8(i)(8) to
exclude a shareholder proposal seeking to amend a company's bylaws to
establish a procedure under which a company would be required, in
specified circumstances, to include shareholder nominees for director
in the company's proxy materials. The Second Circuit interpreted the
Commission's statement in 1976 as limiting the election exclusion ``to
shareholder proposals used to oppose solicitations dealing with an
identified board seat in an upcoming election and reject[ing] the
somewhat broader interpretation that the election exclusion applies to
shareholder proposals that would institute procedures making such
election contests more likely.'' \29\ It is the Commission's position
that the election exclusion should not be limited in this way.\30\
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    \28\ American Federation of State, County & Municipal Employees,
Employees Pension Plan v. American International Group, Inc., 462
F.3d 121 (2d Cir. 2006) (AFSCME v. AIG).
    \29\ Id. at 128.
    \30\ In this regard, we note that the Second Circuit noted in
its decision that ``* * * if the SEC determines that the
interpretation of the election exclusion embodied in its 1976
Statement would result in a decrease in necessary disclosures or any
other undesirable outcome, it can certainly change its
interpretation of the election exclusion, provided that it explains
its reasons for doing so.'' Id. at 130.
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    We are concerned that the Second Circuit's decision has resulted in
uncertainty and confusion with respect to the appropriate application
of Rule 14a-8(i)(8) and may lead to contested elections for directors
without adequate disclosure. In this regard, not only are shareholders
and companies unable to know with certainty whether a proposal that
could result in an election contest may be excluded under Rule 14a-
8(i)(8), but the staff also is severely limited in their ability to
interpret Rule 14a-8 in responding to companies' notices of intent to
exclude shareholder proposals. Therefore, to eliminate any uncertainty
and confusion arising from the Second Circuit's decision, we are
issuing this release to confirm the Commission's position that
shareholder proposals that could result in an election contest may be
excluded under Rule 14a-8(i)(8). We also are soliciting comment as to
whether we should adopt proposed changes to Rule 14a-8(i)(8) to further
clarify the rule's application. If clarification of the text of Rule
14a-8(i)(8) would be helpful, we are seeking input as to whether the
text of the proposed amendment provides adequate clarity.

B. The Purpose of the Election Exclusion

    The proper functioning of the election exclusion is critical to
prevent the circumvention of other proxy rules that are carefully
crafted to ensure that investors receive adequate disclosure in
election contests. Because the board of directors of a company most
often will include its own director nominees in its proxy materials,
allowing shareholders to include their nominees in company proxy
materials would create what is, in fact, a contested election of
directors, without the shareholders conducting a separate proxy
solicitation.
    The detailed and carefully crafted regulatory regime governing
contested elections does not contemplate the presence of nominees from
different vying factions in the same proxy materials. As explained
above, numerous protections of the federal proxy rules are triggered
only by the presence of a solicitation made in opposition to another
solicitation. Accordingly, were the election exclusion to be applied as
contemplated in the Second Circuit's decision in AFSCME v. AIG, it
would be possible for a person to wage an election contest without
conducting a separate proxy solicitation, and thus without providing
the disclosures required by the Commission's present rules governing
such contests, and potentially without liability under Rule 14a-9 for
misrepresentations made by that person in its proxy solicitations. Such
a result would be inconsistent with the Commission's 1976 statement
regarding Rule 14a-8(i)(8) and the staff's application of that
statement in responding to Rule 14a-8 notices of companies' intent to
exclude proposals.

C. Application of the Election Exclusion Since 1976

    Since the Commission made its original statement regarding the
intended purpose of the election exclusion in 1976, the Commission has
made few statements regarding the exclusion, instead leaving
application of the exclusion to the staff to implement in accordance
with its stated intent at adoption. When the Commission has had
occasion to comment on the exclusion or to review staff positions in
applying the exclusion, however, it has done so in a manner that is
consistent with its longstanding view of the exclusion's purpose.
    The Division issued a series of letters in 1990 that addressed
nomination proposals similar to that presented in the AFSCME v. AIG
matter. In those letters, the Division set forth its framework for
applying Rule 14a-8(i)(8) to nomination proposals:

    There appears to be some basis for [the company's] view that the
proposal may be omitted pursuant to rule 14a-8[(i)](8). That
provision allows the omission of a proposal that ``relates to an
election to office.'' In this regard, the staff particularly notes
that the Commission has indicated that the ``principal purposes of
[rule 14a-8(i)(8)] is to make clear [that] with respect to corporate
elections, that [r]ule 14a-8 is not the proper means for conducting
campaigns * * * since other proxy rules, including rule [14a-12] are
applicable thereto.'' Securities Exchange Act Release No. 12598
(July 7, 1976). Insofar as it seeks to implement a common ballot
procedure, it appears that this proposal * * * would establish a
procedure that may result in contested elections to the board which
is a matter more appropriately addressed under Rule 14a-12.
Accordingly, this Division will not recommend enforcement action to
the Commission if the Company excludes the proposal from its proxy
materials.\31\
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    \31\ See Division letter to Amoco (Feb. 14, 1990).

    In 1992, in proposing reforms to the proxy rules, the Commission
acknowledged the ``difficulty experienced by shareholders in gaining a
voice in determining the composition of the board of directors'' but
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noted further that:

    Proposals to require the company to include shareholder nominees
in the company's proxy statement [rather than in the dissident's own
proxy statement] would represent a substantial change in the
Commission's proxy rules. This would essentially mandate a universal
ballot including both management nominees and independent candidates
for board seats.\32\ (emphasis added).
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    \32\ See Exchange Act Release No. 34-31326 (Oct. 16, 1992) [57
FR 48276].

    The Division continued to include the ``may result in contested
elections'' language in its letters regarding shareholder nomination
proposals and Rule 14a-8(i)(8) for 10 years.\33\ In 1998,

the Division included this language in its letter to Storage Technology
Corporation.\34\ In that letter, the Division agreed that there was a
basis for the company's view that it could exclude, under Rule 14a-
8(i)(8), a proposal that sought to amend the company's governing
instruments to provide that any three shareholders who owned a combined
minimum of 3,000 shares could include a director nominee in the
company's proxy materials.\35\ The shareholder sought Commission review
of this Division position, but the Commission declined to review the
no-action determination.\36\
---------------------------------------------------------------------------

    \33\ In each of 1993 and 1995, the Division issued one letter
that took a view that was counter to existing precedent and its own
statements with regard to similar proposals. See Dravo Corp. (Feb.
21, 1995); and Pinnacle West Capital Corp. (Mar. 26, 1993) (not
permitting exclusion under Rule 14a-8(i)(8) of proposals seeking to
include qualified nominees in the company's proxy statement). The
staff issued these letters in error, as they clearly are
inconsistent with the Commission statement in the 1976 release
proposing Rule 14a-8(i)(8) and numerous Division statements before
and after. Further, these letters are inconsistent with later
Commission statements, as described below.
    \34\ See Division letter to Storage Technology Corporation (Mar.
11, 1998) (``There appears to be some basis for your view that the
first proposal may be omitted under rule 14a-8[(i)](8). It appears
that the first proposal, rather than establishing procedures for
nomination or qualification generally, would establish a procedure
that may result in contested elections of directors, which is a
matter more appropriately addressed under Rule [14a-12].
Accordingly, the Division will not recommend enforcement action to
the Commission if the Company excludes the first proposal from its
proxy materials in reliance upon Rule 14a-8[(i)](8)'').
    \35\ See id.
    \36\ Letter of Jonathan Katz, Secretary of the Commission, to
Dr. Seymour Licht P.E. (Apr. 6, 1998).
---------------------------------------------------------------------------

    As noted above, the Division continued to include the ``contested
elections'' language in its Rule 14a-8(i)(8) no-action letters through
and beyond the Commission's 1998 letter to Storage Technology
Corporation. While the Division has continued to follow this analysis
in past seasons, it ceased repeating this language in its letters
during the 2000 proxy season, as the analysis had been established
definitively through 10 years of Division positions and the
Commission's letter to Storage Technology.
    In 2003, the Division agreed that there was a basis for the view of
Citigroup Inc. that it could exclude, under Rule 14a-8(i)(8), a
proposal that was substantially similar to the proposal that was
submitted to AIG by AFSCME and that was the subject of the Second
Circuit's recent opinion. In its letter to Citigroup Inc. (Jan. 31,
2003), the Division agreed that there was a basis for the Citigroup's
view that the company could exclude a proposal because the proposal,
``rather than establishing procedures for nomination or qualification
generally, would establish a procedure that may result in contested
elections of directors.'' The shareholder proposal at issue in
Citigroup was submitted by AFSCME and, similar to the proposal
submitted to AIG, would have amended the company's bylaws to require
the company to include the name, along with certain disclosures and
statements, of any person nominated for election to the board by a 3%
or greater stockholder.
    The shareholder sought Commission review of the Division's position
in its 2003 letter to Citigroup. The Commission declined to review the
staff's determination, stating:

    [t]he Commission has determined not to review the Division's no-
action position under Rule 14a-8(i)(8). The Division's current no-
action position is consistent with Division positions taken in
recent years. Any change in the Division's current interpretation
would require other significant adjustments in the system of proxy
regulation under Section 14(a) of the Securities Exchange Act of
1934.\37\
---------------------------------------------------------------------------

    \37\ See letter from Jonathan Katz, Secretary of the Commission,
to Gerald W. McEntee (Apr. 14, 2003). In that letter, the Commission
directed the Division to review the proxy rules and regulations, as
well as the Division's interpretations, regarding procedures for the
election of corporate directors. This review resulted in the
Commission's proposal of revisions to the proxy rules in October
2003.

    While the Commission determined not to review the staff's position,
it directed the Division of Corporation Finance to review the proxy
rules regarding procedures for the election of corporate directors and
provide the Commission with recommendations regarding possible changes
---------------------------------------------------------------------------
to the proxy rules.

    Following the Division's review of the proxy rules, in 2003 the
Commission proposed a comprehensive new set of rules, based on the
Division's recommendations, which would govern shareholder director
nominations that are not control-related.\38\ The Commission would not
have taken such action had it believed that Rule 14a-8 provided an
appropriate avenue for shareholder director nominations. In fact, in
discussing alternatives considered but not chosen in proposing the
rules, the Commission specifically noted the alternative of revising
Rule 14a-8(i)(8) to enable shareholders to use the shareholder proposal
rule to participate more fully in the director nomination process.\39\
---------------------------------------------------------------------------

    \38\ Exchange Act Release No. 34-48626 (Oct. 14, 2003) [68 FR
60784].
    \39\ Id. See also AFSCME at 130, n. 8 (stating that, because of
the court's determination, ``there might very well be no reason for
a rule based on Proposed Rule 14a-11 to co-exist with the procedure
that our holding makes available to shareholders'').
---------------------------------------------------------------------------

D. Commission Interpretation of Rule 14a-8(i)(8)

    As noted previously, the Commission stated clearly when it proposed
amendments to Rule 14a-8 in 1976 that ``Rule 14a-8 is not the proper
means for conducting campaigns or effecting reforms in elections of
that nature, since other proxy rules, including Rule 14a-11, are
applicable thereto.'' \40\ Thus, Rule 14a-8 expressly was not intended
to be a substitute, or additional, mechanism for conducting contested
elections (the type of elections that would involve the ``conducting
[of] campaigns''), or for effecting reforms in contested elections
(elections whose ``nature'' involves campaigns). Based on the
foregoing, it is the Commission's view that a proposal may be excluded
under Rule 14a-8(i)(8) if it would result in an immediate election
contest (e.g., by making or opposing a director nomination for a
particular meeting) or would set up a process for shareholders to
conduct an election contest in the future by requiring the company to
include shareholders' director nominees in the company's proxy
materials for subsequent meetings.
---------------------------------------------------------------------------

    \40\ Exchange Act Release No. 34-12598 (July 7, 1976). The
Commission's reference in its 1976 statement to ``other proxy rules,
including Rule 14a-11,'' reflects the fact that, in 1976, Rule 14a-
11 was the Commission proxy rule governing election contests. As
part of a series of rule changes in 1999, the Commission rescinded
Rule 14a-11 and moved many of the requirements of prior Rule 14a-11
to the current Rule 14a-12. [17 CFR 240.14a-12] See Securities Act
Release No. 33-7760 (Oct. 22, 1999) [64 FR 61408]. Accordingly, the
Commission's reference to Rule 14a-11 in 1976 was to the rules
governing election contests, which now may be found generally
elsewhere in the proxy rules and, in particular, in Rule 14a-12.
---------------------------------------------------------------------------

    In the AFSCME opinion, the Second Circuit agreed with the
Commission's view that shareholder proposals can be excluded under Rule
14a-8(i)(8) if they would result in an immediate election contest. The
court, however, disagreed with the view that a proposal can be excluded
under Rule 14a-8(i)(8) if it ``establish[es] a process for shareholders
to wage a future election contest.''
    We believe that the fact a proposal relates to the process for
future elections rather than an immediate election is not dispositive
in determining whether the election exclusion applies to the proposal.
As the Commission stated in 1976, the express purpose of the election
exclusion is to make clear that Rule 14a-8 is not a proper ``means'' to
achieve election contests because ``other proxy rules'' are applicable
to such contests. The use of Rule 14a-8 to require companies to include
proposals that would require election contests to be conducted without
compliance with

the specific rules governing such contests would be contrary to the
intent of the Commission's 1976 statement.
    For these reasons, and to avoid such circumvention, the phrase
``relates to an election'' in the election exclusion cannot be read so
narrowly as to refer only to a proposal that ``relates to the current
election,'' or a particular election, but rather must be read to refer
to a proposal that ``relates to an election'' in subsequent years as
well. In this regard, if one looked only to what a proposal
accomplished in the current year, and not to its effect in subsequent
years, the purpose of the exclusion could be evaded easily. For
example, such a reading might permit a company to exclude a shareholder
proposal that nominated a candidate for election as director for the
upcoming meeting of shareholders but not exclude a proposal that
required the company to include the same shareholder-nominated
candidate in the company's proxy materials for the following year's
meeting.
    In implementing the Commission's intended meaning, the staff has
taken care not to adopt an inappropriately broad reading of whether a
proposal ``relates to an election,'' as such a reading would permit the
exclusion of all proposals regarding the qualifications of directors,
the composition of the board, shareholder voting procedures, and board
nomination procedures. We agree with the staff's application of the
exclusion in this regard, as an inappropriately broad reading of the
exclusion would deny shareholder access to the company proxy materials
under Rule 14a-8 with respect to a vast category of election matters of
importance to shareholders that would not result in an election contest
between management and shareholder nominees, and that do not present
significant conflicts with the Commission's other proxy rules.\41\
---------------------------------------------------------------------------

    \41\ In this regard, the staff has taken the position that a
proposal relates to ``an election for membership on the company's
board of directors or analogous governing body'' and, as such, may
be excluded under Rule 14a-8(i)(8) if it could have the effect of,
or proposes a procedure that could have the effect of, any of the
following:
     Disqualifying board nominees who are standing for
election;
     Removing a director from office before his or her term
expired;
     Questioning the competence or business judgment of one
or more directors; or
     Requiring companies to include shareholder nominees for
director in the companies' proxy materials or otherwise resulting in
a solicitation on behalf of shareholder nominees in opposition to
management-chosen nominees.
    Conversely, the staff has taken the position that a proposal may
not be excluded under Rule 14a-8(i)(8) if it relates to any of the
following:
     Qualifications of directors or board structure (as long
as the proposal will not remove current directors or not disqualify
current nominees);
     Voting procedures (such as majority or cumulative
voting);
     Nominating procedures; or
     Reimbursement of shareholder expenses in contested
elections.
---------------------------------------------------------------------------

    Our interpretation of the election exclusion is fully consistent
with the Commission's statement in 1976, that the rule was not intended
``to cover proposals dealing with matters previously not held not
excludable by the Commission, such as cumulative voting rights, general
qualifications for directors * * * '' In the AFSCME v. AIG opinion, the
Second Circuit inferred from this Commission statement that the
Commission ``reject[ed] the somewhat broader interpretation that the
election exclusion applies to shareholder proposals that would
institute procedures for making election contests more likely.'' Our
view that Rule 14a-8(i)(8) allows companies to exclude shareholder
proposals that could result in election contests without compliance
with the contested election proxy rules is consistent with the
Commission's statement in 1976. As explained above, the analysis under
Rule 14a-8(i)(8) does not focus on whether the proposal would make
election contests more likely, but whether the resulting contests would
be governed by the Commission's proxy rules for contested elections.
The Commission's references in 1976 to proposals relating to
``cumulative voting rights'' and ``general qualifications for
directors'' simply reflect the long-held belief that these proposals
generally do not trigger the contested elections proxy rules and
therefore are not excludable under Rule 14a-8(i)(8). Accordingly, the
Commission's 1976 statement should not be interpreted to mean that Rule
14a-8(i)(8) is inapplicable to proposals establishing procedures for
elections generally.

III. Proposed Amendments to Rule 14a-8(i)(8)

    In addition to the guidance provided in this release regarding our
interpretation of Rule 14a-8(i)(8), we are considering whether it would
be appropriate to amend that rule to further clarify the meaning of its
exclusion. The text of Rule 14a-8(i)(8) currently specifies only that a
proposal may be excluded ``[i]f the proposal relates to an election for
membership on the company's board of directors or analogous governing
body.'' To clarify the meaning of the exclusion, consistent with the
Commission's interpretation of that exclusion, we are proposing to
revise the exclusion to read:

    If the proposal relates to a nomination or an election for
membership on the company's board of directors or analogous
governing body or a procedure for such nomination or election.

    We believe that the added references to ``nomination'' and
``procedure'' in the rule text will reflect more appropriately the
purpose of the election exclusion. Further, if adopted, we would
indicate clearly that the term ``procedures'' referenced in the
election exclusion relates to procedures that would result in a
contested election, either in the year in which the proposal is
submitted or in subsequent years, consistent with the Commission's
interpretation of the exclusion.
    As discussed above, we are proposing amendments to Rule 14a-8 that
would clarify the operation of the exclusion in Rule 14a-8(i)(8) in a
manner that is consistent with the Commission's interpretation of that
exclusion. With regard to this proposed amendment, we are soliciting
comment as to the following:
     Would the proposed amendments to Rule 14a-8(i)(8) provide
sufficient certainty regarding the scope of the exclusion? If not, what
additional amendments are necessary?
     Should the exclusion specify those procedures that the
staff historically has found to fall within the exclusion?
     What additional clarification would be helpful and/or
appropriate?

For further clarity, should the proposed amendments include a specific
reference to the interpretation of the exclusion with respect to
procedures that could not result in a contested election? An example of
such a further clarification would be:

    In this regard, a proposal relates to ``a nomination or an
election for membership on the company's board of directors or
analogous governing body or a procedure for such nomination or
election'' if it could have the effect of, or proposes a procedure
that could have the effect of, any of the following: (A)
Disqualifying board nominees who are standing for election; (B)
removing a director from office before his or her term expired; (C)
questioning the competence or business judgment of one or more
directors; or (D) requiring companies to include shareholder
nominees for director in the companies' proxy materials or otherwise
resulting in a solicitation on behalf of shareholder nominees in
opposition to management-chosen nominees.

IV. General Request for Comment

    We request and encourage any interested person to submit comments
regarding:

     The proposed amendments that are the subject of this
release;
     Additional or different changes; or
     Other matters that may have an effect on the proposals
contained in this release.
    We request comment from the point of view of companies, investors,
and other market participants. With regard to any comments, we note
that such comments are of great assistance to our rulemaking initiative
if accompanied by supporting data and analysis of the issues addressed
in those comments. We will consider all comments responsive to this
inquiry in complying with our responsibilities under Section 23(a) of
the Exchange Act.\42\
---------------------------------------------------------------------------

    \42\ 15 U.S.C. 78w(a).
---------------------------------------------------------------------------

V. Paperwork Reduction Act

A. Background

    The proposed amendments affect ``collection of information''
requirements within the meaning of the Paperwork Reduction Act of 1995,
the PRA.\43\ The title for the affected collection of information is
``Proxy Statements--Regulation 14A (Commission Rules 14a-1 through 14a-
16 and Schedule 14A)'' (OMB Control No. 3235-0059). This regulation was
adopted pursuant to the Exchange Act and sets forth the disclosure
requirements for proxy statements filed by companies to help investors
make informed voting decisions.
---------------------------------------------------------------------------

    \43\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    The hours and costs associated with preparing and filing the
disclosure, filing the forms and schedules and retaining records
required by these regulations constitute reporting and cost burdens
imposed by each collection of information. An agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid OMB control number.

B. Summary of Proposals

    Rule 14a-8 is the Commission rule that provides shareholders with
an opportunity to place a proposal in a company's proxy materials for a
vote at an annual or special meeting of shareholders. The proposed
amendments to that rule are intended to clarify the scope of the
exclusion in Rule 14a-8(i)(8), consistent with the Commission's
interpretation of the exclusion. The amendments would provide certainty
regarding the meaning of the exclusion in that rule.

C. Paperwork Reduction Act Burden Estimates

    Adoption of the Rule 14a-8(i)(8) amendments would merely revise the
text of the rule in a manner that is consistent with the Commission's
interpretation of the rule. As such, the amendments proposed today
would not change the information that companies are required to provide
on Schedule 14A; the same information will be required if the proposed
amendments are adopted.

D. Solicitation of Comments

    We request comment on this Paperwork Reduction Act Analysis.
Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits comments
to:
     Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
     Evaluate the accuracy of the Commission's estimate of
burden of the proposed collection of information;
     Determine whether there are ways to enhance the quality,
utility, and clarity of the information to be collected; and
     Evaluate whether there are ways to minimize the burden of
the collection of information on those who are to respond, including
through the use of automated collection techniques or other forms of
information technology.

Persons submitting comments on the collection of information
requirements should direct the comments to the Office of Management and
Budget, Attention: Desk Officer for the Securities and Exchange
Commission, Office of Information and Regulatory Affairs, Washington,
DC 20503, and should send a copy to Nancy M. Morris, Secretary,
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-1090, with reference to File No. S7-17-07. Requests for materials
submitted to OMB by the Commission with regard to these collections of
information should be in writing, refer to File No. S7-17-07, and be
submitted to the Securities and Exchange Commission, Office of Investor
Education and Assistance, Washington, DC 20549.

VI. Cost-Benefit Analysis

    We propose amendments that would clarify existing rules. The
opinion in American Federation of State, County & Municipal Employees,
Employees Pension Plan v. American International Group, Inc.\44\ has
created uncertainty regarding the Commission staff's longstanding
administration of Rule 14a-8(i)(8), making it difficult for
shareholders and companies to assess the operation of that rule. The
proposed amendments to that rule are intended to clarify the scope of
the exclusion in Rule 14a-8(i)(8), consistent with the Commission's
interpretation of the rule. Without such clarification, shareholders
and companies may be uncertain as to the range of shareholder proposals
that are required to be included in company proxy materials and may be
uncertain as to the proper range of proposals that shareholders may
submit to companies for inclusion in those proxy materials. For
example, without clarification of the exclusion in Rule 14a-8(i)(8),
shareholders may incur costs in preparing and submitting proposals that
a company may properly exclude from its proxy materials.
---------------------------------------------------------------------------

    \44\ 462 F.3d 121 (2d Cir. 2006) (AFSCME).
---------------------------------------------------------------------------

    Because the proposed amendments would clarify that the scope of the
exclusion in Rule 14a-8(i)(8) is consistent with the Commission's
interpretation of that exclusion, shareholders and companies would not
incur additional costs to determine the appropriate scope of that
exclusion. Further, companies would not incur additional costs with
regard to the inclusion of shareholder proposals in proxy materials.
    The proposed amendments should improve the ability of shareholders
to prepare and submit proposals that will be required to be included in
a company's proxy materials, as those shareholders will have a clear
understanding of the scope of the Rule 14a-8(i)(8) exemption. Further,
without the clarification of the proper scope of the Rule 14a-8(i)(8)
exclusion that would be provided by the amendments, shareholders and
companies may incur substantial expense in litigating disputes
regarding that exclusion.
Request for Comment
    We are sensitive to the costs and benefits imposed by our rules. We
have identified no costs and certain benefits related to these
proposals. We request comment on all aspects of this cost-benefit
analysis, including identification of any costs and additional
benefits. We encourage commenters to identify and supply relevant data
concerning the costs and benefits of the proposed amendments.

VII. Consideration of Burden on Competition and Promotion of
Efficiency, Competition and Capital Formation

    Section 23(a)(2) of the Exchange Act \45\ requires us, when
adopting rules under the Exchange Act, to consider the impact that any
new rule would have on competition. In addition, Section 23(a)(2)
prohibits us from adopting any rule that would impose a burden on
competition not necessary or appropriate in furtherance of the purposes
of the Exchange Act. Section 3(f) of the Exchange Act \46\ and Section
2(c) of the Investment Company Act of 1940 \47\ requires us, when
engaging in rulemaking that requires us to consider or determine
whether an action is necessary or appropriate in the public interest,
to consider, in addition to the protection of investors, whether the
action will promote efficiency, competition and capital formation.
---------------------------------------------------------------------------

    \45\ 15 U.S.C. 78w(a)(2).
    \46\ 15 U.S.C. 78c(f).
    \47\ 15 U.S.C. 80a-2(c).
---------------------------------------------------------------------------

    The AFSCME opinion has created uncertainty regarding the Commission
staff's longstanding administration of Rule 14a-8(i)(8), making it
difficult for companies and shareholders to assess the operation of
that rule. This has resulted in uncertainty regarding whether Rule 14a-
8 requires companies to include in their proxy materials shareholder
proposals that would establish procedures under which shareholder
nominees for director, despite the exclusion provided by Rule 14a-
8(i)(8). This uncertainty has made it difficult for shareholders and
companies to assess the proper operation of the shareholder proposal
rule and has generated economic inefficiency by introducing potential
litigation costs, and costs incurred to prepare and respond to
shareholder proposals.
    The proposed amendments are intended to clarify the scope of the
exclusion in Rule 14a-8(i)(8), consistent with the Commission's
interpretation of the rule. This should improve shareholders' and
companies' ability to assess shareholder proposals with a clear
understanding whether Rule 14a-8 will require inclusion of the
proposal. Informed decisions in this regard generally promote market
efficiency and capital formation. We believe the proposed amendments to
Rule 14a-8 would not impose a burden on competition.
    We request comment on whether the proposed amendments, if adopted,
would impose a burden on competition. We also request comment on
whether the proposed amendments, if adopted, would promote efficiency,
competition and capital formation. Finally, we request commenters to
provide empirical data and other factual support for their views if
possible.

VIII. Initial Regulatory Flexibility Act Analysis

    This Initial Regulatory Flexibility Analysis has been prepared in
accordance with 5 U.S.C. 603. It relates to proposed amendments to Rule
14a-8 that would clarify the application of the exclusion provided by
paragraph (i)(8) of that rule.

A. Reasons for, and Objectives of, Proposed Action

    The purpose of the proposed amendments is to clarify the
requirements of companies to include in their proxy materials
shareholder proposals relating to procedures for the inclusion of
shareholder nominees for directors in company proxy materials. The
proposed amendments would clarify the scope of Rule 14a-8(i)(8), which
permits companies to omit certain such proposals from their proxy
materials.
    The proposals, if adopted, should improve shareholders' and
companies' ability to assess shareholder proposals with a clear
understanding whether Rule 14a-8 will require inclusion of the
proposal.

B. Legal Basis

    We are proposing amendments to the rules under the authority set
forth in Sections 14 and 23(a) of the Exchange Act, as amended, and
Sections 20(a) and 38 of the Investment Company Act of 1940, as
amended.

C. Small Entities Subject to the Proposed Rules

    The Regulatory Flexibility Act defines ``small entity'' to mean
``small business,'' ``small organization,'' or ``small governmental
jurisdiction.'' \48\ The Commission's rules define ``small business''
and ``small organization'' for purposes of the Regulatory Flexibility
Act for each of the types of entities regulated by the Commission.\49\
A ``small business'' and ``small organization,'' when used with
reference to a company other than an investment company, generally
means an company with total assets of $5 million or less on the last
day of its most recent fiscal year. We estimate that there are
approximately 1,100 companies, other than investment companies, that
may be considered reporting small entities.\50\ The proposed rules may
affect each of the approximately 1,315 small entities that are subject
to the Exchange Act reporting requirements.
---------------------------------------------------------------------------

    \48\ 5 U.S.C. 601(6).
    \49\ Securities Act Rule 157 (17 CFR 230.157), Exchange Act Rule
0-10 (17 CFR 240.0-10) and Investment Company Act Rule 0-10 (17 CFR
270.0-10) contain the applicable definitions.
    \50\ The estimated number of reporting small entities is based
on 2007 data, including the Commission's EDGAR database and Thomson
Financial's Worldscope database. Approximately 215 investment
companies meet this definition.
---------------------------------------------------------------------------

    We request comment on the number of small entities that would be
impacted by our proposals, including any available empirical data.

D. Reporting, Recordkeeping and Other Compliance

Requirements
    The proposed amendments would impose no new reporting,
recordkeeping, or compliance requirements. The impact of these
proposals relates to clarifying the scope of the requirement to include
shareholder proposals in company proxy materials.

E. Duplicative, Overlapping or Conflicting Federal Rules

    We believe that there are no rules that conflict with or duplicate
the proposed rules.

F. Significant Alternatives

    The Regulatory Flexibility Act directs us to consider significant
alternatives that would accomplish the stated objective of our
proposals, while minimizing any significant adverse impact on small
entities. In connection with the proposed amendments and rules, we
considered the following alternatives:
     The existence or nature of the potential impact of the
proposals on small entities discussed in the analysis; and
     How to quantify the impact of the proposed rules.
    Commenters are asked to describe the nature of any impact and
provide empirical data supporting the extent of the impact. Such
comments will be considered in the preparation of the final regulatory
flexibility analysis, if the proposals are adopted, and will be placed
in the same public file as comments on the proposed amendments
themselves.

IX. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of

1996,\51\ a rule is ``major'' if it has resulted, or is likely to
result in:
---------------------------------------------------------------------------

    \51\ Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996)
(codified in various sections of 50 U.S.C., 15 U.S.C. and as a note
to 5 U.S.C. Sec.  601).
---------------------------------------------------------------------------

     An annual effect on the economy of $100 million or more;
     A major increase in costs or prices for consumers or
individual industries; or
     Significant adverse effects on competition, investment or
innovation.
    We request comment on whether our proposals would be a ``major
rule'' for purposes of SBREFA. We solicit comment and empirical data
on:
     The potential effect on the U.S. economy on an annual
basis;
     Any potential increase in costs or prices for consumers or
individual industries; and
     Any potential effect on competition, investment or
innovation.

X. Statutory Basis and Text of Proposed Amendments

    We are proposing amendments to rules pursuant to Sections 14, and
23(a) of the Exchange Act, as amended, and Sections 20(a) and 38 of the
Investment Company Act of 1940, as amended.

List of Subjects in 17 CFR Part 240

    Reporting and recordkeeping requirements, Securities.

    In accordance with the foregoing, the Securities and Exchange
Commission proposes to amend Title 17, chapter II of the Code of
Federal Regulations as follows:

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

    1. The authority citation for part 24 continues to read, in part,
as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i,
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5,
78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4,
80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless otherwise
noted.
* * * * *
    2. Amend Sec.  240.14a-8 by revising paragraph (i)(8) to read as
follows:

Sec.  240.14a-8  Shareholder proposals.

* * * * *
    (i) * * *
    (8) Relates to election: If the proposal relates to a nomination or
an election for membership on the company's board of directors or
analogous governing body or a procedure for such nomination or
election;
* * * * *

    By the Commission.

    Dated: July 27, 2007.
Nancy M. Morris,
Secretary.
[FR Doc. E7-14955 Filed 8-2-07; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 87, Number 42 (Thursday, March 3, 2022)]
[Rules and Regulations]
[Pages 11959-11961]
[FR Doc No: 2022-04362]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R03-OAR-2021-0606; FRL-9176-02-R3]

Air Plan Approval; Virginia; Revision to the Classification and
Implementation of the 2015 Ozone National Ambient Air Quality Standard
for the Northern Virginia Nonattainment Area

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is approving a state
implementation plan (SIP) revision submitted by the Commonwealth of
Virginia. This revision consists of an amendment to an existing
regulation which adds a new section listing the localities that
comprise the Northern Virginia ozone nonattainment area, which is
classified as marginal for the 2015 8-hour ozone national ambient air
quality standard (NAAQS). EPA is approving this revision to the
Virginia SIP in accordance with the requirements of the Clean Air Act
(CAA).

DATES: This final rule is effective on April 4, 2022.

ADDRESSES: EPA has established a docket for this action under Docket ID
Number EPA-R03-OAR-2021-0606. All documents in the docket are listed on
the https://www.regulations.gov website. 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, is
not placed on the internet and will be publicly available only in hard
copy form. Publicly available docket materials are available through
https://www.regulations.gov, or please contact the person identified in
the FOR FURTHER INFORMATION CONTACT section for additional availability
information.

FOR FURTHER INFORMATION CONTACT: Serena Nichols, Planning &
Implementation Branch (3AD30), Air & Radiation Division, U.S.
Environmental Protection Agency, Region III, 1650 Arch Street,
Philadelphia, Pennsylvania 19103. The telephone number is (215) 814-
2053. Ms. Nichols can also be reached via electronic mail at
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    On December 15, 2021 (86 FR 71214), EPA published a notice of
proposed rulemaking (NPRM) for the Commonwealth of Virginia. In the
NPRM, EPA proposed approval of Virginia's amendment to an existing
regulation by adding a new section listing the localities that comprise
the Northern Virginia ozone nonattainment area. This revision is needed
for the Commonwealth to implement the 2015 8-hour ozone NAAQS in the
Northern Virginia ozone nonattainment area. The formal SIP revision was
submitted by the Commonwealth of Virginia through the Virginia
Department of Environmental Quality (VADEQ) on August 28, 2020.

II. Summary of SIP Revision and EPA Analysis

    Virginia's August 28, 2020 SIP revision consists of an amendment to
an existing regulation which adds a new section listing the localities
that comprise the Northern Virginia ozone nonattainment area, which is
classified as marginal for the 2015 ozone NAAQS. The amendments revise
the Virginia Administrative Code (VAC), specifically 9VAC5-20-204
(Nonattainment areas) subsection A, which geographically defines the
nonattainment areas by locality for the criteria pollutants indicated.
The amendments are necessary for implementation of the 2015 ozone
NAAQS. The added subdivision, 9VAC5-20-204 A 4, defines the Northern
Virginia marginal ozone nonattainment area for the 2015 8-hour ozone
standard as including the following areas: Arlington County, Fairfax
County, Loudoun County, Prince William County, Alexandria City, Fairfax
City, Falls Church City, Manassas City, and Manassas Park City. A
reference is also added to 40 CFR 51.1303(a), which pertains to the
application of classification and attainment date provisions for areas
designated nonattainment for the 2015 8-hour ozone NAAQS.
    Other specific requirements of VADEQ's August 28, 2020 submittal
and the rationale for EPA's proposed action are explained in the NPRM
and will not be restated here. No public comments were received on the
NPRM.

III. Final Action

    EPA is approving, as a SIP revision, the Commonwealth of Virginia's
August 28, 2020 submittal revising the subsection listing the
localities that comprise the Northern Virginia ozone nonattainment area
for the 2015 8-hour ozone NAAQS.

IV. General Information Pertaining to SIP Submittals From the
Commonwealth of Virginia

    In 1995, Virginia adopted legislation that provides, subject to
certain conditions, for an environmental assessment (audit)
``privilege'' for voluntary compliance evaluations performed by a
regulated entity. The legislation further addresses the relative burden
of proof for parties either asserting the privilege or seeking
disclosure of documents for which the privilege is claimed. Virginia's
legislation also provides, subject to certain conditions, for a penalty
waiver for violations of environmental laws when a regulated entity
discovers such violations pursuant to a voluntary compliance evaluation
and voluntarily discloses such violations to the Commonwealth and takes
prompt and appropriate measures to remedy the violations. Virginia's
Voluntary Environmental Assessment Privilege Law, Va. Code Sec. 10.1-
1198, provides a privilege that protects from disclosure documents and
information about the content of those documents that are the product
of a voluntary environmental assessment. The Privilege Law does not
extend to documents or information that: (1) Are generated or developed
before the commencement of a voluntary environmental assessment; (2)
are prepared independently of the assessment process; (3) demonstrate a
clear, imminent and substantial danger to the public health or
environment; or (4) are required by law.
    On January 12, 1998, the Commonwealth of Virginia Office of the
Attorney General provided a legal opinion that states that the
Privilege law, Va. Code Sec. 10.1-1198, precludes granting a privilege
to documents and information ``required by law,'' including documents
and information ``required by Federal law to maintain program
delegation, authorization or approval,'' since Virginia must ``enforce
Federally authorized environmental programs in a manner that is no less
stringent than their Federal counterparts. . . .'' The opinion
concludes that ``[r]egarding Sec.  10.1-1198, therefore, documents or
other information needed for civil or criminal enforcement under one of
these programs could not be privileged because such documents and
information are essential to pursuing enforcement in a manner required
by

Federal law to maintain program delegation, authorization or
approval.''
    Virginia's Immunity law, Va. Code Sec. 10.11199, provides that
``[t]o the extent consistent with requirements imposed by Federal
law,'' any person making a voluntary disclosure of information to a
state agency regarding a violation of an environmental statute,
regulation, permit, or administrative order is granted immunity from
administrative or civil penalty. The Attorney General's January 12,
1998 opinion states that the quoted language renders this statute
inapplicable to enforcement of any Federally authorized programs, since
``no immunity could be afforded from administrative, civil, or criminal
penalties because granting such immunity would not be consistent with
Federal law, which is one of the criteria for immunity.''
    Therefore, EPA has determined that Virginia's Privilege and
Immunity statutes will not preclude the Commonwealth from enforcing its
program consistent with the Federal requirements. In any event, because
EPA has also determined that a state audit privilege and immunity law
can affect only state enforcement and cannot have any impact on Federal
enforcement authorities, EPA may at any time invoke its authority under
the CAA, including, for example, sections 113, 167, 205, 211, or 213,
to enforce the requirements or prohibitions of the state plan,
independently of any state enforcement effort. In addition, citizen
enforcement under section 304 of the CAA is likewise unaffected by
this, or any, state audit privilege or immunity law.

V. Statutory and Executive Order Reviews

A. General Requirements

    Under the CAA, the Administrator is required to approve a SIP
submission that complies with the provisions of the CAA and applicable
Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in
reviewing SIP submissions, EPA's role is to approve state choices,
provided that they meet the criteria of the CAA. Accordingly, this
action merely approves state law as meeting Federal requirements and
does not impose additional requirements beyond those imposed by state
law. For that reason, this action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Orders
12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21,
2011);
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based
on health or safety risks subject to Executive Order 13045 (62 FR
19885, April 23, 1997);
     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the CAA; and
     Does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).
    The SIP is not approved to apply on any Indian reservation land as
defined in 18 U.S.C. 1151 or in any other area where EPA or an Indian
tribe has demonstrated that a tribe has jurisdiction. In those areas of
Indian country, the rule does not have tribal implications and will not
impose substantial direct costs on tribal governments or preempt tribal
law as specified by Executive Order 13175 (65 FR 67249, November 9,
2000).

B. Submission to Congress and the Comptroller General

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this action and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).

C. Petitions for Judicial Review

    Under section 307(b)(1) of the CAA, petitions for judicial review
of this action must be filed in the United States Court of Appeals for
the appropriate circuit by May 2, 2022. Filing a petition for
reconsideration by the Administrator of this final rule does not affect
the finality of this action for the purposes of judicial review nor
does it extend the time within which a petition for judicial review may
be filed, and shall not postpone the effectiveness of such rule or
action.
    This action, amending the section listing the localities that
comprise the Northern Virginia ozone nonattainment area, may not be
challenged later in proceedings to enforce its requirements. (See
section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by
reference, Intergovernmental relations, Ozone, Reporting and
recordkeeping requirements, Volatile organic compounds.

    Dated: February 16, 2022.
Diana Esher,
Acting Regional Administrator, Region III.

    For the reasons stated in the preamble, the EPA amends 40 CFR part
52 as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart VV--Virginia

0
2. In Sec.  52.2420, the table in paragraph (e)(1) is amended by adding
an entry for ``Revision to the Classification and Implementation of the
2015 Ozone National Ambient Air Quality Standard for the Northern
Virginia Nonattainment Area'' at the end of the table to read as
follows:

Sec.  52.2420   Identification of plan.

* * * * *
    (e) * * *
    (1) * * *

----------------------------------------------------------------------------------------------------------------
    Name of non-regulatory SIP          Applicable           State                                Additional
             revision                geographic  area   submittal date   EPA approval date       explanation
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Revision to the Classification     Northern Virginia           8/28/20  3/3/22, [insert      This revision
 and Implementation of the 2015     Ozone                                Federal Register     consists of an
 Ozone National Ambient Air         Nonattainment Area.                  citation].           amendment to an
 Quality Standard for the                                                                     existing
 Northern Virginia Nonattainment                                                              regulation which
 Area.                                                                                adds a new section
                                                                                listing the
                                                                                localities that
                                                                                comprise the
                                                                                Northern Virginia
                                                                                ozone
                                                                                nonattainment
                                                                                area.
----------------------------------------------------------------------------------------------------------------

* * * * *
[FR Doc. 2022-04362 Filed 3-2-22; 8:45 am]
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The background papers on the candidate national program priorities are intended to initiate further discussion. When priorities are selected more detailed strategies with in depth background information, numerical targets, schedules, milestones and performance measures will be developed. ______________________________________________________________________________

December, 2003 Page 1 of 2 Proposed Priority Safe Drinking Water Act ( SDWA)  Microbial Plus Universe & Types of Facilities This potential priority includes public water systems ( PWSs), defined at 40 C. F. R. § l41.2 III. While public water systems are identified under SIC code 4941 North American Industry Classification System ( NAICS 221310), they may also be located at facilities identified under other SIC codes if the facility produces drinking water onsite. EPA` s Safe Drinking Water Information System/ Federal version ( SDWIS/ FED) database currently maintains an inventory of approximately 168,000 active PWSs, more than 90 percent of which serve 3,300 or fewer users. The various drinking water regulations define systems serving 3,300 or fewer users as small systems. There are nearly 1,000 PWSs on Indian lands, most serving fewer than 3,300 people and none serving more than 10,000.

Geographic Range Nationwide.

Environmental Risks Bacteria, protozoans and viruses are all microbial pathogens of concern. Microbial contamination can be present in source water ( surface water, ground water, or purchased finished water), can be introduced by unsanitary conditions at treatment or storage facilities, and can enter the drinking water delivery infrastructure through infiltration or cross connections. Generally speaking, the risk of microbial contamination is highest during warm months at systems that use surface water as a source. Because nitrates are a primarily component of chemical fertilizers and are also concentrated in animal and human wastes, nitrate contamination of drinking water is most likely to occur in agricultural areas, or as a result of improper biosolids application near a public water system's water source.

1. Acute Contaminants   Microbial pathogens or nitrates in drinking water can produce immediate severe health effects, especially in children, the elderly, and persons with compromised immune systems. Adverse health effects of microbiological contaminants can include, fever, jaundice, pneumonia, vomiting, diarrhea, dehydration, and death. Nitrate taken into the body is converted to nitrite, which obstructs the blood's ability to carry oxygen. This can produce serious illness, particularly in infants, characterized by shortness of breath, bluish skin and, in extreme cases, death by suffocation.

2. Substantial Endangerment   Many contaminants, microbial, chemical, or radiological, regulated The background papers on the candidate national program priorities are intended to initiate further discussion. When priorities are selected more detailed strategies with in depth background information, numerical targets, schedules, milestones and performance measures will be developed. ______________________________________________________________________________

December, 2003 Page 2 of 2 or unregulated, may constitute an imminent and substantial endangerment to public health if present at significant levels in drinking water.

3. Cumulative Risks   Public water systems in non compliance with multiple non microbial rules ( e. g., a radionuclide Maximum Contaminant Level ( MCL) and a barium MCL) or that have combinations of multiple types of violations ( e. g., violations of a MCL or treatment technique plus a monitoring/ reporting violation) may pose a higher cumulative risk to public health. Additionally, systems located within the same geographic area may experience similar violations thus posing another type of cumulative risk for users who get their water from more than one system ( e. g., people whose drinking water at work and home are supplied by different systems).

Noncompliance Information The Total Coliform Rule, which applies to all public water systems, historically is the drinking water rule most frequently violated. Almost 44,000 of the more than 110,000 drinking water violations reported in EPA's 2001 National Public Water Systems Compliance Report were violations of the Total Coliform Rule. Another 5,000 of the drinking water violations were violations of the Surface Water Treatment Rule. This means that more than 56 percent of all drinking water violations in calendar year 2001 were violations of microbial rules. In the same year, there were more than 9,100 violations of nitrate requirements. In FY 2005, by focusing on violations of the Total Coliform Rule, the Surface Water Treatment Rule, the nitrates requirements, and the newly effective requirements of microbial rules such as the Interim Enhanced Surface Water Treatment Rule, the Filter Backwash Rule, the Long Term 1 Enhanced Surface Water Treatment Rule, and the Stage 1 Disinfectants and Disinfection Byproducts Rule, EPA would likely be addressing approximately two thirds of all drinking water violations.

Of the 41,300 PWSs for which the states reported a violation of a health based standard or significant monitoring and reporting requirement, almost 39,400 were small systems serving 3,300 or fewer users.


[Federal Register Volume 81, Number 109 (Tuesday, June 7, 2016)]
[Notices]
[Pages 36636-36637]
[FR Doc No: 2016-13329]

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SECURITIES AND EXCHANGE COMMISSION

Proposed Collection; Comment Request

Upon Written Request Copies Available From: Securities and Exchange
Commission, Office of FOIA Services, 100 F Street NE., Washington, DC
20549-2736

Extension: Rules 7a-15 thru 7a-37, SEC File No. 270-115, OMB Control
No. 3235-0132

    Notice is hereby given that, pursuant to the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission

(``Commission'') is soliciting comments on the collection of
information summarized below. The Commission plans to submit this
existing collection of information to the Office of Management and
Budget for extension and approval.
    Rules 7a-15 through 7a-37 (17 CFR 260.7a-15-260.7a-37) under the
Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) set forth the
general requirements as to form and content of applications, statements
and reports that must be filed under the Trust Indenture Act. The
respondents are persons and entities subject to requirements of the
Trust Indenture Act. Trust Indenture Act Rules 7a-15 through 7a-37 are
disclosure guidelines and do not directly result in any collection of
information. The rules are assigned only one burden hour for
administrative convenience.
    Written comments are invited on: (a) Whether this proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (b) the accuracy of the agency's estimate of
the burden imposed by the collection of information; (c) ways to
enhance the quality, utility, and clarity of the information collected;
and (d) ways to minimize the burden of the collection of information on
respondents, including through the use of automated collection
techniques or other forms of information technology. Consideration will
be given to comments and suggestions submitted in writing within 60
days of this publication.
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid control number.
    Please direct your written comment to Pamela Dyson, Director/Chief
Information Officer, Securities and Exchange Commission, c/o Remi
Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or send an email
to<EMAIL_ADDRESS>
    Dated: June 1, 2016.
Brent J. Fields,
Secretary.
[FR Doc. 2016-13329 Filed 6-6-16; 8:45 am]
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